Documents challenge Sheridan’s spin
Credibility is hard won and easily lost. It’s a credo Finance Minister Wes Sheridan should take to heart.
Our minister, in charge of spending our money wisely, has a knack for exaggeration. He rarely misses an opportunity to publicly trumpet a government initiative well beyond even the normal level of government self-aggrandizement. On more than one occasion Sheridan has found his public statements countered by facts.
Take his role in government’s failed bid to make PEI the online gaming capital of North America. Government spent $1 million on the effort, funnelled through Charlottetown law firm McInnes Cooper. Sheridan claimed the Mi’kmaq Confederacy led the project. It didn’t. It was a project driven by the minister. All information and direction was orchestrated from the minister’s office. When a consultant prepared a viability plan it was Wes Sheridan and the PEI government named as requesting it.
The only reference in the 41-page report to the Confederacy is in a listing of whom the minister appointed to serve on the high-level, secret committee.
The minister seems oblivious that his reputation with Islanders is in tatters. Time and again he makes public utterances with a bravado that implies Islanders are too lazy to fact check his words.
Take his defense of Island taxpayers throwing a $4 million investment into a British company that delivered the online gaming bomb known as Geosweep. Sales were so poor Atlantic Lottery cancelled the game shortly after launch.
Here’s what the minister said during a recent interview with CBC:
“The investment of $4 million is in the parent company Geonomics and with that there is an awful lot of work that’s going on in all kinds of countries all over the world. And through our investment in Geonomics we have investments and returns coming from these other countries and the way that the game is being seen and resonating in these other countries.”
In typical Sheridan style it is a claim made without a scintilla of supporting documentation.
When the Department of Finance was asked directly what countries and how much revenue has been generated for Island taxpayers, Sheridan’s office fell silent. Surely if there is a counter argument against the minister squandering $4 million in a blind chase for online gaming revenue, he would have those facts and figures at his fingertips.
Public documentation from the United Kingdom paints a less rosy picture of Geonomics than Wes Sheridan would have Islanders believe.
Here’s what the minister told CBC: “Atlantic Lottery spent an awful lot of time doing research on it just to ensure exactly what kind of technology, what kind of finances, the type of company it exactly was. So they were very confident in their abilities to put forward a very complete set of games and we had the same type of confidence.” He went on to say, “But meanwhile our investment inside Geonomics is very well kept and we expect to see great things out of this company into the future.”
For starters, there actually is no direct evidence that PEI owns roughly five per cent of the firm that our $4 million bought us.
A listing of all Geonomics shareholders indicates only one Canadian investor, a numbered company 7865813 Canada Inc., bearing the address of Atlantic Lottery Corporation. Canadian corporate records indicate the firm lists three directors including Brent Scrimshaw, President and CEO of ALC, Chief Financial Officer C. Sean O’Connor and Patrick Daigle.
Only two of four partners in Atlantic Lottery invested in Geonomics, PEI and New Brunswick. Both Nova Scotia and Newfoundland refused. So why is the PEI investment not a direct one?
More concerning is Sheridan’s contention PEI could have sold its investment for a profit last year. Geonomics financial disclosures cast doubt on that claim.
For its $4 million PEI received 17,270 of 343, 393 total shares issued, which equates into a company valued at a whopping $79 million or $231 per share.
By last year, Geonomics burned through virtually all of the $8 million invested by New Brunswick and PEI. It required additional investment and that came in the form of a £10 million investment by
Tipp 24SE, which in return received 60,950 newly created shares.
This had the effect of diluting the PEI investment. The paper value of Geonomics dropped to $66 million, with the per share value dipping to $164. In real dollar terms this 16 per cent drop means our $4 million is now only worth $3,360,000.
Auditors give a far less generous position of Geonomics than Wes Sheridan. As of December 31, 2012 the company had ample cash to fund operations for at least 12 months. However auditors stated, ‘the directors consider it appropriate to continue to adopt going concern basis in preparing financial statements.’
This is hardly a ringing endorsement.
No one really knows what the true value of Geonomics is. We do not know its revenue or its prospects for new business. In all probability its real value is far less than the per share value indicates.
We only know Wes Sheridan’s chase for online gaming revenue has thus far only resulted in cash flowing down the drain for Island taxpayers. His ‘investment’ in Geonomics is unprecedented. There is no other example of the PEI government directly investing in a company with no corporate presence in the province.
Wes Sheridan’s tenure as minister is a growing embarrassment. He refuses to be transparent with taxpayers forced to foot the bill for his investment follies. The minister is a growing liability for Premier
The only question is whether the Premier has the guts to turf Sheridan.
Paul MacNeill is Publisher of Island Press Limited. He can be contacted at firstname.lastname@example.org