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TRANSCRIPT OF PROCEEDINGS BEFORE
THE CANADIAN RADIO‑TELEVISION AND
TRANSCRIPTION DES AUDIENCES DEVANT
LE CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
Harmony Broadcasting Corporation called to a Public Hearing /
Convocation de Harmony Broadcasting Corporation à
une audience publique
HELD AT: TENUE À:
Provencher Room Salle Provencher
The Fort Garry Hotel The Fort Garry Hotel
222 Broadway Avenue 222, avenue Broadway
Winnipeg, Manitoba Winnipeg (Manitoba)
June 4, 2008 Le 4 juin 2008
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès‑verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.
Canadian Radio‑television and
Conseil de la radiodiffusion et des
Transcript / Transcription
Harmony Broadcasting Corporation called to a Public Hearing /
Convocation de Harmony Broadcasting Corporation à
une audience publique
BEFORE / DEVANT:
Len Katz Chairperson / Président
Peter Menzies Commissioner / Conseiller
Marc Patrone Commissioner / Conseiller
ALSO PRESENT / AUSSI PRÉSENTS:
Cheryl Grossi Secretary / Sécretaire
Michael Craig Hearing Manager /
Gérant de l'audience
Peter McCallum Legal Counsel
HELD AT: TENUE À:
Provencher Room Salle Provencher
The Fort Garry Hotel The Fort Garry Hotel
222 Broadway Avenue 222, avenue Broadway
Winnipeg, Manitoba Winnipeg (Manitoba)
June 4, 2008 Le 4 juin 2008
- iv -
TABLE DES MATIÈRES / TABLE OF CONTENTS
PAGE / PARA
PRESENTATION BY / PRÉSENTATION PAR:
Harmony Broadcasting Corporation 39 / 250
INTERVENTION BY / INTERVENTION PAR:
Devol Dryden 205 / 1484
Manjit Blake, Robert Blake, Peter Bjorklund, 228 / 1649
David Kovnats, Chris Knight & Chris Oliver
No reply / Aucune réplique
Questions by the Commission 326 / 2279
Winnipeg, Manitoba / Winnipeg (Manitoba)
‑‑‑ Upon commencing on Wednesday, June 4, 2008
at 1306 / L'audience débute le mercredi 4 juin 2008
1 THE CHAIRPERSON: Good afternoon, ladies and gentlemen, and welcome to this Public Hearing.
2 Je m'appelle Len Katz et je suis vice‑président des télécommunications au CRTC. Je présiderai cette audience en compagnie de mes collègues, Peter Menzies, conseiller, et Marc Patrone, conseiller national.
3 The Commission team assisting us today are Hearing Manager Michael Craig, who is also senior radio analyst, Peter McCallum, senior legal counsel and Cheryl Grossi, Hearing Secretary.
4 Please speak with Ms Grossi if you have any questions with regard to hearing procedures.
5 In January, 2007 the Commission issued mandatory orders requiring the licensee of radio station CJWV FM Winnipeg, the Harmony Broadcasting Corporation, to comply at all times with sections 2.2 subsection (8) and (9) of the Radio Regulations and with the station's Conditions of Licence.
6 Harmony subsequently failed to provide logger tapes as requested by the Commission on two separate occasions.
7 This represented an alleged breach of one mandatory order, while also preventing the Commission from verifying if the licensee was in compliance with the other mandatory orders, the Regulations, its Conditions of Licence and the Campus Radio Policy.
8 The station ceased its operations in October, 2007 and the entity known as Harmony Broadcasting Corporation was dissolved.
9 It has since been revived with an entity with an entirely new Board of Directors and a new sole member representing an apparent change of control effected without the Commission's prior approval.
10 The Commission has called Harmony to this Public Hearing to show cause as to why additional mandatory orders requiring the licensee to conform to the Regulations and to its Conditions of Licence should not be issued, why the Commission should not suspend or revoke Harmony's licence under sections 9 and 24 of the Broadcasting Act, and why prior Commission approval for the apparent change of control is not required.
11 In the event that prior approval is required, the licensee is expected to show cause as to why the Commission should grant its approval to the change in control and why further measures, such as suspension or revocation of Harmony's licence, are not warranted.
12 I will now invite the Hearing Secretary, Cheryl Grossi, to explain the procedures we will be following.
13 THE SECRETARY: Thank you, Mr. Chairman.
14 We will now proceed with the presentation by Harmony Broadcasting Corporation.
15 The Commission is gravely concerned that Harmony has again apparently failed to comply with the very basic and fundamental requirements of the Regulations and a consequent uncertainty concerning its adherence to broadcasting mandatory orders CRTC‑2007‑3 through 2007‑6 and its Conditions of Licence.
16 Appearing for Harmony Broadcasting Corporation is David Asper. Please introduce your colleagues and you will then have 20 minutes to make your presentation.
17 MR. KOVNATS: Mr. Chairman, my name is David Kovnats. I'm with the law firm of Murray and Kovnats.
18 I am here with a few preliminary objections that I would like for the record.
19 First of all, the people set out as representing Harmony Broadcasting Corporation are not the proper people and the Board should not be having presentation made on behalf of Harmony by anyone other than Peter Bjorklund, Paula Bjorlund and Manjit Blake.
20 Secondly, I asked for subpoenas from the Commission counsel in order to subpoena Mr. Don Douglas who is with the law firm of Thompson, Dorfin, Sweatman, and Mr. Shane Lasker. I am adding to that list. I would like to also subpoena Rita Tully.
21 I asked for those subpoenas on Monday night. Mr. Lasker I understand is still in his office today, Mr. Douglas left the city yesterday, I spoke to him. I would have been able to subpoena him yesterday because he didn't leave the city until this morning.
22 Thirdly, although this is not an objection I guess, not all the interveners were listed on the Agenda, but a number of interveners are now going to be added.
23 I believe that in order for the Commission to have a full and complete understanding of the situation, the proper board of Harmony should be represented and the issue of that should be determined long before we get anywhere else.
24 And, in order to do that, I think it is crucial to have Mr. Don Douglas present by subpoena and it is crucial to have Mr. Shane Lasker who is a government employee present by subpoena and I also would like to have Ms Rita Tully present by subpoena.
25 Without that, I don't think the Commission can get to the truth, and it cannot understand the history of Harmony, nor its proper ownership and its proper directors.
26 In fact, the actions of some of the employees of the Commission have presumed, and have worked to the detriment of the true Board of Directors, the volunteer Board, and they had not been corresponded with until April of this year, and any of the orders that were given in any of the correspondence that went to other parties prior to this year were improper.
27 I respectfully submit that the Commission should order the subpoenas and give a reasonable time before reconvening a hearing in order to hear from these people properly, in order for the Commission to make an adequate and proper determination, with all of the facts before it.
28 THE CHAIRPERSON: Counsel?
29 MR. McCALLUM: With respect to the subpoenas that you are requesting, what is it that you want these people to say?
30 What is the issue that you wish them to address?
31 MR. KOVNATS: The issue that I wish to address through Mr. Douglas ‑‑ in fact, through all of them, is the true Board of Harmony Broadcasting Corporation, who the proper parties are to deal with, and who should be dealing with the matters involved.
32 Mr. Douglas was retained by the Board of Harmony Broadcasting, and I understand that his firm is also representing Mr. Asper's organization.
33 And I am not going to get into that issue, but as far as ownership is concerned, I think that Mr. Douglas is absolutely key, because he made sure ‑‑ first, there were meetings that may or may not have been held properly, but then he made sure that all meetings were held properly, and that the appropriate Board was confirmed.
34 Secondly, I believe that Mr. Lasker will be able to give testimony, specifically, as to how the operations of our Corporations Branch works, and how one has to look at the register in a different way to understand what it really means.
35 And, Ms Tully, the same sort of information, plus financial. She has other information, as well, as to the ownership.
36 Without those people present and giving evidence, I think there is an issue.
37 I feel that the Commission should have them here, and I think that it wouldn't have been hard to issue the subpoenas yesterday. I could have had them here, but now we have to get them, and it will have to be at a later date, obviously.
38 But the ownership of Harmony ‑‑ and when you call it ownership ‑‑ the Harmony Broadcasting Corporation is a not‑profit ‑‑ a non‑share corporation in Manitoba.
39 It's not called a not‑profit, it's called a non‑share corporation in Manitoba, and its proper directors have been sidestepped by members of the Commission, who knew of their existence, who talked with them, who met with them, and who had some correspondence with them prior, and they did not follow what they were supposed to.
40 So for this Commission to go ahead ‑‑ and I am not casting any aspersions on anyone. It didn't happen. I believe that the Commission should, very definitely, hear from those witnesses on the issue of ownership and control of Harmony Broadcasting long before you deal with any other issues. I think it's absolutely crucial.
41 MR. McCALLUM: For the record, who is Ms Tully?
42 MR. KOVNATS: Ms Tully was an accountant employed at Harmony Broadcasting.
43 MR. McCALLUM: Why is her testimony needed, in your view?
44 MR. KOVNATS: My understanding of her testimony is that she will be able to confirm the improper attempts to change directors.
45 The new Board ‑‑ there has been no new Board. The Board since, I think, 2004 or 2005 has been Manjit Blake, Paula Bjorklund and Peter Bjorklund.
46 No other memberships have been granted. People's names have been put on registers.
47 There will be further testimony, by other people, who are here, and who will come again, as to how their names were put on without their consent as being on the Board, and I believe this is something that should be dealt with. The full and complete information should be before the Commission.
48 MR. McCALLUM: There was a document included in the rather extensive package ‑‑ in the intervention package that Mr. and Mrs. Blake filed, which appears to be an agreement of, I think, January 29, 2004.
49 Was Mr. Douglas retained to draft documents resulting from that meeting?
50 MR. KOVNATS: Not only from that meeting, but from further meetings in December of 2004, and, I believe, January or February of 2005.
51 He would have the knowledge. I don't want to say a date, because I don't have it right in front of me, but it was the early part of 2005.
52 I believe that he should be here. If anyone should be here who can explain it in its entirety, it's Don.
53 THE CHAIRPERSON: Just so I understand, you mentioned someone's name who could address the issue of improper attempts to change directors.
54 MR. KOVNATS: Yes.
55 THE CHAIRPERSON: Which means that the directors have not changed as of this moment, although there were attempts ‑‑
56 MR. KOVNATS: That's right.
57 THE CHAIRPERSON: ‑‑ improper attempts to do that.
58 MR. KOVNATS: That's right. The directors of the corporation, I submit, are Peter Bjorklund, Paula Bjorklund and Manjit Blake.
59 THE CHAIRPERSON: I am still confused.
60 You are submitting that, but are you saying that there were improper attempts to remove them, or that there were improper attempts to not put them on the Board?
61 MR. KOVNATS: No, improper attempts to remove them.
62 They were put on the Board, it was filed with the Corporations Branch of Manitoba, and a copy was given to the CRTC.
63 The documents were filed in 2004, and a copy of the annual return showing them as directors was given to the CRTC in January of 2005.
64 THE CHAIRPERSON: Most of us in this room weren't there then.
65 There was a preceding hearing that took place two years ago.
66 MR. KOVNATS: Yes.
67 THE CHAIRPERSON: Were they principals and Board members at that time?
68 MR. KOVNATS: Yes, and they had no notification.
69 That's what this is going to boil down to. They had no notification of the hearing, absolutely none.
70 They are directors; they had no knowledge of this.
71 That is why, I believe, it is imperative that you hear the testimony of Mr. Douglas as to their directorship, as to their membership in the corporation, amongst others ‑‑ Mr. Lasker, on how the operation of our Corporations Branch works, and then hear from people whose names were put forward wrongfully.
72 There were attempts to put people's names at the Corporations Branch that were totally improper, and I have the party present who will say that he was never a director, even though someone put his name down. He never attended a meeting.
73 Nothing has been done properly since the 2005 filings by Mr. Douglas.
74 THE CHAIRPERSON: I want to come back to something you said. You said that they had no knowledge of the public hearing.
75 MR. KOVNATS: That's correct.
76 THE CHAIRPERSON: Did the CRTC not put out a Public Notice and publicize the hearing?
77 MR. KOVNATS: They did not see the notice.
78 This is a volunteer Board. They were unaware of the hearing.
79 There was a Public Notice, but the letter went to the wrong party. So the letter that they would have thought they were getting if something was going on never reached them.
80 And the CRTC knew of them, knew of their directorship, and should have notified them the same way they notified other people who were improperly notified.
81 I believe this is very important, and I think this is why you should hear all of the evidence, and that's why I think you should have Mr. Douglas present to testify, Mr. Lasker present to testify, and Ms Tully present to testify.
82 I will admit that I only asked for two subpoenas. I am not in any way suggesting that I asked for more.
83 MR. McCALLUM: Can you advise what litigation is going on between the parties to settle these issues?
84 MR. KOVNATS: None.
85 MR. McCALLUM: So no litigation has ever been taken.
86 MR. KOVNATS: None.
87 MR. ASPER: Mr. Chair, I wonder ‑‑ my name is David Asper, for the record.
88 Mark Lewis, who is regulatory counsel for us, is prepared to respond to what Mr. Kovnats has said. I am not sure if that's appropriate now, but you might want to hear a response on behalf of us.
89 THE CHAIRPERSON: I'm in the hands of my counsel on this one, so I will look to him for advice and guidance.
90 MR. McCALLUM: We may have further questions of Mr. Kovnats, but I think it would be appropriate to hear from Mr. Lewis.
91 MR. LEWIS: Thank you. Good afternoon.
92 Section 31 of the Rules of Procedure is clear ‑‑ and I quote:
"The Secretary may, on behalf of, and as authorized by the Commission, issue subpoenas in the form set out in Schedule 2 to compel the attendance of any person at a hearing as a witness." (As read)
93 Intervenors, in our view, have no right, pursuant to section 31, or any other section of the rules, to request the Secretary to subpoena a witness in a broadcast proceeding. There is no precedent that we know of where this has happened before.
94 The Blakes are intervenors, plain and simple.
95 At the 2006 hearing, the matter of ownership of the radio station, and the matter of the Blakes, was discussed with Mr. Capozzolo and his counsel. The transcript of that proceeding, which we have here, is clear, and we can quote the paragraphs verbatim.
96 Notwithstanding the allegations made by the intervenors at the 2006 hearing, the Commission found that Harmony, and specifically the sole member of the corporation, Mr. Capozzolo, was responsible for the operation of the broadcasting undertaking and issued the mandatory orders that we are speaking of today.
97 The rules of procedure in the Broadcasting Act provide for an appeal of the decision, either by way of an appeal to the Governor in Council or the Federal Court. The Blakes had ample opportunity to challenge the decision issued in January 2007, but took no such action.
98 What they are asserting today is that the proceeding in 2006, and the decision that followed in January 2007, was improper, and the mandatory order accrued or attached to the wrong parties.
99 If the Blakes were in control of the undertaking, or disputed the Commission's finding of facts as a result of the 2006 hearing, they should have come forward. There was ample publication of that decision, not just the Public Notice of the hearing, and associates of theirs attended at that hearing in 2006.
100 There were legal remedies available to them, and they did not avail themselves of them at that time.
101 When the Notice of Public Hearing was issued for this proceeding a few months ago, they intervened ‑‑ and, I repeat, intervened ‑‑ and they didn't file any response to the matter of regulatory issues before the Commission. They did not properly put a case before the Commission, and the issues they are raising today, or attempting to raise today, weren't properly raised in the appropriate process of the intervention.
102 So, to purport to have the opportunity to do so today, in our view, is not permitted under the rules.
103 What they are attempting to do, with due respect, is to hijack the hearing. If there are civil issues as between the parties, those issues should be resolved in the courts.
104 The Commission has the ability to bring clarity to these matters. Mr. Capozzolo is here voluntarily in the room. We have had no notice of whom the Blakes, until moments ago, or their counsel wish to compel to attend under subpoena.
105 I understand that one of the parties they wish to subpoena is a solicitor, and he is probably bound by solicitor/client privilege, as well.
106 I just want to go back to the Broadcasting Act.
107 The Broadcasting Act and the Regulations, also, do not allow opposing counsel of intervenors to cross‑examine witnesses. Section 33 is very clear:
"No evidence may be introduced at a public hearing, except in support of statements contained in an application, intervention, or reply, as the case may be, or in support of documents or material filed in support thereof." (As read)
108 To be brief, Mr. Chair, the time has past. Earlier in May was the time that they could have brought all of these matters before the Commission.
109 I have one other comment, and it is on a comment that Mr. Kovnats made regarding the record of the Commission in this matter.
110 The record is clear. We understand that there is a body of documentation in the possession of the Commission, provided by the Blakes long ago, prior to the issuance of the Public Notice for this hearing, regarding their allegations of putative ownership of this radio station.
111 The Commission properly reviewed the material, and from our examination of the public file, made previous determinations that they were not the putative owners of the radio station, or the undertaking, and had no standing to apply for transfer of ownership for the non‑share corporation, which is the licensee.
112 So today, after repeated determinations, they should not be permitted to hijack the hearing.
113 I have one last comment, that is, directors are responsible in law for the operations and actions of the corporation, and if they have been directors, they have been absent for a very, very long time.
114 THE CHAIRPERSON: Mr. Kovnats, do you want to respond?
115 MR. McCALLUM: I'm sorry, could I put a question to Mr. Lewis?
116 THE CHAIRPERSON: Yes.
117 MR. McCALLUM: Would you address what value the proposed witnesses could bring to this hearing?
118 Mr. Kovnats has suggested that they would bring some value to this hearing. What would you say to that?
119 MR. LEWIS: It appears that the only clarity they might bring is in the determination of the civil matter which is outstanding, and we were going to reply in intervention to the nature of the civil matter, which may be looming, and the discussions that have taken place.
120 I could address that now, if you wish.
121 The other issue that I wanted to raise ‑‑ I'm sorry, I should have raised it a moment ago ‑‑ is that the parties ‑‑ Mr. Kovnats' clients could have brought a complaint pursuant to section 9 of the Rules of Procedure, in writing, at any time in the last two years or three years, because he is alleging that these matters go back to 2005, regarding the putative ownership of the undertaking, and the Commission could have, at that time, investigated, called a hearing, et cetera.
122 He has basically ambushed the Commission today on this matter, and we think that's improper.
123 We see no clarity that can be brought. We think that our presentation today will bring great clarity to the situation.
124 MR. McCALLUM: I wonder if you could elaborate on what you mean by the determination of the civil matter.
125 MR. LEWIS: Perhaps Ms Stiver could make comment.
126 MS STIVER: Good afternoon. For the record, it's Lisa Stiver.
127 What I believe Mr. Lewis was referring to is that there are some matters, as Mr. Kovnats has also alluded to ‑‑ issues that go back to 2004, I believe was the date, about some of the material that you have also seen, which they filed in their intervention ‑‑ the Blakes' intervention.
128 We believe that those matters are of a contractual nature. There may be an issue over what transpired and what documents were executed ‑‑ authorized ‑‑ at that time.
129 Again, that is not related to the regulatory matters, at this point, which Harmony is being asked to deal with today.
130 MR. McCALLUM: I would like you to explain the latter one, "not related to the regulatory matters".
131 MR. ASPER: Counsel, there may be civil claims. There may be contractual claims that Mr. Blake may assert against Harmony Broadcasting regarding ordinary course business dealings that may or may not have occurred back in 2004. He can go to court and fill his boots, but that's not a matter for the CRTC.
132 MR. McCALLUM: What about the points of the other two witnesses?
133 I think you were addressing, principally, Mr. Douglas. What about the other two witnesses that Mr. Kovnats has suggested?
134 MR. ASPER: I think it is a little awkward to try to particularize what the applicant seeks from a witness.
135 These are employees of the Corporations Branch of Manitoba. It is a little awkward for us to try to anticipate the particulars of a request for a subpoena.
136 MR. McCALLUM: Ms Tully is an employee of the Corporations Branch?
137 MR. ASPER: I'm sorry, no, she is an accountant.
138 I'm sorry, Mr. Lasker is. Ms Tully was the former accountant and, as you will hear from our presentation, we have actually had to retrieve from her all of the documents relating to Harmony, such that we can, almost on a forensic level, recreate the financial affairs of the company and, as part of getting back into compliance, file the annual returns.
139 Again, I can't particularize or anticipate what Mr. Kovnats thinks Ms Tully will say.
140 MR. McCALLUM: Would you also elaborate, Mr. Lewis, on what you meant by opposing counsel cannot or should not ask questions?
141 MR. LEWIS: In a Commission hearing, with the exception of the telecom hearings and regulations under the Telecom Act, there is no provision for intervenors' counsel to cross‑examine witnesses. It doesn't exist in the rules. It's not specified. It is very clearly specified in the telecom rules ‑‑ in the Telecommunications Act.
142 Our position is that, absent very specific direction in the rules in the Broadcasting Act, that is not a remedy available to an intervenor's counsel at a hearing.
143 MR. McCALLUM: If the Commission were to allow Mr. Kovnats to ask questions, what would be the repercussions for the group that is in front of the Commission?
144 Would this group be seeking other remedies, or rights?
145 MR. LEWIS: I think that the Commission's procedures are quite clear. There is a procedure for filing materials prior to a public hearing. There were directions in the Public Notice. There were dates specified. Those have been complied with, as far as I can see. I have seen no miscarriage of justice with respect to the filing of materials.
146 Our concern is that Mr. Kovnats may very well bring in new documents that should have been filed either by way of, number one, a complaint under section 9, or prior to the date fixed for interventions in this matter, or under some other procedure at some time in the past.
147 As I alluded to, perhaps he should have challenged ‑‑ or his clients should have challenged the decision in January 2007, on January 29th.
148 MR. ASPER: Counsel, if I may also add, I think the consequences to this panel may be less than the potential consequences to the operation of the Commission and the operation of the rules.
149 What Mr. Kovnats is essentially trying to do is convert this into an adversarial proceeding.
150 Any questions that he wanted to ask, or wanted the Commission members to be aware of from these witnesses, he could have written them a letter and asked them to answer the questions, and filed it.
151 He could have done that for the past three years, or however long this claim has ‑‑ four years. However long this has been simmering.
152 What I fear is being attempted here is to take a regulatory proceeding and convert it into a civil litigation forum, and I think that the consequence to the Commission is potentially ‑‑ and how this Commission functions is very serious.
153 MR. McCALLUM: To be specific, though, if Mr. Kovnats were permitted to ask questions, would you seek the right to ask question as well?
154 MR. ASPER: Well, now we need a different kind of lawyer on the panel.
155 Yes, I would assume so.
156 If that door opens, then, I think, the door opens.
157 I would certainly want to reserve our right to do so.
158 MR. McCALLUM: Would you seek to address responding materials?
159 MR. ASPER: Our position is that they are irrelevant.
160 If the Commission determines that they are relevant, then we will respond.
161 MR. McCALLUM: It may be appropriate to hear Mr. Kovnats in reply.
162 THE CHAIRPERSON: Mr. Kovnats?
163 MR. KOVNATS: Mr. Chairman, there is no attempt by me to hijack anything, and I don't like language used in that way. I do not use pejorative language, and I will not have it used about me.
164 Number one, I had to take over representation of this client at the last minute because Don Douglas, who is a lawyer with Thompson Dorfman Sweatman, had been their lawyer, who should have taken care of this in the past.
165 Number two, we are not intervenors. We were forced to be intervenors by the operation of the Commission staff.
166 My clients are not just "The Blakes", my clients, as I indicated, are Peter Bjorklund, Paula Bjorklund and Manjit Blake, for the purposes of the "ownership", or operation, or control of Harmony Broadcasting Corporation.
167 I have represented Mr. Blake in what could be considered a civil way, dealing with contractual matters, but that is a separate issue at this moment.
168 I am here on behalf of the true directors of Harmony Broadcasting Corporation, who had to file papers as intervenors, and shouldn't have had to file as intervenors, but should have been, indeed, the applicant ‑‑ or the respondent.
169 So we are in a conundrum and the Commission staff has taken ‑‑ and I am not questioning them. They have taken a position in their actions that have put us sort of in a set of rules that don't necessarily apply.
170 Now, there was a letter sent by my office which was declined. It was returned to me and I was told it had to be filed as intervenors. And I think that should be brought to your attention.
