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Please note that the Official Languages Act requires that government publications be available in both official languages.
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TRANSCRIPT OF PROCEEDINGS BEFORE
THE CANADIAN RADIO‑TELEVISION AND
TELECOMMUNICATIONS COMMISSION
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
Transcripts
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
Contents.
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.
Transcription
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
Telecommunications Commission
Conseil de la radiodiffusion et des
télécommunications canadiennes
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
Conseiller Juridique
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
PHASE I
PRESENTATION BY / PRÉSENTATION PAR:
Harmony Broadcasting Corporation 39 / 250
PHASE II
INTERVENTION BY / INTERVENTION PAR:
Devol Dryden 205 / 1484
Manjit Blake, Robert Blake, Peter Bjorklund, 228 / 1649
David Kovnats, Chris Knight & Chris Oliver
PHASE III
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
à 1306
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.
257 Franc.
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.
287 Lisa.
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.
‑‑‑ Pause
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.
‑‑‑ Pause
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 ‑‑
‑‑‑ Pause
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.
887 Counsel...?
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.
‑‑‑ Pause
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.
‑‑‑ Pause
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.
‑‑‑ Pause
932 MR. LEWIS: Well, you have to read the effective control provision ‑‑ I lost my way.
‑‑‑ Pause
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?
‑‑‑ Pause
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?
‑‑‑ Pause
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.
‑‑‑ Pause
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.
1442 Counsel.
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.
‑‑‑ Pause
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.
INTERVENTION
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.
1563 COMMISSIONER MENZIES: From one year, okay.
1564 MR. DRYDEN: From August of 2006 to August of 2005.
1565 COMMISSIONER MENZIES: Okay. Where do you work now?
1566 MR. DRYDEN: I work at Arnold Bros. Transport in the accounting department.
1567 COMMISSIONER MENZIES: You said something about this rumour ‑‑ I believe you were referencing the initial allegation concerning the reason for your dismissal, illegal payoffs. You said that had damaged your ability to find work in this industry?
1568 MR. DRYDEN: Yes, Mr. Capozzolo has deliberately gone around speaking to advertisers who work with the company, saying that I had taken illegal payoffs to play artists' music on the radio station.
1569 COMMISSIONER MENZIES: And then he had a different position at the time of your Labour Board hearing?
1570 MR. DRYDEN: At the Labour Board hearing he said an advertiser had complained about me and that's why I was terminated.
1571 COMMISSIONER MENZIES: Did he talk about the nature of the advertiser's complaint?
1572 MR. DRYDEN: It was owing money for pass situations.
1573 COMMISSIONER MENZIES: Okay.
1574 You have mentioned that Mr. Capozzolo ‑‑ when was the last time he has been calling you still?
1575 MR. DRYDEN: He called me last year at my job, in my present job, and very crassly on the phone treated ‑‑ lots of names.
1576 I don't know, I'm not a fan of saying it, but I mean he called me in and he basically said, "You're fucking dead. You are fucking dead." And I told him, "Do not call here ever again" and I hung up.
1577 COMMISSIONER MENZIES: Okay. When was that last year?
1578 MR. DRYDEN: That was during our labour proceedings. As the Labour Board, Kathy McGimpsey, was going back trying to figure out what was owed, I think it was a time where she must have just spoke with him or she had just met with them.
1579 COMMISSIONER MENZIES: Okay. So that was what month last year?
1580 MR. DRYDEN: Don't quote me, but I have to say maybe April.
1581 COMMISSIONER MENZIES: So it was more than a year ago?
1582 MR. DRYDEN: Yes, exactly. Just last year.
1583 COMMISSIONER MENZIES: In 2007, the spring of 2007.
1584 Was that the last time he communicated with you?
1585 MR. DRYDEN: Yes, that was the last time.
1586 COMMISSIONER MENZIES: Had he communicated with you frequently prior to that or was this ‑‑
1587 MR. DRYDEN: I hadn't spoken to Mr. Capozzolo since the day that I left. The only time we spoke was when he called me concerning ‑‑ the phone call he called me at work, and then when we were at the labour dispute.
1588 COMMISSIONER MENZIES: So it was the one phone call?
1589 MR. DRYDEN: Yes.
1590 COMMISSIONER MENZIES: Okay. Thank you.
1591 What do think should happen here?
1592 MR. DRYDEN: I'm not sure. I mean, I look at what has happened, I look at what Mr. Capozzolo has done, and I know you will be hearing later from Manjit Blake and Peter Bjorklund, but I have watched him deceive them.
1593 I am the one who wrote the receipts and I have seen the money change hands firsthand. I have seen him destroy people. I have seen him. He has fired people, he has not paid people.
1594 There are two individuals here who they had to go to the Labour Board, too. Myself. I look at the destruction he has caused and yes, I understand David Asper is trying to clean up, but I also look at the mess that has been left behind and how do you destroy this mess you have left behind, clean up your shirt and say okay, I'm going to walk forward and leave the mess behind.
1595 Hip‑hop is a way of life; it is a culture, and he has taken that and destroyed it and people have to suffer from that at that point.
1596 COMMISSIONER MENZIES: So do you think the licence should be revoked? Do you think it should be suspended?
1597 MR. DRYDEN: I personally think that it should be ‑‑ I mean there are two ways I feel about it.
1598 I do feel it should be revoked. I do feel that the first deal that was struck with Manjit Blake and Peter Bjorklund was the deal that brought this together.
1599 I was a big part of the station, meaning in the music content due to the fact that I knew a lot about hip‑hop. I brought my music content to the station. I lost that content when I left, but I basically taught Franc Capozzolo about hip‑hop at the time. And Eddy Blake and Manjit Blake brought me in there to teach him that.
1600 If it wasn't for them bringing this idea and this whole thing, we wouldn't even be here today.
1601 Franc had a licence. He was playing Canadian content with no speaking and that was it. And he found a way that he could use his licence to turn money and he abused that portion.
1602 If he followed the rules that you guys had put in and found out, say, I have this gentleman who would like to purchase a licence or be a part of the station, how can I incorporate the situation, then I would say, you know, I'm sure you guys would have the decision of saying yes, you can move forward, no you can't.
1603 But he didn't. He decided to take it in his own hands and figure out how he can manipulate the situation for financial gain, when a situation after Mr. Blake at that point he realized is a point for him to just oh, I don't have to deal with this guy. I can take his money and run.
1604 At that point he decided ‑‑ he told any of us, myself and Mr. Knight, any contact with Mr. Blake and you guys will be fired.
1605 When I was speaking with the accountant at the adjudication, she said he used to dangle the station in front of us. It was like food. That's what he does.
1606 Ms Norris, who sat on the stand and lied and said I was a volunteer, that I told her I was a volunteer, lied about that. I am the one who got her job at the station. And then all of a sudden she is on the board.
1607 You know, the judge, he asked her, he said what is your take on this? She said well, I was promised to be on the Board of Directors.
1608 So to me, I look at it as she lied in order to become a board, because Franc dangled the station in front of her and she took this position.
1609 COMMISSIONER MENZIES: Okay. You mentioned something there. What we heard this afternoon was that Mr. Capozzolo had, over a period of seven years, only taken about $10,000 I think ‑‑ I stand to be corrected ‑‑ out of the ‑‑ that's what the books showed in terms of revenue from the company.
1610 You just said something that indicated that he was making money doing it.
1611 MR. DRYDEN: This is the ‑‑ how it worked is we sold advertising and we were supposed to make commissions off this advertising. Mr. Capozzolo asked us, you know, the station is not doing well, can you guys just ‑‑ I am going to bank the money you make and eventually when the station gets running, I will pay you out.
1612 At that point Mr. Knight and myself, we went out and we talked to advertisers and we got some advertisers on board and Mr. Knight attracted a few nightclubs. They paid major dollars for live‑to‑airs.
1613 That money in return Mr. Capozzolo would get every week. It would be a weekly fee of ‑‑ I think it was ‑‑ and don't quote me, but I think it was two grand or so.
1614 Now, in my adjudication ‑‑ and I don't know if this part is in there, but Rita Tully, who is very important to this whole entire operation, she used to say the reason why she left is because Mr. Capozzolo was gambling the money owing.
1615 She would take ‑‑ he would go to advertisers, collect the cash and then do whatever he wanted to do with the money and she couldn't keep the books any more because that's what he was doing.
1616 I know that he had a salary that she paid him every month, but I don't know the amount. He had that for ‑‑ since 2005.
1617 COMMISSIONER MENZIES: Thank you very much, Mr. Dryden.
1618 MR. DRYDEN: Thank you.
1619 THE CHAIRPERSON: Counsel...?
1620 MR. McCALLUM: Just on one point.
1621 You said early on in your presentation that you are preparing music reports at one point?
1622 MR. DRYDEN: Yes. When you guys actually sent in a reply for compliance back in '06, I was given the actual discs that I had to take home and listen to these discs. At that point Mr. Capozzolo said well, okay ‑‑ for instance, as an example, if a Celine Dion record comes out, it is considered Canadian. She is a Canadian artist so we will take that as Canadian content. No one really knows, you know, if she follows the Maple rule, but she is Canadian so we will follow that.
1623 I also had to take the talk time, so when a jock was talking on a talk down set, I would have to say okay, he took a minute and say he mentioned an artist. He would say okay, use that as your educational talk.
