The Stel Salaried Pensioners Organization wishes to thank The Hamilton Spectator for permission to post the following article by Columnist Steve Buist published in the December 1, 2004 edition
|
Dec. 1, 2004. 12:40 AM |
|
Stelco director Dey resigns |
|
Potential conflict of interest over his law firm
acting for U.S. Steel |
|
By Steve Buist |
|
A Stelco director has resigned from
the company's board over a potential conflict of interest involving his law
firm and one of the possible buyers of Hamilton's distressed steelmaker. Peter Dey, a partner in the high-powered Toronto law firm Osler, Hoskin
& Harcourt LLP, announced his resignation last night after two years on
Stelco's board of directors. "This is the right thing to do for all concerned," Dey said in a
prepared statement. He did not return calls to The Spectator. Osler, Hoskin & Harcourt now represents U.S. Steel, one of the
companies that's expressed interest in buying Stelco. As a partner in the Osler law firm, Dey could expect to share in any
profits that arise from client billings, including those from U.S. Steel. "He's in a position where he might profit from fees generated through
this transaction," said Prof. Richard Coleman Powers, who specializes in
corporate governance at the University of Toronto. Dey is a former chairman of the Ontario Securities Commission, and sits on
several boards, including CP Ships, Camco and Atlas Cold Storage. Ironically, Dey's legal expertise is in the area of corporate board
issues. In 1994, he authored a report on corporate governance for the Toronto
Stock Exchange. Dey was also a member of Stelco's corporate governance
committee. "He's very well-respected, not only as a lawyer but as a director as
well," Powers said. In his statement, Dey noted that steps could have been taken that would
have allowed him to stay on Stelco's board yet remove himself from
discussions involving his law firm's client. "But these arrangements could, nevertheless, have fostered the
perception of a conflict of interest," said Dey, "even were I to
excuse myself from various deliberations of the board." Powers indicated that Stelco must guard against not just real conflicts of
interest but perceived conflicts as well. "You don't want to give the impression there's anything wrong or even
potentially wrong," he said. "Everyone's watching them right
now." It's the second time that Dey's connection to Osler has prompted action
since Stelco applied for protection from its creditors 10 months ago. Dey's law firm was already removed back in February as the legal representative
for Ernst & Young Inc., which was appointed by the court to oversee
Stelco's restructuring. To dispel any perception of a conflict of interest, Ernst & Young
replaced Osler as its legal counsel with the firm Thornton Grout Finnigan
LLP. Dey's connection to both Stelco and Osler, Hoskin & Harcourt is just
one of a number of close relationships that exist between the various
players. Hap Stephen, Stelco's chief restructuring officer, spent 20 years at Ernst
& Young, including 12 years as the company's president. He also acted as
chief restructuring officer during both of Algoma Steel's trips through
court-ordered bankruptcy protection. Algoma is rumoured to be one of the
possible bidders for Stelco. Meanwhile, the lawyer representing Russian steelmaker OAO Severstal is a
member of the same law firm as James Arnett, the province's special adviser
on steel issues to Premier Dalton McGuinty. Severstal, also a Stelco potential buyer, is represented by Daniel Dowdall
of the law firm Fraser Milner and Casgrain. sbuist@thespec.com 905-526-3226 |