171 I am not trying to interrupt you. I didn't mean to cut you off but I did want you to know that I had written on behalf of the directors to the CRTC and they said, "No, you must file as intervenors". So procedural or not, it would be a denial of natural justice not to have the full matter with all information put before you in a proper fashion. I'm not trying to hijack your hearing.
172 THE CHAIRPERSON: Can you explain to us how acting as an intervenor will not allow you to put whatever information you seek to put on the record and have it fully aired and considered by the Commission?
173 MR. KOVNATS: I can do it from the intervenor chair, so to speak, but I need the power to subpoena people to bring forward evidence because they won't come forward voluntarily. And I need that evidence before the Commission. It is absolutely crucial to have that evidence before you in order to respond and to put forward the intervenor's position, if you call them intervenors.
174 I believe they should be the true respondents but for the purpose of this discussion I will call them the intervenors, just for identification purposes only.
175 And the intervenors need ‑‑ and the intervention and the public needs to have the full knowledge, the full facts put forward completely so that you can make an informed decision. And in order to do that I absolutely need Mr. Douglas. I need Ms Tully and I need Mr. Lasker.
176 Mr. Lasker will not come voluntarily and I am, quite frankly, embarrassed in some ways because I am cordial with both Mr. Douglas who I consider a friend; I'm cordial with Ms Stiver. I think their firm is the conflict; they don't. That's up to them. My clients relied on their firm.
177 I think you need to have the full facts before you. In order to do that you need Mr. Douglas to come forward and tell you exactly what happened and when, and without that I don't think you are going to get to the bottom of it the way you should. My clients can give you a layman's version but you need a proper version and the person who can do it best is Mr. Don Douglas.
178 Mr. Lewis kept referring to the Blakes. I represent in this capacity Mrs. Blake as a board member, Mr. Bjorklund and Mrs. Bjorklund. They were the proper board members of Harmony Broadcasting Corporation, and I can't stress that strongly enough.
179 MR. McCALLUM: If I may, Mr. Chair?
180 THE CHAIRPERSON: Sure.
181 MR. McCALLUM: In bringing in the witnesses that you are proposing to bring in, you would ask them questions would you?
182 MR. KOVNATS: I would ask them just to tell exactly what happened.
183 MR. McCALLUM: So you would be ‑‑ you would be asking for the right to ask questions; is that correct?
184 MR. KOVNATS: That is correct.
185 MR. McCALLUM: You would be asking them to bring a document, would you?
186 MR. KOVNATS: I don't think that ‑‑ I think most of the documents have been filed with you. The only person who might have to bring documents I believe would be Ms Tully. I believe you have the documents that Mr. Douglas can explain and document and I believe you have documents that were registered in the corporation's branch for Mr. Lasker.
187 I did not prepare the packages that were dropped off to your office and I have seen various copies and I believe you have them. I looked upstairs in the file and I think you have most of them.
188 MR. ASPER: Counsel ‑‑ sorry, David Asper for the record.
189 Just on that point with respect to documents, Mr. Kovnats is on notice from us that we would be seeking to apply in the event that there is any documentary evidence considered that the best evidence rule apply and that originals be produced.
190 MR. McCALLUM: So as I understand it, you would have no new documents except from Ms Tully ‑‑
191 MR. KOVNATS: I don't know if the others would have documents that I am not aware of. I would ask them to bring their files so I could compare the documents, yes.
192 MR. McCALLUM: So you would be issuing a subpoena duches tecum, bring your whole file and then it would have to be examined once it's received here.
193 MR. KOVNATS: Yes, to make sure that the documents that I ‑‑ there is no other documents other than what I have seen here before. I'm not ‑‑ because I have not seen their files I can't tell you.
194 MR. McCALLUM: So in other words there may be documents?
195 MR. KOVNATS: Yes.
196 MR. McCALLUM: Okay.
197 MR. KOVNATS: There may be that I can't ‑‑ that I'm aware of.
198 MR. McCALLUM: Right.
199 MR. KOVNATS: And there would certainly be some information as to telephone calls.
200 And I don't know where I received notice from anybody. I would appreciate seeing where I received notice. I'm not saying what other people did or didn't do. I never received any notice to produce original documents for the purpose of this hearing. I was asked to produce some original receipts; that's it. That's a separate issue. I was not asked by anyone.
201 MR. ASPER: Yes, actually, counsel, Mr. Kovnats was asked to produce a particularly contentious original version of the documents because they are not the same, I believe, dated January 24th, 2000 and January 29th.
202 MR. KOVNATS: If you are talking contractual documents I'm talking corporate ownership documents. There is a big difference. I said for the purpose of this hearing. I was very clear, Mr. Asper, in what I said.
203 And you know what? I don't want to go on that contract issue. I am here dealing with the ownership issue, with the control issue; with who should be notified, with who shouldn't be notified.
204 MR. McCALLUM: You said earlier that Mr. Lasker would not come voluntarily. Can you explain what you mean by that?
205 MR. KOVNATS: If you want to subpoena him he will come in a moment but I have tried with Shane before on things. You have to give him a subpoena. He is a government employee.
206 MR. McCALLUM: Have you received any indication that there would be a challenge of that subpoena by anyone?
207 MR. KOVNATS: No, none. I don't think he would challenge it.
208 And as to solicitor‑client ‑‑
209 MR. McCALLUM: Sorry, he is a provincial government employee, right?
210 MR. KOVNATS: Yes.
211 MR. McCALLUM: He would presumably have to report to his superiors and his superiors would presumably make a decision whether or not to challenge the subpoena; is that not correct?
212 MR. KOVNATS: I don't know, sir. I have never had a situation where I have had to subpoena someone for the provincial government but they declined to show up. And I have only done it twice in my life so ‑‑ I'm not normally doing litigation. I would anticipate that in his capacity he would show up with whatever documents he was supposed to and answer questions. I don't think Mr. Lasker would hold back. But I could be surprised. I'm not saying it can't happen but I would be surprised.
213 Mr. Douglas ‑‑ and I want to address the issue of solicitor‑client privilege. The solicitor‑client privilege that Mr. Douglas would be under would be to the people who retained him, who were Mr. Bjorklund, Mrs. Bjorklund and Manjit Blake. So I would imagine he would be more than happy ‑‑ if they say to speak, that he would speak. I can't imagine him not being willing to speak.
214 MR. McCALLUM: Just for the record, have your clients made any applications to the Commission?
215 MR. KOVNATS: The Commission through Mr. Crushin had asked them to start an application and to start a new company to make a different corporation. I was involved in incorporating that new company and then Mr. Crushin said, no, no, it has to be a full application and that wasn't what we had understood at the beginning so they did not proceed with the application. The application was done at Mr. Crushin's request because he didn't want to have to deal with the dispute with respect to Mr. Capozzolo, Manjit Blake, Peter Bjorklund and Paula Bjorklund.
216 I would also point out to you that Mr. Capozzolo's:
"No individual can be the 'owner or controller' of a non‑share corporation in Manitoba." (As read)
217 MR. ASPER: Counsel, I think if you ‑‑ Commission, I think if you played back the last portion of the transcript you have out of counsel's mouth the concession that they got direction from Mr. Crushin as to what needed to happen and chose not to proceed, that is in fact what happened and that is in fact how the CRTC proceeded in 2006 and 2007.
218 MR. KOVNATS: With due respect, Mr. Crushin said one thing one day and another thing the next, which is why we didn't proceed. I wasn't going to attack Mr. Crushin. He is not here to defend himself.
219 MR. ASPER: The point is ‑‑
220 MR. KOVNATS: Information that Mr. Crushin gave us that caused us to initiate something then changed so we didn't proceed because Mr. Crushin said, "If you are going to go this method you also have to do A, B, C". When he told us originally just go this method and it will happen, that's different.
221 So there was no sense in making an application or a further application in any way because it was not as was presented to my clients, all right?
222 MR. McCALLUM: Was the name of the company that you incorporated Winnipeg Technical Centre Inc.?
223 MR. KOVNATS: No ‑‑ well, yes, I think I did that as well but I also did Earhole. I think they were the people who were going to make it. I'm not sure. I don't ‑‑ that was irrelevant for the purpose of this.
224 What happened at that time ‑‑
225 MR. McCALLUM: Sorry, there is a document:
"Winnipeg Technical Centre Inc., a for profit corporation established under this Canada Business Corporations Act." (As read)
226 MR. McCALLUM: It's on the record. Should the Commission take notice of it or is it irrelevant?
227 MR. KOVNATS: Was it relevant or not?
228 MR. BJORKLUND: No, it was relevant because that was the for profit for the purpose of training students. Earhole was the non‑profit side to take over the licence per se because of all the bad vibes and past history with Harmony Broadcasting and as the current directors we were not wanting that, you know, to follow us.
229 MR. ASPER: Sorry, sir, for the record could you say your name, please?
230 UNIDENTIFIED SPEAKER: Peter Bjorklund.
231 MR. BJORKLUND: I'm Peter Bjorklund. I am a board member of Harmony Broadcasting.
232 MR. KOVNATS: I didn't want this to go sort of all over the map. The purpose of this and the reason I felt that I was approaching this the way I was, and I will continue to do in my own slow style, is I felt the Commission should hear all the facts from the people who can best give them and I need Mr. Douglas present to do that. I think he has a professional obligation when he comes and I don't think Don would walk away from it.
233 Number two, I believe Mr. Shane Lasker will be able to come. I also think Shane would answer questions.
234 And number three, I don't know Rita Tully but from what I am told and what I have heard that she testified at another matter, I think it is absolutely crucial for the Commission to hear these three people.
235 I strongly request that you allow the subpoenas to be issued and to reconvene with these people present so that you can hear the whole situation from soup to nuts. Otherwise, you are not going to get the full story properly. You are going to get people's versions. These are the people who know the best and let it come out. That's what I am asking.
236 THE CHAIRPERSON: I believe we have two issues in front of us. The first one is who is the rightful party to appear pursuant to the call today to deal with the non‑compliance in the mandatory order and the second is the issue as to whether we will or we will not accept the proposal to issue subpoenas.
237 In the absence of counsel having other questions I would like to recommend that the panel here adjourn for 15 minutes or whatever period of time it takes for us to deal with these issues.
238 MR. McCALLUM: Thank you, Mr. Chair.
‑‑‑ Upon recessing at 1448 / Suspension à 1448
‑‑‑ Upon resuming at 1543 / Reprise à 1543
239 THE SECRETARY: Please be seated. We will now resume.
240 Mr. Chairman.
241 THE CHAIRPERSON: Thank you.
242 The Commission has received an unusual request to determine, as between two competing groups, which group should be the one that is the respondent to the call to the present hearing set out in Public Notice CRTC 2008‑4 of April 3, 2008.
243 The Commission has heard arguments from the two competing groups and rules as follows. The group that includes Mr. Capozzolo is directed to act as respondent to the present process and the group that includes Mr. and Mrs. Eddie and Manjit Blake to be designated as interveners in the present process.
244 This ruling is based on the fact that Mr. Capozzolo appears from the renewal to be the sole member of Harmony Broadcasting Corporation. Mr. Capozzolo was responsible for running CJWV‑FM station during the last several years and it was Mr. Capozzolo who appeared on behalf of Harmony at the September, 2006 public hearing which resulted in the mandatory orders attached to Decision 2007‑27. He is the only party running the station that can be asked to address the past non‑compliance and his notice at public hearing states a main purpose of this hearing is to deal with and address past non‑compliance.
245 In argument Mr. Kovnats acknowledged that he would be given an opportunity to deal with the issues during the intervention phase.
246 The group designated as interveners will have a full opportunity to present their views and material during the intervention phase in support of the extensive materials they have filed and is on the record.
247 On the issue of the request for subpoenas, the Commission is still investigating the matter and will make a decision at the earliest possible time.
248 With that said, we will proceed with the Phase I presentation.
249 THE SECRETARY: We will now hear from Harmony Broadcasting Corporation. Mr. Asper, please introduce your colleagues, and you will then have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
250 MR. ASPER: Thank you.
251 We will begin with Mr. Wortley please.
252 MR. WORTLEY: Mr. Chair, Commission members, for the record, my name is Brian Wortley and I appear here today on behalf of Harmony Broadcasting Corporation.
253 With me today are Franc Capozzolo, the former sole member of Harmony Broadcasting; David Asper, who is the sole member of Harmony; Lisa Stiver, legal counsel of the law firm Thompson Dorfman Sweatman LLP, Ms Stiver is also a Harmony board member; Ken Penner, President of Robertson College, Mr. Penner is also a member of Harmony's board; Louise Nebbs, who is CFO of YO Radio Management; Mr. David Dubnicoff, who was formerly with Moffat Communications, Mr. Dubnicoff is a retired Chartered Accountant who was formerly the Controller with the Radio and Television Division of Moffat Communications; Mr. Lewis, Regulatory Counsel from the law firm of Lewis Birnberg Hanet LLP.
254 And seated in the room today are the board members of Harmony: Tanis Kircher, Medical Technician Student at Robertson College; Michelle Norris, Human Resources Officer for Manitoba Lotteries Corporation; and Travis De Koning, Chartered Accountant for Book & Partners accounting firm.
255 Prior to the hearing and the issuance of broadcasting notice of public hearing a number of documents were filed with the Commission which we will reference in this presentation.
256 Mr. Franc Capozzolo will speak to the matters pertaining to the operation of CJWV‑FM from the period following the issuance of the mandatory order in January, 2007.
258 MR. CAPOZZOLO: Good afternoon., Mr. Chair and members of the Commission.
259 In 2007 the Commission issued mandatory orders. Prior to the public hearing in September, 2006 I had negotiated an agreement with Robertson College. However, around the time of issuance of Broadcasting Decision CRTC 2007‑37 Robertson College withdrew from the agreement due to the negative press that the station was and had received.
260 I immediately contacted a number of educational institutions and concluded that no one was prepared to enter into agreement with the station due to the regulatory status of the station.
261 I met with Gary Krushen of the Commission and was given to understand that I would be given time to come into compliance. I determined that I would have to apply to the Manitoba Private Vocational Institute for accreditation of the broadcasting curriculum which I had created.
262 However, over a period of time it became apparent that neither I nor Harmony would be accredited as a private vocational institute. During the period of January 29, 2007 to October 15, 2007 the financial situation of the station continued to worsen.
263 Due to the dire financial situation in mid‑August, 2007 Harmony was evicted from the premises used for the broadcast studios. In accordance with the mandatory order a number of reports were to be submitted as of September 30, 2007.
264 On the date the reports were due to be filed, that would be September 30, I was in a situation where I had just moved from the studio space and I attempted to continue broadcasting from a very small apartment with a lack of financial and/or human resources.
265 Exactly two weeks following the date when the reports were due to be filed with the Commission transmission lines were terminated by the telephone company and the transmissions were disrupted.
266 The letter notices from the Commission requesting additional logger tapes had been sent to a location that I could no longer access. When I received the notice sometime later via email I was informed that I had less than 48 hours to satisfy the request. The technician who handled the retrieval of logger material was out of the country at that time. And in haste to comply with the Commission's request during the short 48 hour period I reproduced the wrong recordings from the files, which were from the prior year. I admit that I provided those recordings in error, in error, to the Commission.
267 The second request for air‑check tapes for the weeks of September 7 to 13 of October, 2007 was made in October. The notification was received following the closure of the station.
268 I did everything in my powers to enter into agreement with an educational institution and get the institutional programming on the air and I attempted to right the financial situation. Likewise, the failure to file the financial returns was exacerbated by the lack of funds to retain professional accounting services.
269 I was a one‑man show that could no longer pull it together. I had no intentions of being out of compliance or of misleading the Commission at anytime.
270 Everyday I woke‑up hoping that something would happen to right the situation, but I realized that I could only fool myself for so long. I realized that I was way over my head and that I had reached the end of the road. And I determined in October, 2007 that it was the end of the road with respect to the continued operation of the station under my management.
271 I want to state that I regret the series of events which resulted in the closure of the station and the circumstances which brought us to this hearing here today.
272 Shortly after the station went off the air, I received a call from Mr. Wortley and over the course of a few weeks I was put in touch with Mr. Asper and his team.
273 MR. ASPER: Mr. Chairman, members of the Commission, last fall when Mr. Capozzolo voluntarily suspended broadcast operations for CJWV‑FM we both made an approach and were approached to determine whether there was any potential for us to assist in rescuing this community resource and whether we could assist in restoring financial viability.
274 As you are aware from the discussion yesterday, I do have a passion for radio and I was aware of this station because my children listened to that station for rap and hip hop music, which was not otherwise readily available as a consistent format in this market.
275 I accepted that the proposition was worth a look. And, as I said yesterday, this was the first involvement that we had prior to the application for the new commercial FM. And I accepted the proposition was worth a look and asked Brian Wortley to assemble a team of professionals, which includes the team you see here today, to determine whether a rescue could actually be undertaken.
276 We held a number of meetings with CRTC staff, both the staff based here in Winnipeg and staff located in Gatineau. This included a number of telephone consultations and fact‑to‑face meetings. It became clear in the course of those meetings that there was reoccurring managerial and, more particularly, record keeping problems which had occurred over time resulting in regularly noncompliance.
277 We were fully conversant with the problems that Mr. Capozzolo had faced in the operation and management of the station and the regulatory history of the station, including the outstanding mandatory orders as well as the decisions and factual conclusions made by the CRTC, as discussed in the context of the motion and the objection that we discussed earlier today.
278 I want to be clear and candid with the Commission. We are sitting before you today and have undertaken board management changes on the advice and counsel of Commission staff. We believe that we have been forthright in providing documentation and a clear plan of action, vis à vis addressing the outstanding regulatory issues, and we will speak to those in a moment.
279 It was very clear to us after consultation with Ms Lynne Renaud in the CRTC ownership group that a transfer of the licence to a new corporation, which would be unencumbered by the past debts and sins of Harmony, would require a full public hearing and, further, a regulatory process which could take upwards of six to nine months to facilitate.
280 We discussed with the Commission staff the need to get the station back on the air and the need to involve incoming broadcasting students in the current academic year in the operation of the station. In the course of those discussions, the counsel which we received from the Commission was to provide in great detail an action plan and a proposal to reinstate broadcasts rather than to change the ownership or effective control of the licensee.
281 In those consultations with the Commission we discussed the constitution of a new board of directors for Harmony drawn from the community and in full compliance with the requirements under the Campus and Community Radio Policy of 1992.
282 I personally became involved in the search committee to seek out members of our community who would not only serve on a board of directors, but who would also be a resource for this radio station. As you are aware, we have found very highly qualified individuals, drawn from the legal community, academia and so on.
283 And while I always understood that there would be some financial risk in attempting to revive the station, the extent to which funds have now been expended on obtain proper corporate and regulatory counsel, as well as with regard to reconstructing the financial affairs of Harmony so as to be in a position to file annual returns and address several outstanding matters with Canada Revenue Agency, is substantial.
284 I say this not to seek your sympathy, but as evidence of our bona fides that we are serious and committed to making this endeavour work. We have done everything asked of us and are here today to say that whatever problems existed in the past are not going to be problems in the future. We are here today to ask that you give us the green light to put this station back on the air.
285 One of the issues that seems to have arisen is whether there has been a change of control. The terms of previous board members had lapsed, hence there was a necessity to appoint new board members. We met all legal requirements under Manitoba law in order to constitute and appoint the board. There was no effective change of control of the programming undertaking.
286 I will now turn to Ms Stiver to provide you with additional background concerning Manitoba legal requirements and a corporate governance of Harmony Broadcasting relative to its conditions of licence and the radio regulations.
288 MS STIVER: Thanks, David.
289 As David explained, over the past few months Harmony underwent a reorganization of the board of directors and a change in its membership. Both of these changes are the same type of changes to Harmony's governance that have occurred various times throughout its corporate existence, from 1993 to the present time.
290 At this time, however, the correspondence from the CRTC suggests that there was a change of control which is contrary to Section 11(4) of the Radio Regulations. As I am sure you are all aware, this section speaks specifically to a change in share ownership and a change in voting interest.
291 Harmony is a not‑for‑profit corporation, which it must remain as a condition of its licence. Harmony is incorporated under the Corporation Act of Manitoba and is referred to as a non‑share corporation, as contemplated under Sections 267 and 277 of the Act. No shares can be issued in a non‑share corporation. Accordingly, no change in share ownership can occur.
292 Specifically these sections provide that:
"Firstly, the articles of a non‑share corporation shall restrict its undertakings to endeavours that are of an artistic, educational, charitable nature, et cetera.
Secondly, that upon dissolution of a non‑share corporation, unless otherwise provided for in the articles, all assets and property must be distributed to another non‑share not‑for‑profit undertaking, which is charitable or beneficial to the community." (As Read)
293 Accordingly, the licence and property and assets of Harmony have no value to its members. There cannot be a sale of its shares for there are no shares, nor a distribution of its assets, one of which is a licence upon dissolution.
294 In summary, change of control of a non‑share corporation is arguably analogous to a change of its directors. But there is no requirement to obtain prior approval of a change of directors for broadcasting undertakings either pursuant to the provisions of the Radio Regulations or circulars issued by the Commission.
295 I have brought with me, and I believe we handed to the Secretary beforehand, a detailed legal memorandum which may be of assistance to the Commission in reviewing the Manitoba law pertaining to not‑for‑profit corporations. I have filed the memorandum with the hearing Secretary and Commission counsel
296 Brian Wortley will now address the safeguards put in place to ensure regulatory compliance.
297 MR. WORTLEY: Thank you, Lisa.
298 Earlier this year, several months prior to the notice of public hearing, we put into place a number of policies and safeguards to ensure compliance. Bear in mind there were no broadcasts taking place and all of this was done in full consultation with the Commission prior to undertaking a single broadcast.
299 In January, February and early March we provided the Commission with comprehensive details of these initiatives including draft agreements with Robertson College. A meeting was held in Winnipeg on January 24, 2008 with Commission staff. With respect to Robertson College, Mr. Penner is in attendance today.
300 The completion of the negotiation of the agreement and provisions of an executed copy of that agreement to the Commission, along with the provisions of full curriculum and course materials and further arrangements undertaken for the first intake of students, resolves a longstanding problem pertaining to the operation of the radio station as an institutional licensee.
301 Further, Robertson has resolved outstanding administrative issues and has obtained full certification of the course from the private vocational institute, thus, the course will fully qualify under the Manitoba Government vocational institutional requirements.
302 We have also undertaken to search for qualified staff who can assist in the practicum portion of the course and integrate the work of students into the programming of the radio stations.
303 We have simultaneously been in discussion with the members of the Winnipeg community at large and have identified individuals who wish to become involved in the production of high‑quality spoken‑word programming, programming I might add that would be alternative to the programming currently available on mainstream commercial radio stations which serve Winnipeg.
304 We have also worked to create a weekly schedule of programming including required news, talk shows, specialty music programming which meet the licence criteria and should allow the station to perform at or, in fact, over‑perform relative to the conditions of licence and the requirements of the radio policy.
305 We undertook to provide a double logger system with a failsafe program so that a duplicate recording would be made and retained off premises. In the course of our discussions and communications with the Commission we became apprised of the fact that the station's former management was in default of filing annual returns to the Commission.
306 We retained Mr. Dave Dubnicoff who, as you have heard, was formerly with Moffat Communications. Mr. Dubnicoff is independent of YO Radio Management and Harmony Broadcasting. Working with Ms Nebbs and our company staff we obtained financial records of Harmony and prepared annual filings for the years 2004 through 2007. Those returns have been prepared in the format required by the Commission and have been filed with the Commission, as we had undertaken prior to this hearing.
307 We believe the licensee has therefore complied with the requirements under the regulations. Further, we have voluntarily undertaken to bring the company into compliance with CRA relating to GST, payroll withholdings and the annual filings. We also brought the company into compliance into compliance with respect to filings with the Province of Manitoba, including annual corporate returns.
308 We entered into an agreement with Mr. Capozzolo to facilitate financial arrangements with Harmony's creditors. We have prepared business plan and cash flow analysis which, with the support of YO Radio Management, would facilitate the restart of broadcast operations by Harmony.
309 I want to be clear. The financial plan is multifaceted, but Harmony will be operated as a not‑for‑profit radio station. The modest advertising revenue, in conformity with the institutional radio policy, would allow for payment of transmission costs and a modest professional staff.