1624 At that point I had taken I think it was three discs and listened to it, and there is no possible way. I mean, I'm taking talk down sets of 30 seconds, 32 seconds and I'm adding them up throughout the day on top of his morning show.
1625 There is no way he could be in compliance at that point. It is manipulating the system.
1626 It is saying talking about ‑‑ a hypothetical example ‑‑ Michael Jackson and what he is doing currently in his life is educational. That's not educational; that is artist information.
1627 MR. McCALLUM: So are you saying this led to a failure to provide logger tapes?
1628 MR. DRYDEN: Yes. So what happens is, he had gone on vacation and he had come back and realized there is no possible way to hand in these loggers because it was off. That is the reason why you guys had your hearing in September '06.
‑‑‑ Pause
1629 MR. McCALLUM: If I look at the decision 2007‑37, it talks about:
"In response to the complaints noted above, the Commission requested that Harmony supply logger tapes for the week of 17 to 23 April 2005." (As read)
1630 Is that the one you are talking about?
1631 MR. DRYDEN: That's correct, yes.
1632 MR. McCALLUM: "Following extensions,
the Commission informed the licensee that Harmony's failure to provide the requested material constituted a violation." (As read)
1633 So that is the ones that you were monitoring at the time?
1634 MR. DRYDEN: Correct.
1635 MR. McCALLUM: Thank you.
1636 THE CHAIRPERSON: Just one question, Mr. Dryden.
1637 Did I hear you say that Mr. Capozzolo did the morning show?
1638 MR. DRYDEN: Yes. He did the morning show from 7:00 until 10:00.
1639 From 6:00 until 7:00 was prerecorded and then from 7:00 to 10:00 he was on the morning show as well as a few other people in the station.
1640 THE CHAIRPERSON: Okay. Thank you.
1641 Thank you very much for appearing. We appreciate it very much.
1642 THE SECRETARY: Thank you, Mr. Chair.
1643 I would now like to call upon Manjit (Molly) Blake, Robert Eddy Blake, Peter Bjorklund, David Kovnats, Chris Knight and Chris Oliver to present their intervention.
1644 You have 40 minutes for your presentation.
1645 Thank you.
1646 THE CHAIRPERSON: Madam Secretary, is there a handout at all? No?
1647 THE SECRETARY: There is no handout.
1648 THE CHAIRPERSON: Okay. Thank you.
INTERVENTION
1649 MR. KOVNATS: Mr. Chairman, I don't know that we can finish in 40 minutes, but we are going to do our best. These people all filed, they filed at the same time and they sent the package up at the same time and it was treated as a panel, which is not appropriate in our opinion. But we are still going to try, in the interest of trying to keep time to a minimum, to comply within the time periods. But we certainly don't want to be limited from putting forward all the information.
1650 What I have asked and what I have explained to The Secretary, because each person should be able to speak, is that the person who can tell you the best about the whole story is Mr. Eddy Blake.
1651 The other people will then advise you or confirm to you that anything that they knew about that Eddy talked about, they are confirming.
1652 They are not confirming everything because they don't know everything that went on, but the parts that they do know, if they believe that Eddy said it properly, they will say "I confirm this and I just want to add one, two, three" or whatever, in the interest of saving time.
1653 So I am going to ask Mr. Blake to go back, give the history properly.
1654 I have asked him to go as quickly as he can and hit the highlights, but I think it is absolutely imperative that we have all of this information before you.
1655 Eddy...?
1656 MR. BLAKE: Good afternoon, gentlemen and ladies.
1657 My name is Robert Edward Blake for the record. I am speaking on behalf of DSH Holdings and Promotions, which is the company that I run and do promotions with.
1658 Basically everything that I am about to say is 100 per cent the truth. I am not coming here to attempt in any way to try to mislead anybody here in this room by a lie or any mistruths.
1659 In 2004 I was running and owning and operating a nightclub in the city called Fat Daddy's, 165 McDermot and Rory. It is basically an all hip‑hop club. It was the first time ever done in the city where a club would pretty much make its whole entertainment package based around hip‑hop, with new music, old music, underground hip‑hop.
1660 There are variations of ways that hip‑hop can be played on radio. That is one of the things that was for education that I wish to extend to you guys today, and ladies.
1661 I met with ‑‑ at the time I was getting radio advertisement through HOT 103. For nine years I did all my advertising through HOT 103. I ran the most successful hip‑hop promotion company in the city to date and I prided myself on having radio spots, doing my own creative writing. I wrote my own spots. I voiced my own spots and I worked with the producers of HOT 103.
1662 I even worked with Mr. Brian Worley at one time when he worked at HOT 103 as the General Manager in the late '90s. So I am very familiar with radio itself.
1663 And to that point Mr. Tony Mariani was my sales rep for HOT 103. He and I had done business for about three years and we have built up a very, very respectful rapport with each other. He often commended me on the fact that as far as hip‑hop goes, I was the only one in the city promoting it and making money on a consistent basis.
1664 That's how I knew Mr. Dryden. Mr. Dryden used to be a DJ for me. Chris Oliver is a DJ for me and Chris Knight was a hip‑hop promoter.
1665 So Mr. Tony Mariani brought the position that Mr. Capozzolo owned a frequency. At that time it was called WAVE 107, WAVE 107 and it played all Canadian content music. He didn't play one song of hip‑hop and that was the extent of his knowledge in hip‑hop itself.
1666 So when Tony Mariani told me that this guy had a frequency and he was not the richest guy in the world, to say the least, but he said he needed help financially to get everything going and it was basically just stagnant, just dead.
1667 So before I even met Franc I also ‑‑ with my promotion company I run a security part of it, too, which does personal bodyguard and also event security for multiple ‑‑ like many, many, many guys. Peter Bjorklund, he worked with me with my company installing security cameras, and we ran a very successful security camera company which is Internet access so it is kind of high tech ‑‑ not just the electric thing with a VCR.
1668 So basically I talked to Peter. I said Peter, this has come on my table. Everything that I was doing business‑wise, I would always confer with Peter. I promoted over at least 2,000 club night shows, boxing promotions. I box myself. So Peter helps me in all that, helps me organize it, because one man can't do it all by himself.
1669 So I talked to Peter and I said this is what is going on. And this frequency I have heard could have the ability ‑‑ I could turn it into a hip‑hop station and I just need to know the ramifications of it. So could you do a research on the bylaws and let me know what is going on before I talk to this man.
1670 So that's the way I do my due diligence in business.
1671 So Peter did. He told me this is what it is. It is a campus instructional licence. It has a school joined with the programming and the programming is set up to build a budget for the school and run an operating budget for the school, but it is non‑for‑profit. So the programming is separate from the school.
1672 I was like very good. That's very unique. I haven't heard a licence like that before.
1673 So basically me and Peter did ‑‑ well, Peter did the research and I approached Franc. I called him. Tony gave me the number so I called him and we had several meetings. Johnny G's was located like 20 steps from my club at the time, so he used to come down in the daytime and sit and we got to get to know each other and we started getting familiar with what we exactly wanted to do.
1674 So I told him that I had an idea to bring a hip‑hop station to the city, and I was going to name it Flava, Flava 107.9, and he said well, let's just iron out the details.
1675 So it probably took us about what, like maybe a month and a half because the conversation was very extensive because Franc was not being forthwith with all the information. We could tell he was holding things back.
1676 So we took it on ourselves to go and find out everything we had to know about this licence before we entered into any contract with him.
1677 As of January 29, 2004, we finally narrowed it down to how we wanted to do it and we were at my home at 98 Bethune Way, negotiated at the time just by chance.
1678 I played nine years professional football, three years in the NFL, three years with the Bombers and also in Europe in the World Football League. So I have a lot of friends in pro football and in football in general. And at that time Ronnie Williams and Ryland Whitman was at my house visiting me that day.
1679 So they was sitting over there. We were sitting at the table talking and we finished up the negotiations. We signed the contract and Franc received $10,000 cash upon signing the contract from Peter.
1680 Peter also gave him the money for the membership drive, because Peter knows more about the licence than I did and he made sure that everything that we did and everything that we signed was in accordance to the bylaws of NIB 95.9, of the station.
1681 So basically we signed the contract. Franc signed the contract. We gave him the money and everything was fine. There was not a problem; there was not an issue.
1682 MR. KOVNATS: Eddy, excuse me for one moment.
1683 MR. BLAKE: Yes...?
1684 MR. KOVNATS: You actually paid memberships for ‑‑ who paid memberships?
1685 MR. BLAKE: Peter can explain that.
1686 MR. BJORKLUND: That is correct. Underneath the Corporation bylaws a membership drive can be invited by the Corporation direct. It is a $10 membership fee.
1687 MR. BLAKE: Yes. One thing I would like to add to the Panel. I sit here all day and I have been waiting for four years to be in a position like this to speak to you about this matter, because there is a lot of untruths being told and a lot of misinformation.
1688 So I take it as an honour to be able to tell you the truth and what really happened and who Mr. Capozzolo really is.
1689 So at that time I told Franc I would provide a budget for the radio station from the programming. All the programming will belong to DSH. All the advertising will be sold through DSH. He had no problem with it; everything was fine.
1690 So I brought in all the staff. I paid for all the staff. I brought in Ronnie Williams. And all of these people were students. They came in his students.
