Competition Bureau’s latest loss: Nine years on, IT boss acquitted
When Barney Shum showed up to hear his verdict at the Elgin Street courthouse on June 11, he had been living under a very dark shadow for nearly a decade.
Despite prescriptions for an ulcer and anxiety, the former mid-level manager at Library and Archives Canada had been unable to sleep for days, so worried was he about this moment in court.
Shum, 61, had been hired by the Library in the late 1970s straight out of university and had worked
there until 2012.
He was now facing two years in jail.
The allegation was that he had created conditions that allowed two of the library’s information technology contractors, Microtime and ADRM, to defraud taxpayers through a 2009 bidrigging scheme.
Shum had been informed of the charges April 29, 2014. The Vancouver native at the time had not been alone. Microtime, three of its employees and two library colleagues had also been charged in connection with the same set of facts.
The Competition Bureau, the federal agency that conducted the investigation, alleged the contractors had contravened the Competition Act by failing to notify library procurement officials of certain teaming arrangements.
At the same time, library employees, including Shum, were facing charges of violating the Federal Administration Act — of laying the groundwork for the rigged bids, thereby helping to defraud Canadian taxpayers. All the accused were to have been tried in a single legal proceeding.
But after four years of legal preliminaries, Shum was now alone in this court. Three of the accused had accepted pleas in exchange for lighter penalties, while Microtime and its owner, John Cassandra, had opted for separate trials that begin in December. Marie-Claude Renaud, a former library colleague of Shum’s, had been defending herself in another proceeding until very recently, when the Crown unexpectedly stayed charges against her.
Superior Court Judge Catherine Aitken asked Shum to stand. He had not expected her to address him directly.
The judge said she would not read her entire judgment, some 75 pages. Instead, Aitken got straight to the matter at hand, the two counts of “making an opportunity to defraud the government.”
Aitken said, “I find you not guilty.”
At first, Shum didn’t take it in. “There was a time delay in my head,” he explained. “Her words didn’t seem to register.”
He glanced at his wife, Lyne. “I think she said not guilty. Is that what you heard?” he asked, not quite ready to accept the good news was real.
Finally he looked at his lawyer, John Hale, for reassurance. Hale, smiling, gave him a thumbs up.
“It’s the sweetest acquittal I’ve ever heard, and I’ve been practising for nearly 30 years,” Hale said. “Barney’s just a good, decent guy. This ordeal has been a nightmare for him.” verdict is tempered by the time he lost, the mortgage debt created by his legal costs and the worry that the verdict could yet be appealed. The Crown has until July 11 or so to decide.
“I’ve had a lot of years taken away from me,” Shum said, reflecting on the verdict and what he might do now.
But that’s not what bothers him most. Through it all, through the past nine years, Shum’s most common thought was, “Why?”
The answer looks straightforward. Shum had the remarkable bad fortune to be caught in the crosshairs of the Competition Bureau just as it was ramping up its campaign to combat whitecollar crime.
“The bureau will not hesitate to take action against bid-riggers when it uncovers evidence the law has been broken,” then-bureau commissioner Melanie Aitken (no relation to the judge) said Feb. 17, 2009. That was the same day the competition agency announced more than 150 bid-rigging and conspiracy charges against 14 individuals and seven companies led by TPG Technology.
Weeks later, the federal government emphasized Aitken’s determination by amending the Competition Act. The maximum penalty for a bid-rigging conviction was bumped up to 14 years from five.
But the bureau’s momentum screeched to a halt after most of the accused in the TPG case opted for a trial by jury, which in 2015 acquitted the defendants of all charges. This decisive defeat prompted the Crown to withdraw all remaining charges against other contractors in the TPG action. These defendants had elected to be tried before a judge.
The Crown, it transpired, had relied too heavily on the testimony of competitors of the accused and, further, failed to produce evidence that the accused had shared information about profits, something that would have crossed the line.
Trial witnesses also shed much light on the messy business of supplying information-technology services to the government. In order to make sure they could provide all the necessary skills, bidders collaborated through joint ventures, subcontracts and other teaming arrangements. Not only were these encouraged by federal departments, they were legal — provided their makeup was known to contracting officials.
The Crown charged that bidders in the TPG case neglected to make officials aware. Unfortunately, the law is less than clear about how this was to have been done. TPG defendants argued their teaming arrangements were well known to the departments contracting for their services — Canada Border Services Agency in particular — so there was no need to also notify Public Services and Procurement Canada, the department that negotiated the contracts.
Because a jury rendered the verdicts in 2015, no reasons were given. A precedent, a ruling to clarify things, would have to wait for a future trial. Meantime, several of the acquitted in the TPG case are suing five current and former bureau officials for $30 million, citing a negligent investigation. The government is contesting the suit. The bureau declined to comment for this story, citing ongoing litigation.