310 That brings us to the involvement of YO Radio Management. We have assessed reoccurring problems with Harmony which apparently have been occurring for nearly 13 years, back to the first licence term of the station under NIB. It is clear that this community‑supported station cannot depend on the human resources of a single person, nor can a community‑based institutional radio station operate successfully without professional, legal accounting and allied services.
311 YO Radio Management has undertaken to provide clearly defined services provided by qualified professionals who are knowledgeable of the regulatory requirements of the licensee and radio operations. YO Radio will provide these services on a contracted basis. I will be the key contact in the provisions of these services.
312 As you heard yesterday, in the event that YO Radio Management is granted the licence for 106.3 FM there would be very limited synergies between the two stations. Those synergies primarily relate to the provision of professional services. But I want to be clear. The provisions of this service to Harmony is not dependent upon licensing 106.3 FM. And further, this is not an LMA agreement.
313 Programming decisions at CJWV will be made by a program director who will report to the Harmony board of directors. There will be full transparency of the two radio station operations. YO Radio will have its own news staff, editorial voice and newsroom which will not be operated in common with Harmony. 106.3 FM is proposed as a full‑fledged local commercial radio service and is not an institutional radio station.
314 We expect that Mr. Kowalson, formerly employed by Harmony, will return as news director of Harmony. Mr. Kowalson will be responsible for the news and editorial direction of the radio service.
315 That brings us to the matter of Mr. Capozzolo and his continuing involvement in Harmony. He would be retained to host the morning program. He will not have day to day managerial duties in the station. We believe that it was the one‑man operation which consistently lead to regulatory and operational problems.
316 With assistance from YO Radio's professional staff day to day operations with Harmony will run smoothly and Mr. Capozzolo's role will be to use his creative skills to provide Winnipeggers with locally‑focused spoken‑word programming.
317 In our view he is a talented broadcaster and the topics covered on his talk shows are broader and that commercial radio stations have had been more involved in the community events at the grassroots level. He will also work with the students mentoring them in their practicum segment of their broadcasting course.
318 The programming of the station will continue to provide very low duplication of the music broadcast by Winnipeg commercial stations. We have provided with our presentation a block program schedule which illustrates scheduling of special interest Category 3 music. There will be Category 3 music in the overall mix throughout the broadcast day. This will be complimented by an urban music format which will be unique in the Winnipeg area.
319 There is a great affinity between the musical interests of the broadcast students and other younger listeners with this music genre. The music will also conform to the hits restriction imposed on institutional stations.
320 And last, and of key importance, is the role of students enrolled at Robertson College. They will be involved in all facets of the operation of CJWV. They will provide spoken‑word content, educational content, assist in preparation and presentation of news programs, will provide voices for commercial messages, will act as program hosts, interviewers and announcers and assist in news gathering.
321 The Robertson College course is based on semester system with multiple intakes of students each year. So at any given time students enrolled in the course will be at different stages of their radio development. Students will be involved in all aspects of radio programming, including audio production, copyrighting, sales, traffic and music selection.
322 As we have noted, the program director will report to the Harmony board of directors, will oversee the programming orientation of the station and regulatory compliance in terms of spoken word, news, Category 3 and Canadian music commitments.
323 To conclude, we believe that the root of regulatory problems of this station have been resolved and the station has the human, financial and managerial resources in place which are necessary to resume broadcasting. The radio service has been off the air since operations were suspended in the fall of 2007.
324 It would take approximately four weeks to relocate broadcasting equipment and resume broadcast operations. It is imperative, however, that the broadcasts commence in advance of the fall semester, because the arrangements with Robertson College necessitate on‑air promotion of the broadcasting course in order to attract enrolees.
325 Further, it is imperative that the radio station be operational so that students can obtain their practicum experience as per the curriculum, which was approved by the Private Vocational Institute and the Provincial Department of Education. The curriculum of the broadcasting course dovetails with the broadcasting operations.
326 The continued registration of the broadcasting course with the government ministry is dependent upon the operation of this station. Therefore, in order to fulfil enrolment it would be necessary for this station to resume operations by the month of July. And that is what we seek the authority for the station to resume broadcast operations.
327 We will be pleased to answer your questions.
328 THE CHAIRPERSON: Thank you very much.
329 I note in your final conclusion that the radio station is currently off the air, is that correct?
330 MR. WORTLEY: That is correct.
331 THE CHAIRPERSON: Where is the infrastructure currently located for this station?
332 MR. WORTLEY: There is some equipment in Mr. Capozzolo's apartment.
333 THE CHAIRPERSON: Okay. And that is all there is right now?
334 MR. WORTLEY: And there is also equipment in storage.
335 THE CHAIRPERSON: Has any equipment been purchased in anticipation of this?
336 MR. WORTLEY: Yes, we have purchased computers.
337 THE CHAIRPERSON: And how much money has been invested so far in the purchase of all this?
338 MR. WORTLEY: About $2,000.
339 THE CHAIRPERSON: Okay. I want to start I think with the comment that was made in here on page 5, where you say:
"We are here today to ask that you give us the green light to put the station back on the air." (As Read)
340 As I said when we made our ruling earlier, the primary reason we are here is to see whether the Commission should either an additional mandatory order, suspend or revoke the licence of Harmony based on its past operations.
341 Subsequent to that, you are making an application to transfer the ownership and to create a different entity. But the primary reason that this hearing was called was to deal with the transgressions that were made pursuant to a mandatory order in 2007 and that is what I look to Mr. Capozzolo to respond to as we go through this.
342 You indicate, Mr. Capozzolo, that you had difficulty getting approval from Robertson College when you approached them.
343 MR. CAPOZZOLO: No, actually, with the hearing in September of 2006 we had reached a final and comprehensive agreement with Robertson College and that was finalized in May of 2006.
344 In July of 2007 the practicum for the radio program was approved by PBI. Shortly after the approval I received a notice to appear at the hearing in September of 2006. Subsequent to the hearing and just prior to the release of the Notice 2006‑37 I received notice from Robertson College that they wished to terminate our agreement.
345 I spoke with Mr. Penner and he felt concerned that the negative press that the radio station was receiving due to the compliance issues and issues with the regulatory body that it would probably cast his institution in a pall light and decided to withdraw.
346 I immediately searched for someone new.
347 After about the third school that I spoke to, the individual was very frank with me, very candid, and he said: No one will touch you with a 10‑foot pole. Good luck with getting accredited because you have issues with your regulatory agency. PVI is a regulatory agency, and they probably will have a difficult time granting you an accreditation. If they do, it will probably take two to three years.
348 At this point I have no money. I have very limited ‑‑ I was counting on January ‑‑ I believe the course was supposed to start in January, and I was looking forward to enrolment and the much needed dollars to be able to put things properly in place. I was, truly, a one‑man show. I was the only radio person in the whole building.
349 The people that I had on the air were people that I had trained myself, basically.
350 THE CHAIRPERSON: And the principal that you were talking with at Robertson College back then, was that Mr. Penner?
351 MR. CAPOZZOLO: Yes, it was.
352 THE CHAIRPERSON: And Mr. Penner is in the room here today?
353 MR. CAPOZZOLO: Yes, he is.
354 THE CHAIRPERSON: Mr. Penner, can you provide us with some insight as to why you felt compelled to withdraw the agreement, because that, obviously, was one of the critical factors in the ongoing approval process for Harmony. That is number one.
355 The second question is: Are you comfortable today with the arrangement that you have struck with the principals, I guess here today, and the fact that the plan, as I heard it this afternoon, is that Mr. Capozzolo will be retained by Harmony ‑‑ by the new owners of Harmony ‑‑ to operate the morning show?
356 You have three questions there.
357 MR. PENNER: Thank you, Mr. Chair.
358 With respect to the first question, why we withdrew, it was not a light decision. We chatted a fair bit internally. We talked to the Department of Education. The Private Vocational Institutions Branch, we conferred with them. At the end of the day, we decided that the reputation of the program, of the school, was at risk, and we decided not to proceed.
359 With respect to the second question, do I feel comfortable today? Yes, I do.
360 The people that I have worked with, Brian and the others so far, we met again with the Director of PVI, the Department of Education, in a meeting with the members here, as well as myself, and they got their blessing to move ahead. They are supportive of this, so we feel comfortable moving ahead.
361 With regard to Frank's role in the future, as I understand it, as a morning host, we have no objection to that. We would feel comfortable with that.
362 THE CHAIRPERSON: Did you, at any time, have any contact with the CRTC during the 2006‑2007 period?
363 MR. PENNER: I did not.
364 THE CHAIRPERSON: Mr. Capozzolo, you stated here that you woke up hoping that something would happen to right the situation.
365 Did you ever contact the CRTC formally to indicate the situation you were in?
366 MR. CAPOZZOLO: I did speak to Mr. Krushen when I spoke to the third school, and I believe that was CDI ‑‑
367 Actually, it was someone that Mr. Penner had suggested that might be interested, and he came straight out and said: Based on the transcript from the hearings alone, I can't jeopardize the time and sweat that I have put into my school, and I suggest that you would probably have a difficult time getting any accredited school in the province to piggyback with you.
368 THE CHAIRPERSON: But you were already, at that time, operating under the initial mandatory order by the CRTC.
369 You state here that your transmission lines were terminated, you were disrupted, you moved, your mailing address ‑‑ your Post Office couldn't deliver information to you.
370 Did you ever think of contacting the CRTC to let them know?
371 MR. CAPOZZOLO: Again, it was a one‑man operation, and to be totally honest, I had allegators at my throat. I felt that the allegators in Ottawa, with all due respect, were not as urgent.
372 I was evicted from the premises that we had been in for four years.
373 Things were dire.
374 And I didn't know what to do at that point. I didn't have legal counsel. I didn't have anything.
375 THE CHAIRPERSON: Your discussions with Mr. Krushen were on a casual basis, you are saying?
376 There was nothing official?
377 MR. CAPOZZOLO: I went to the office and spoke to him in person, and I said, "I don't know if you have heard, but the college has withdrawn," and he said, "Yes, I was aware of that."
378 I was rather upset. I was bitter. I felt that ‑‑ and I am just being honest here ‑‑ I felt that the Commission had put me into a position where now I was kicked out of compliance by the Commission efforts to keep me in compliance, which was an odd situation, but one of those situations ‑‑ a Catch‑22 situation.
379 THE CHAIRPERSON: But that is no different from any other obligation. One has to pay taxes, right‑of‑ways ‑‑ whatever. You have an obligation. You were given a licence with certain terms and conditions and ‑‑
380 MR. CAPOZZOLO: Right.
381 THE CHAIRPERSON: ‑‑ if you couldn't meet them, there are processes in place to provide extensions, deferrals ‑‑
382 You were already under a mandatory order, to start with. This was a second mandatory order that you were given, with major, major repercussions, and you chose not to even contact us and let us know that you have gone dark, you can't provide the information that is being sought.
383 MR. CAPOZZOLO: I believe that in October ‑‑ now, keep in mind that it was a nine or ten‑month period from the time that Robertson College withdrew from our agreement to the time that I went dark. That was a nine‑month period.
384 It took some time to come to understand that I was on the edge of the precipice, as it were.
385 I should have done things differently perhaps, but at the time it was a desperate situation.
386 THE CHAIRPERSON: So during this desperate situation we asked you for some logger tapes, and we found you somewhere, and you pulled off logger tapes that were a year old.
387 So, obviously, there was contact between the Commission and yourself.
388 MR. CAPOZZOLO: Yes, there was.
389 And I also know that the local office was going through some changes, and in the past, any time that I communicated with the Commission, Mr. Krushen would send me advance notice.
390 Now, because I had moved from the premises where we had been for close to four years ‑‑ or a little over four years ‑‑ all of a sudden the mail is a different situation. There was a paid‑for mailbox.
391 With the first request, I actually discovered that the request was sitting in the mailbox two days before the tapes and documentation were due. So it was a mad dash.
392 I can't even begin to explain what it would be like to be in a 700‑square foot apartment with 4,000 square feet worth of junk, and the logger machine is sitting on top of boxes somewhere, and you are up there, risking life and limb, trying to pull this thing off.
393 I am looking for dates. I am looking for the 23rd to the 27th, or whatever it was at the time.
394 Actually, that day Ms Grossi was kind enough ‑‑ I called her and I said: Look, I'm having problems getting this onto a disk. Would you be kind enough to give me a few extra minutes to get down to the office?
395 In fact, she waited, and was kind enough to stay an hour late, in order for me to fill in the last few pieces of documentation.
396 And, then, that was the end of it. That would have been somewhere in and around October ‑‑
397 I don't know. I think it was October 12th or 10th or 7th, or something along those lines.
398 On October 15th, MTS cut off the transmission lines, and at this point I had serious pause for reflection. I had exhausted all of my money, a bunch of other people's money, and I was in deep debt, and was just sitting there going, "Okay, what do I do now?"
399 Sometime in November I was contacted by Ms Grossi, by e‑mail, saying, "Frank, there has been another request for tapes which you didn't provide," and I said, "I wasn't even aware of that."
400 Then I received, through an e‑mail, the request asking for tapes in November, and again later on ‑‑ again in November.
401 At that point ‑‑ and I will be totally honest ‑‑ I was upset. I felt that it was a done thing, and I felt that it was a moot point to pull logger tapes down if I wasn't going to proceed.
402 I had some preliminary discussions with Mr. Wortley. At the time it seemed like, yes, he might have been interested. "Well, we're just kind of looking around."
403 So I figured, okay, he was just another tire kicker, and this would never really amount to much.
404 Then it became serious, and Brian introduced me to Mr. Asper.
405 I should also like to add to this that this is a not for profit organization. There aren't a lot of people walking this country that are willing to invest the kind of dollars that Mr. Asper has invested and we're not even close to being on the air.
406 I mean, this is a philanthropic thing as far as that goes. You know, I don't know anybody who's willing to drop a few hundred thousand dollars into a not for profit situation unless it's someone who's interested in the community.
407 THE CHAIRPERSON: I believe it was Ms Stiver's piece here on page 6 where she indicates that:
"The licence and property of Harmony has no value to its members, there cannot be a sale of shares, as there are no shares, nor a distribution of its assets, one of which is the licence upon dissolution." (As read)
408 THE CHAIRPERSON: Mr. Capozzolo, is there a change of money flowing between yourself and YO with regard to this transaction?
409 MR. CAPOZZOLO: Harmony Broadcasting owes me something in the neighbourhood of $590,000. Mr. Asper said he wouldn't be interested in providing that, he wouldn't be interested in discussing that, it's way out of his league in terms of wanting to do that.
410 But he was impressed with my on‑air work and would be interested in keeping me on as an on‑air personality and I said sure.
411 THE CHAIRPERSON: And for that there is a contractual obligation to pay you for a period of time, to compensate you for the equivalent of that $590,000?
412 MR. CAPOZZOLO: No.
413 MR. ASPER: No, Mr. Commissioner, if I may jump in.
414 There is a contract with ‑‑ there would be a contract with Mr. Capozzolo to provide broadcast services for the morning show for which he would be compensated by way of salary.
415 THE CHAIRPERSON: And that salary would be at market rates going forward?
416 MR. ASPER: Or lower.
417 MR. WORTLEY: Lower.
418 THE CHAIRPERSON: Lower.
419 MR. WORTLEY: Yeah.
420 THE CHAIRPERSON: And aside from that there is no exchange of funds at all in this transaction?
421 MR. WORTLEY: The only funds that are going to be forwarded will be satisfy outstanding creditors.
422 THE CHAIRPERSON: Can you expand upon that?
423 MR. WORTLEY: Well, there were a number of loans that were made to the company.
424 THE CHAIRPERSON: From...?
425 MR. ASPER: I wonder if I ‑‑ maybe Ms Nebbs or Mr. Dubnicoff who have been reconstructing the finances can explain it to you in detail.
426 THE CHAIRPERSON: Well, no, Mr. Wortley is doing a good job. I don't need the fine detail, I just want to understand the principles behind it and we can get into the finer details later on.
427 MR. ASPER: Okay.
428 MR. WORTLEY: There were outstanding loans, there was service providers that were owed money and statutory remittances with Canada Revenue Agency that had to be satisfied and that's where those funds were going.
429 THE CHAIRPERSON: Were there loans from principals such as Mr. Capozzolo himself?
430 MR. WORTLEY: No. Mr. Capozzolo was owed money ‑‑ Mr. Capozzolo basically worked for nothing for four years. He took very little out of the company and I guess I could tell you just the way it is, and he had a contract with Harmony as the manager, but he did not take any money out per se and I think at one point he may have made $15,000 in that neighbourhood
431 However, he did invest a fairly large sum of money into the company starting out, along with other investors.
432 THE CHAIRPERSON: And is he getting anything out for that investment?
433 MR. WORTLEY: No, he's not. What we're prepared to offer Franc, and only because of the kind of announcer he is, you know, he's a very talented announcer, not that great on the administrative side. We want him to be involved in the morning show because we feel that he can bring something to the table for our students and he can ‑‑ some of his shows were very informal, informative and did a lot for the community that wasn't noted in past documentation or correspondence.
434 So, what we're paying him is far under market value for a morning host and Mr. Capozzolo will do a morning show for three hours Monday to Friday.
435 MR. ASPER: I think, sir, we should be very precise on this question and I'm going to ask, if you don't mind, Louise Nebbs to explain exactly the structure.
436 THE CHAIRPERSON: Sure.
437 MS NEBBS: When Mr. Asper first became the sole member of Harmony Broadcasting, we understand what it means to be the sole member and to be a director and the obligations involved.
438 The first thing that we did was attempt to get control of the financial records and reconstruct the financial records, and particularly in this situation I was most interested in what the liabilities of the company were.
439 And since that time we have been on a meticulous basis going through and satisfying the liabilities of the company.
440 And the liabilities included debts to CRA as well as to Mr. Capozzolo. The debts to Mr. Capozzolo were made up of cash advances that he had put into the company, as well accrued but unpaid wages.
441 THE CHAIRPERSON: So, Mr. Capozzolo has already ‑‑ I won't say been made whole ‑‑ but been compensated for the past debts and the outstanding wages?
442 MS NEBBS: No, he has not. Mr. Asper agreed that he would pay Mr. Capozzolo a partial settlement for those amounts due to him, but funds have not been advanced at this time.
443 THE CHAIRPERSON: I'm probably going to come back for some more questions later on, but I will allow my co‑Commissioners here to ask some questions.
444 Commissioner Menzies.
445 COMMISSIONER MENZIES: Maybe we could just finish on that point then.
446 Mr. Capozzolo, what was the management ‑‑ what was the compensation, what was the contract between you and Harmony, what were the management fees that you charged?
447 MR. CAPOZZOLO: $150,000 a year.
448 COMMISSIONER MENZIES: Okay. And that was for how long?
449 MR. CAPOZZOLO: And that was ‑‑ I believe it was the year 2003 into 2007. No, it was 2002 when I started to negotiate with the previous licence holder and I put it all together.
450 COMMISSIONER MENZIES: And how much of that are you still owed?
451 MR. CAPOZZOLO: How much of that money?
452 COMMISSIONER MENZIES: Yes. How much of it was actually paid to you?
453 MR. CAPOZZOLO: There was money given to me to help, for example, I had friends pay for my rent, cigarettes, food for the last seven or eight months. They were people locally who lent me money to ‑‑
454 COMMISSIONER MENZIES: No, sorry. Just to be clear, between 2002 and 2007, how much did Harmony pay you ‑‑
455 MR. CAPOZZOLO: Oh, how did it pay me or owe me?
456 COMMISSIONER MENZIES: How much did it ‑‑ I understand that for six years, 2002, 3, 4, 5, 6 and 7.
457 MR. CAPOZZOLO: No, I didn't actually ‑‑ you know, I started putting up money in 2002. The licence wasn't actually signed over until ‑‑
458 COMMISSIONER MENZIES: But your contract, your management fees contract with Harmony is what ‑‑
459 MR. CAPOZZOLO: Yeah, yeah, we'll go back to 2002, yes.
460 COMMISSIONER MENZIES: Okay. So that was for six years was to pay you $150,000 each year?
461 MR. CAPOZZOLO: Yeah.
462 COMMISSIONER MENZIES: So, that's $900,000.
463 MR. CAPOZZOLO: Yeah, but the first year it was more of a ‑‑ because I sat down with the accountant and we went over the numbers because I put it together in terms of, you know, finding the location and buying the furniture and contacting the people, I mean.
464 COMMISSIONER MENZIES: How much did it pay you?
465 MR. CAPOZZOLO: Basically at the end of 2007 it owed me $590,000.
466 COMMISSIONER MENZIES: So, it paid you $310,000?
467 MR. CAPOZZOLO: No, it paid me somewhere in the neighbourhood of ‑‑ over the last six years, maybe 45 in total.
468 COMMISSIONER MENZIES: So, if you had a management contract with them for $900,000 over a six‑year period and you're still owed $590,000, where did the rest ‑‑
469 MR. CAPOZZOLO: No, no, no, no, no. No.
470 In total ‑‑ the only money that I took out of this company over five years is $45,000.
471 COMMISSIONER MENZIES: Okay. I'm trying to establish how come you're only owed $590,000 when you had a six‑year contract for $150,000.
472 MR. CAPOZZOLO: Because ‑‑
473 MS NEBBS: Could I correct the numbers for Mr. Capozzolo.
474 I have had the opportunity to review the financial statements and as at August, 2007 the financial statements show a liability of $896,000 to Mr. Capozzolo.
475 Going through the records, we've only been able to find evidence of a payment of $10,000 to him in return for management fees.
476 He has had some cash advances being repaying of cash advances he made to the company.
477 COMMISSIONER MENZIES: And how much in expenses did he ‑‑ were claimed?
478 MS NEBBS: These numbers were include expenses claimed.
479 COMMISSIONER MENZIES: Those numbers would include expenses claimed?
480 MS NEBBS: Yes.
481 COMMISSIONER MENZIES: So, in six years he claimed $10,000 worth of expenses or $10,000 worth of management fees?
482 MS NEBBS: The evidence that we found was that the company paid about $10,000 of the management fees that were accrued to him.
483 COMMISSIONER MENZIES: Okay. What is the amount of expenses claimed by Mr. Capozzolo from Harmony between 2002 and 2007?
484 MS NEBBS: I don't think I found any detail on that. We found from time to time expenses paid by the company, but they were charged against Mr. Capozzolo, they were charged as a repayment of his debt.
485 So, where we found evidence of that, the company had accounted for it correctly.
486 COMMISSIONER MENZIES: Okay. So, the correct figure then of what Harmony owes Mr. Capozzolo is $890,000 not 500?
487 MS NEBBS: $896,000 ‑‑ 896,206.
488 COMMISSIONER MENZIES: And Mr. Capozzolo, how do you intend to get repaid that amount of money?
489 MR. CAPOZZOLO: Well, until Mr. Asper came along I didn't expect to get anything.
490 COMMISSIONER MENZIES: Okay. So, how much are you getting now?
491 MR. CAPOZZOLO: Well, I asked Mr. Asper to take care of debts that ‑‑ from family and friends that I borrowed and it's somewhere in the neighbourhood of $200,000.
492 And Mr. Asper offered me a $60,000 a year job, and that's it.
493 COMMISSIONER MENZIES: Okay. What is the ‑‑ is that job a contract or is that an employee job?
494 MR. CAPOZZOLO: That is a contract.
495 COMMISSIONER MENZIES: And what's the length of the contract?
496 MR. CAPOZZOLO: It is a three‑year ‑‑
497 COMMISSIONER MENZIES: Guaranteed contract?
498 MR. CAPOZZOLO: Not guaranteed, but it's a three‑year contract.
499 COMMISSIONER MENZIES: It's a three‑year contract.
500 MR. CAPOZZOLO: Yeah.
501 COMMISSIONER MENZIES: For $60,000 a year?
502 MR. CAPOZZOLO: Yeah.
503 COMMISSIONER MENZIES: Any expenses involved, any automobiles, any rent, anything in addition to that?
504 MR. CAPOZZOLO: Maybe a cell phone.
505 COMMISSIONER MENZIES: That's it? Okay.
506 MR. ASPER: Commissioner Menzies, just ‑‑ I hope you can appreciate, Members of the Panel, that we are and Louise and Dave Dubnicoff and others have done service in actually reconstructing the financial records of the corporation as best as we can. It's by far complete, however.