1691 I made sure. I said listen, you guys have to come in as students, work with the school and then when you get finished come on over to the radio part and I will put you guys on the program and give you guys a chance to have a career in life or whatever.
1692 So Ronnie Williams, Devol Dryden, Chris Oliver, Chris Knight, Gorba Jackson, Charles Peterson, Nigel Ronan all was on the payroll of DSH, getting paid by me every month.
1693 We signed the contract in January. We worked under the terms of the contract all the way to September.
1694 But little did we know, one day an unfortunate incident happened, or whatever what happened, a disagreement between Peter and Franc at the radio in front of the receptionist, Beverly. I was at the nightclub. So a disagreement happened and Peter reminded Franc ‑‑ he said Franc, listen, we are partners here man. You know, if you don't allow us to fulfil our agreements that we all agreed on, we can vote you out of here.
1695 And he was upset, to say the least. So he come running down to the club, cursing and screaming, saying all kinds of negative things, saying he wanted to get rid of Peter and all this and all that. He said I want to get rid of him. He said he's not going to vote me out. He said I took the contract to my lawyer and my lawyer told me that I signed over my whole radio station to you guys.
1696 I said you didn't sign over nothing. You just made an agreement and we are going to follow it, period.
1697 And many a chance he tried to get me to tear up the contract and I said no, because you signed it; you have to honour it as an obligation as a man. Franc, what's wrong with you? I said, you know, just work with Peter. We are all going to work together and that's it.
1698 So little did we know, he took the extreme measures of getting out of the contract and we didn't know this until '06. And I will get to that later.
1699 So basically we worked under the terms of the contract for eight months.
1700 I have receipts for everything that I have given this man, and not one time today did I hear him mention my name as a major creditor. That just shows you what kind of truth he is going to provide for you guys today, because I was waiting for him to say yes, you know, the major creditor of this debt that we have is sitting back here, because if it wasn't for Eddy Blake there would be no Flava 107.9.
1701 I want that on the record as well.
1702 So what happened is Franc decided that he would go visit the police department and he was taking the monthly budget money to the police department, which they have in their possession right now.
1703 He created untruths to the police department, villainizing me in a way that encouraged them to have me arrested in September. So when I got arrested, Franc decided ‑‑ but not at first. So I got arrested, and the day after I got arrested my wife went to the radio station and she told Franc ‑‑ she said I know you have seen the paper and, you know, it's unfortunate but my husband is accused of a crime. He is not convicted of a crime. And to this day I'm not convicted of any crime.
1704 So Franc said Molly, don't worry, you know, we know Eddy and, you know, we are going to support Eddy. He is only accused of a crime so we are going to support him. His contract is still legitimate. I ain't worried about it.
1705 So the very next day a lot of the guys that was in the radio station that I hired and that I was ‑‑ that I had paid for eight months, told me hey, Eddy, Franc said that he is not going to honour your contract. He is going to take your programming and sell it himself.
1706 I said what? I said that can't be true. I said he's not like that. Only a low‑down person would do something like that.
1707 So that's what he did. And needless to say, it has been four years later and we have seen no accounting. We have seen nothing, no minutes, resolutions to all the people that he has brought on to the frequency ‑‑ I mean to the directors.
1708 He would go down to the company's office and with his hand write people's names out, right people's names in, in front of the Director of the company's office.
1709 So that itself is like ‑‑ and this is the true Franc Capozzolo.
1710 So basically we worked under the term, we signed the deal. In September he threatened me with the police, after I got arrested. The day I got out on bail, I went to the radio station and made payroll to everybody on this list. I have receipts to that effect.
1711 This is September, maybe the end of September.
1712 So that the I get there, Franc said, well, the cops say I don't got to honour your agreement and, you know, you can't touch me, and this and that. If you come back down here, I'm going to call the cops and they said you were going to get arrested.
1713 And my criminal lawyer had gave me advice, because he knew certain things about Franc. He said stay away from that guy. That guy is trying to put you incarcerated for something that you ain't done, but he is trying to steal your stuff so you have to stay away from him.
1714 So I had to make a decision at that point. I had to make a decision whether to be an ignorant man or be a man of reason. And I said you know what, the directors has not even got anything to do with me. I am not a director. I am a subcontract to the programming.
1715 Peter, my wife and Peter's wife are directors.
1716 So at that point Franc threatened everybody. He started calling the cops on all the guys that I brought in there, threatened the guys that I brought in there: If you talk to Eddy, if you tell him anything that is going on in the radio station, I'm firing you ‑‑ referring to all of the people that worked there as niggers, baboons and monkeys, saying it to them in their face. And thanks to Eddy, I've got to treat you all like that.
1717 These people are here today to testify to that.
1718 So basically I waited for about a month and a half after I got out and I went to Gary Krushen from the CRTC and I told him about what's happening. And he told me, he said yeah, Franc told me that he signed a contract with you but he said the cops say he don't have to honour it.
1719 I said how much ‑‑ there is no way nothing like that will hold up in court. This is a legal document. It is filed at the company's office. We did everything by the book, and this man is trying to use a situation to his advantage basically.
1720 So Gary said ‑‑ you know, I showed Gary the contract and he said oh, he said this was just a programming contract. He didn't ever say anything about directors.
1721 That's how he is about his information; that he's going to give only what he wants you to know.
1722 So I said no, no, this is a contract you signed and this is it. I said you know, the programming is what I do from my promotion company for profit for the radio, and I explained to him about Flava and about the hip‑hop radio station. There was no introduction to hip‑hop itself. There was no learning programs for the things that they should have had as far as bringing music from where does hip‑hop begin, how did it start and where is it now.
1723 When you asked earlier about spoken word, they had to refer to a chart and the reference to the chart has nothing to do with spoken word because spoken word is more like poetry or something that you articulate on the spoken word level. It has nothing to do with news.
1724 That is the familiarity that people have about hip‑hop. Unless you are a person of my genesis or someone in the neighbourhood like I grew up in, which there were white people, Puerto Rican, black people where I was in the poor neighbourhoods, they all knew about hip‑hop.
1725 But somebody who has luxuries that I never seen and things like that, they don't know nothing about hip‑hop.
1726 There is one more thing that I want to add. You know, one thing that I took pride in is the fact that I came from nothing and ain't nobody give me nothing. Everything that I ever had, I had to work for.
1727 So when I created ‑‑ I say I, but with the grace of God, he gave me the ability to think and create a situation like Flava and put it together for the community that it exist in.
1728 We were exemplifying the fact that diversity ‑‑ we was diversity in the marketplace with the music itself, because there was no other hip‑hop station in the city who was representing diversity in administration because we were supervisors.
1729 That was in diversity is our skin colour and then we was representing diversity as ownership.
1730 So I mean like we put together all the qualifications that needed to be put together. We don't have frequencies here, there, everywhere that we have that ‑‑ we don't have a luxury like that. We just have this one that we put our life savings into, and thanks to a person like Franc Capozzolo, he thinks that he can steal it based upon the way ‑‑ whatever.
1731 I don't want to get into it, but I'm just saying I am very, very emotional because this is my life. This is not a game. This is not a joke. This is for real.
1732 Franc is ‑‑ he is the reason we are all here. He signed the contract, he took the money, he took the money for eight months, and he just ‑‑ this whole thing is about Mr. Capozzolo, to be honest.
1733 As far as the contract goes, Peter can give you more information about it.
1734 If you have any questions to me, please, feel free to ask.
1735 MR. KOVNATS: I would like you to clarify one issue.
1736 How much money does the radio station owe you, approximately?
1737 MR. BLAKE: Approximately over $200,000. Not quite $300,000, but over $200,000.
1738 And he never mentioned that once here. That is his truthfulness.
1739 Anybody...? Who is next?
1740 MR. BJORKLUND: Just before you go.
1741 The disagreement that Franc and I had was based upon because we were not in compliance and I was fearful that we would lose the licence.
1742 I asked him very hard questions. Where is the letter from a college? You said you had one; you can't produce one.
1743 Where is the, you know, making sure that the logger tapes are all working and all of that.
1744 And he couldn't answer those questions.
1745 And I said listen, Franc, it is unacceptable. You are not a board member any longer. You have to accept direction from the board members, which I am one of them. You are a station manager. You work for Harmony Broadcasting.
1746 And that is where the disagreement came in.
1747 MR. BLAKE: I forgot which month was it, but I think it was around June, July ‑‑ around July. Because Franc was so adamant in the fact that black people didn't know anything about running a radio station, he said you guys don't know anything about running a radio station. You have to have a white person in there. I said that's not true, Franc. Have you ever been down south? Have you ever been to Atlanta? Have you ever been to Mississippi, Alabama, Georgia, Tennessee? I said you can't say that.
1748 And that is very ignorant of you to say something like that, especially since you have been in the radio business for 30 years. You know, that's wrong.
1749 So what I did was, to show him that he was wrong, a friend of mine by the name of Sean Taylor, he is very, very well‑known in the hip‑hop industry around the world. He works for Ludacris, Ludacris out of Atlanta, and they ran a campus instructional radio station in College Park, Atlanta, Georgia, for around six years.
1750 From that point they have done so well that they have moved to V103, which is a commercial station in Atlanta. From that point they had done so well that Sean Taylor moved all the way to New York City and was a program director at HOT 97 for seven years.
