Victory for Sorbara, dilemma for McGuinty

Erstwhile Ontario finance minister Greg Sorbara has succeeded in having his name struck from the RCMP search warrants that resulted in his resignation from the Ontario cabinet last October. From the Canadian Press story:

Ontario Superior Court Justice Ian Nordheimer's ruling quashed parts of the search warrants that included Sorbara's name. The rest of the warrants stand.

Sorbara stepped down as finance minister after his name surfaced during an RCMP criminal investigation into allegations of fraud by Royal Group Technologies (TSX:RYG).

Sorbara had been a board member and part of the audit committee at Royal Group until he became finance minister in October 2003.

In his ruling, Nordheimer said police acted too quickly and without enough information to add Sorbara's name to the warrants, which included several other former top executives at the company.

"I am left with the nagging concern that the application for a search warrant, at least as it related to the applicant (Sorbara) was very much premature," Nordheimer wrote in his ruling.

Premier Dalton McGuinty, however, has yet to indicate whether he will put Sorbara back into cabinet now that – in Sorbara’s mind, anyhow -- Sorbara has been cleared. No doubt Sorbara is of the view that getting back the keys to both his government car and the Ontario treasury are his due.

More than any single individual, Sorbara is responsible for installing McGuinty in the second-floor corner office at the Pink Palace. In the late 90s, Sorbara was comfortably retired from politics and active in business. But watching McGuinty blow the 1999 election lured him back to politics: he ran for party president in the fall of ‘99, raised money, found candidates, set up the campaign team and, at McGuinty’s urging, ran for the Vaughan-King-Aurora seat left empty by Al Palladini’s untimely death in 2001.

Word has it that, prior to his resignation, Sorbara’s sign-off was required on all government initiatives. The PCs took to calling him “the Real Premier” and had T-shirts made to that effect (one of which is proudly owned by Sorbara himself).

All of this is no doubt why McGuinty expended political capital by refusing to remove Sorbara from cabinet when news of the investigations into Royal Group first broke in early 2004 – when Sorbara’s story on Royal was that he had done a good job and any criticisms were unjustified (more on this later). This was in contrast to McGuinty’s assertion while opposition leader that ministers under any cloud should step aside.

But when Sorbara’s name appeared on search warrants in the fall of 2005, McGuinty had no choice but to ask him to step aside. Sorbara’s news conference in the lobby of the Frost building was the first time I have ever seen him publicly rattled.

Whether McGuinty sincerely wishes to put Sorbara back into cabinet or not, I have no clue. But politically, the move has more downsides than upsides.

While the absence of Sorbara has had little apparent impact on the McGuinty regime, putting Sorbara back in the cabinet means exposing him to questions about the investigations and his past statements.

In the days after his resignation, Sorbara gave media interviews in which he described himself as a “passive participant” in his family’s real estate and development business. This despite the fact that the Sorbara Group’s website described the firm as having “an experienced management team combined with the personal hands-on approach of the principals Edward Sorbara, Joseph Sorbara and Gregory Sorbara.”

And according to the Globe and Mail this past March, Sorbara swore in court documents that his older brothers, Edward and Joseph, made it clear "that I ought not to contemplate becoming involved in the management and direction of 'their' business."

Also in the days after his resignation, he claimed that, although he was an independent director at Royal Group and a member of the audit committee, the board never examined any deals below a certain dollar figure (I believe it was $60 million), and that figure excluded the deals Royal Group did with the Sorbara Group.

He also told the Star’s Richard Brennan that he knew there were governance problems at Royal Group and, though he tried valiantly to fix them, met with little success. Sorbara told Brennan that he was concerned “from Day 1” he began serving on the board in 1994 that “we [the board] had no capacity to reverse the decisions of management.” Sorbara says he tried to assert the board’s oversight over management, but he was unsuccessful.

Though Sorbara may have succeeded in convincing a judge that his latest version of what went on at the Sorbara Group and Royal Group is the truth, once back in cabinet he may be called upon to explain his glaring inconsistencies on (a) whether he was a successful developer or the Gary Ewing of the Sorbara family, and (b) whether he was a competent independent director of Royal Group, or a failed corporate governance reformer.

And while Sorbara may have succeeded in having his name removed from some court documents, they remain on others, namely a class action lawsuit brought against Sorbara and several other former and current Royal Group officials by Canadian Commercial Workers Industry Pension Plan. Though admittedly, this lawsuit stems from the conduct alleged in the criminal investigation. Perhaps Sorbara will try to bootstrap today’s ruling into getting his name removed from the civil suit.


Then there’s the matter of Sorbara’s alleged leaking to local politicians of the McGuinty government’s biggest ticket item in its March budget: building the Spadina subway extension. Sorbara denied being the source, but several news articles resulted, mentioning Sorbara Group land holdings along the subway route.

Sorbara is also notorious for having an arrogant streak that may reflect poorly on a government facing a by-election in Parkdale-High Park and 18 months away from a general election, intent on branding itself as “on the side of” average folks. Most average folks are not in a position to hire $500-per-hour lawyers to amend search warrants in a police investigation still in its early stages.

And then there’s the problem of moving aside current finance minister Dwight “Spanky” Duncan, who appears very comfortable in the finance spot. Bringing Sorbara back means demoting at least one cabinet member. And those who may not be interested in running again in 2007 – names such as Gerry Phillips spring to mind – may not be any more willing to give up their car and driver than Sorbara was.