507 COMMISSIONER MENZIES: Sure. Thank you.
508 Mr. Capozzolo, are you in control of Harmony?
509 MR. CAPOZZOLO: In what way? Now?
510 COMMISSIONER MENZIES: Now.
511 MR. CAPOZZOLO: No.
512 COMMISSIONER MENZIES: When were you last in control of Harmony?
513 MR. CAPOZZOLO: I think it was January where we signed off. You know, I should also add that the Board of Directors were more than happy to jump off because in the end they would responsible for outstanding debts, not to me, however, but...
514 COMMISSIONER MENZIES: End of January you said?
515 MR. CAPOZZOLO: I believe January was when we signed things across.
516 COMMISSIONER MENZIES: Okay. Now, in your comments, in our preliminary comments and that, in going through this and it seemed there are a number of people that you had difficulties with and I want to give you an opportunity to address this.
517 It seems that some of your problems arose from the CRTC, some of your problems arose from negative media, MTS was a problem ‑‑
518 MR. CAPOZZOLO: CRA, the Labour Board and PBI.
519 COMMISSIONER MENZIES: Yes. I mean, did it ever cross your mind that maybe they weren't the problem?
520 MR. CAPOZZOLO: I'm sorry, one more time?
521 COMMISSIONER MENZIES: Did it ever cross your mind maybe they weren't the problem, that maybe your actions were the problem?
522 MR. CAPOZZOLO: Certainly my actions. I'm an intelligent person, I want you to know that and I don't apologize for that. I created a nine‑month curriculum with a one‑month practicum.
523 I've been in this industry for over 30 years. I've trained the new broadcasters out of so‑called broadcasting schools all the way through and I ‑‑ you know, what happens is we have a group of people like we have here today, every single one of the interveners today are the exact same interveners from the previous hearing.
524 They have maligned me, assassinated my character with PBI, with CRA, with the Labour Board. They've made outrageous allegations that have been posted willingly and openly by the CRTC and I'm upset about that.
525 You know, I put five years of myself into this and, do you know what, I'm more than happy to pull away. All I've been done is been shot at, I've been threatened physically, mortally. I've gone to the police. I can't begin to tell you what I've been through over the six years.
526 And, you know, I look back, I've certainly had a lot of time for reflection over the last eight months. And I think, you know, if I had to do it again, I'm down a family. I didn't have a place to live for nine months, you know, and I'm being treated like I'm some kind of villain here.
527 We've got people in this room who, I assure you, should be behind bars and they are making me to look to be this evil character who's trying to pull the wool over the Commission's eyes.
528 I've been in this business for 30 years, why on earth would I do that?
529 I'm sorry, you know, and I'm sorry if I get a little hot, I'm getting a little instruction ‑‑
530 COMMISSIONER MENZIES: No.
531 MR. CAPOZZOLO: But it's been a long time.
532 COMMISSIONER MENZIES: I wasn't trying to cast aspersions on your stellar broadcasting career, I was just trying to establish where you feel the accountability for your current circumstances truly lays.
533 MR. CAPOZZOLO: It lays with me, I mean ‑‑
534 COMMISSIONER MENZIES: Thank you.
535 Now, Mr. Capozzolo, the Campus Radio Policy defines a campus station as a not for profit organization associated with an educational institution.
536 MR. CAPOZZOLO: Right.
537 COMMISSIONER MENZIES: That has not always been the case with Harmony; has it?
538 MR. CAPOZZOLO: No.
539 COMMISSIONER MENZIES: Mr. Wortley, what written policies and procedures do you have in place to address that shortcoming?
540 MR. WORTLEY: The agreements with the post‑secondary education?
541 COMMISSIONER MENZIES: No, with ‑‑ yes.
542 MR. WORTLEY: Well, we have now a signed agreement with Robertson, Krushen, Mr. Ken Penner ‑‑
543 COMMISSIONER MENZIES: And I believe that's been completed filed with us now?
544 MR. WORTLEY: It has been filed with the Commission, yes, sir.
545 COMMISSIONER MENZIES: Mr. Capozzolo, the Campus Radio Policy defines a campus station as one that its primary role is to be a training ground for students in broadcasting courses.
546 That has not always been the case with Harmony; has it?
547 MR. CAPOZZOLO: No.
548 COMMISSIONER MENZIES: Mr. Wortley, what written documentation do you have for us in terms of the ‑‑ do you have, for instance, do you have any students registered for the course yet?
549 MR. WORTLEY: We don't.
550 COMMISSIONER MENZIES: Okay.
551 When is registration to take place for the course.
552 MR. WORTLEY: Right now. And perhaps, if you wouldn't mind, Commissioner Menzies, I would like to ask Mr. Penner just ‑‑
553 COMMISSIONER MENZIES: I'll come back to that okay.
554 MR. WORTLEY: Okay.
555 COMMISSIONER MENZIES: And if I don't remind me, all right.
556 MR. WORTLEY: Okay, thank you.
557 COMMISSIONER MENZIES: Okay. Mr. Capozzolo, the Campus Radio Policy defines a campus station as one that provides listeners with alternative music, especially Canadian not normally based on commercial radio.
558 Has that always been the case?
559 MR. CAPOZZOLO: Not initially, not always the case.
560 COMMISSIONER MENZIES: I'm sorry, I beg your pardon?
561 MR. CAPOZZOLO: Not initially. I had difficulty finding artists that ‑‑ because I was unfamiliar with this brand of music, so it took me some time to identify who those artists were, but as soon as I did they were on and I believe that a great part of the success of the radio station, if we can call anything a success with this radio station, was the fact that I was so involved with the local hip hop and R&B community.
562 COMMISSIONER MENZIES: Okay. And, Mr. Capozzolo, despite many requests, have consistently refused or been incapable of proving to the Commission that you have been in compliance with the Policy.
563 Is that not the case?
564 MR. CAPOZZOLO: Yes.
565 COMMISSIONER MENZIES: Mr. Wortley, on those items, what policies and procedures do you have in place to address those shortcomings?
566 MR. WORTLEY: What items would you want me to refer to, sir?
567 COMMISSIONER MENZIES: That would be the provision of alternative music, especially Canadian not normally heard on commercial radio to be in compliance with the Campus Radio Policy.
568 MR. WORTLEY: Right. We have an operating system in place now and all loggers are approved by me weekly, I have to check all loggers. Our program director will be responsible that all music is in compliance on a day‑to‑day basis, on a weekly basis that would be put through me to sign off on and authorize the fact that it is in compliance with...
569 COMMISSIONER MENZIES: Do you have written policies and procedures on that?
570 MR. WORTLEY: Yes, we do.
571 COMMISSIONER MENZIES: Okay. Have they been filed with us?
572 MR. ASPER: Moreover, sir, if I can just add, from a governance perspective, because this is a very serious, see it's the core of the issue here or part of it, we will construct and have committed to construct a program advisory committee of the board so that the board will constantly monitor Mr. Wortley to ensure management compliance.
573 COMMISSIONER MENZIES: And have you ‑‑ do you have written policies and procedures on that that you can ‑‑
574 MR. WORTLEY: We submitted to the Commission on February the 15th our policies on programming with regards to CAT 3 and logger tapes and Canadian content.
575 COMMISSIONER MENZIES: Does it have procedures and do we know what procedures you have, your checks and balances? As Mr. Asper said, it's a very ‑‑
576 MR. WORTLEY: Yes, yes, it does.
577 COMMISSIONER MENZIES: ‑‑ serious matter, so it has all that. Okay. Thank you.
578 And does that apply to your spoken word programming as well?
579 MR. WORTLEY: It does.
580 COMMISSIONER MENZIES: Okay. Thank you.
581 Mr. Capozzolo, do you have any documentation that you can provide or have provided to the Commission to show that CJWV has provided listeners with educational programming?
582 MR. CAPOZZOLO: You want documentation?
583 COMMISSIONER MENZIES: Yes.
584 MR. CAPOZZOLO: I don't understand. Wouldn't that be logs; is that what you're asking for?
585 COMMISSIONER MENZIES: Right. I mean, there's space in your programming where it says educational.
586 MR. CAPOZZOLO: Right.
587 COMMISSIONER MENZIES: But do you have anything to prove that what was scheduled actually went on the air or what went on the air?
588 MR. CAPOZZOLO: Well, I mean, you know, I could ‑‑ I do but I don't. I could give you documentation ‑‑ what I did was, we'd have educational guests on and we'd record it and then we'd cut it up and run it gain on the weekend.
589 I was out of compliance initially when there were a bunch of people who were upset with me, complained as a way of getting back at me.
590 And at that point, you know, there were things that I didn't know because I came from a commercial broadcasting world, I didn't realize that news about artists didn't count as news. I think that perhaps that's a little different today.
591 I didn't know that sports didn't count as news, I didn't know that weather didn't count as news. So, my news was way out and I thought that I was in place.
592 There was never any issue with regards to the level of spoken word, we always over delivered on the spoken word.
593 Once I came to understand things, I put things into place.
594 COMMISSIONER MENZIES: So, is the answer yes or no?
595 MR. CAPOZZOLO: I can't. I mean, what ‑‑
596 COMMISSIONER MENZIES: I'll take that as a no for now.
597 MR. CAPOZZOLO: Okay.
598 COMMISSIONER MENZIES: Mr. Wortley, what policies and procedures do you have in place to address this shortcoming?
599 MR. WORTLEY: Of the spoken word?
600 COMMISSIONER MENZIES: That would be the educational programming?
601 MR. WORTLEY: Of the educational programming?
602 COMMISSIONER MENZIES: Yes.
603 MR. WORTLEY: Well, it's part of the logger ‑‑ like of our operating system, so there has to be spoken word inserted into our operating system and we have also submitted a programming grid ‑‑
604 COMMISSIONER MENZIES: Specifically educational programming.
605 MR. WORTLEY: Right.
606 COMMISSIONER MENZIES: Is that all in there for us?
607 MR. WORTLEY: It is.
608 COMMISSIONER MENZIES: Okay. And what's the content going to be of it?
609 MR. WORTLEY: The content can vary from a number of topics. It could go from the green gas effects on the economy, it could ‑‑ or on the environment, it could go with regards to the pollution in the water and run‑offs, the pork problem we're having now with the big barns.
610 It will vary from week to week.
611 COMMISSIONER MENZIES: And what sort of people would be offering the educational programming?
612 MR. WORTLEY: Students.
613 COMMISSIONER MENZIES: Is this ‑‑
614 MR. WORTLEY: Part of their curriculum is to research ‑‑
615 COMMISSIONER MENZIES: So, students would be teaching students...
616 MR. WORTLEY: No. The instructor ‑‑ the head instructor of our course will teach the students, but these will be assignments that the students will have to create educational programming for the station.
617 COMMISSIONER MENZIES: Okay. And what sort of people would they be ‑‑ would they be interviewing experts in these areas?
618 MR. WORTLEY: Absolutely. Yes.
619 COMMISSIONER MENZIES: So they would be drawing on people from the academic field, professional field, that sort of thing.
620 MR. WORTLEY: Right. Yes.
621 COMMISSIONER MENZIES: So the students listening would be able to benefit from that voice.
622 Is that what's happening?
623 MR. WORTLEY: That's right.
624 That's essentially how the curriculum has been developed, was those are assignments that students would be responsible for.
625 MR. ASPER: Commissioner, one of the philosophies here and one of the unique attributes of the license is that in that particular strand of programming it provides an outstanding opportunity, educational opportunity, because this has to be a very significantly diverse voice and something that is not on the commercial radio stations, is to take an approach to issues and to educational matters that is counter to the mainstream and to try to force people into that mind‑set is part of the philosophy of what we are trying to achieve here.
626 COMMISSIONER MENZIES: Do you want to expand on that bit?
627 MR. ASPER: Well, critical thinking. It's critical thinking. And it would be our hope that part of the learning experience at Robertson College and through Harmony Broadcasting will be to use that strand to critically evaluate and to communicate things of interest, things maybe not of interest, things that maybe should be of interest.
628 COMMISSIONER MENZIES: Maybe what we would call contrarian points of view?
629 MR. ASPER: I would hope so.
630 COMMISSIONER MENZIES: I wonder where they got that idea?
‑‑‑ Laughter / Rires
631 COMMISSIONER MENZIES: Are there any other agreements, Mr. Capozzolo, between ‑‑ do you own any other companies that might have any agreements or have had any agreements with Harmony?
632 MR. CAPOZZOLO: No.
633 COMMISSIONER MENZIES: Okay. Does anybody else at the table own any other companies that might have any agreements or arrangements with Harmony?
634 MR. ASPER: No.
635 COMMISSIONER MENZIES: Mr. Capozzolo, how many students were involved with the station in 2006 and 2007 before you went dark?
636 MR. CAPOZZOLO: None.
637 COMMISSIONER MENZIES: Mr. Wortley, how many students will be involved under your watch if you were to be granted it?
638 MR. WORTLEY: Our business plan was developed based on a minimum of 10 students per intake. Because it's a trimester intake, every quarter there will be another intake of students.
639 COMMISSIONER MENZIES: So 10 students per quarter ‑‑
640 MR. WORTLEY: Yes.
641 COMMISSIONER MENZIES: ‑‑ flowing through?
642 MR. WORTLEY: Yes.
643 COMMISSIONER MENZIES: What do they do?
644 MR. WORTLEY: I'm sorry?
645 COMMISSIONER MENZIES: What do they do?
646 MR. WORTLEY: They learn the radio business.
647 COMMISSIONER MENZIES: Okay, but how? I mean do they learn sales, are they on air, are they copywriters, are they producers?
648 MR. WORTLEY: Well, maybe what would be best is the architect of the course could explain to you how it would flow.
649 Would that be all right?
650 MR. ASPER: And also, everybody has seen the curriculum. We have looked at the production kits that have been provided. And the Board has actually evaluated this. So this is not sizzle, there is steak to this.
651 COMMISSIONER MENZIES: Yes, it's not the curriculum that I'm so much worried about in this specific question, it is exactly their roles at the station.
652 MR. CAPOZZOLO: Can I answer that question?
653 COMMISSIONER MENZIES: Sure.
654 MR. CAPOZZOLO: The course was designed to appease or satiate the requirements of the campus radio license, so the students begin with a general overview. Almost immediately the students will be on the morning show, which will lessen our requirement for ‑‑ it will give us fodder for picking on somebody and getting them to know how to become the second banana.
655 The talk has been placed on the morning show. Anybody can read a liner after a week and a half, but personality radio is, if not dead is certainly dying in our country. There are no more places where we are growing future talent.
656 Therefore, these kids will come on right away and they will provide traffic or they will provide ‑‑ interview guests or subjects, whatever, and that is almost immediately. We will introduce them and we will rotate through them.
657 We might have Billy and Susie and Billy will be taking care of this and he is a knucklehead and Susie is hot so were going to be nice to her, that kind of thing. This is just hypothetical.
658 And then, within, I would say within a couple of weeks, they will be editing to fulfil our talk commitment. The morning show, which is basically a three‑hour talk show, quite often a name, quite often quite interesting and engaging.
659 We have had Dr. Suzuki live in the studio with us. He came in one day for 15 minutes. He ended up staying over an hour. He said "Are you sure this is a hip‑hop station? This is a lot of quality talk for a hip‑hop station." I said "Hey, whatever works." And he continued to stay.
660 So what happens is, we will take that interview, we will chop it up, we will run it on the weekend. David Suzuki would be an educational guest.
661 We have had the Manitoba Museum. We have had each of their departments and they were a regular guest, we have had the geology department on, we have the astronomy division on, all kinds of things like that. We have homeless, blah, blah, blah, blah, local issues.
662 So this stuff will be edited and they will learn editing and producing as they learn writing skills with regards to commercials and newsgathering and presenting.
663 And within two months they will be voicetracking the rest of the shifts. There are only two shifts that are going to be filled, that is the morning show ‑‑
664 COMMISSIONER MENZIES: Are you responsible for the management of the students?
665 MR. CAPOZZOLO: No.
‑‑‑ Laughter / Rires
666 MR. ASPER: Commissioner, the course is divided up into specific modules. I think your question is: What are the students actually going to do.
667 Is that where you were headed?
668 The course is divided up into specific modules with a subject matter per module and resources are applied as each module is taught. They are quite intensive. So there is of course a production module, but there is also a sales module, and admin module and all the way through, marketing, branding, you know.
669 There is a classroom and they sit in the classroom and there are instructors and they get taught. And part of why we recruited the board that we did was because we are all interested in interacting with the students, in providing the expertise that we can provide, and they move through the program.
670 It is a phenomenal idea, because it is a 10‑month program that respects the fact that some people don't have many years, 2, 3, 4 years to go through a formal university program, but this gives them the broadest possible exposure and makes them ready the day they walk out the door to come in at an entry‑level to anything that is going on in a radio station. It is quite a phenomenal program.
671 COMMISSIONER MENZIES: Okay. Who manages those students?
672 MR. WORTLEY: Those students will be managed by a lead instructor.
673 COMMISSIONER MENZIES: A yet to be identified person?
674 MR. WORTLEY: Correct.
675 COMMISSIONER MENZIES: Okay. Thanks.
676 MR. WORTLEY: We have had a couple of resumes of people who are interested, primarily ex‑announcers who found out that we were involved in the school. We haven't hired anyone yet.
677 COMMISSIONER MENZIES: Okay. Who manages Mr. Capozzolo?
678 MR. WORTLEY: Mr. Capozzolo will be managed by me and the Program Director.
679 COMMISSIONER MENZIES: You will be responsible for him?
680 MR. WORTLEY: I will.
681 MR. ASPER: I think you need to know also about the instructor, that this is not isolated or disaggregated from Robertson. Mr. Penner and his people will have to be approving in order for the accreditation process any instructors that are brought in to program.
682 COMMISSIONER MENZIES: Okay. What will happen to your association with Robertson College ‑‑ and I would like Mr. Penner's comments on this as well ‑‑ if the Commission suspends the CJWV licence or revokes it ‑‑ well, suspends it. Change the question, please.
683 MR. ASPER: What will happen to the program, to the broadcast program?
684 COMMISSIONER MENZIES: What will happen to the association with Robertson if there is a suspension of the licence?
685 MR. ASPER: Well, I think Mr. Penner could tell you sort of the practical implication of that and that I can pick up from there.
686 COMMISSIONER MENZIES: Okay.
687 MR. PENNER: Well, we likely would not be proceeding.
688 COMMISSIONER MENZIES: Okay. Thank you.
689 Mr. Asper...?
690 MR. ASPER: I think we will have to evaluate that in the circumstances as they present themselves.
691 COMMISSIONER MENZIES: My apologies, I'm pretty sure I asked this before, but there has been no money deposited by any students for this course at this time?
692 MR. WORTLEY: No.
693 COMMISSIONER MENZIES: Thank you.
694 Mr. Capozzolo, CJWV has frequently operated in noncompliance with the Campus Radio Policy and terms of the structure of its Board, has it not?
695 MR. CAPOZZOLO: Yes.
696 COMMISSIONER MENZIES: I will leave the board questions to Commissioner Petrone.
697 A radio licensee has the privilege of using radio frequencies that are public property. This means that licensees are accountable to the public and, Mr. Capozzolo, this hasn't always been the case with Harmony, has it?
698 MR. CAPOZZOLO: No, it hasn't.
699 COMMISSIONER MENZIES: Okay.
700 Mr. Capozzolo and Mr. Wortley, who handles your complaints if and when you get them? What is your procedures on that?
701 MR. WORTLEY: From the Commission?
702 COMMISSIONER MENZIES: No, not your complaints from us.
703 MR. WORTLEY: From the general public, oh.
704 MR. ASPER: There aren't going to be any more complaints from the Commission.
705 COMMISSIONER MENZIES: Yes, yes, yes, yes, yes.
‑‑‑ Laughter / Rires
706 MR. WORTLEY: I will.
707 COMMISSIONER MENZIES: You will get ‑‑ somehow yes.
708 Sorry, who will? You will?
709 MR. WORTLEY: Yes.
710 COMMISSIONER MENZIES: What is the process you have developed for the handling of public complaints?
711 MR. WORTLEY: From the public?
712 COMMISSIONER MENZIES: Yes. I'm not talking about public institutions, I'm talking about from your listeners, audience. They hear something, they don't like it ‑‑
713 MR. WORTLEY: Right.
714 COMMISSIONER MENZIES: ‑‑ somebody goes over the edge, somebody says something, they think there is an imbalance in programming, they don't like one of the contrarian point of view, anything like that ‑‑
715 MR. WORTLEY: Right.
716 COMMISSIONER MENZIES: ‑‑ the sort of things that people phone up and say "I have a complaint, I don't like what you did, when he going to do about it?" Accountability to the public. You are holding ‑‑ you are holding a public property.
717 MR. WORTLEY: Right.
718 COMMISSIONER MENZIES: How are you going to manage your relationship with the public and any complaints it has with you?
719 MR. WORTLEY: Well, I think I can just pull from my experience as a General Manager, whenever we had complaints from a commercial station ‑‑ and I don't differentiate between a complaint from a listener on a commercial station or a not‑for‑profit station. I look at them as the same.
720 I would listen to the listener, I would invite them to write in, if they wish, to me, and then I would look into the complaint internally with our staff.
721 If I felt that there was a valid complaint, then I would take the necessary action.
722 If I felt that perhaps the listener might have exaggerated ‑‑ at times when they do ‑‑ I would respond by letter of what I did in terms of their complaint and follow through and "Here's what I have done" or "Here's what I haven't done". If they wish to take it further they also have the opportunity to.
723 COMMISSIONER MENZIES: Okay. Is it just you are is there ‑‑ I mean do you have an advisory committee or a similar structure to oversee the handling of the complaints?
724 MR. WORTLEY: Well, what we are looking at implementing ‑‑
725 COMMISSIONER MENZIES: What happens if you get hit by a truck?
726 MR. WORTLEY: ‑‑ is a program advisor. This essentially takes the place of a program director. The program advisor would have two members from the Board of Directors with him to oversee the programming of CJWV. They would report directly to the Board of Directors. So yes, there is someone in place.
727 COMMISSIONER MENZIES: So your Programming Advisory Committee would also be your public complaints?
728 MR. ASPER: That's a committee of the board, Commissioner Menzies. It is a committee of the board and we expect that the public reaction, public interaction be part of an ongoing reporting by Mr. Wortley to the board.
729 COMMISSIONER MENZIES: Okay. Do you have a written policies or written procedures in place like that that you could provide us with in terms of ‑‑
730 MR. WORTLEY: I don't.
731 COMMISSIONER MENZIES: ‑‑ specifically in terms of your handling of your public complaints
732 MR. ASPER: We can provide you with ‑‑
733 COMMISSIONER MENZIES: Your public complaints procedures.
734 MR. ASPER: Sure. Absolutely.
735 COMMISSIONER MENZIES: Thank you.
736 MR. McCALLUM: Could we set a date on that undertaking?
737 MR. ASPER: Seven days.
738 COMMISSIONER MENZIES: What is the total outstanding debts of Harmony?
739 MR. ASPER: That is a great question.
740 MS NEBBS: In a situation like this there are what is recorded on the financial statements and then there is the unrecorded liabilities. I probably do not know right now the total unrecorded liabilities. What is recorded on the financial statements, however, is a total of $981,206. What is not recorded in that number were some of the debts to CRA.
741 COMMISSIONER MENZIES: Do you have any idea what that is?
742 MS NEBBS: To date we paid that additional assessment relating to GST of approximately $10,000. Upon completing the calculations an amount of about $3,500 was paid. We had an assessment relating to payroll withholdings, as we investigated and discussed that matter with CRA. I think we believe that there will be an amount of about $1,500 due and owing at the end of those discussions.
743 COMMISSIONER MENZIES: Sorry, it was $980,000?
744 MS NEBBS: The total recorded liabilities are $981,206.
745 COMMISSIONER MENZIES: And $890,000 of that is to Mr. Capozzolo?
746 MS NEBBS: Pardon me?
747 COMMISSIONER MENZIES: $890,000 of that is to Mr. Capozzolo?
748 MS NEBBS: The vast majority of that is to Mr. Capozzolo.
749 COMMISSIONER MENZIES: Mr. Capozzolo, you mentioned that Mr. Asper had offered to clear off about $200,000 in debts to your families and friends. So that's money that is owed in addition to the $890,000.