1751 So with that information I flew him here. It cost me a lot of money. I flew him here for the weekend to teach at Flava, at the radio station, to teach a weekend course on what is expected of an air man and things like that, just to familiarize the guys with someone who was very knowledgeable about the real business of radio not pretending they know stuff.
1752 So at that point Franc was really shocked that I knew someone on that level and he was here for the whole weekend. And it wasn't until the week before that when I tried ‑‑ because all of these people, all the staff was initially students. That was the key for them coming to the radio station.
1753 So we tried to have a class in the radio station, because Franc said he was writing the curriculum.
1754 And some of the curriculum was also written by Mr. Marty Bradinski, in the back, who I also introduced to Franc when he was doing the Canadian content.
1755 So I said, you know what, I said Franc, we can add to the curriculum because in hip‑hop there are certain things that they don't teach in ABC or a Red River College. They don't teach turntablism, they don't teach creative writing and hip‑hop, they don't teach spoken word, they do not teach ‑‑ there was about six curriculums that I wanted to add to their curriculum that would benefit us so we could do some teaching at the radio station physically.
1756 So we had a class that weekend and the guys that was here now, they was in the class. And I left the room for about 20 minutes, and then I heard a loud boom and when I came back Franc had threw a desk at one of the students.
1757 So this is the kind of person that people are trying to get to be an instructor?
1758 I don't think so. I mean, like this guy is ‑‑ I can go on and on, but I think if you have any questions, just ask me.
1759 MS BLAKE: The contract that Eddy refers to was submitted in our intervention package, so there should be a copy of it available to you. And, as mentioned, Peter does have the original.
1760 I just want to mention briefly, I know Mr. Lewis was up here earlier and said that it would be a miscarriage of justice due to the procedure for us to be considered and weren't, as we wished. But I think it is a miscarriage of justice that we are here at this point because of the actions of Franc Capozzolo.
1761 To give a little bit of background, Eddy was arrested with criminal charges in September of '04. Now, an obvious thing to point out, he doesn't look like the rest of us, he doesn't act like the rest of us, he sure doesn't dress like the rest of us. So people look at him and they make stupid assumptions about him: he's stupid, he's black, he must be a criminal, or he must at least know gang stuff.
1762 Which conveniently was actually mentioned in the Free Press yesterday, tying it into this hearing. So just to bring that up.
1763 To speak to Eddy's charges, I want to state the obvious. He is innocent until proven guilty.
1764 As I mentioned, he was charged in September of '04. His preliminary was in February of '08. The judge as yet has not given a decision as to whether to proceed, what to do. We are still waiting.
1765 So on top of the four years of limbo that we have been waiting on this, now we have to deal with this other stuff that has been added on top of it.
‑‑‑ Pause
1766 MS BLAKE: I'm sorry, I'm just trying to get myself together here.
1767 Another thing that was mentioned earlier was Franc had mentioned that when he had to submit the log tapes that he didn't have the stuff ready on time so he called to the local office and said please wait, I will have it for you, and that they were kind enough to wait. I think he said they stayed an hour late to let him submit the stuff.
1768 Now, we submitted a package to the CRTC which was subsequently returned to us because we were told that it was submitted too late.
1769 So I am kind of curious how come there is a different standard for him than there is for us, or for his ‑‑ the group that he is with than there is with us.
1770 To speak to the issues of the bylaws, I did want to just clarify the June 17, 1999 bylaws, NIB 95.5, they are signed and it is in the package, but it is just that the papers were out of order. So I just wanted to clarify that.
1771 In those bylaws it does indicate that there needs to be a minimum of three directors. CRTC was aware of this and the ongoing issues and concerns.
1772 Eddy mentioned that he had been speaking with Gary Krushen and literally they were speaking on almost a daily basis. He was intimately involved with the issues; he was intimately aware of it.
1773 There were stamped documents received from the CRTC stating that we were the board in June of '05.
1774 Now following that, what happened was again Franc went to the company's office and submitted many incorrect ‑‑ yes, incorrect documents stating that we were not the board and putting people on and off.
1775 As Devol mentioned, he was put on without any sort of notice. He was told after the fact. Devol himself was not a member. He didn't pay the $10 to be a member, so I don't know how he could even be put onto the board.
1776 When we brought the issue to the local office, saying that we are the board and that we need to be recognized as the board and that Franc can't just go in ‑‑ people can't just go in and change these things and you guys just blindly follow it.
1777 At that time, in 2008, the office said yes, now we understand that anybody can walk into the company's office and change documentation without having the legal grounds to do it. So Franc can easily ‑‑ or anybody could walk off the street and say I want the documentation for Harmony. I am submitting something; I am the Director.
1778 So there is no ‑‑ the company's office is really ‑‑ they are a bookkeeper here.
1779 MR. BJORKLUND: Just a minute there, Molly.
1780 I would like to know what the CRTC does recognize as a legal document. Sorry.
1781 MR. KOVNATS: Wait. Let Molly finish.
1782 MS BLAKE: To go back to the contract or understand one of the things that we have heard, again, first Franc said he didn't sign the contract, then he said yes, I did sign a contract but the police say I don't have to honour it. Then he has told Mr. Asper or per Lisa Stiver, he said that that is not really my real signature on the contract.
1783 I mean, now he has three different excuses for it.
1784 We have the original. It can be looked at.
1785 I find it completely offensive that he would suggest that we would stoop to a level that we would make up some sort of documentation to prove our point. I don't have the time or energy, when I am dealing with the things that my husband is dealing with, to try and be forging Franc's signature.
1786 Again, it is one of three stories.
1787 The other thing is that Franc and Eddy did follow up with meetings through the law firm of Fillmore and Riley to revise the original contract, because, as it Eddy said, Franc had issue with it. So they had several meetings with the law firm to try and revise the terms of it. They could not come to agreement so the contract had to stand as it was.
1788 Also, another thing that I would like to mention is my understanding in discussion with Mr. Robert Ramsay, this Senior Director of Radio Policy and Applications, he has indicated to me that the actual authenticity of the contract is not something that would be questioned because it would be accepted at face value.
1789 So again, I'm not sure why the issue is being brought up.
1790 December 22, 2004, as related to the non‑compliance, the board, Peter, myself and Paula, recognized that Franc was not being compliant and he was removed as of the GM. There are minutes to say that.
1791 The same document was submitted to the CRTC, stamped as received in their office on December 23, 2004.
1792 We were advised by counsel Don Douglas that there is a process that should have been followed to do this, taking him off the ‑‑ removing him as GM and that we had not actually followed the correct process. So we resubmitted. We redid it. We notified him. We did the minutes. We did everything we were supposed to do.
1793 And on March 10, 2005 again we removed him as the GM.
1794 Another thing that Franc mentioned earlier that I would like to just speak to, he said that one of the guests who came said that oh, this is quality talk for a hip‑hop station, and his response was "Hey, whatever works".
1795 Again, I'm not sure why hip‑hop is considered that they can't have quality talk in their station. You know, just because we dress a certain way or we talk a certain way, we are not incapable of speaking correctly or having intellectual conversations.
1796 We have been intimidated by Franc. As Eddy said, he has threatened to call the police. He has called the police on others. He has sworn, he has been prejudicial, he has been discriminatory, he has been racial, he has called out racial slurs.
1797 He has used the police against us.
1798 He claims that, you know, he suffered so much. I'm not quite sure how he suffered because we are the ones who four years later are still not even being acknowledged as the true board.
1799 All of this has happened with the footwork and the energies that were put forward by us and it was taken off.
1800 Now, that is actually evident in the fact that when the station first started, it had a very high listenership and was rated well and then, as we got further and further away from being involved, then the ratings dropped and dropped and dropped to the point where they just stopped.
1801 As I say, Franc has used the police to intimidate us and I quite honestly feel that the Commission has also been used by Franc to take part in this. We are not being duly recognized. We have not been given any notice.
1802 There was question as to why were we not at the previous meetings or at the previous hearing. Again, we were not notified.
1803 And beyond that, we had been, we have been threatened. We have been physically threatened. Our safety has been threatened. Eddy was charged already.
1804 I mean, there is so much more that is beyond this that needs to be ‑‑ I mean, you guys need to ‑‑ excuse me, the Commission needs to know about so that a fair decision can be made.
1805 The lawyers who were working with us, Don Douglas again, with the firm Thompson Dorfman Sweatman, is now the same firm who has abandoned us or have gone with the big money, big business, big everybody.
1806 As Eddy said, this is our life savings, this is it. We are out, you know.
1807 I think it's completely unfair what has happened to us and the CRTC has endorsed this, this inappropriate behaviour and this favouritism, which we take objection to.
1808 In January 18, 2008, I went to go revive the corporation and wanted to revive it as a director. The company's office refused me that and said that there was ‑‑ that I could not do that and that I had to revive it as a creditor.
1809 So somehow the company's office has been now taken into this whole thing and has been very involved, and I'm not quite sure where their role is or how they have the authority to do that because again that is not their place.
1810 Through documents and information that we have found, for instance such as on the CRTC website, you do indicate that you are striving for diversity or are interested in diversity.
1811 As Eddy mentioned, we have diversity in the board, in the music, in the staff that were hired. However, because the Commission has been working in concert with Franc, who has been non‑compliant, discriminatory, I say again prejudicial, this is acting against all the diversity that we have put our hard work and effort into.