This all might have been resolved without the sledgehammer of a criminal trial had the government issued a directive to contractors, clarifying exactly what types of teaming arrangements needed to be declared, in what form and to whom.
But in 2009 the bureau was convinced of its evidence and interpretation of the law.
It was the year that everything began to go wrong for Shum and his colleagues at the library.
Shum had been responsible for stitching together separate strands of technology from the National Library and Archives Canada, which had earlier merged to create Library and Archives Canada.
Shum was looking after two information-technology projects aimed at modernizing the storage and retrieval of electronic documents. A colleague, Marie-Claude Renaud, was responsible for a third project. The library had nowhere near enough technical experts on staff so it had hired some 45 outside consultants under a variety of contracts to get the jobs done. These contracts were valued at roughly $3.5 million.
Budgets were tight, the jobs were complex and technical staff was stressed. Managing the contracts had been complicated by the introduction in 2007 of a new procurement system that allowed officials to invite prequalified firms from a list to bid for various projects. (The old system was less streamlined).
But by 2009 the library had yet to train Shum, among others, on the new system.
In April, Shum got a new boss at the library. Sylvain Richard, it soon became clear, was disturbed by the amount of overtime that was being charged by the consultants. He launched an administrative review.
It was this investigation that lit the fuse.
Aitken covers the sequence in her June 11 verdict, noting that Richard “had a very low regard for consultants” and for Shum. In October 2009, three months before the review was complete, the investigators filed a complaint about possible bid rigging to the criminal matters branch of the Competition Bureau, and almost immediately began forwarding Shum’s emails and other records.
On Feb. 3, 2010, the investigators presented their report, alleging Shum had mismanaged the contracts and was guilty of misconduct. Two days later, Shum was suspended with pay and given 10 minutes to clear out his desk.
Stunned at the development, Shum hired an employment lawyer, James Cameron, who challenged the report’s methodology and conclusions. At Cameron’s prodding, the library commissioned an independent investigation by Michel Gosselin, a partner with Gosselin Nadeau, a human resources consulting firm. His report, delivered May 27, 2010, concluded: “There is no such evidence that Mr. Shum was involved in a bid-rigging scheme.”
Shum, accordingly, returned to work, eventually retiring on June 29, 2012. For the next 22 months, Shum provided information technology services to Health Canada as a casual employee and consultant.
But the bureau had not let go of the case. On April 29, 2014, a bureau official told Shum that criminal charges would be brought against him under Section 80 of the Financial Administration Act. On May 2, he, five other people and Microtime were charged with the same or related offences.
While the facts are complex, their essence is straightforward. The Crown alleges ADRM bid successfully for the library’s information technology contracts because, among other things, it included Microtime consultants (the incumbents) — and that the arrangement was not made known to the library’s contracting officials.
Thus, in the Crown’s view, the contractors were guilty of rigging bids while Shum and his library colleagues committed the sin of allowing this to happen, or, in legal terms, “making opportunity for another person to commit fraud.”
Aitken challenged the Crown’s thinking.
“There is no evidence that the government actually suffered any deprivation as a result of ADRM being invited to bid and ultimately winning it or as a result of Microtime’s consultants being bid through ADRM,” she wrote in her judgment.
Furthermore, Aitken ruled, “Mr. Shum was aware that Microtime had some kind of pass-through agreement with ADRM but he did not know the details of that agreement.”
Indeed, Aitken appeared to take exception to the Crown’s attempt to use the Financial Administration Act in its case against library employees. “‘Making opportunity for another person to commit a fraud’ is an exceptionally broad concept on which to found criminal liability. It can potentially capture all kinds of innocent, innocuous and normal behaviour that could open the door for someone else to commit a fraud,” she concluded.
As for the Crown’s use of the Competition Act to allege bid rigging against the contractors, that’s a matter for the other criminal proceedings involving Microtime and Cassandra, Aitken implied.
The judge several times referred to the teaming arrangement between ADRM and Microtime, and whether its existence had been declared to contracting authorities. Such a determination “is of relevance to a finding of bid-rigging ” she noted.
However, at the same time, she ruled, “Evidence is insufficient to establish that Microtime, or any of the name individuals, engaged in a deceit or falsehood in entering the teaming agreement.”
In short, Aitken concluded, taxpayers did not lose any money as a result of the library contracts managed by Shum, nor did the UBC computer science grad benefit personally.
“There is no allegation that anything done by Mr. Shum was done for the personal gain or benefit of himself or any member of his family,” Aitken wrote.
The abiding frustration of Shum is that it took so long to reach this determination.
The Crown, it transpired, had relied too heavily on the testimony of competitors of the accused.