750 Is that money owed that is in addition to this money that's on the books?
751 MR. CAPOZZOLO: No. You know what, to be honest, I was never a money guy. It never really ‑‑ you know ‑‑
752 COMMISSIONER MENZIES: Really.
753 MR. CAPOZZOLO: Yes, money is important, don't get me wrong, I have habits, but however it wasn't my driving force. As long as I had enough to get by it really didn't matter.
754 But there were people, people in this room who put in a serious amount of money. My parents took a mortgage out on their house, my sister did, my brother lent me $3,000 to $10,000 at a time as I needed it along the way, be it for rent or whatever. There were local friends that would lend me $5,000 at a time when I needed it.
755 I should also mention that I do a lot of freelance work and I was taking that money and putting it into helping pay the bills.
756 COMMISSIONER MENZIES: Where do you freelance?
757 MR. CAPOZZOLO: I do voiceover work for local and national advertisers.
758 COMMISSIONER MENZIES: Is that how you have lived for the last six years?
759 MR. CAPOZZOLO: Mostly borrowing money here it
760 COMMISSIONER MENZIES: Mostly borrowing money.
761 How many people are not going to get repaid at the end of this?
762 MR. CAPOZZOLO: Including myself?
763 COMMISSIONER MENZIES: No, I'm not worried about you in this question.
764 MR. CAPOZZOLO: Okay. I think that everybody will get pretty close to what they put in, if not a little extra.
765 COMMISSIONER MENZIES: Is there any procedure set up for handling that?
766 MR. CAPOZZOLO: I'm going to give them the names of the people that get the money and they are going to make the cheques out to those people.
767 COMMISSIONER MENZIES: Is that correct, Mr. Asper?
768 MR. ASPER: Generally, yes.
769 We have taken concrete steps in several specific directions. A couple of our ‑‑ a couple remain outstanding and a couple remain to be quantified, but yes.
770 COMMISSIONER MENZIES: Okay.
771 Can you give me examples of other community radio stations that pay their morning man $60,000 a year, or campus radio stations that do that?
772 MR. CAPOZZOLO: This one.
773 MR. ASPER: I can't offhand, no.
774 COMMISSIONER MENZIES: What would be the average pay for a morning announcer at a campus radio station?
775 MR. WORTLEY: I can't ‑‑ I'm not sure of that.
776 The challenge with this license is, unlike other campus licences, it is not housed inside a university or a college.
777 I can give you a great example. Red River Community College here in Winnipeg has a campus licensed radio station. Their station is housed in their building. Red River Community College picks up all the bills of the radio station, with the exception of the General Manager, which I believe his salary is somewhere around $50,000 or $60,000. That is the only cost, direct cost that the radio station is responsible for. The rest of those expenditures are covered by the community college.
778 Because this licence sits outside of a campus they are responsible ‑‑ it is responsible for all its bills. I wouldn't know what a morning man on a campus radio station ‑‑ I can tell you what a morning man in commercial radio might make and it's a lot more than that here in Winnipeg.
779 COMMISSIONER MENZIES: Well, I'm just wondering, because I look at a lot of radio applications and quite often their operating expenses for an entire year in a commercial relatively small market might be $600,000 or $700,000 and their on‑air talent, a lot of it is making $30,000 a year.
780 Put it this way: How much more ‑‑ is the amount Mr. Capozzolo is being paid as part of this arrangement for his talent ‑‑ and I'm not getting into whether it is deserved or undeserved or market value ‑‑ an extraordinarily high amount within the campus radio world?
781 Yes or no?
782 MR. ASPER: Let me answer that, if I can.
783 That really never factored into it. We tried to evaluate what was basically available in this market at what rates and the value that we thought we could derive from Mr. Capozzolo's talent in terms of the teachers, the teaching and mentoring skill that he can do in the course of that program.
784 What Mr. Capozzolo does ‑‑ and I have to tell you, I listened and I kept wondering why I was listening to his program in the morning, except I kept listening, because he is actually very engaging. So there is a subjectivity to this, not a scale, and we made a choice.
785 COMMISSIONER MENZIES: I'm not saying that it's ‑‑ I mean it's your choice, I just need to get an answer as to whether it ‑‑ Mr. Capozzolo, said no there isn't another campus radio station doing that.
786 MR. CAPOZZOLO: There are ‑‑
787 COMMISSIONER MENZIES: I'm not getting into whether or not it is justified, I just need for the record the fact that it is exceptional or not exceptional.
788 MR. ASPER: I'm not sure how you want us to answer that ‑‑
789 COMMISSIONER MENZIES: Yes or no.
790 MR. ASPER: Because I don't know if it's exceptional or not.
791 MR. WORTLEY: And I have to be honest with you, I'm not familiar with the other campus licences in Canada so I wouldn't know what they would pay a morning show, to be honest with you. I look at it as it's ‑‑ I felt it was low on the scale.
792 COMMISSIONER MENZIES: Mr. Capozzolo, how much would people typically pay a campus radio station host?
793 MR. CAPOZZOLO: I don't know that with regards to this kind of licence.
794 I mean, you are going to have your ‑‑ you see, the radio station is the marketing tool for the school. To hire somebody with my abilities, capabilities, talents, whatever you want to call that, experience, not only is there the possibility of garnering advertising revenue from a captivating program, but you are also the marketing tool for the school. If someone enjoys listening to my program and loves listening to me, as sometimes listeners do, I would want to go to that course before any other course. Therefore, $60,000 would be ‑‑
795 COMMISSIONER MENZIES: Gentlemen, like I said, I'm not saying that the circumstances and the job description ‑‑
796 MR. CAPOZZOLO: Oh, you are just saying ‑‑
797 COMMISSIONER MENZIES: ‑‑ teacher, mentor, guru, broadcaster, whatever, that is multifaceted enough to justify the $60,000, I just need to know, is this somewhat unique within the campus radio world?
798 MR. CAPOZZOLO: I don't necessarily think so, no.
799 MR. ASPER: We can endeavour to try to find out. I'm not sure that that is easily obtainable information.
800 I think the other thing we have to look at is total on‑air professional paid compensation for campus radio stations as opposed to an individual, because you may have ‑‑ if you follow what I'm saying.
801 COMMISSIONER MENZIES: Okay.
802 MR. ASPER: I mean, we can endeavour to try. I'm not sure how we can answer.
803 COMMISSIONER MENZIES: Let me try one more time this way.
804 Mr. Wortley, what would be the average market rate in a market the size of Winnipeg for a commercial morning radio host in terms of compensation?
805 MR. WORTLEY: Your range would probably be anywhere from $80,000 to $120,000 a year.
806 COMMISSIONER MENZIES: Okay. Thank you.
807 Those are my questions for now.
808 THE CHAIRPERSON: Thank you.
809 Commissioner Petrone...?
810 COMMISSIONER PATRONE: Thank you, Mr. Chair.
811 Good afternoon. I have some questions around corporate governance, specifically effective control of Harmony Broadcasting. When I look at the document that was handed to me today, the statement, it lists Franc Capozzolo as the former sole member of Harmony, David Asper as the sole member of Harmony currently.
812 On page 5 you say that there was no change of effective control.
813 I need you to walk me through this because as the sole member of Harmony, Mr. Asper, would you not in effect be in control of this undertaking at this point?
814 MR. ASPER: I'm going to dodge this, but Lisa can explain that I think comprehensively, because I know that it kind of feels like it.
815 COMMISSIONER PETRONE: Yes.
816 MR. ASPER: But there is actually law around this that explains it.
817 COMMISSIONER PETRONE: Okay.
818 MR. ASPER: So let me pass it over to Lisa.
819 MS STIVER: Thank you
820 I just wanted to clarify, at the beginning of your question you said ‑‑ I think we had listed in here that there was no change of control, and what I mean by that is that there is no change of control as it is defined in your Radio Regulation or as it appears on the Notice.
821 In other words, what I'm trying to say is that we have not effectively had a change of control the way that it would I guess traditionally be defined or how it is defined in the Regulations.
822 So is your question just to walk you through it?
823 COMMISSIONER PATRONE: My question is how is Mr. Asper both the sole member of Harmony and yet not in effective control of Harmony?
824 How do you square that? How do you reconcile those two points?
825 MS STIVER: Okay. Where should I start?
826 In the memorandum that I handed out to you ‑‑ I don't think you have had a chance to look at it, or if you have ‑‑ I didn't read it through for everyone because it's boring, but it's a memo that we presented to the Board ‑‑
827 COMMISSIONER PATRONE: Feel free to bore me, because ‑‑
828 MS STIVER: Okay. And basically it discusses the specific sections of the Corporations Act of Manitoba that speak non‑share capital corporations. That was in regard to the fact that then there are no shares so there could be no transfer of share ownership, which is part of what is defined as a change of control under the Regulations.
829 So there is no change of share ownership, so therefore there is no change of control in that respect.
830 Now, if you look at Mr. Asper now being the member, and you asked the question how is there no change of control, in a campus instructional station, of which this undertaking is one, under the license it has actually been discussed by the CRTC in Public Notice 2000‑12 that ‑‑ and I quote it in the memorandum. I won't quote the whole piece, but what is said is that:
"There was a range of opinions expressed by certain licensees of campus stations relating to how the Board of Directors of a campus station should be structured." (As read)
831 And the CRTC goes on to say:
"The extent of the interest in this particular issue stems from the fact that it is with the Board of Directors of a campus station that effective control of the station resides." (As read)
832 That supports our contention as well that three is no change of control because there is no change of shares.
833 What we would like to say, then, is there may have been a change of control under that definition in the Board of Directors, but the Board of Directors changes continuously with this undertaking, as with any other undertakings, and there is no requirement to approve a change of Board of Directors.
834 COMMISSIONER PATRONE: I guess the word that jumps out at me is "effective control" of this undertaking.
835 So my question remains, Mr. Asper, are you not ‑‑
836 MS STIVER: No.
837 COMMISSIONER PETRONE: ‑‑ in effect in control of Harmony broadcasting and has therefore, not been a change in effective control of this entity?
838 MR. ASPER: No. At the end of the day the governance of this non‑share capital corporation occurs at the Board of Directors and I do not control the Board of Directors.
839 MS STIVER: He is one of seven Board of Directors at this point and conceivably 8 or 9 or 10 if we can add more, as we hope to do. So in this case he wouldn't in any way control the Board or the company.
840 COMMISSIONER PATRONE: Correct me if I'm wrong, Mr. Capozzolo, you do not sit on the Board? You are no longer a Board Member?
841 MR. CAPOZZOLO: First I want to say that it's an excellent pronunciation of the last name, as my parents would say.
842 No, I don't sit on the Board and, if I can give my two cents, sole member basically to me means the guy who you guys call up and say "What's going on over there", like you were doing with me, now you do it with David.
843 David's name is on the licence. Harmony Broadcasting is the licensee, but there has to be someone who answers. Like a board doesn't answer to the Commission, it would be an individual, and the individual's name appears on the licence. I believe in the grand scheme of things that is what a sole member is.
844 For the Red River College licence for example, somebody's name has to be on the licence. When that individual retires or moves to another institution, somebody else's name has to be put on the licence because they are the person that is contacted if you need logger tapes, if whatever.
845 COMMISSIONER PATRONE: Were you, in effect, in control of Harmony Broadcasting before Mr. Asper and his group came along?
846 MR. CAPOZZOLO: For the most part, yes. Yes.
847 COMMISSIONER PATRONE: And now you are not?
848 MR. CAPOZZOLO: Not at all.
849 COMMISSIONER PATRONE: So logic would dictate to me that there has been a change.
850 MR. CAPOZZOLO: I'm still involved, but we have to say ‑‑
851 COMMISSIONER PATRONE: But you are no longer in effective control though.
852 Is that correct?
853 MR. CAPOZZOLO: In effective control only because I don't have as much money as Mr. Asper, and the few dollars that I had, I didn't have Board of Directors that were professionals. There were decent local individuals, but not experts in the field of law or accounting or any of that stuff.
854 COMMISSIONER PATRONE: But, Mr. Capozzolo, you just told me a minute ago that you were in effective control of Harmony Broadcasting and now you no longer are.
855 Did I not hear you correctly?
856 MR. CAPOZZOLO: And I don't mean it ‑‑ and I think that ‑‑
857 MR. CAPOZZOLO: Okay. This is a legal question.
858 MR. ASPER: Commissioner, the record has to be clear and Mr. Capozzolo's response is on the record.
859 But there is a line, there is a very technical legal line ‑‑ that I'm not sure Mr. Capozzolo completely appreciates ‑‑ about where the control ultimately resides.
860 In all of the discussions leading up to this hearing with Mr. Capozzolo, his conception of the corporate law is actually not the way it actually is, not the way the law is actually constructed as to how the concept of corporate control resides.
861 So again, if I can pass it over to Lisa, but the fundamental issue is that once you appoint the board, the board is in control of the corporation.
862 MR. LEWIS: If I could just ‑‑
863 COMMISSIONER PATRONE: Sorry, did you want to say something, sir?
864 MR. LEWIS: Yes, please.
865 If I could just add something, the fundamental problem that we assessed over the last few months as we were trying to make things right and go forward and consult with the Commission, is the fact that ‑‑ and getting back to the central compliance issue ‑‑ there probably was at times no effective control by board because the Board Members were either (a) inactive, some of their memberships had lapsed, and weren't being apprised of the operating problems.
866 So we came at is as to what does Manitoba law say, first of all, vis‑à‑vis the effective control. We went back to the source of the Campus Radio Policy, the Commission's circulars, the Ownership Policy, and in putting this new board together we attempted to make it right and conform to the Regulations.
867 COMMISSIONER PATRONE: Counsel may have something to say at this point.
868 MR. McCALLUM: Could I ask a few questions in this area, Mr. Chair?
869 THE CHAIRPERSON: I want to go first, if you don't mind.
870 MR. ASPER: Can I just add one thing on there?
‑‑‑ Laughter / Rires
871 MR. ASPER: Everybody wants ‑‑ if I can just add one other part to this, and you may want to raise this in due course, we hope to incorporate this actually as part of the course itself.
872 Being a Director, being a member of the Board of Directors, whether it's this company or another company, brings with it a duty of due diligence and a duty of inquiry and a duty to know what is going on with the corporation for which you may personally be held liable. That wasn't happening.
873 If you bisect the issue before the Commission today, if you accept Mr. Blake's position, or Mr. Kovnats' position, there was absolutely no corporate governance or due diligence. Zero. None. Didn't even know what was going on, by their own words.
874 If you accept our position you are pretty close to the same thing. And what we have come to you today is to say we have fixed it and we have proper corporate governance. I don't control the board. We have a capable, credible board that understands the obligations of corporate governance.
875 COMMISSIONER PATRONE: And yet we are here to examine whether or not, among other things, there has been a change in control. You yourself said you believe that it appears that there has been and when you examine Mr. Capozzolo's role under this new arrangement, he is being put in the function of mentoring and training students and, as far as I can see, he is your main on‑air talent.
876 Is that correct?
877 MR. ASPER: I think that's true. But bear in mind ‑‑ and everybody focuses on the on‑air part because it's the public part. I think that's maybe two or possibly three of 10 modules that will be taught in this program.
878 You know, Mr. Capozzolo will not be involved in broadcast sales, teaching or admin or traffic or production, or the other parts. I mean there is a discrete area.
879 COMMISSIONER PATRONE: I know our Chairman wants to weigh in as well as our legal counsel, so I'm going to allow them to do this at this point.
880 Thank you.
881 I have more questions afterwards.
882 THE CHAIRPERSON: Thank you. Thank you for letting me interrupt as well.
883 I have always been taught to follow the money and after sitting on the BCE hearing as well control and effective control, it begs the question ‑‑ and Ms Stiver may be talking about the legal Act in the Province of Manitoba that I'm not cognizant of, and I know our counsel will get involved as well ‑‑ but do you want us to believe, Mr. Asper, that Tannis Kircher, Travis DeKoning and Michelle Norris, notwithstanding their excellent credentials, have as much power and authority to hire and fire Mr. Wortley as you do?
884 MR. ASPER: I will tell you, Mr. Chairman, that just before we resumed the hearing this afternoon I collected the board to consider a very important urgent matter and was given specific direction by that group and took it on a very serious issue that touches on the very hearing today.
885 So yes, I do believe that and I am prepared to abide by the direction of the board.
886 THE CHAIRPERSON: Okay.
888 MR. McCALLUM: Yes, thank you.
889 Just a couple of questions about the legal control. I appreciate the opinion that was attached by Ms Stiver.
890 Do you have the Radio Regulations section 11 open by any chance?
891 MS STIVER: Yes, we do.
892 MR. McCALLUM: You did 11(4) which talks about:
"a change by whatever means of the effective control of (an) undertaking."
893 And you also spoke of 4(b) and following which deals with share corporations.
894 Is that right so far?
895 MS STIVER: Yes, I believe so. We are just trying to find it. Sorry.
896 MR. McCALLUM: Sorry. It's in the green book, it's not in the red book. Sorry about that, but it is the same and the other regulations.
897 This is for the benefit of Mr. Lewis. If you look up for example the Broadcasting Distribution Regulations you will find a provision that is similar.
898 MR. LEWIS: Okay.
899 MR. McCALLUM: You will find it at pages 142 and 143 of the green book, Mr. Lewis.
900 MR. LEWIS: Right.
901 MS STIVER: Thank you.
902 MR. LEWIS: Yes...?
903 MR. McCALLUM: So (b) and following deal with share corporations, but:
"(a) a change by whatever means of the effective control of its undertaking"
904 ‑‑ does not address whether it's a share corporation or a membership corporation.
905 Is that correct?
906 MS STIVER: Yes.
907 MR. McCALLUM: Okay.
908 Effective control of a licensee is defined in 11(3). Right?
909 MR. LEWIS: Yes.
910 MR. McCALLUM: And it has two or three possible definitions. One is:
"a person controls, directly or indirectly, other than by way of security only, a majority of the voting interests of a licensee;
(b) a person has the ability to cause the licensee or its board of directors to undertake a course of action;
(c) the Commission, after a public hearing of an application for a licence, or in respect of an existing licence determines that a person has effective control and sets out that determination in a decision or public notice."
911 MS STIVER: Yes.
912 MR. McCALLUM: Okay.
913 In (a) the words "voting interest" is then defined in the previous subsection, which is (2).
914 Is that correct?
915 MR. LEWIS: Yes.
916 MS STIVER: Yes.
917 MR. McCALLUM: 2(a) says:
"the person is, directly or indirectly, the beneficial owner of the voting interest; or
(b) the person, by means of an arrangement, a contract, and understanding or an agreement, determines the manner in which the interest is voted..."
918 It excludes solicitation of proxies.
919 That's correct so far?
920 MR. LEWIS: Yes.
921 MS STIVER: Yes.
922 MR. McCALLUM: Okay.
923 And then voting interest is a term that itself is defined, correct, in 11.1(1)?
924 MS STIVER: Yes.
925 MR. LEWIS: Yes.
926 MR. McCALLUM: And (b) says:
"a corporation without share capital, means an interest that entitles the owner to voting rights similar to those enjoyed by the owner of a voting chair."
927 MS STIVER: Yes.
928 MR. McCALLUM: And (d) says ‑‑ I will read (d):
"a not‑for‑profit partnership, trust, association or joint venture, means a right that entitles the owner to participate directly in the management of it or to vote on the election of the person to be entrusted with the power and responsibility to manage it..."
929 MS STIVER: Yes.
930 MR. McCALLUM: Okay.
931 So explain why the provisions do not apply in the case of a membership corporation.
932 MR. LEWIS: Well, you have to read the effective control provision ‑‑ I lost my way.
933 MR. LEWIS: You have to read it in concert with (3)(b):
"a person has the ability to cause the licensee or its board of directors to undertake a course of action or determines that the person has such effective control..." (As read)
934 I'm sorry. I'm sorry:
"...a person has the ability to cause the licensee or its board of directors to undertake a course of action..."
935 Mr. Asper does not have that ability with this Board of Directors. He may be the sole member, but he doesn't have the power ‑‑
936 MR. McCALLUM: He has the power to name all the Directors because he is the member ‑‑ he is the sole member. So if it goes from one sole member who has the power to name the entire Board of Directors to another sole member that has the power to name the entire Board of Directors, how is that not a change of effective control?
937 MS STIVER: What we did in this case is we have the board changed before the sole member had changed. The board was appoint ‑‑ I don't want to call it a vacuum, but there were virtually no board members. So first we constituted the board. The board then held meetings and approved further board members and then the membership was changed.
938 MR. McCALLUM: But it remained a sole member corporation all the time. Right?
939 MS STIVER: All the time as in the operative time period, for the last few months.
940 MR. McCALLUM: I'm sorry, it still remained a sole member board.
941 MS STIVER: Sorry, yes. It was not always just a sole member, but for the operative time we are talking about, yes.
942 MR. McCALLUM: So your view is that the naming of board members by the sole member prior to the change of the sole membership from Mr. Capozzolo to Mr. Asper is sufficient to not engage our regulations.
943 Is that your view?
944 MS STIVER: I would believe so, yes, as it has been done in the past with this same undertaking.
945 MR. LEWIS: And with other community radio stations. That's the policy, the Campus Radio Policy.
946 Certainly it is very well defined in the policy as to how board members must be replaced, the nature and the qualification of the board members, but nowhere in the policy or in this Regulation does it say that in the campus stations does prior approval have to be made ‑‑ obtained from the Commission in electing or appointing new members of the board.
947 MR. McCALLUM: Well, I think that's an issue the Commission is going to decide, so I think we will leave it at that and my perhaps let you resume questions.
948 COMMISSIONER PATRONE: Thank you, counsel.
949 Relative to that, how are new members going to be appointed going forward?
950 Will you, Mr. Capozzolo, be continuing to do that function as you did before YO Radio came along?
951 MR. CAPOZZOLO: No. I have absolved myself of any administrative, board or any responsibility. I just want to be a talent now.
952 MR. ASPER: And I made it clear, Commissioner Petrone, that when we first initiated discussions with the Commission and this issue arose ‑‑ and I will just be straight up.
953 The idea was to try to rescue and to try to get some stability quickly and to try to move forward and resume its operations and do all the other things that we had to do. And I said to Commission staff of the time that ‑‑ although I don't want to trigger another hearing, but I'm happy to expand the membership and I'm happy to ‑‑ you know, once we get on our feet, if you give us the opportunity to do that, to make this maybe look and feel a little bit more like what you want but, you know, the house was on fire.
954 COMMISSIONER PATRONE: I can appreciate that. And as long as we are being straight up, it sounds like you have done contortions to try and get around this stipulation in order to change control without having to say that you have changed control.
955 MR. ASPER: Well, we started by going and asking the Commission about what to do here and it was part of our due diligence as to whether we were going to wind up with a change of control hearing versus whether there was a mechanism of survivorship, organic survivorship. That's what we hoped we were trying to achieve.
956 COMMISSIONER PATRONE: I'm going to ‑‑
957 MR. LEWIS: I'm sorry, if I may jump in?
958 COMMISSIONER PATRONE: I'm sorry, please continue.
959 MR. LEWIS: Well before this hearing was called we apprised the Commission ‑‑ we wrote to the Commission and apprised them specifically of the Board change, the methodology being used.
960 The one thing we were very careful of was ‑‑ and this was in discussions with Commission staff ‑‑ not to resume broadcasting until there had been consideration of these changes.
961 But we were very clear that these were the things that were being put into place because directors, former directors who are apprised of their potential financial and other liability, did not want to be directors and were dropping off. Directors' terms had expired as well. So in order to resuscitate the corporate structure in line with the Act, these were undertaken.
962 But we also wrote to the Commission and there is a letter on file from myself to the Secretary General advising that in other situations where there had been a collapse ‑‑ and I cited a number of cases, specifically the Dancy Broadcasting case a number of years ago, where in that particular case the sole shareholder had died and on his deathbed he had transferred he shares to other family members, and because he was gone, passed away, and this couldn't be undone, the Commission looked at it and approved it after the fact through an expedited process.
963 What we did here was we wrote to the Commission and said these of the things that are being put in place in trying to become ready to, in the dialogue with the Commission, resume broadcasting. And if it suited the Commission we believed, in our opinion that we sent to the Commission, that this could be done on an expedited basis similar to the Dancy case.