1812 Additionally, I find it somewhat hypocritical that, you know, when you talk about human rights, our rights have been walked all over and nobody recognizes that.
1813 I don't know what has to happen for people to realize that Ron has happened to us and that this is not fair. They see him and they think no, he ‑‑ Eddy must be wrong. He must be, because look at him.
1814 MR. BLAKE: I can't change the way I look. God did this.
1815 MS BLAKE: So as the proper and true directors of Harmony, we were not given notice by the CRTC about anything. I am unclear about this, again, as why, since the CRTC did receive paperwork indicating we were the true board, there was nothing legal that was submitted to them indicating that we ever had resigned, we had been taken off.
1816 There was no change that was ever legally done.
1817 Then I also wonder why the CRTC has not only supported but has taken a role in this discrimination that has happened against us.
1818 Actually, to be honest, the only reason that we were able to hear about the proceedings and the actions that have been taken through Mr. Wortley, et cetera, was we read an article in the paper that said that the station was reopening and that they were taking it over.
1819 That was the only way we found out about this. That's why we moved forward with it.
1820 Franc has acted illegally and immorally over the past four years and the CRTC has followed with him. What has happened has happened ‑‑ what has to happen for us, who are again, as you can see, a majority of visible minorities, to be treated with the same respect and dignity that is being afforded to the rest of them.
1821 The true character and actions of Franc cannot continue to be not only supported but endorsed and rewarded by the CRTC.
1822 I think, again, if there are any questions, I can answer them.
1823 I just want to quickly refer to page 16 of the document submitted by Devol Dryden, the decision.
1824 You know, Franc got up here and said that there are people in this room who should be in jail, behind bars. And I would submit that, you know, somebody in a glass house should not be throwing stones.
1825 This document on page 16 says on it here that Franc is not credible. That's it.
1826 MR. KOVNATS: Peter...?
1827 Wait a minute, before you start.
1828 MR. BJORKLUND: Yes...?
1829 MR. KOVNATS: Unfortunately, people are quite emotional and because we are under the time constraints, you may not be getting the whole picture. I will sum up at the end.
1830 But understand, there is a tremendous amount of emotion. You are dealing with a volunteer board who were truly volunteers. Eddy was not a volunteer, nor a board member, but I want you to keep in mind that what you were getting, they are just trying to not repeat so it is not coming out in as logical a fashion and as cogent a fashion as I would like tonight.
1831 I think it is important and I think you may get the flavour of what is really happening here and what has happened.
1832 Peter, I'm going to ask you to please tone it down and go through it step by step.
1833 MR. BJORKLUND: Yes, I'll keep it very brief.
1834 One of the questions that I asked about the legal document, what the CRTC would recognize as the Board of Directors, was I may have it in my possession. That was the reason for that.
1835 Now, I must object to the CRTC not serving the mandatory orders to the appropriate body of directors who consist of Manjit Blake, Paula Bjorklund and myself, Peter Bjorklund.
1836 Again, Molly has summed up and Eddy has summed up the deception that continues to grow out of Franc Capozzolo to his even new apparent partners. And if he is to remain as a general manager or somebody at that station, as a citizen I will thoroughly object because it is not somebody that I would think is a mentor.
‑‑‑ Pause
1837 MR. KNIGHT: Well, I can't say good afternoon. Good evening. My name is Chris Knight, also known as Escalade.
1838 I was brought into the Flava family from Mr. Eddy Blake and Molly. Eddy I have known for quite a few years. He has known me as a promoter and also an MC myself. So I know a lot about the hip‑hop culture and also the promoting aspect.
1839 I also have my own promotion company as well, MC Productions. He has known about that. He brought me in, and I was brought in as a sales guy as well as a promotion and also an on‑air personality, which I later developed.
1840 At the same time I was doing scriptwriting, so basically writing the commercials, voicing the commercials and providing sales for Flava 107.
1841 What I would like to talk mainly about today is, number one, my dismissal in regards to Mr. Capozzolo, a dispute over money and issues regarding lack of payment support by Mr. Capozzolo.
1842 I had to go to the Labour Board. It had a lot to do with my commissions that I wasn't paid for, for numerous advertising that I brought into the station, nightclub events. I was considered not only the salesperson and the promotion person, but also more so as Franc's right‑hand man in regards to what happens with sales and how we kind of direct the attraction of what we are going to do to promote the station and also get sales from different clients.
1843 So I was always there. I was the main person that was with him in that regard.
1844 But I guess our relationship obviously dissolved due to the fact that we were like students so we weren't very respected by Mr. Capozzolo.
1845 Numerous times he would use terms "nigger". He would state things like that. This is typical of Eddy nigger bullshit. I definitely want to say I apologize for using these terms, but these were terms that were used at me, Mr. Dryden as well, and also Nigel Roden.
1846 For any reason that there was a discussion or dispute about programming or anything, it always led to Mr. Capozzolo using derogatory remarks.
1847 But basically Mr. Dryden said earlier in regards to the family unit that we kind of put together, us as DJs and emcees, the game of hip‑hop and a love for the music is what kept us here. It wasn't Franc.
1848 Mr. Capozzolo basically, even with all his negativity and derogatory remarks, we kind of helped the station continue because this is something that we have been doing since we were kids and we believe fully in the dream that Mr. Blake put together, naming Flava 107, also paying for all the promotional material, the Flyers, the banners.
1849 I personally picked up myself ‑‑ I helped organize a street team who went out there numerous times to help promote the station. I was also at many events that Flava 107 has done, live‑to‑air events. I was the main character alongside Mr. Dryden, as well as another individual who is no longer there as well; he is at 103 right now.
1850 We were all brought into the radio station for our ability and our talent and our respect and our love for the music.
1851 There was no mention of any hip‑hop station in the city on this level until Mr. Blake introduced the idea. Franc may have had the licence prior to this, but there was no discussion that I can understand or believe why he would choose this format without individuals involved in this hip‑hop family, in this scene, more or less what we call the scene.
1852 There was no reason for him to introduce this into the market, the diversity of hip‑hop.
1853 The Urban music is played on 103 and Q94 and a few of the other stations, to some minimal extent. But Flava 107, on the radio aspect of it, the right people were brought in because it was the way of life for them. This is what we know. This is what we do and that is why we were brought to the station.
1854 Franc thought that by using individuals in this scene to manipulate us in the fact that well, you know what, I have a radio station, you have an opportunity to be on air. I own you, I tell you what to do and this is basically our day‑to‑day and this is how it went.
1855 If we wanted to voice our opinions in regards to promotion, advertising, no, no, no, we don't operate like that. We are a campus radio station. Neither Franc or any of us at the time truly knew what the value of a campus radio station was, not to mention the legalities and the practices of what we were allowed and not allowed to do.
1856 All we knew was our music and we were relying on Franc Capozzolo, the GM, to instruct us.
1857 At numerous times and events, publicly and also at other CRTC hearings, he wanted to blame us for not being compliant. We are students. We are to learn from you. What we provide to you is the lifestyle, the music format and the introduction of hip‑hop, our culture, to you. You are to provide the instruction on how to continue and how to distribute this format out into the public.
1858 So at numerous occasions, you know, we would have incidences where we would be called a lot of negative names ‑‑ and I don't need to repeat them because there are other individuals here who have heard them publicly.
1859 I just want to go on record stating that Mr. Capozzolo, not only is he a shyster, not only does he not have respect for the CRTC because on numerous accounts we as individuals and employees/students, or what have you, we were privy to him discussing how he has lack of respect for your organization, for your practices and your beliefs and that you are nothing but bureaucrats. And we were all in the room present for all of these yelling matches that we got into in regards to non‑compliance, into blaming us for being out of compliance and that "I could put anybody behind that DJ booth and do a format because hip‑hop is just a format".
1860 To us, that was a direct insult because we have been doing this music since I was 14 years old. I used to promote parties when I was a kid until now. I'm 37 years old now and I know every and anything there is to know about hip‑hop, both on the radio aspect, both on the music aspect and the promotional aspect.
1861 And for this individual who has been in the radio for 26 years, who only knows one typical format or a commercial end of it, but not the true life of hip‑hop, for him to take advantage of us not only because we are maybe not in the educational format of radio like him, or maybe because we are not in the financial status, or whatever the reason was at the time that we all were brought into the station ‑‑ he manipulated us, he used us, laughed at us, didn't want to pay us a time when we were due.
1862 The station was not making money. We came up with ideas and different ways promoting that I know personally as a promoter to try to help Franc create more revenue.
1863 His only answer was I can't pay you guys, I can't this, I can't that; nothing but excuses for months. Go out and sell.
1864 Me, as a salesman with a promotion background, I did every and anything that I possibly could to create new ideas, anything that could generate revenue for the station to keep Franc afloat so that we could keep our hip‑hop dream alive.
1865 All Franc wanted to do was basically use our energy, use our talent, manipulate the CRTC and the city, take advantage of it and walk away.
1866 And me, and everybody else who was involved in the station, rather, we put in hours of time where there was no payment involved. There was extra hours where I would be on the morning show from 6:00 in the morning and I would be going home at night at 2:00 in the morning because I would leave the station, I basically wouldn't even have to change and I would go straight to the nightclub, do a live‑to‑air event that probably ends at around 3 o'clock by the time we end up bringing all the equipment back.
