Details of 1.6 million-dollar compensation deal fuel controversy over Hydro chief's expenses

The provincial government is considering firing Hydro One chief Tom Parkinson as details of his $1.6 million compensation package fuel the controversy around his expense claims.

Parkinson is due to get a 4.9 per cent salary increase in three weeks' time — unless the Liberals sack him for skirting the utility's policy on expenses requiring his claims to be approved by the board.

Parkinson was criticized by Ontario's auditor general for putting expenses — including $15,000 for an office move and $11,000 for an approved trip to Australia — on his secretary's corporate credit card, then approving the claim himself.

Premier Dalton McGuinty, who has been weathering opposition party attacks for not yet firing Parkinson, said something "concrete" needs to be done to clean up Hydro One.

"There is certainly a culture there that has not matured and evolved in keeping with this higher standard that taxpayers expect of all of us," McGuinty told reporters.

Parkinson's employment contract, which expires Jan. 31, 2010, entitles him to the pay hike in the new year and other perks, including a subsidy of $125,000 toward mortgage interest on the Oakville home he purchased for $1.3 million several years ago.

If the Australian-born executive is dismissed without cause, his contract calls for two years' pay plus full benefits and a bonus, likely totalling in the range of $3 million to $4 million.

The auditor general found Hydro One executives approved $127 million in expenses made by staff with corporate credit cards, but often with receipts "that were often insufficient" to determine what was purchased.

"You can't get away with that in the private sector and you sure as heck shouldn't be able to get away with that in the public sector," said McGuinty.

In the Legislature, McGuinty responded to NDP Leader Howard Hampton's demand that Parkinson be fired by saying "there are things that have happened there which are unacceptable, to reduce it to one word."

But the premier also said the government will take its time in deciding what to do with Parkinson.

McGuinty said he was surprised that a Hydro One official has insisted no discipline is warranted against Parkinson, who was not available for comment.

"There's clearly a disconnect in terms of our recognition there is something wrong there," the premier said.

The controversy has dogged the Liberal government since Auditor General Jim McCarter exposed the spending in his report recently.

Hydro One chair Rita Burak was not available for interviews, although a spokesman for Parkinson has noted the expenses were legitimate and sent to the board for approval after the mistake was caught.

Sources said Parkinson was absent from a recent industry lunch with executives from Hydro One, Ontario Power Generation and private sector energy companies.

Energy Minister Dwight Duncan was tight-lipped about Parkinson's future.

"I'm looking at all of our options.... We'll deal with the situation in what I would call a responsible and timely fashion," he said.

Duncan would not comment on whether Parkinson would remain on the Hydro One board of directors after his current term expires at the end of the year. Board members are appointed annually.

"Prior to the auditor general's report we were already looking at some reappointments," the minister said, adding he shares McGuinty's concerns that more than Parkinson's handling of his expenses are troublesome at Hydro One.

"There are a number of other items, in my view, just as significant."

The auditor general found there were policies in place to make sure taxpayers get "value for money" but compliance was weak. One purchase order established in 1996 for a two-year term at $120,000 was revised 39 times and reached $6.7 million by 2005. The auditor general's report didn't specify what the purchase order was for.

"The key is the enforcement of those policies and procedures," Duncan said.

He wouldn't comment when asked if Burak, who was once secretary of cabinet to Conservative premier Mike Harris, shared the government's concerns, but said the two have "a good working relationship." However, Duncan said he, as energy minister, has the legal power to issue directives to the board.

In 2002, the government of then Conservative premier Ernie Eves fired Hydro One chief executive Eleanor Clitheroe, who earned $2.2 million a year, for her allegedly lavish spending habits. Clitheroe is still suing for wrongful dismissal. Parkinson was recruited from Australia to replace her after running NorthPower in New South Wales. Hydro One hired him for $400,000 a year in 2002.

Opposition parties again called for Parkinson to be fired.

"The government has to say to Mr. Parkinson, `You're gone.' ...This guy's pay is greater than the pay of the CEOs at Hydro Quebec, Manitoba Hydro and B.C. Hydro together ...the pay scale is completely out of line," Hampton said.