964 COMMISSIONER PATRONE: I'm just curious, given what you had to go through in order to try to meet stipulations before your radio could initiate this process how you are going to go forward in cases where there are changes in the board or reappointments or that sort of thing.
965 Have you figured that part out yet?
966 MR. LEWIS: Well, from a governance point of view I think Ms Stiver can comment on that.
967 But going forward the Board Members will ‑‑ there will be elections on a regular basis. We anticipate that in the future, because there are, with campus community radio, specific categories of people that must be on the board. For example, a student. What will happen in the future ‑‑ and this happens with all campus community stations ‑‑ students graduate and they are no longer eligible under the policy, under the 1992 policy, to serve on the board. At that point the stations don't back to the Commission. A search committee of the board or the people within the stations seek out someone to replace them and they are elected for a fixed term. That's how it works.
968 I think, as I say, the '92 policy is pretty clear on that. I know in '91 and '92 there was a series of Public Notices because people were coming to grips with the fact that changes were coming down in the policies as to the composition of these boards and the mechanics are not simple.
969 I'm sorry to go on for so long.
970 COMMISSIONER PATRONE: That's okay.
971 Further to the composition of the board, and the Chairman alluded to this earlier with respect to your stature, Mr. Asper ‑‑ I know that you say earlier today as a matter of fact there was an issue brought before to your attention by the members of the board and so forth. But with all due respect, you would be the elephant in the room, wouldn't you, as far as your stature, as far as your background.
972 What guarantees does the CRTC have that board members will be given the leeway to express themselves and vote based on their beliefs, experience and values rather than by pressures to ratify decisions made by yourself?
973 MR. ASPER: I want to be careful in this answer because if ‑‑ there is some idea that because I walk into a room people clam up or people won't say what they think, and it's just false. I encourage you, I encourage everybody ‑‑ Mr. Menzies knows this ‑‑ come into my life and feel the dissent.
‑‑‑ Laughter / Rires
974 MR. ASPER: That's all I get in my life, and nobody seems to shy about giving it to me.
975 COMMISSIONER PATRONE: I'm feeling a little bit of it now.
976 MR. ASPER: Yes. You haven't heard it yet.
977 I think that you can't underestimate the intelligence and the willingness of the people that we have recruited. I don't want you to underestimate my enjoyment of a good solid debate and discussion. I can't force people how to vote, they are independent‑minded people.
978 And I'm telling you, there was a serious issue today where Ms Kircher and Ms Norris spoke most vociferously and told me exactly what I was going to do, and I did, and I value the advice.
979 COMMISSIONER PATRONE: That allowed you to have something to speak to before this Commission.
980 MR. ASPER: It was coincidental, but it's a good example.
981 And I can tell you that the issue, how it was resolved, was contrary to my commercial interest.
982 COMMISSIONER PATRONE: As sole member, what powers does that titled give you, either over the board or any other aspects of involving Harmony?
983 MR. ASPER: To be honest, once the board is constituted I guess ‑‑ I'm not sure what it gets me. I'm not sure what it gets me, because the board then is ‑‑ the idea is the board will regenerate and create its own election and nomination process.
984 COMMISSIONER PATRONE: Could you endeavour to find out what that entails and inform our staff?
985 MR. ASPER: Do you know?
986 MS STIVER: One thing I think, and Franc spoke to it earlier, is I believe then David would be the person responsible for what I'm told there won't be any future CRTC issues. But he would be named likely as the member in those circumstances. But beyond that we can put something together and look at it.
987 Really, we have focused much more on the composition of the Board of Directors and that has been our focus, but we can look into this.
988 COMMISSIONER PATRONE: How many students are on the board right now?
989 I'm sorry if you have already answered that, but do you have any?
990 MR. ASPER: We asked Mr. Penner to nominate one until we have got through this process to determine whether we were actually going to be an ongoing licensee. And if that becomes the case, we intend to bring broadcast program students more onto the board.
991 COMMISSIONER PATRONE: That would be one out of seven?
992 MR. ASPER: More than that. I think more.
993 COMMISSIONER PATRONE: No, I mean currently.
994 MR. ASPER: Oh, currently, yes. Yes.
995 COMMISSIONER PATRONE: Because of course you know that among the stipulations are that students have adequate representation on that board.
996 So currently you would be not in compliance as far as that issue is concerned.
997 MR. ASPER: I'm not sure if having one puts us offside strictly speaking. I can tell you that ‑‑
998 COMMISSIONER PATRONE: One out of seven. I would think that ‑‑
999 MR. ASPER: I'm not sure what "adequate" means.
1000 MR. CAPOZZOLO: The campus regulations say you should have at least one member that is community at large, somebody representing the student body, somebody representing volunteers, representative from the school.
1001 So the Commission actually recommends six, but at least one from each one of these different areas.
1002 COMMISSIONER PETRONE: I'm going to shift gears a ‑‑
1003 MR. ASPER: Again, the difficulty is that with no program it is very difficult.
1004 I can assure you, though, that the size of the board will expand and the number of students will grow.
1005 COMMISSIONER PATRONE: I think I touched on this and you touched on this as well.
1006 Could you give me some more information about the nomination process in terms of board members, appointments, selections, by whom and for how long?
1007 Do you have that information?
1008 MR. ASPER: Well, we had ‑‑ actually, I sat down with Brian Wortley and with Ms Stiver and we evaluated what kind of people we might need in the first go round of appointing new directors, the kinds of skills we might need. We determined that we needed some financial strength, some legal strength.
1009 And given the interrelationship with the students Ms Norris would bring some ‑‑ or we needed some HR and some sort of administrative strength. Ms Norris had already had some experience with the station, was known to Mr. Wortley.
1010 Mr. DeKoning is known to me and actually was a fan of the station, was well aware and had asked me, you know, where was it. These were people who were interested.
1011 Mr. Penner represented Ms Kircher as a student representative and we felt looking at it that that would suffice. We met, discussed what was expected and what was going to be going forward and we felt that the constitution of this board would be sufficient to get us going.
1012 COMMISSIONER PATRONE: I'm going to shift gears a little bit here and just go into some history.
1013 On page 3 of your statement today, Mr. Asper, you say:
"We both made an approach and were approached to determine whether there was any potential for us to assist in rescuing this community resource." (As read)
1014 Who exactly approached who and under what terms was a deal struck? And is there a written statement or contract between you and Mr. Capozzolo?
1015 MR. ASPER: No. This issue has been going on for quite a while and I can't specifically recall who or when the first discussion arose about the distress of the campus radio station of Flava 107.9 in Winnipeg. It was well before the conversation, the first conversation, with Mr. Capozzolo. I was intrigued by it because, as I said in my comment, I was actually listening to this station more than I was listening to other stations.
1016 I don't recall exactly how the first conversation with Mr. Capozzolo arose. Mr. Wortley I think, who had ‑‑ Mr. Wortley and I had been talking for quite some time about Flava and I think Mr. Wortley may have gone to Mr. Capozzolo, or he may have made a call to us first, I'm not exactly sure.
1017 I do know that there were some over last summer, other than Mr. Capozzolo, who spoke to me about this radio station and I got drawn in. I can't give you all the ‑‑
1018 COMMISSIONER PATRONE: In what way did you get drawn in?
1019 Did you believe this would be a licence that you could try to acquire?
1020 MR. ASPER: Or somehow rescue. I didn't even understand ‑‑ to be honest, going into it, I didn't even understand what the legal construct of a campus instructional radio station was, even though I had worked many years ago at CJUM.
1021 But it was an intriguing opportunity. I think it's an ‑‑ done well, I think this is a really interesting idea.
1022 COMMISSIONER PATRONE: I want to ask a question regarding the role of students. My colleague, Mr. Menzies, has touched on this as well.
1023 Specifically the role of students in all aspects of the broadcast operation, because it appears that, Mr. Capozzolo, you are the main source of talent, on‑air talent, and that you will be involved in pretty much all aspects of the programming area of the station.
1024 Where do students actually get any hands‑on experience here?
1025 MR. CAPOZZOLO: When the students deal with me it's only because they are requiring or fulfilling their requirement to be on the morning show.
1026 They will have an instructor. I am not the head instructor, I am the facilitator for the morning show practicum or practical experience. They will have a lead instructor and there will be also guest instructors along the way that, you know, some might be salespeople, some might be Commission people, some could be ‑‑ that type of thing.
1027 So my only component is when they show up on the morning show.
1028 COMMISSIONER PATRONE: The representative of the college, sir, are you comfortable with that?
1029 MR. WORTLEY: I am.
1030 COMMISSIONER PETRONE: I believe those are my questions, Mr. Chair.
1031 Thank you.
1032 MR. WORTLEY: Mr. Petrone, if I could just add ‑‑
1033 COMMISSIONER PETRONE: Go ahead, Mr. Wortley.
1034 MR. WORLEY: ‑‑ with regard to the curriculum and the program, because the lure of this program is on‑air.
1035 Here is the key, and I can't stress it hard enough here, because I have been in the business for 26 years, I have seen what has happened to the radio industry with development of on air, with development of sales people, production people. Right now, there is a real need in western Canada for traffic managers.
1036 The one woman that we had hired to be part of our group was taken away from us, was stolen away by a big company to do traffic. So I know there is a shortage of traffic people. The key here is that when a student enters this school and this course probably the first thought was to be on air.
1037 But once they get inside and they get into real time in terms of inside of a radio station, it is not simulated, it is not internet, but now they get exposed to creative, they get exposed to production and perhaps they may not want to go on air. They may find a career path in production would be interesting to them.
1038 This is what I find is crucial is that there is now an environment for these young people to learn radio, trained by professional broadcasters, not theory, not what is in a textbook, but actually what happens inside a commercial radio station.
1039 I have seen too many practicum of students coming into radio stations, that I have not managed but I have been involved in, and they end up getting coffee and doughnuts for program directors. And we have to look for jobs for these kids to do, because it is really difficult for them to integrate into a commercial radio station just by sitting there and watching, this is how you do it.
1040 So instead, this concept of this campus instructional licence of bringing a student in the door and they now can experience the real world of radio. It may not be what they set out to be, but this is what it is like. So when they leave our course in 10 months they are market ready. This is not a young student coming out with a diploma from somewhere and saying, I want to be on the air. They are market ready. They are market ready in sales, production and they are trained by professional broadcasters.
1041 We have overlooked this and I want to reinforce this with the Commission that this is one venue that young people will have a chance to learn the business.
1042 We have voice tracked all nights, we have cut staff, we have gutted news departments and sports departments. I am not saying everybody but we have, and I am talking about us as an industry, have been dictated by an ROI, by shareholders and a board of directors and it is appalling.
1043 Because now what we end up doing as broadcasters is steal talent from other broadcasters.
1044 COMMISSIONER PATRONE: But with a professional like Mr. Capozzolo as your morning man and your main source of on‑air talent, it sounds like you are trying to put as professional a product on the air as possible. So my question would be, how do students get a chance to make their mistake on air and still allow you to do what you want to do?
1045 So in other words, will students get a chance to do the sort of things that they need to do in order to become professional broadcasters.
1046 MR. WORTLEY: Right. And this is the venue that we are offering them. They will do an on‑air shift, they will do a ‑‑ they will make mistakes, absolutely they will make mistakes. But what they will be allowed to do is to develop as an announcer and develop their persona. What they will see and learn from Mr. Capozzolo is how to read a log, how to setup a song.
1047 He will be cueing them up with interviews, he will be teeing them up for doing weather, traffic reports, news reports. They will sit in that studio and watch him operate and they will learn firsthand of what it is like to be a morning announcer, not to mention do a three‑hour talk show with very little commercial breaks.
1048 I just think the concept was fabulous. And I contacted Mr. Asper. I am sure he doesn't remember all the details, but I went to David and I said, there is something here. And he already know about Flavin. And he said, do you listen to it? And I go, I listen to it too. There is something about it, it just has a ‑‑ I would hate to see this go away, for our radio industry.
1049 I am sorry to go on.
1050 COMMISSIONER PATRONE: That is all right, that is okay.
1051 MR. WORTLEY: But I am very passionate about this side of the business.
1052 COMMISSIONER PATRONE: Your passion, I can hear it.
1053 MR. WORTLEY: Thank you.
1054 COMMISSIONER PATRONE: So thank you for your answers.
1055 Those are my questions, Mr. Chairman.
1056 THE CHAIRPERSON: I think there is still some follow‑up questions that some of us have.
1057 I want to come back to control in law and control in fact. I think I heard you say, Mr. Asper, that the size of the board will grow and the number of students on the board will grow.
1058 I didn't hear you say anything about the size of the sole member expanding beyond a sole member.
1059 MR. ASPER: I have been very clear that, and I said it from the outset, that I was quite happy if we were successful in reviving this operation to look at expanding the membership. But I didn't want ‑‑ and until we get some clarity on whether that is going to wind‑up in a change of control, unless it is only one other member, I think we just need some direction on that.
1060 But I am happy to look at increasing the membership. As I say, what we were confronted with was a crisis. And we went to the Commission staff and we tried to figure out a way to work within the rules and to get the flames out and to get this thing back and complying with the rules. So yes, it will look different over time.
1061 THE CHAIRPERSON: Would you accept, if the Commission did award the transfer of licence or the approval, as a condition of licence to increase the sole membership beyond just yourself?
1062 MR. ASPER: I would. There would have to be some shape around that. I have been involved in other not‑for‑profit corporations where you can actually take it over, there can be hostile takeovers. So I would be interested in what the Commission has in mind there.
1063 THE CHAIRPERSON: I am going to jump back to the finances. And I guess Louise Nebbs put on the record the fact that the liability outstanding was $981,206. And I have actually got the balance sheet in front of me here and I always shake when I see pink pages, because they are confidential and I can't quote numbers, but you put the number on the record, so that is fine. And when I look at the page I see a whole host of assets and liabilities.
1064 Can you tell me post‑transfer, if it comes to pass, what this balance sheet in front of me will look like? There are all sorts of assets and liabilities on here and there is obviously a huge deficit on here as well. We talked about the huge management fees that are payable.
1065 MS NEBBS: Yeah.
1066 THE CHAIRPERSON: What gets wiped out and what gets paid?
1067 MS NEBBS: We are honestly going through that process and it isn't complete. So I don't know right now what of these liabilities will actually be paid in full versus some settlement reached. We know the amount paid to Mr. Capozzolo. We know as well there are certain liabilities that weren't recorded.
1068 My other variable that is preventing me from answering that question is the costs that we are incurring right now. I have prepared a number of cash flow forecasts in terms of the start‑up costs of rescuing Harmony and resuming broadcast and those numbers keep growing.
1069 So that forecast I have revised it several times and it is standing at approximately $500,000 right now, the cost to get Harmony from the state it was when Mr. Asper first became involved to the point where it will be broadcasting again.
1070 THE CHAIRPERSON: But there are some long‑term debts on here called deposits I guess, loans and advances and that sort of thing. Will they all be paid off?
1071 MS NEBBS: Some of them will be paid in full. In other cases, such as the case of Mr. Capozzolo, we have reached an arrangement where it will be partially paid.
1072 THE CHAIRPERSON: And that arrangement is what we talked about earlier?
1073 MS NEBBS: Pardon me?
1074 THE CHAIRPERSON: That arrangement is what we talked about earlier?
1075 MS NEBBS: Yes.
1076 THE CHAIRPERSON: Okay. I see on here as well "value of a CRTC licence" under assets. Who set that amount of money and how did that come about?
1077 MS NEBBS: These are the financial records that were prepared by the company's accountants. In some cases we are not able to find the supporting documents, we didn't necessarily ‑‑ we weren't able to audit or review. In that case my recollection was, and Dave can correct me, that that represented certain payments Mr. Capozzolo made when he became the sole member, including professional fees.
1078 Dave, is that correct?
1079 MR. DUBNICOFF: That is pretty much correct, yes.
1080 MS NEBBS: So those were professional fees that Mr. Capozzolo incurred.
1081 THE CHAIRPERSON: So it is not good will for the value of the CRTC licence?
1082 MS NEBBS: No. No, it was professional fees incurred.
1083 THE CHAIRPERSON: Okay. There is also a value here on a broadcasting system, which I gather is in Mr. Capozzolo's apartment?
1084 MS NEBBS: Yes.
1085 THE CHAIRPERSON: Will he be compensated for that?
1086 MS NEBBS: And that is the antenna. Pardon me?
1087 THE CHAIRPERSON: Will he be compensated for that?
1088 MS NEBBS: No, they are in storage in Mr. Capozzolo's apartment. Mr. Capozzolo also has assets with a professional storage company, so these are assets of the company.
1089 THE CHAIRPERSON: Okay. And they won't be sold basically, they will remain where they are?
1090 MS NEBBS: They remain the assets of the company.
1091 THE CHAIRPERSON: I want to go back to the contract between Robertson College and Harmony.
1092 I have the contract in front of me here and I am trying to understand the term of this agreement. And it is article 12 on page 9, and obviously written by a lawyer, there is five parts to it and a lot of "subject tos." Can someone provide me with just a synopsis as to what are the outs by each of the parties with regard to this agreement, who can trigger what and when?
1093 MR. ASPER: We are just retrieving the document. I am sorry, which clause were you referring to?
1094 THE CHAIRPERSON: It is article 12 on page 9. Article 12.01, there is five parts; a, b, c, d and e.
1095 MR. ASPER: It looks to me like it is 90 days notice generally and 30 days on breach.
1096 MS STIVER: Sorry. And provided that there is no classes running at the time.
1097 THE CHAIRPERSON: So between September and June, 10 months of the year I think someone said, September and July, whatever it is, school is running so you can't trigger that until July effectively, is that right?
1098 MS STIVER: Well, and Brian Wortley might clarify this, but I believe that it runs throughout the year though, right?
1099 MR. WORTLEY: I am sorry, what was that, Mr. Chair?
1100 THE CHAIRPERSON: Well, I was told that you can't terminate this agreement during the school year.
1101 MR. WORTLEY: Our agreement is that you cannot terminate the agreement as long as there is an intake in process. You have to wait for an intake to complete the final process before that could be triggered. In other words, if there is an intake in place halfway through the quarter you couldn't trigger that out clause until the complete course was completed.
1102 THE CHAIRPERSON: But there is an intake every quarter.
1103 MR. WORTLEY: Right.
1104 THE CHAIRPERSON: And students register in advance of that quarter.
1105 MR. WORTLEY: Correct.
1106 THE CHAIRPERSON: So there is always students that are on the hook for the next quarter sometime during the quarter.
1107 MR. WORTLEY: Right.
1108 THE CHAIRPERSON: So how does someone trigger this without impacting the students that have either registered already or, as you are saying, you can't do it if they are already in the program?
1109 MR. WORTLEY: That is right. It could not be terminated while there are students in the nine‑month course, it doesn't matter where they come in.
1110 MR. ASPER: But if you have no applicants for the intake that was due, you have to complete what is there and then you can terminate is my understanding.
1111 THE CHAIRPERSON: So it is basically if there are no applicants for a quarter this agreement can be terminated?
1112 MR. ASPER: I think that is the way it reads.
1113 THE CHAIRPERSON: And as long as there is one student that has applied you can't?
1114 MS STIVER: Well, arguably, the 90 days is your restriction there. So, arguably, if there even was one student and there was a class running you could give longer than 90 days' notice and it would be terminated between the parties, in agreement though, but the 90 days is stipulated there for when there are no classes running.
1115 Arguably, it would be longer then, you could give a year's notice if you wanted to and that would give everybody time to find a transition out plan.
1116 THE CHAIRPERSON: Now, if there is no program would that put your licence conditions in jeopardy?
1117 MR. ASPER: Yes.
1118 MS STIVER: Yes.
1119 THE CHAIRPERSON: Where in this contract does it say that, at the same time as you notifying the other parties, the other venture as you call it, that you are triggering this termination. You are also at the same time informing the CRTC that basically you are shutting down is what I gather it is going to be.
1120 MS STIVER: No, sorry. It could also be that an arrangement is being made with another school, for instance.
1121 THE CHAIRPERSON: Okay.
1122 MR. ASPER: Oh, absolutely. It wouldn't necessarily collapse automatically, we would obviously look for other arrangements.
1123 But are you looking from the regulatory perspective of knowing that the termination provisions have been triggered?
1124 THE CHAIRPERSON: First of all, the answer to your question is yes.
1125 MR. ASPER: I know you ask the questions, but ‑‑
1126 THE CHAIRPERSON: Yes. The answer to that question is yes. But the thing I am looking for here as well is if the Commission is to approve this, obviously this contract becomes part of that approval process as well.
1127 MR. ASPER: Right.
1128 THE CHAIRPERSON: And if it is to be amended by some other agreement with some other college or institution or something, I think it behoves the Commission to approve that as well and make sure that it isn't being watered down or, in some other way, reshaped.
1129 MR. ASPER: Right.
1130 MS STIVER: Yes.
1131 MR. ASPER: If you would like us to provide alternate language requiring notification to the Commission with respect to those provisions, we would be happy to do so.
1132 THE CHAIRPERSON: Okay. And in your clause 12.01(d) you talk about the 30‑day breach with a 30‑day remedy period. If someone complains to the CRTC about the terms and conditions of this not being upheld and we contact I guess yourselves, the ventures, with regard to a potential breach in here. How would that evolve? If after 30 days there was no remedy, would one party automatically be able to walk away from this agreement?
1133 MR. ASPER: If I can just have a moment.
1134 MS STIVER: Sorry, just to clarify your question. The question is if one party breaches the agreement can that party walk away from the arrangement or can the other party walk away from the arrangement?
1135 THE CHAIRPERSON: Can either party? And I am using the CRTC as an example of us coming to you and saying we have had a complaint from somebody, a student, Robertson College, whomever, with regard to the way you are administering this contract and you fail to remedy.
1136 MS STIVER: So, in your scenario, Harmony has done something that someone is complaining of and Robertson ‑‑ because this is an agreement between Robertson and Harmony, so Robertson would have to then put Harmony on notice that they have breached the agreement.
1137 THE CHAIRPERSON: Right.
1138 MS STIVER: Then Harmony would have 30 days to remedy the breach. If they haven't remedied the breach within that time Robertson, under this contract, has an obligation if they wish or they have a right to then carryon without Harmony involved and fulfil their obligations under the agreement to the students.
1139 THE CHAIRPERSON: But the location of this course is not in Robertson College, it is standalone, separate, rented facilities by Harmony or whomever.
1140 MS STIVER: Yes.
1141 THE CHAIRPERSON: So how could they continue this process on when they don't have control of the infrastructure, if I can call it that?
1142 MR. ASPER: Well, I suppose Robertson could build its own. Let's take that scenario and that is how they are going to deal with it. I think it would be fair for the Commission to want to know whether those provisions have been triggered and we would be happy to live with that.
1143 THE CHAIRPERSON: Okay. And you have no problem with adding a clause in here that would basically inform the CRTC if the terms were ever invoked?
1144 MR. ASPER: Absolutely.
1145 MS STIVER: No, we have no problem. Of course, I would make sure Robertson was okay with that as well, but we would have no problem with that.
1146 THE CHAIRPERSON: Robertson, would you have any problem with that?
1147 MR. PENNER: No, that is fine.
1148 I mean, the perspective we look at this is from, the 90‑day clause, is from a student perspective as well, is that we are obligated through our licence to look after a student and so the 90‑day clause, because the program is continuous intake so to say, every quarter another group comes in, is that we have to ensure that any student that starts with us completes with us.
1149 And so it would definitely mean that there would be a planned ending, in which case we would stop recruitment, so the students in the program would be able to complete their program. With other organizations we have health programs running in Beausejour, St. Pierre and so on which are not at our location and, as well as at our location, so we are acquainted with running programs off campus.
1150 THE CHAIRPERSON: Thank you, those are my questions.
1151 Mr. Menzies.
1152 COMMISSIONER MENZIES: Thanks.
1153 I just want to look back at a couple of things. I know some of this has been filed with us, but it is a public hearing. Mr. Asper, in terms of your financial commitment to this, is it an ongoing commitment, is it budgeted, scheduled for years ahead?
1154 I am just trying to get back to the board issue in terms of that, that if you are ‑‑ and I will have another question regarding the business structure coming up ‑‑ if you are, at least in the short‑term, the sole source of funding for this is that funding going to be renewed on an annual basis and what happens if you get hit by a bus?