1867 All those hours are not accumulated; they are not paid for. They are nothing.
1868 And at the end of the day what we are going to do is we are going to hand this licence over to somebody who has been running the station inappropriately for all these amount of years, not able to afford to keep the licence on because he ran the format down so much that it is not worth anything so that he couldn't even make revenue to keep his station on air.
1869 And at the end of it, not only rip Molly off, rip Eddy off, but every person who was involved in creating the element of Flava 107.
1870 Franc was a holder of a licence that all it was. The station WAVE, from what I understand and what I see, was not generating any revenue.
1871 His idea of creating a campus instructional to teach. What are you teaching when the very people that you allow to educate the public you are discriminating against?
1872 You are using the format to generate money so that you can go out allegedly gamble or what have you, but you choose not to pay your bills, you choose not to pay your employees, you choose not to recognize the CRTC's bylaws and at the same time you want to call all of us or anybody involved in the hip‑hop scene criminals?
1873 All I would say and suggest is that the CRTC should look long and hard before recommending that Mr. Capozzolo run any campus station or be awarded any licensing or be allowed to speak at any public event, being from all this amount of time that has been put into the station, his lack of respect for the community, his lack of respect for nationality, for race, for creed or belief.
1874 They put him on air so that he can educate the public. The campus station is so that people can take advantage of instruction and education.
1875 All Franc has been given is a gun, a loaded gun, a licence to continue hate and discrimination behind closed doors.
1876 I am obviously a visible minority. The majority of us who worked there were minorities, or that were volunteers or students per se, were all minorities, discriminated daily and daily.
1877 There are individuals who currently are on his side right now that have been working with him after I left the station, after Mr. Dryden left the station, that are also visible minority, and if in closed chambers you were to ask them if they were discriminated against, they would probably have to say yes, because Mr. Capozzolo has used this licence in the most wrongful fashion, has used the CRTC to skate by for all these years. And if you let him continue to do this, there is going to be more damage and more lives out there ruined.
1878 Me, I totally don't believe that it is a fair thing to do.
1879 MR. OLIVER: Good evening, ladies and gentlemen, everybody in attendance.
1880 My name is Chris Oliver.
1881 I just want to start off by saying I am hip‑hop from when I was born to right now. I have been a respected member of the hip‑hop community in this city since I have been 15 years old. I am now 25.
1882 THE SECRETARY: Mr. Oliver, you are over 40 minutes.
1883 Would you please continue on with your comments and wrap them up.
1884 MR. OLIVER: All right, yes.
1885 So anyways, I worked at Fat Daddy's Cabaret ‑‑
1886 MR. KOVNATS: Mr. Chairman, excuse me.
1887 Part of the problem that you're not getting all the information is that we are racing to get it out, racing.
1888 The document is there. We were to illuminate on them. We have been put together as a group. We didn't want to come as a panel and I mentioned that before. I am trying to accommodate. We are not going super over, and I really think that this is exceedingly important and that you should hear these people.
1889 I will sum up, but don't cut them off so they are racing and you are not getting the full impact of what they have to say. They all filed papers.
1890 The papers unfortunately were filed in a package, but three or four copies of that package were submitted and then the office assumed it was one presentation. It is not. It is individual presentations.
1891 THE CHAIRPERSON: We all have copies of the presentations, but please continue.
1892 MR. OLIVER: All right.
1893 So I worked at Fat Daddy's Cabaret, a nightclub that was owned by Mr. Blake, as the headline DJ there on Friday nights. Thursday, Friday, Saturday I was there anyways helping out with sound systems and whatnot for live bands we had, what have you, until summer 2004 when Eddy decided he wanted to broaden his horizons and get into the radio business, as the lease was approaching for the nightclub at the end of that summer.
1894 I began working at Flava, which was WAVE 107.9 at the time, in April 2004 setting up the sound libraries and checking each song on numerous websites to determine what position the song reached on Billboard charts, how long it was on the chart and if it became a hit or not.
1895 This was done on every single song that was to be used in our new sound library to appeal to our target market.
1896 I had my own designated office where I did this almost every day until the official opening day, which was September 3, 2004.
1897 Towards the end of that summer my girlfriend at the time had begun to assist me in looking up certain information needed for the music in our sound library, as she was going to be the second secretary when the station opened. She help me for the time being prior to the station going on air.
1898 About a week or so after the opening day, September 3rd, Mr. Blake had been accused of a crime. My girlfriend and I at the time had continued to work at Flava 107.9 for about a month or so afterwards when we were approached by Franc Capozzolo and told that the station wasn't making any profits and that we could "head home and sit tight until I call you guys to come back in".
1899 He had said that he didn't want us to be putting in work at the station because he was unable to pay us at the time.
1900 About a month or so after that, I had some free time and was in the neighbourhood so I figured I would stop by to see how everybody was doing, the people I had been working with for the past six months. I began to head down the hall to the office where I had been working for five months prior to September 3rd when I was approached by Franc and told that I was not allowed to go back there. When I questioned him as to why, he replied, "Because you don't work here."
1901 Frustrated, I then left the station, only to realize when I got to my car that I had left all my DJ equipment and stuff that I had brought there to ‑‑ you know, for the station, needles for the turntables, whatnot, upstairs.
1902 So I came back upstairs and walked around the station retrieving all my belongings. There was nobody remaining at the station that I could trust to return my belongings, so I just took it upon myself to retrieve them.
1903 Mr. Capozzolo then proceeded to call the Winnipeg Police on me and said ‑‑ I will remember it like it was yesterday ‑‑ "I have a person in my place of business that refuses to leave. He is becoming violent and he is affiliated with a drug dealer."
1904 So, disgusted by his comments, I had words with him and made my way out.
1905 Then the Winnipeg Police showed up at my girlfriend's house looking for me. They also went to Mr. Blake's house looking for me, and actually mistook Eddy's wife Molly as my girlfriend. They thought she was my girlfriend and then they ended up saying to her that, "Oh yes, we see nice girls with bad guys all the time."
1906 They then called me on my cell phone from my parents' house asking me where I was and that they would come and pick me up from wherever I was, to which I declined and told them that they could come and talk to me at my house when I got back home.
1907 I then had four Winnipeg police officers ‑‑ four ‑‑ come to my house that night to talk to me. They parked the wrong way on the street in front of my house and made it look like a big scene to my surrounding neighbours. They had then asked me if I would like to come outside to talk to them and I declined, and I told them that anything they had to say to me could be said in the presence of both my parents.
1908 I then invited them inside and they had told me that Mr. Capozzolo said that I had threatened him as I was leaving the station, which I did not. We both had words with each other, as anyone in their right mind would if they are wrongfully dismissed from their position.
1909 I have never been arrested in my life and have no history of violence, so the fact that the Winnipeg Police came to their own conclusion that I was a bad guy is absolutely ridiculous.
1910 I work now for Warner Music Canada's Warner Urban Division as their sole urban street marketing representative and I'm also a keyholder and have been for the past four years at a major franchise music store in the city.
1911 So as far as I know, these companies do not hire individuals that are affiliated with drug dealers or have criminal pasts.
1912 That's all I really have to say. Thank you.
1913 THE CHAIRPERSON: Thank you.
1914 Are you going to sum up now, Mr. Kovnats?
1915 MR. BLAKE: I'm sorry for taking all your time, and I am very, very sorry, but there is one thing that I did forget that I want to say.
1916 I do understand one thing. Playing professional football gave me the opportunity to be around people with lots and lots of money. I know people ‑‑ I know a lot of millionaires; I know people with lots of money. I don't really know a lot of people with $100 million, but I know a lot of people with 1, 2, 3, 4, 5, $6 million.
1917 Being that Mr. Capozzolo has expressed all of this negativity as a human being in radio business, hiding behind the shield of the CRTC, I don't think it's fair whatsoever for him to be able to hide under the umbrella of the David Asper name or the Asper name itself.
1918 I respect Mr. Asper more than he will ever know. I just hate to have to meet him under these circumstances because the information that he has received has maybe given him a predisposition on who I am.
1919 But hopefully by me being honest ‑‑ he said he is going to be straight up. I'm going to be real. By me being honest, I hope he understands that I would sell my blood to fund this radio station, because I'm telling the truth and the truth has to stand for something.
1920 Somebody here has to have a moral compass to understand what is really going on and if it doesn't happen, it is going to surprise the hell out of me.
1921 THE CHAIRPERSON: Thank you very much.
1922 MR. KOVNATS: Now to try to put this in some perspective.
1923 A few years ago the radio station was operating and it wasn't doing what it was supposed to do. Mr. Blake was introduced to it. Mr. Blake said look, I am not in the non‑profit area but I have people who are. I will provide ‑‑ I would like to see hip‑hop in the city. It would be synergist with the nightclub I have; it would be in keeping with my culture.
1924 Those weren't the words he used, but that is the description I am giving you.
1925 As a result of that, he had Mr. Bjorklund look at the situation and Mr. Bjorklund said look, in order for us to do what is appropriate for the licence we have to have members and they pay for memberships.
1926 Then they signed an agreement and the Board of Directors was to be Paula ‑‑ Paula and Peter Bjorklund and Molly Blake.
1927 Prior to that Mr. Capozzolo signed a contract turning over certain assets to Mr. Blake. The contract is on file.
1928 The contract provided that Mr. Blake would do certain things and Mr. Blake's promotion, selling the advertising, was going to generate enough money to operate the station and the station would then teach students.