1155 MR. ASPER: Yes, there is a business plan which has a full cash flow analysis of what we think this project is going to need. And I am hopeful that there will be a repatriation of the capital that it has taken to get it back up and running. And I do have a commitment to continue to fund it. My hope is that this can become a self‑funding operation as soon as possible.
1156 COMMISSIONER MENZIES: And I just want to take that back for clarity on the relationship with the board. And I accept what you say in your undertaking to take direction from the board and that sort of stuff.
1157 But if you are the sole or the necessary source of funding for the operation for a while isn't there, as much as you might oppose it, don't you fear a fairly, how do I put this, an almost systemic endemic process with board members that they will have to say, well, okay David is being really good about this and he is taking lots of direction, but we really don't want to push it too far because after all, I mean, he is the guy who is propping this thing up?
1158 MR. ASPER: Let me approach it a different way. I think a business person would look at me with the capital that I am proposing to inject into this project where I don't have control of the board and send me straight to a psychiatrist.
1159 COMMISSIONER MENZIES: Yeah, there's that option (laughter).
‑‑‑ Laughter / Rires
1160 MR. ASPER: Because you may think that there's this suasion and you may think that there's this endemic sort of moral thing. And you may be right but I'm taking a huge, huge, financial leap of faith if you are right.
1161 And I understand what you're saying. People are going to say, you know, he's funding it and we should we defer to him. I think that actually puts a higher obligation on me to work cohesively with the group knowing that on the turn of a dime the group could turn.
1162 COMMISSIONER MENZIES: And my concern isn't so much for the present. Is it sort of are there guarantees in place around this for down the road? Are there written documents, written commitments, that sort of stuff?
1163 Because you know, as much as we can all say ‑‑ and this is our mood at the moment, it's optimistic and it's gung ho ‑‑ relationships break down. You know, people feel differently a few years from now and that sort of stuff. And then you know we're looking at, you know, seven‑year license periods and that sort of stuff.
1164 And you are asking us to approve a rescue of something. And you know, I mean frankly if we do I don't think anybody wants to be back here five years from now rescuing it again because something has broken down.
1165 MR. ASPER: Yes, least of all me because that will mean that we've failed.
1166 COMMISSIONER MENZIES: So are there written documents in place, written commitments in place in terms of that, I mean for like a seven‑year license term or...?
1167 MR. ASPER: In terms of providing funding?
1168 COMMISSIONER MENZIES: Yeah.
1169 MR. ASPER: No. There's no written agreement at this point.
1170 COMMISSIONER MENZIES: So, the funding you would provide would be at the board's request perhaps or management's request on an annual basis from ‑‑
1171 MR. ASPER: No.
1172 COMMISSIONER MENZIES: ‑‑ budget meetings or budget approval process?
1173 MR. ASPER: What we decided at the last board meeting was that we have been working obviously on draft business plans and that we would await the outcome of this hearing before finalizing it.
1174 It is a multi‑year plan. It is a plan that I will obviously have to review. But given that I will be providing a major source of the capital I will not be present during the voting or discussion of the actual business plan.
1175 And it will be a multi‑year plan. It's not a contract but it will be a multi‑year plan. And it will provide for the capital requirements of the company.
1176 COMMISSIONER MENZIES: So let me get this straight. You have told the board to go ahead and do up a budget and you're good for whatever they need you to be good for?
1177 MR. ASPER: Oh, no, no, no.
1178 COMMISSIONER MENZIES: Okay.
1179 MR. ASPER: Oh, no, no, no, no.
1180 COMMISSIONER MENZIES: You really would need a psychiatrist then.
‑‑‑ Laughter / Rires
1181 MR. ASPER: Oh, no, no, no, no, no. I mean that's part of the due diligence, part of the due diligence of looking at this business was to say what realistically is it going to need? And I will provide the money as a lender in effect to the business.
1182 COMMISSIONER MENZIES: Okay. So, you're the bank.
1183 MR. ASPER: Yes.
1184 COMMISSIONER MENZIES: Okay.
1185 Now, and have you a preset limit on...?
1186 MR. ASPER: Not formally.
1187 COMMISSIONER MENZIES: Informally? I mean is there ‑‑
1188 MR. ASPER: Well, I'll probably know it when I see it.
‑‑‑ Laughter / Rires
1189 MR. ASPER: I haven't thought of the actual number.
1190 COMMISSIONER MENZIES: Okay, because I mean it's just a little awkward for us in terms of that in that you're waiting for our decision and we kind of need to have some idea from you in order to make a fully informed decision.
1191 MR. ASPER: Well, I have to tell you, we went into this thinking that it was actually a fairly straightforward project. And the costs have spun massively out of control.
1192 And I'm not shying away from what it's going to take. And I have a very good sense of what it's going to take and I'm not backing away from it.
1193 COMMISSIONER MENZIES: Okay. I'll take that as the answer on that.
1194 Now, in terms of the business plan, like the Campus Radio Policy limits advertising to 504 minutes a week, sort of maximum four minutes an hour of advertising. And now, that's, I don't know, if you sold every minute that would be about $3 a minute to pay Mr. Capozzolo's salary and benefits.
1195 That's obviously not going to be ‑‑ I'm not sure if you'll sell it as cheap as $3 a minute but it's not going to be enough to operate the whole station. And typically campus stations have different types of fundraisers for a campus radio station.
1196 And one of them, one of the most popular sources is student fees, right?
1197 Now, do you have any plans around charging student fees with Robertson or around Robertson, any current or future plans on that? Well, we'll just deal with that question first.
1198 MR. WORTLEY: No. We haven't any plans to charge student fees.
1199 What we have looked at is a model where ‑‑ a membership model with the listeners, very similar to I guess PBS. We have looked at that where you can get a membership and then this will access you to information about the Hip Hop world and the Rap world.
1200 And if you'd like to have this information e‑mailed to you it might afford you with other opportunities where you might be able to get into a nightclub for half‑price of the cover charge. We have looked at that model but we've not decided on anything.
1201 MR. ASPER: That's listener membership ‑‑
1202 MR. WORTLEY: That's a listener membership as ‑‑
1203 MR. ASPER: ‑‑ as opposed to sole member membership.
1204 MR. WORTLEY: Yeah, thank you.
1205 COMMISSIONER MENZIES: Yeah. Yeah. I'll get to that in a minute too.
1206 MR. WORTLEY: On the revenue side, Commissioner Menzies, because I was ‑‑ been involved in the preliminary budgeting of the revenues and we have the advertising inventory, I mean there's not a lot there. And by design of the conditions of license there's a reason for that.
1207 I think what is important also though is that the tuition is there to defer some of your costs of the radio station also. And this is one of the reasons that Mr. Capozzolo had problems because he never did launch the course, of course he never collected tuitions.
1208 When we budgeted the advertising we actually looked at only selling 40 percent of the inventory on average for the year as opposed to 100 percent. So, it's on the conservative side.
1209 So, if you have 504 minutes and we were to looking at 40 percent of that as a revenue budget at about $15 ‑‑ $10 to $15 a spot.
1210 COMMISSIONER MENZIES: Okay.
1211 MR. WORTLEY: That's not a lot but it goes towards obviously the operation and that's the intent of it.
1212 COMMISSIONER MENZIES: Can you provide us with that?
1213 MR. WORTLEY: Certainly.
1214 COMMISSIONER MENZIES: Your plans versus on revenues.
1215 MR. WORTLEY: We're working on that on our business plan.
1216 COMMISSIONER MENZIES: Yes.
1217 MR. WORTLEY: It's being worked on as we speak and we would certainly supply that to you once ‑‑
1218 COMMISSIONER MENZIES: When do you think that would be a reasonable time to get it to us?
1219 MR. WORTLEY: Ten days.
1220 COMMISSIONER MENZIES: You can take two weeks if you want. Is ten days enough? Or two weeks? Two weeks?
1221 MR. WORTLEY: Sure.
1222 COMMISSIONER MENZIES: Okay.
1223 MR. WORTLEY: Thank you.
1224 COMMISSIONER MENZIES: And just, Mr. Asper just one point. Are you providing this financing at no cost to the station or is there an interest rate that you're charging?
1225 MR. ASPER: My approach is that I would like to get my money back plus the cost of the money if I can. If I can't then I'd like to just get the money back, the principal.
1226 COMMISSIONER MENZIES: Okay. Is that prime, prime plus one? Sub‑prime?
‑‑‑ Laughter / Rires
1227 COMMISSIONER MENZIES: You don't have to ‑‑ a competitive, a generous rate? I mean are you subsidizing this? Is it ‑‑
1228 MR. ASPER: It will not be something that jumps off the page.
1229 COMMISSIONER MENZIES: Okay. Thank you.
1230 One last area, Mr. Capozzolo. Now, the Harmony by‑laws, that's for NIB 95.5 FM.
1231 MR. CAPOZZOLO: Right.
1232 COMMISSIONER MENZIES: Section 302 state, "Directors shall be members of the corporation."
1233 Now, based on the application Harmony has been operating in violation of its own by‑laws since January 22nd, 2003 when you are recorded as the sole member until you were recently replaced by Mr. Asper. Would you agree that that was the case, that the company was operating in violation of its own by‑laws for that period of time?
1234 MR. CAPOZZOLO: Yes.
1235 COMMISSIONER MENZIES: Okay. And now I need you to explain to us the contradiction between the information and the application regarding this sole membership. As you just said it was operating ‑‑ at the public hearing in 2006 and I'm quoting from paragraph 390 of the September 29th, 2006 Winnipeg public hearing, you indicated to us that there were "40 or so" Harmony members.
1236 MR. CAPOZZOLO: Right.
1237 COMMISSIONER MENZIES: Right.
1238 MR. CAPOZZOLO: But not members, okay, see sole member is a term that's only cropped up since Mr. Asper has been involved. In the past as well as with the Commission it was always referred to as a single shareholder.
1239 COMMISSIONER MENZIES: Right. But were there really 40 members there in 2006?
1240 MR. CAPOZZOLO: Well, members, these are people that participated in the station. They're not the kind of members that necessarily pay you money. They are people that come to the station. They give you advice on things, they provide music, contacts with people who can ‑‑
1241 COMMISSIONER MENZIES: But you pretty much in your opening statement you pretty much told us that you were a one man show, you were all on your own ‑‑
1242 MR. CAPOZZOLO: Yeah, in terms of the radio station.
1243 COMMISSIONER MENZIES: You didn't have anybody around, anybody to turn to, anybody who could support you, so...
1244 MR. CAPOZZOLO: No, in terms of running the operation as it were but not as far as people who are associated with the station who felt like members of, you know, part of the ‑‑
1245 COMMISSIONER MENZIES: And did they feel like members or were they members?
1246 MR. CAPOZZOLO: Yeah, they'd walk in; they'd walk in to my office; they'd walk in and talk to the guy on the air. I mean it was ‑‑
1247 COMMISSIONER MENZIES: I'm trying to get to the difference between members and pals, right?
1248 MR. CAPOZZOLO: Well (laughter) aren't they the same thing? No. They were, I suppose pals, members, people that I met because of the radio station.
1249 COMMISSIONER MENZIES: So there were no official members.
1250 MR. CAPOZZOLO: No, they weren't, I mean if I went home and called them up and said, okay, how did you get to know this guy and it was because of the radio station what would you say? Are they members or are they pals?
1251 They're people that associated with the station who contributed their time, effort, things like that...food...certainly cigarettes.
‑‑‑ Laughter / Rires
1252 COMMISSIONER MENZIES: Okay, thank you very much.
1253 THE CHAIRPERSON: Counsel, have you got any questions?
1254 MR. McCALLUM: Yes, I do. Thank you.
1255 Just on the number of directors, in the book that was sent to you with the materials for this file, I see one Bylaw, No. 1 that said the number of directors should be not less than three and no more than seven. In another version of Bylaw No. 1 it says:
"...unless changed in accordance with the act the board shall comprise of three directors." (As read)
1256 MR. McCALLUM: Can you tell me, is the board three or is it three to seven?
1257 MR. ASPER: Of which company?
1258 MR. McCALLUM: It was NIB 95.5 Cable FM Inc. Bylaw No. 1, and then you have another one called Bylaw No. 1, being a general bylaw of the same company NIB 95.5.
1259 MS STIVER: Sorry, what are the dates on those bylaws? I vaguely recall ‑‑ I'm not sure Frank can clarify this but I vaguely recall a reference somewhere to an attempt to amend the bylaws. So there was an amendment to the bylaws but I'm not sure if those are the two versions that you have.
1260 MR. McCALLUM: Okay. Well, in the package that was sent it's under the tab "Correspondence between CRTC and Harmony" and it's maybe midway through the package. One Bylaw No. 1 says "29 January 1999" and another one which is unsigned says "17 June 1999". And as far as I can tell those appear to be the bylaws of the company.
1261 MS STIVER: And sorry, what is the difference in the number of directors as stated in each one?
1262 MR. McCALLUM: Yes. One says "not less than three and not more than seven" and the other one says, "The board shall comprise of three directors".
1263 MR. ASPER: I think that had something to do with the previous licence holder because then Manitoba ‑‑ Manitoba corporate law in comparison to what the Commission requires. So I think that might have been an amendment in a previous life.
1264 MR. McCALLUM: Well, sorry, but the Commission records have this document and to the best of my knowledge, and correct me if I'm wrong, it has not been updated, amended or changed. So vis‑à‑vis the Commission it appears to be a document that says that either there is a minimum three directors or somewhere between three and seven.
1265 And if you want to take an undertaking to check into it I am more than happy to let you do that.
1266 MR. ASPER: I think that's what we should do.
1267 MR. McCALLUM: Okay. Assuming the number is three, just for the sake of argument, the next problem that I had was that whether it's three or seven it says that "they shall be members of the corporation". And how can you have board directors of three directors exist when you have a sole member of corporation and the other two don't seem to be qualified because they are not members. How does that work?
1268 MR. ASPER: I think we need to undertake to get you an answer on that.
1269 MR. McCALLUM: Okay, thank you. I would appreciate that.
1270 Let's assume that all the undertakings are 14 days because that's the ‑‑ is that the date you have set? Thank you.
1271 Okay. The next one is this. It's to be determined whether Commission approval is required for the transfer to Mr. Asper or not and you have made submissions on that. So we are there so far, right?
1272 MR. ASPER: Yes.
1273 MR. McCALLUM: Okay.
1274 If Commission approval is required, you would agree with me that the Commission could subject that approval to conditions?
1275 MR. ASPER: Yes.
1276 MR. McCALLUM: One of the conditions discussed with Commissioner Katz was that there be a minimum number of members.
1277 MR. ASPER: Yes.
1278 MR. McCALLUM: And you asked for clarification on that.
1279 MR. ASPER: Yes.
1280 MR. McCALLUM: And the bylaw seems to have, at least in one of the versions, that a minimum of directors is three and they all have to be members. What if the condition of approval was that there be three members of the corporation?
1281 MR. ASPER: As I say, I don't philosophically have a problem with that. I would like to understand however, though, and I think for the purposes of the corporation like leave me out of it. What happens and what is the mechanism for change in that membership and will that organic change then result in another hearing like this?
1282 I think we need ‑‑ I'm fine with the numbers but I think we need some clarity as to how this company keeps going.
1283 MR. McCALLUM: Sure, and I think that has to be looked at in due course.
1284 MR. ASPER: Absolutely.
1285 MR. McCALLUM: But in terms of that as a condition of approval that seems acceptable?
1286 MR. ASPER: Yes.
1287 MR. McCALLUM: Okay.
1288 You probably are aware that there was an old condition on the licence before the policy changed and the condition as it used to read was:
"It is a condition of licence that the applicant..."
1289 MR. McCALLUM: In this case it would be the licensee:
"...retain full control over all decisions concerning the management and programming of this station and that representatives of the student body, faculty alumnae or administration representatives of the university or college with which the station is associated considered together form a majority of the board of directors." (As read)
1290 MR. McCALLUM: That was a condition on NIB 95.5?
1291 MR. ASPER: Right.
1292 MR. McCALLUM: If that were imposed as a condition of approval what would be your reaction? I will change applicant to:
"It is a condition of approval that the board of directors of the licensee retain full control...." (As read)
1293 MR. McCALLUM: Et cetera.
1294 MR. ASPER: I think we could live with that but I wouldn't agree with that and I think that you are unduly limiting the scope of experience that can be brought to bear both with the students and the other members of the board. But we could live with it.
1295 MR. LEWIS: Counsel, if I can just jump in?
1296 In the green regulatory book I found the clause I was looking for. We have to reconcile that because I think that's been overridden by paragraph 56 which came into force as the licence was turned over after that.
1297 MR. McCALLUM: Sure, and I'm looking at a situation to deal with the specific circumstances of this licensee. So that's what I am dealing with. There are certain policy things and there are these specific circumstances.
1298 MR. LEWIS: Yes, my question is this: My understanding is that as licenses were renewed, and this licence was renewed I believe in 2002‑2004, the provisions of that paragraph overrode the old conditions. So I think each party has to look at that and see if it's overridden now.
1299 MR. McCALLUM: All right.
1300 MR. LEWIS: Because in preparing for this hearing we looked at the old licence and we looked at a policy. It was our view in the constitution of the board that that paragraph is now operative for all institutional licensees. We may be ‑‑ we may be in error but that's what we were going on.
1301 MR. McCALLUM: Sure, and I'm saying you know what about an option of the Commission imposing it as a condition of approval. That's what I'm dealing with.
1302 MR. LEWIS: I appreciate that.
1303 MR. McCALLUM: Okay.
1304 My next question is, in respect of the questions that I just asked this licence term began on the 1st of September '04; is that correct?
1305 MR. LEWIS: Yes.
1306 MR. McCALLUM: Five years into the term would be the 1st of September '09, correct?
1307 MR. ASPER: Yes.
1308 MR. McCALLUM: The Commission could impose conditions of licence effective the 1st of September, '09, correct?
1309 MR. ASPER: I assume so.
1310 MR. McCALLUM: Could the Commission impose the very conditions that I discussed with you as conditions of approval as conditions of licence effective on the 1st of September '09?
1311 MR. ASPER: I think it could but they shouldn't ‑‑ but it shouldn't. I don't know. I'm not sure what is magic about September 1, 2009.
1312 MR. McCALLUM: It's five years into the licence term;
1313 MR. ASPER: Right.
1314 MR. McCALLUM: But that would be a possibility the Commission could consider?
1315 MR. ASPER: You could do it four and a half years in or four years in.
1316 MR. McCALLUM: No, I think we will have to look at section 9 of the Act, but the five‑year anniversary is the magic date.
1317 MR. ASPER: Well ‑‑
1318 MR. McCALLUM: Unless you apply, of course.
1319 MR. ASPER: Okay.
1320 MR. McCALLUM: Could you comment just for the record on the possibility of the Commission revoking this licence?
1321 MR. ASPER: Well, I was going to raise that and I think I was going to speak to that specifically in conclusion, but I'm happy to deal with it.
1322 It's something that we frankly considered as one of the recommendations that we might actually make to the Commission as a way of flushing everything from the past out and come back and start anew. At the end of the day that's capital punishment, and what are we talking about here?
1323 We are talking about an individual who, whether you find in good faith or bad faith, got a licence for a low power campus instructional radio station and didn't comply. It wasn't as though the Broadcast Standards Council was crawling all over it for breaches. There wasn't Canadian human rights' violations. We are talking about ‑‑ and they are serious and I'm not minimizing it ‑‑ we are talking about broadcast regulation. And I understand it's a privilege and I understand that the spectrum is a scarce resource and I understand all of the philosophy. But this is not a case for capital punishment.
1324 MR. McCALLUM: Okay. If the Commission decided suspension was a possible recourse could I have comments on that?
1325 MR. ASPER: This licensee has been off the air since October and I would disagree with that disposition as well. If it's the will of the Commission we will obviously accept that, but this has been a seriously harmed asset by being off the air. There was a prospect of it coming back on the air. There was a little bit of media coverage. Mr. Penner got interest from potential students. The punishment has been meted out.
1326 Mr. Capozzolo has come before the Commission and admitted that the problems existed and he failed to live up to the conditions. You have a group here that's ready, willing and able to proceed and to pick up. It's a credible group. It's well‑financed and suspension is not necessary in my submission.
1327 MR. McCALLUM: The intakes to Robertson College occur three times a year, is that right?
1328 MR. ASPER: That's my understanding, yes.
1329 MR. McCALLUM: And sorry, what are the three dates, please?
1330 MR. WORTLEY: Four times a year.
1331 MR. ASPER: Four times, four times.
1332 MR. McCALLUM: Sorry, four times a year.
1333 MR. ASPER: Yes.
1334 MR. McCALLUM: What are the dates, please?
1335 MR. WORTLEY: Well, they work on quarters so the first intake that we have projected would be September 3rd, 2008 and then it would be every quarter after that.
1336 MR. McCALLUM: So assuming ‑‑
1337 MR. WORTLEY: I can't give you exact dates.
1338 MR. McCALLUM: Assuming for the sake of argument that the station is allowed to continue, how much time before one of these intake dates do you need in order to get the thing up and running if that's what happens?
1339 MR. WORTLEY: Well, I spoke to Mr. Penner about that because we had those discussions before the hearing and realistically he needs eight weeks pre‑promotion prior to each intake.
1340 That's the minimum and because of the processes it goes through to get a student ‑‑ whether a student loan or something to that effect, it takes eight weeks to pre‑promote the course and get students signed up for first intake, to be ready for first intake. Let's take the example September 3rd.
1341 MR. McCALLUM: Right. So we are almost ‑‑ right now we are almost too late for September the 3rd because of ‑‑
1342 MR. WORTLEY: We are getting very close.
1343 MR. McCALLUM: Yes.
1344 MR. WORTLEY: Yes.
1345 MR. McCALLUM: Okay.
1346 With respect to one of Commissioner Katz's questions about what the balance sheet will look like after ‑‑ assuming this is allowed to go ahead and it is not a revocation of licence and there will be a future balance sheet, do I understand it correctly that there will be a write‑off of the entire indebtedness to Mr. Capozzolo for the $896,000 as a result of the agreement that was dated the 10th of January and filed?
1347 MS NEBBS: I can answer that question.
1348 Yes, there will be the settlement and the balance will be unpaid and written off, forgiveness of debt.
1349 MR. McCALLUM: Right, so that will disappear from the balance sheet as a result of that particular settlement. Is that right?
1350 MS NEBBS: That will disappear from the balance sheet.
1351 MR. McCALLUM: Other debts would remain?
1352 MS NEBBS: Other debts will remain.
1353 MR. McCALLUM: Thank you.
1354 Could you just go into, for a minute, source of funds? There have been two or three identified and one is Mr. Asper's loans. One is advertising which I think there is a condition of four minutes per week, and another one is student fees.
1355 Are there any other sources of revenues for this station?
1356 MR. ASPER: Tuitions, not fees. Student tuition, not fees, is what we said.
1357 MR. McCALLUM: Okay.
1358 MR. WORTLEY: No, the only thing I had mentioned earlier is that we were looking at a listener membership drive. But in terms of revenue streams the school or the radio station is relying on advertising and the tuition and fundraising, promotional events.
1359 MR. McCALLUM: Okay. You mentioned in your presentation earlier today that several of the members' terms ‑‑ the directors ‑‑ former directors' terms had lapsed. I think that was at page 5 of your presentation, your written notes.
1360 Could you explain what occurred there and whose terms had lapsed?
1361 MS STIVER: I can answer that question.
1362 As part of our due diligence we reviewed the corporate minute book of the corporation and it indicated that on January 22nd, 2005 three individuals were elected for a three‑year term. As a result, as of January 22nd, 2008 those terms had lapsed. The three individuals are Roxanne Taylor, Devol Dryden and Myles Shafsky.
1363 MR. McCALLUM: Sorry, those terms had lapsed?
1364 MS STIVER: Yes, and absent any notice from them that they wished to be nominated for a subsequent term, when the term lapsed that's the end of their term. And then we received resignations from the remaining four board members in the time period between December 2007 to February 2008.
1365 MR. McCALLUM: Yes. It's just I'm a little confused here and maybe you can help me.
1366 I'm looking again at what was Bylaw No. 1 of NIB 95 and it says the term of office ‑‑ this is 3.03.
1367 And in fact, both versions of the bylaw, Bylaw No. 1, one version which is dated 29 January, 1999 and the other one which is also on file which is dated, unsigned but dated 17 June, 1999 say:
"The term of office of a director upon election or appointment shall cease at the close of the first annual meeting of members following his election or appointment; provided by that if no directors were elected at such annual meeting he shall continue in office until his successor is elected or appointed." (As read)
1368 MR. McCALLUM: So I am just wondering how lapsed works with something that seems to envisage that if there is no meeting the director continues.
1369 MR. ASPER: If I can just have one minute?
1370 MR. ASPER: Counsel, we have to do some more digging on this. Again, may we have an undertaking to provide you with a response within a couple of weeks?
1371 MS STIVER: We have the minute book and it only contains the one copy of the bylaws so I have not seen in the corporate context the other set of bylaws that you refer to, but we can review ‑‑ review them if it's in the file.
1372 And we can look at the minutes in the minute book and attempt to reconstruct what was done in 2005, if you would wish for us to do that.
1373 MR. McCALLUM: Yes, please.
1374 I would like to ask a question that relates to one that Commissioner Menzies asked you. He asked about written policies in place and policies and procedures dealing with compliance and he referred to the letter dated 15 February that's on file. That was signed by Mr. Wortley and I see, for example, under Compliance Issues, page 5:
"We will keep Flava 107.9 in compliance with all applicable CRTC regulations and policies." (As read)
1375 MR. McCALLUM: And then for example, under Musical Selections:
"The station will air a minimum of 35 percent Canadian content each week in our Category 2 selections." (As read)
1376 MR. McCALLUM: What I really was expecting in answer to Commissioner Menzie's question was a bit more in terms of written policies and procedures and a statement in the letter that you had complied with the regulations.
1377 Is there anything in addition to this or was there intent to create anything in addition to this?
1378 MR. WORTLEY: I think when Mr. Menzies and I ‑‑ Mr. Menzies drilled down a little farther, I think, when he stated, "Was there a policy in place with regards to complaints from the public?" and I said, "No, there wasn't."
1379 With regards to reference to this letter to the Commission of February of 15th, this was safeguards that were put in place or remedies that would be put in place to be in compliance all the time and acknowledge and refer to the mandatory orders. For example, under logger tapes on page 7:
"In order to ensure compliance with all regulations concerning the station's content YO Radio will maintain two logger machines. One will be located onsite at the station. The second one will be located offsite as a backup system." (As read)
1380 MR. WORTLEY: It can be argued is that a policy? Yes, it is as far as we are concerned. Is it policy procedures? I guess it's all in the reference of what ‑‑
1381 MR. McCALLUM: So basically, the answer is that there is no additional document per se but the policies and procedures are as reflected in this letter?
1382 MR. WORTLEY: Correct.
1383 MR. McCALLUM: And would it be your intention to put other written policies in place or would this be the only thing?
1384 MR. WORTLEY: Yes, that would be our intent, one of the things that I have to do.
1385 MR. McCALLUM: To put more things ‑‑
1386 MR. WORTLEY: Put a policy ‑‑ put a policy and procedures book together. I think ‑‑ I don't think. I know what this radio station needs.
1387 COMMISSIONER MENZIES: Seeing as I am being talked about, what I was really after was that, sort of written policies and procedures and all the areas that I talked about, like a corporate or company manual that ‑‑
1388 MR. WORTLEY: Right.
1389 COMMISSIONER MENZIES: ‑‑ that staff can refer to and use, especially if you are having a lot of students. "Okay, here is the book. Read it carefully. This is how we do things around here and comply with these."
1390 So people know when they are in compliance with company regulations and they know when they are out of compliance.
1391 MR. WORTLEY: I will do that. You will have one.
1392 MR. McCALLUM: I mean, let's just be reasonable and practical about this. Is that something that can be done within 14 days as an undertaking or is that too much or can you do an outline within 14 days, or what is it that you would be doing?
1393 MR. WORTLEY: Would the Commission be satisfied with an outline of a policies and procedures booklet?
1394 MR. McCALLUM: It seems to me that there should be something in place within 14 days.
1395 MR. WORTLEY: I agree.
1396 MR. McCALLUM: Okay. We will take that as an undertaking.
1397 MR. WORTLEY: Would you be satisfied with an outline of a policies and procedures or would you want to see ‑‑
1398 MR. ASPER: We will undertake to provide you with the outline within 14 days.
1399 MR. McCALLUM: Yes, that's right.
1400 MR. ASPER: That's what we will do.
1401 MR. McCALLUM: Okay.
1402 MR. PENNER: Maybe I could add something to that as well from a Robertson College perspective. All our students sign a student's contract including a student handbook which outlines the policies and procedures as it relates to students attending our school. It might be applicable here as well.
1403 MR. McCALLUM: Could you speak a little about the spoken word commitment and what ‑‑ how you would address the spoken word commitment; again, if this licence is allowed to continue?
1404 MR. WORTLEY: You wouldn't happen to have the program grid that we supplied to you?
1405 MR. WORTLEY: And if you can go through it with me, Mr. McCallum?
1406 MR. McCALLUM: Please.
1407 MR. WORTLEY: This lays out what a week of ‑‑
1408 MR. McCALLUM: Sorry, you are dealing with the program that's attached to your written comments?
1409 MR. WORTLEY: Yes, and do you have the narrative behind it?
1410 MR. McCALLUM: Yes, I just wanted for the purposes of the record to show what it is you are referring to. That's all.
1411 MR. WORTLEY: Okay, thank you.
1412 So this lays out quite clearly what our programming would look like on a weekly basis. On page two you will see that it has been ‑‑ a legend and there is a narrative of each program. Now, these schedules have been programmed into our operating system in the computer and so that's how you actually make sure that each of these run properly and in their time slots.
1413 For example if you look at news, because there is a fairly large news component of the radio station, you will see the purple top at six a.m., that we have one hour of news from Monday to Sunday.
1414 MR. McCALLUM: So, for example, is that a function that Mr. Capozzolo would be doing, the one‑hour news show?
1415 MR. WORTLEY: No, that would be Mr. Kowalson, Warren Kowalson.
1416 MR. McCALLUM: Would I correctly infer that the yellow I see in this programming grid would be Mr. Capozzolo's program?
1417 MR. WORTLEY: Correct.
1418 MR. McCALLUM: And what's the little blue in the middle of it on Wednesday and also Saturday/Sunday morning?
1419 MR. WORTLEY: That's our educational programming and that's what we referred to earlier in the hearing of special educational programming that we researched, assignments given to students with regards to different aspects of topics in the community.
1420 MR. McCALLUM: In terms of student involvement, I understood from the answers that students would be involved with Mr. Capozzolo in the morning time to varying degrees; in other words, in the yellow here.
1421 MR. WORTLEY: Mm‑hmm.
1422 MR. McCALLUM: Where and in what ways would they be involved elsewhere in this programming grid?
1423 MR. WORTLEY: As you can ‑‑ it shows ‑‑ I guess you can see the different day parts that are broken out. They would also be involved in voice tracking or doing a live on‑air shift.
1424 They would be involved in...
1425 Do you see the day parts how they're broken out in colour?
1426 So, you have mid‑morning ‑‑ you have mornings, you have mid‑mornings, you have afternoons, drive home, evenings and all nights.
1427 So, students would be involved in all those day parts. In terms of whether it's on air, whether they voice track the show or if they supply the piece in terms of a feature on an artist or a feature on a topic that we had ‑‑ as part of their assignment.
1428 So, they will be involved throughout the whole week in different aspects of the radio station.
1429 MR. McCALLUM: Thank you.
1430 Mr. Chair, I'm running close to the end of my questions, so I'll just check around to see if there are others, and perhaps the Panel has others in the mean time.
1431 THE CHAIRPERSON: Yes, Commissioner Menzies has one more question. He wants to play "Columbo".
1432 COMMISSIONER MENZIES: I just wanted to come back, Mr. Asper, on this matter raised with legal about possible remedy and your reference to capital punishment.
1433 Although you indicated that you had initially thought of it as euthanasia and then switched to a capital punishment view, and in terms of suspension.
1434 One of the things that I just need hear on this is, a concern in situations such as this would be, the country is filled with broadcasters who don't have these difficulties and who spend a lot of time and money efficiently managing their business and that sort of stuff, and there could be a point of view that says failure on the Commission's part or on a Panel's part to recognize the severity of these sorts of incidents could be seen as an affront to those broadcasters who are good ‑‑ whether you agree with them all or whether I agree with them all doesn't really matter ‑‑ they are the regulations and it could be seen as an affront to those regulations.
1435 And I just wanted to get a comment from you on that thought.
1436 MR. ASPER: I think it's ‑‑ Commissioner Menzies, it is essential that all of us emerge from this process with the integrity of the rules and regulations in tact.
1437 And I understand that over the years there has been assault on those rules and regulations.
1438 There have been mandatory orders issued and, if I understood the Chair, it could be that we could continue to operate under continuing mandatory orders which would preserve, in my view, the integrity of the system and the respect for the rules and regulation by essentially giving one last shot.
1439 And that's not contrary to either the administration of administrative law or any other kind of law, because there's a massive change of circumstances.
1440 And I think that it does not do damage to the construct of the CRTC and the rules and the use of the spectrum, I submit, under the circumstances you're faced with today, because you've got assurance, I believe, that the problem can get fixed and the perpetrator of the problem, including the community who has not been served by this valuable asset, hasn't had it for eight months.
1441 COMMISSIONER MENZIES: Okay. Thank you for that.
1443 MR. McCALLUM: Mr. Chair, we're fine for now.
1444 THE CHAIRPERSON: Great. I was going to wrap up this phase.
1445 I thought we'd give you a couple of minutes if you want to have a summary statement before we adjourn for today and come back tomorrow with the interveners.
1446 Is there something you want to wrap up, or would you rather wait?
1447 MR. ASPER: No, I think I've made my point about the remedy and I really urge that you ‑‑ that the Commission consider very seriously the punishment, in effect, that has already occurred and let us get back to business.
1448 THE CHAIRPERSON: Okay.
1449 Let me then suggest the following.
1450 Our schedule right now calls for us to start tomorrow at 9:00 a.m. with Jessie McKenzie. Unless the Secretary tells me differently, I understand she will not be appearing tomorrow, so that we can move right into Mr. Devol Dryden.
1451 I'd like to start earlier, if possible and see if ‑‑ is Mr. Dryden here, first of all?
1452 MR. KOVNATS: Devol is here.
1453 THE CHAIRPERSON: Sorry?
1454 MR. KOVNATS: Devol Dryden is here.
1455 THE CHAIRPERSON: Okay. Would it be possible if we started at 8:30 tomorrow morning.
1456 MR. KOVNATS: I will not be here to represent tomorrow morning, I have other commitments. I can be back around noon.
1457 MR. McCALLUM: Could you speak into the microphone, please.
1458 MR. KOVNATS: I apologize. Mr. Dryden is definitely here, Devol is here.
1459 I cannot be here tomorrow morning at nine o'clock, I have a commitment out of the city at 8:30, I can be back here ‑‑ it's with a government body and I can be back here by noon.
1460 Mr. Devol Dryden is present. I have ‑‑ there's about eight people that have sat the whole afternoon, and most of the interveners ‑‑ most of them have been here actually since nine this morning and some of them would like me to assist them.
1461 I can be back here by noon time, all being well. I anticipate, my government commitment is 8:30, I would imagine it would be finished by 10:00 and I can drive back by noon.
1462 THE CHAIRPERSON: The alternative from our perspective is to continue on tonight and just keep on going, if that ‑‑
1463 MR. KOVNATS: Well, I also ‑‑ because you haven't ruled on being able to subpoena people, and also because of the number of undertakings that have been given today, in order for the interveners to be heard and respond and comment on everything that's being put before you, because they're going to have, after those undertakings are provided, I would imagine that some of the interveners may have more comments to make.
1464 It seems that it would be better to adjourn this hearing for a couple of weeks, get everything in front of you.
1465 THE CHAIRPERSON: I'm not prepared to adjourn this meeting for a couple of weeks at this point in time.
1466 MR. KOVNATS: All right.
1467 THE CHAIRPERSON: I'd rather continue through. The Commission will make a determination on your request at the appropriate time, it certainly will be before the end of the proceeding.
1468 But, at this point in time, if you are not here tomorrow morning, my gumption is to continue working right through and allow the interveners who have been here all day patiently waiting to be heard.
1469 MR. KOVNATS: I have no problem with that.
1470 THE CHAIRPERSON: Okay.
1471 Why don't we take a 15‑break. It is now just short of six o'clock and let's reconvene at 6:15.
‑‑‑ Upon recessing at 1800 / Suspension à 1800
‑‑‑ Upon resuming at 1825 / Reprise à 1825
1472 THE SECRETARY: Please be seated.
1473 We will now proceed to Phase II in which intervenors appear in the order set out in the agenda to present their interventions.
1474 For the record, intervenor Jesse Mackenzie listed in the agenda has informed us that he will not be appearing at the hearing.
1475 Therefore, I would now like to call Devol Dryden, Manjit (Molly) and Robert Blake, Peter Bjorklund, David Kovnats to appear as a panel.
1476 You will have 40 minutes for your presentation.
1477 Thank you.
1478 MR. McCALLUM: Sorry, for the record, it appears that Mr. Devol Dryden will appear alone and the others will appear separately after that.
1479 Is that correct?
1480 THE SECRETARY: Yes, it is correct.
1481 THE CHAIRPERSON: So he will have the customary 10 minutes then.
1482 Is that right?
1483 THE SECRETARY: Mr. Dryden, you have 10 minutes to make your presentation.
1484 MR. DRYDEN: Okay. May I begin?
1485 My name is Devol Dryden. I am a former employee of Harmony Broadcasting. I wrote my intervention as I have a personal stake in the decision that is made about Harmony Broadcasting. I have brought out copies of documents as proof of it.
1486 But I want to make sure that there is no doubt in anyone's mind about how elaborate the deception of the federal government has been.
1487 After my firing I realized that there was more to the situation around the licence than I had understood, me being forced to fight to this very day, 21 months later, for the money that I earned in a decision made by the Labour Board.
1488 I wanted to tell the CRTC about the multiple fraud committed in the name of Harmony Broadcasting, about the fake list of directors, the lack of governance, the absence required for following broadcasting instructions and the refusal to pay employees.
1489 I also want to tell the CRTC about the way you were deceived about the reasons for the compliance failures of the radio station and how Franc Cappozolo has been out of compliance.
1490 The truth is that when I submitted the music reports, when I had sat down for hours listening to the logger and broadcasting in real‑time, he knew that there was no way to be in compliance at that time. He said the logger machine was broken and that was an outright lie. He did not want to give you the evidence and face the consequences.
1491 He alone was responsible for the station being out of compliance. He alone approved the music. He decided to ignore the Maple rule, for instance, counting Celine Dion and Deborah Cox as following the Maple rule, using ideal DJ chatter as educational content.
1492 But there is no surprise, because he had lied about the entire operation in order to secure the licence, renew and keep his scam going. I wanted to come forward, but because I saw the abuse Franc Capozzolo engaged in against his previous enemies, I wanted to do so under the protection of the confidentiality.
1493 But the CRTC has no rules about witnessing confidentiality. The request was denied and since then I have been subject to abuse from Mr. Capozzolo calling me at my employer presently with cursing.
1494 At the hearing my name was used to manipulate the CRTC into believing that there was a real Board of Directors, that I was included and students and the community representatives.
1495 Again I want to make it clear, I was never invited to an agenda meeting or no minutes were ever brought to my attention.
1496 Mr. Capozzolo used me. He made a board and after he put my name on the board came and said he put me on the board as regard to not follow rules and pull the sheets over Eddy Blake and Manjit Blake.
1497 He instructed myself and Chris Knight to lie about being students so he could appear to be running a legitimate campus station. If anyone asked, he had wanted us to lie to the Labour Investigator Earl Bonito so he did not have to pay Mr. Knight's judgment or any other employees at the time.
1498 After Mr. Capozzolo learned I was going after my money, and I was owed, and appeared at the CRTC hearing with Mr. Knight to support and Gary Krushen had denied us, the smear campaign was the full flight.
1499 Rumours I had caused Flava's trouble with the CRTC, had taken illegal payoffs, still harming my business dealings in the hip‑hop community today. The corporate records proving I was owed thousands of dollars promised on commissions and wages were destroyed, according to a note provided to the Labour Adjudicator from the former bookkeeper Rita Tully. If I had not kept my T4 which was given to me in 2005, I would have no physical proof at all.
1500 I have given you a judgment that I received, and on page 13 it will show you that she was ordered, Rita Tully was ordered to destroy any provings that I had any dealings with the company.
1501 Meanwhile, the people who follow Franc's marching orders are rewarded. There are other so‑called student directors, Warren Kowalson, who is listed in the provincial records as having resigned as a director in 2007. This is remarkable because in the hearing transcripts the CRTC Commissioner got Capozzolo to admit that Kowalson's term as a student director had already expired in June of 2006.
1502 Kowalson's name appeared nowhere in the current filings to the CRTC, nor does his registration letter, which I am sure ‑‑ the registration letter, like the rest, would be undated and there is no record anywhere of Kowalson's reappointment to the board after June 2006.
1503 Maybe this is why Harmony forgot to mention him to you in the time around. Then they would have to explain why Mr. Kowalson's Facebook page claims that he has been the News Director for Harmony since 2004, and if he ever has to fight for his pay like I did.
1504 After persons who were rewarded for supporting Capozzolo's lies, for instance a Michelle Norris who is actually on the board, who stood in the Labour Board and lied, saying that I was just a volunteer, which comes out in my labour agreement stating that I was an employee.
1505 The Board of Directors ‑‑ all these people are under the Board of Directors now of Mr. David Asper and Mr. Capozzolo himself is still the President of Harmony according to the provincial records.
1506 For someone who claims to be a leader and in the case of human rights I am shocked that Mr. Asper would even consider dealing with Mr. Capozzolo, let alone offering him a salary of $60,000 to hand over the station and give him gratuity to the job of being a mentor to students.
1507 I heard so many ugly remarks from Mr. Capozzolo's mouth supporting the hip‑hop culture, and I do refrain from using the language but I have heard this on numerous occasions from Mr. Capozzolo as "Excuse me nigger shit".
1508 I have watched Mr. Capozzolo bury natives on the air calling them welfare bums, and all minorities.
1509 The reason with this obvious and retrospective is more slave labour, people who would put in long hours and hard work to build the following and attract advertisers while Capozzolo would go out and spend his money on VLTs. Now David Asper wants to reward Capozzolo and has convinced Robertson College to let him be the students' mentor.
1510 In what? Deceiving the CRTC, treating employees like slaves, swearing at staff, licence violated mandatory orders.
1511 How can you even consider allowing the licence to continue beyond logic as no one can possibly have reconstructed the company's financial information without speaking to me.
1512 Prove to the public it has operated as a non‑profit. No one person from Asper's group or CRTC or even the CRA can do so. That is because of Franc's personal operation that ignored all the rules.
1513 The message it sends to the Canadians if Harmony Broadcasting is allowed to continue holding a licence after violating the mandatory orders. Franc Capozzolo was right about the impotence of the CRTC.
1514 Four years ago he told me all you have to do is tell them you're sorry and they will give you a slap on the wrist. I am now seeing that it is becoming true.
1515 You gave Mr. Capozzolo a licence to destroy people's lives when the licence was renewed because you did nothing to verify the operation was controlled by a responsible Board of Directors. Now you stand in judgment of whether to ignore the past and pretend it can be made right.
1516 I respectfully disagree and stand by your intervention.
1517 The ownership and the control cannot change hands until this has been cleared up. Until this time I still have a legitimate claim that is still outstanding and not paid. The CRTC cannot approve a sale designed to cheat me a second time and maybe even cheat the tax department. The CRTC cannot turn a blind eye to the lack of financial disclosure for the past four years.
1518 The CRTC exists to protect the interests of the public. How is the public protected if you waive a legal requirement for financial accounting or if you refuse to address the multiple fraudulent Board of Directors, or if you approve a transfer of control as cooked up a deal that smells like high heaven?
1519 THE CHAIRPERSON: Thank you very much for coming here, Mr. Dryden. I'm sure it wasn't easy for you ‑‑
1520 MR. DRYDEN: Yes.
1521 THE CHAIRPERSON: ‑‑ but we do appreciate your attendance.
1522 I just have one question and then I will pass it on to my colleagues.
1523 You mentioned Mr. Kowalson. Were you here earlier when the Wortley, Capozzolo, Asper team read their submission?
1524 MR. DRYDEN: Yes, I was.
1525 THE CHAIRPERSON: They referenced Mr. Kowalson and they say:
"We expect Mr. Kowalson, formerly employed by Harmony, will return as the News Director at Harmony. Mr. Kowalson will be responsible for the news and editorial direction at the radio station."
1526 MR. DRYDEN: Yes.
1527 THE CHAIRPERSON: Is that the same person?
1528 MR. DRYDEN: Yes, it is.
1529 THE CHAIRPERSON: Okay. Those are my questions.
1530 COMMISSIONER PATRONE: Thank you, Mr. Chair.
1531 Good evening, Mr. Dryden.
1532 Do you have a civil action against Mr. Capozzolo pending at this moment?
1533 MR. DRYDEN: Right now there is a judgment that was awarded to me by the Labour Board. Basically, I had won $9,222.
1534 Mr. Capozzolo was to have put ‑‑ in order to appeal the judgment, Mr. Capozzolo was to put $9,000 into the government. He decided to submit $4,900 and say he remitted the rest in taxes.
1535 I come to find out last week that he had remitted no money to taxes and was basically trying to skate by.
1536 COMMISSIONER PATRONE: You also mentioned that you had some documents with you?
1537 MR. DRYDEN: Yes.
1538 COMMISSIONER PATRONE: Have you tabled those documents for staff?
1539 MR. DRYDEN: I gave Cheryl Grossi 15 copies for everybody.
1540 COMMISSIONER PATRONE: What reason were you given for your firing?
1541 MR. DRYDEN: I was told I was fired because I was taking payoffs. In the Labour hearing I was told I was fired because there was a dispute with one of the advertisers.
1542 There is no reason for my firing. I was awarded $750 for the unjust dismissal because no one could find any fault for me being fired.
1543 COMMISSIONER PATRONE: You say Mr. Capozzolo asked you to misrepresent yourself as a student?
1544 MR. DRYDEN: Yes. Back when the station was running, Mr. Capozzolo asked me if anyone asks, if anyone says anything to you ‑‑ and myself and Mr. Knight which you will probably hear from a little later ‑‑ if anyone speaks to you about being a student, you are to tell them that you were.
1545 COMMISSIONER PATRONE: And did you ever do that?
1546 MR. DRYDEN: No, because no one ever approached me.
1547 COMMISSIONER PATRONE: Those are my questions. Thank you, Mr. Dryden.
1548 COMMISSIONER MENZIES: Thank you, Mr. Dryden.
1549 Just to confirm, you are still owed $4,318.33 in back wages?
1550 MR. DRYDEN: Yes, plus $750 for unjust dismissal.
1551 Plus, and I do have to mention, I was given ‑‑ there is a T4 that was given to me ‑‑ it's very complicated.
1552 I had to apply ‑‑ I went to the Labour Board. They can only retract your pay from one year prior to you submitting a claim. At that point Mr. Capozzolo basically tried to say that I was just an employee.
1553 If you look at page 13, basically I had no idea until we had the adjudication and I had to subpoena Ms Rita Tully, and she had mentioned that Mr. Capozzolo had enforced her to delete me from the records.
1554 So now prior to that, in 2005 I received a T4, which is in your documentation, for $13,000, which I wasn't able to claim due to the fact that they were trying prove that I was just a volunteer. But they handed me the actual T4.
1555 There are also commissions that are outstanding.
1556 I am going to be filing a civil suit.
1557 COMMISSIONER MENZIES: So what was your hourly rate of pay when you worked there?
1558 MR. DRYDEN: Just minimum wage at the time.
1559 COMMISSIONER MENZIES: Which was what, $5.00 or something?
1560 MR. DRYDEN: I think it was $7.25 at the time.
1561 COMMISSIONER MENZIES: $7.25. So the money you were owed was back wages and then you ‑‑
1562 MR. DRYDEN: From one year.