1929 Mr. Blake arranged for some students and he also arranged to make sure that those students were able to earn a living, not with the station but in doing other things.
1930 Mr. Blake ‑‑ the appropriate directors were set in place and that has never been changed appropriately. I didn't hear anyone today say they bought memberships. The last memberships that were given were the three people who are the lawful directors.
1931 Mr. Blake, when the problems came, the thing deteriorated, but prior to that it had built up and was serving a part of our culture, the hip‑hop part of our culture mainly for people of colour, but it was serving them.
1932 Then, when Mr. Blake couldn't be there partly because of Mr. Capozzolo's consorting with the police ‑‑ and that may come out even further ‑‑ this whole situation deteriorated.
1933 Mr. Capozzolo ‑‑ the proper directors couldn't keep control and yes, they are deficient. They should have walked into the station. They should have started something. They should have called the police against Mr. Capozzolo. But we had a volunteer board. They were trying to do the right things. They were following the rules.
1934 They met with CRTC. They were given one set of instructions or advice ‑‑ instructions may be too far ‑‑ from a member of the CRTC. They started to act and then the gentleman said no, no, no, you have to do this and this. They said well, that is changing the advice; we are not going to do it.
1935 But what has happened to date is that we are having someone try ‑‑ the ownership belongs to the members, not as owners for themselves, but as members for the public.
1936 That ownership is only ‑‑ there are only three lawful members, as far as I'm aware at the moment, and that is ‑‑ who have had annual meetings ‑‑ it's not in the minute book because they don't have control of the minute book. But they are Peter, Paula and Manjit.
1937 They are the members in accordance with the bylaws and they are voting themselves directors, and they have been continuing on year after year.
1938 They retained the firm of Thompson Dorfman Sweatman, specifically Mr. Douglas. That is why I made a point this morning of saying to you that it is imperative that he be here so that you can hear that they followed all the legal requirements as far as the corporate structure is concerned.
1939 Now, the turnover to the Asper group, I have nothing but respect for some of the people in the Asper group, the ones that I know, and the reputation of some of them. But that doesn't mean that they should be given from the owners and from the people they represent, these owners represent, it should be turned over to someone else.
1940 Mr. Blake ‑‑ I'm dealing with them individually for a moment ‑‑ is owed a great deal of money because pursuant to the contract, he advanced a great deal of money, somewhere in the neighbourhood of $240,000 or $250,000, the details of which I don't have but I am told will be available.
1941 The equipment, he bought equipment and everything else. The equipment there belongs to him or his company.
1942 The other people who were there in the hip‑hop community are not being served any more and what we are hoping the CRTC will do, after they hear all of the testimony from the interveners, after they allow me to question the accountant, Rita Tully, about what was going on and in detail so that they can make an informed choice, and after Mr. Douglas explains how the three directors, although they may not have had the great corporate responsibility in controlling Mr. Capozzolo, the General Manager, did try to do all the right things.
1943 And after you have explained to you by Mr. Shane Lasker how certain people made phone calls to him so that he insisted on certain documents being filed a certain way, I think the Commission will get a picture that three members of the community, who are representing other people from the hip‑hop community, were trying desperately to comply with the CRTC Regulations and that the CRTC staff, instead of communicating with them, communicated with the wrong party and, as a result of that, these people ‑‑ albeit they should have read the Canada Gazette to see when you were having meetings.
1944 There may be some technical things that they have done, and I'm not minimizing those technical things. But this radio station should be restored.
1945 It serves the hip‑hop community. It served the hip‑hop community.
1946 There are three students waiting ‑‑ we can provide you with their names ‑‑ that if the licence is not cancelled and the Board of Directors is properly reinstated, they have made arrangements to have students and to provide a proper curriculum.
1947 Have they complied with all the technical rules yet? No.
1948 Will they comply? Yes.
1949 Have they been hard done by? Yes.
1950 Have they been not appropriately recognized by the CRTC staff? Yes.
1951 But at this point, to have the licence transferred through the actions of Mr. Capozzolo to anyone else ‑‑ and I don't want to knock the people to whom the licence would be transferred because I don't think that is appropriate. They are not part of the problem. In fact, they at least offer a viable solution and I'm not going to deny that.
1952 But to deny the people who should have the licence, who should be operating this properly, and to allow them to put proper corporate governance in place when they have been ‑‑ I have to be careful of my words here because I don't want to use too strong a word ‑‑ when they have been ill served by their General Manager, when they have been not communicated with by the CRTC, and perhaps they should have hired legal counsel before ‑‑ and now their legal counsel is in a conflict because his firm is part of the other group.
1953 I mean, they are in a terrible spot. I wasn't supposed to be doing this for them. I came as a last resort, and if there is litigious action they are going to deal with someone else.
1954 But I was hoping that we could put this thing back together. They are hoping that they could put this back together to have you recognize what they did, to have you recognize the efforts that they made, to have you recognize the fact that they serve a diverse portion of our population in this and, frankly, hip‑hop ‑‑ which until three or four years ago I had never heard of, but I did hear of it ‑‑ and this portion of our mosaic culture that we have.
1955 This should not be denied and they should be restored to operating the station with a different General Manager and follow all the rules.
1956 They wanted to do that and that's how they got in trouble with this thing in the first place, because they asked the General Manager, who has usurped their authority, usurped the licence for his own use.
1957 There were supposed to be three directors. There are three directors. Are they taking anything out personally? No.
1958 Is Mr. Blake going to make some money? Perhaps, but he was only making back what he had done and getting paid for his time.
1959 Maybe Molly shouldn't be a director, but that was all disclosed. They had legal advice that they were doing it right.
1960 That advice, I need to have Mr. Douglas come here and explain to you the basis of his advice and exactly what they did and all the corporate acts they tried to take.
1961 The one thing they failed to do was get Mr. Capozzolo under control and that is in part because the Commission was writing to Mr. Capozzolo and dealing with him and not with them.
1962 I need that information before you in full. We desperately need it. I believe you need it so that you can hear the rest of the story.
1963 I'm sorry it was a little disjunctive because we were under such tight time constraints. I did not prepare the presentation.
1964 This is a volunteer board and they may not be able to fill in the forms as nicely or prepare the papers as nicely, but they were able to operate a radio station very well until there was a problem. They were trying to make sure they complied with the rules.
1965 I don't want to vilify anybody but their General Manager let them down and let you down. It's as simple as that.
1966 The legal documentation you have in your files will bear this all out.
1967 And I thank you.
1968 THE CHAIRPERSON: Thank you very much. I think we all have some questions for you.
1969 We will start with Commissioner Patrone.
1970 COMMISSIONER PATRONE: Thank you, Mr. Chair.
1971 Good evening, everyone.
1972 I know there is a tremendous amount of emotion and acrimony ‑‑ and you spoke to that earlier ‑‑ around this whole matter.
1973 I am going to ask some questions, though, and I would appreciate as much as possible just answering these questions in as factual a way as possible. All we are trying to do is to understand what happened.
1974 I know you have spoken about documents that were tabled and I thank you for those. I'm looking at some of them right now.
1975 I would like to hear from you in your own words matters related to those documents.
1976 Was there an application ever filed with the CRTC relative to a proposed change in the corporate governance of Harmony Broadcasting?
1977 MR. BJORKLUND: Can you explain the question, please? Sorry.
1978 COMMISSIONER PATRONE: By yourself or Mrs. Blake, who were part of this agreement, was there an application filed with the CRTC relative to a proposed change in ownership or governance of Harmony Broadcasting?
1979 MR. BJORKLUND: Well, yes and no. Let me clarify.
1980 Underneath the bylaws that the CRTC has from NIB, which we carried forth, I do not believe that there is a requirement from CRTC I guess of what documents, other than the ones that we filed with the companies branch, that we have stamped, received from your office.
1981 So if that is what you are looking for, we have that available, yes. Sorry.
1982 MR. KOVNATS: If it's an issue of control, there was no application to change control. What there was, was a filing of documentation to show that the three prior directors ‑‑ actually, there were two, not three; the two prior directors were no longer directors and the new directors were indeed Peter, Paula and Molly ‑‑ Manjit. We call Manjit Molly. That's why if there is any confusion, she goes by Molly.
1983 That documentation was indeed filed, not an application. But documentation was filed.
1984 COMMISSIONER PATRONE: And what is your understanding of the CRTC's requirements as far as approval of changes in control of such undertakings?
1985 MR. KOVNATS: It was our understanding that there was no change of "control" because the membership was the appropriate membership. The fact that the directors change wouldn't change the control.
1986 And the membership would ebb and flow. But it wasn't a control situation. Very similar to the questions you were asking earlier, it wasn't ‑‑ and I didn't represent and, frankly, this question is more properly answered by Mr. Douglas, who I want to subpoena, because he was the one who did it all and he did all the research at the time.
1987 COMMISSIONER PATRONE: I know you spoke about this a little bit in terms of your understanding of this as being a not‑for‑profit undertaking.
1988 Did you understand fully the implications of that when you were involved with Mr. Capozzolo and Harmony Broadcasting?
1989 MR. BJORKLUND: Yes, completely. It is a non‑for‑profit organization and will remain until the day that it ceases to exist. Underneath the accordance with the laws of Manitoba, it is required to have three people on the board. We represent those three.
1990 COMMISSIONER PATRONE: Was there ever efforts made to run this as a for‑profit enterprise, because some of what I have heard suggests that there was; that it was run very much as a for‑profit concern.
1991 MR. KOVNATS: Perhaps I should clarify.
1992 There was a contract with Mr. Blake's company to do the advertising which would generate profit in Mr. Blake's company. It wasn't for the station. He was then going to fund the station with the profits to be able to do its teaching, et cetera.
1993 His company ‑‑ he would keep some profit in his company, but he was going to make the station viable and that's why he was not put on the board.
1994 I again reiterate, Mr. Douglas would be able to explain that he looked at this situation in detail and gave the advice on how to structure things. But it was not to make the radio station make money per se, but to offset its costs.
1995 Now, when you hire somebody to go out and sell advertising, you pay them for it, but the advertising would then be used to pay the expenses of the station and then be able to have the students, et cetera.
1996 COMMISSIONER PATRONE: Was there ever an application for acquiring a temporary licence ownership for CJWV‑FM by Molly Blake?
1997 MR. KOVNATS: It is my understanding that Mr. Gary Krushen told them when this problem occurred that the way to solve the problem dealing with Franc ‑‑ that the way to solve it was to incorporate a new company and make an application for a temporary licence and it would be transferred.
1998 At least that was the understanding that they had.
1999 They incorporated a new company called ‑‑ I think it was Ear Hole Inc., if I'm not mistaken ‑‑ and we submitted the documents.
2000 And then we were told wait a minute, this has to go to public hearings, et cetera, et cetera, at which point we said that is not what we were ‑‑ that is not ‑‑ what Mr. Krushen was then told was that is not what you told us. You told us we could get this temporary licence and just move it, and all you wanted was a different corporation to be able to do what we were going to do in the first place. If it is a whole new deal, we are not going ahead with it.
2001 I phoned Mr. Krushen personally and told him that.
2002 COMMISSIONER PATRONE: And so the process was not seen through to its logical conclusion?
2003 MR. KOVNATS: It was not. The process was started for one logical conclusion and it turned out that that is not the appropriate process to take and, as a result, it was ceased immediately.
2004 If Mr. Krushen said you're going to have to go through public hearings and start all over, et cetera, et cetera, it wouldn't have started in the first place.
2005 THE CHAIRPERSON: And why not?
2006 MR. KOVNATS: Because this was a way of not having to deal with Franc Capozzolo.
2007 What Mr. Krushen had suggested to Molly, independent of myself ‑‑ and Molly can confirm or whatever. But as it was explained to me, they came into my office and they said David, can you incorporate quickly another non‑profit because the CRTC will move the licence from the old non‑profit ‑‑ from Harmony over to Ear Hole and then we don't have to get into a contest ‑‑ I will use the word contest ‑‑ with Mr. Capozzolo.
2008 I said that seems too simple to me. They said this is what Mr. Krushen told us. So we incorporated the non‑profit to do that and then Mr. Krushen said no, no, no, it is not as simple as you think it is.
2009 I guess he was looking for ‑‑ and I don't want to put words in his mouth. I guess he was looking to see if there was another way to resolve this problem.
2010 But that is not the way they decided to proceed.
2011 THE CHAIRPERSON: But in the absence of that, if your clients believe they are the sole owners and sought to have that transfer, why wouldn't you continue on with the process as modified by the CRTC in order to accomplish what it is you are trying to accomplish in a legal and CRTC‑approved manner?
2012 MR. KOVNATS: Because it would put us in a contest. And when we were told it wasn't going to be through a process, it was supposed to be administratively done and that's what wee are told. It was the only reason why we went ahead with it.
2013 At that point we did not want to get into a contest and hearings, et cetera, because of many issues.
2014 The only reason it was started, the only reason it was started is because the original information from Mr. Krushen was it would be done internally, administratively, without public fanfare. The minute there was going to be public fanfare, we backed away.
2015 MS BLAKE: I would just like to add something to that, because on the advice of Eddy's criminal lawyer, we have not been involved in this up until now. Even us coming here, he has advised us not to because of his open criminal case.
2016 We are taking a risk here basically to move forward with this as we are.
2017 COMMISSIONER PATRONE: The criminal charges against you, Mr. Blake, do they have anything to do with Harmony or with any of those associated with Harmony or this matter that is before us today?
2018 MR. BLAKE: No, sir. No, sir.
2019 MR. KOVNATS: No, that is not correct, Eddy. It has because Harmony ‑‑ I think it's ‑‑
2020 He is technically correct in giving you the answer he is giving you, but it doesn't answer your question in full.
2021 If you were asking in a courtroom, it is a technically correct answer.
2022 COMMISSIONER PATRONE: I am only asking the question within the context of this hearing.
2023 MR. KOVNATS: All right. Within the context of this hearing, it appears that Mr. Capozzolo was taking cash money from Mr. Blake and turning it over to the police.
2024 So yes, there are issues related to Harmony.
2025 COMMISSIONER PATRONE: Is there a civil suit or any other civil matter pertaining to the situation involving yourself?
2026 MR. KOVNATS: At this point, no. I will not be participating in anything.
2027 I do not know what other advice or other counsel will be doing. I will not preclude it. I have no knowledge of it personally.
2028 I know they have discussed the issue of civil suits. My understanding is ‑‑ now, I am talking on behalf of Molly, Peter and Paula, all right, specifically.
2029 COMMISSIONER PATRONE: I'm wondering if you have a view as to whether or not the civil courts might be the best avenue in which to deal with specifically the agreement that may or may not have been made with Mr. Capozzolo and hence the control or ownership of this property.
2030 MR. KOVNATS: The control of the physical assets may very well be the appropriate place to deal with the civil issue, in the civil courts.
2031 However, the dealing of the licence and the directorship of Molly, Peter and Paula is very much the subject of this hearing and is exactly where it should be. And I believe that Mr. Douglas should be here testifying and explaining it to you in very clear terms.
2032 COMMISSIONER PATRONE: Mr. Blake, you say you are owed over $200,000 as a result of your dealings with Mr. Capozzolo and Harmony.
2033 MR. BLAKE: $200,000‑plus, sir.
2034 COMMISSIONER PATRONE: Were these monies that you personally invested into this undertaking?
2035 MR. BLAKE: Not all personally from me, no, sir.
2036 Well, what happened is I took money that me and my wife had in some of our investments from there. I took some money from the club that I had made from profit from the club, Choclair.
2037 That's one thing I also forgot to mention about the employee‑wise.
2038 Also I have a record company called Dynasty Recordings and Mr. Capozzolo knew this. And after we made the agreement, I went and I sought after the number one rapper in Canada and signed him to my record label. It cost me a lot of money to do that, but I have done it based on the fact that I would have him in a position to be a radio personality and it would be good for the city.
2039 Yes, and he also gave money. I told him that, yes.
2040 All the money from ‑‑ you know, and like Franc knew this. Franc knew all of this. This is not ‑‑ but as he went to the police on a biweekly basis, he made it seem like he was getting all the money from me and several times we gave him money orders from our bank and he took the money orders to his bank, Scotiabank, cashed them and took the cash money to the police to further try to villainize me and incriminate me illegally.
2041 COMMISSIONER PATRONE: What is your understanding of what that money was used for?
2042 Was it mostly for paying staff?
2043 MR. BLAKE: The money that I gave Franc on a monthly basis was used for a radio budget for the staff and equipment, because that is what we had agreed upon at my house, and the antenna.
2044 That's another thing that I want to touch on.
2045 A lot of things that Franc told us, we didn't realize it was untrue until after the fact.
2046 For example, the money for the lease of the radio station is held by a guy named Johnny G. And Franc told me and Peter that he was paying $5,000 a month in lease, which I told him, I said that seems incredibly high because I was paying a little more than that at my nightclub and I had like six floors.
2047 So I'm like you are dealing with a 1,700 square foot of space and you are paying $5,000. I said that is way too much money. I said I'm going to talk to Johnny G. myself and negotiate.
2048 He goes like no, no, I'll take care of it, don't worry. Just keep giving me the money every month and I'll take care of it. So once I did talk to Johnny G., I found out that Franc was only paying $1,200 a month.
2049 So that's just a small example of his truthfulness and his credibility.
2050 COMMISSIONER PATRONE: Were you able to realize any revenues ‑‑ and, if so, how much ‑‑ from the advertising agreement that you had with Harmony, that your company had with Mr. Capozzolo?
2051 MR. BLAKE: The problem is I sold the advertising ‑‑ I'm sorry, can you repeat the question, sir?
2052 COMMISSIONER PATRONE: Well, you claim that there was an advertising agreement ‑‑
2053 MR. BLAKE: Absolutely.
2054 COMMISSIONER PATRONE: ‑‑ between your company and the radio station.
2055 MR. BLAKE: Yes, sir.
2056 COMMISSIONER PATRONE: Were you able to realize any revenues from that agreement?
2057 MR. BLAKE: I didn't get a chance to realize ‑‑ I didn't get a chance to realize a penny because what happened is also ‑‑ like with the radio station, every single part of the radio station I paid for.
2058 For an example, the Internet. With the Internet, all the e‑mails, even after I left the station, because I ran the e‑mail department and the internet department ‑‑ all the e‑mails were still coming to me.
2059 So I was sitting at home reading e‑mails of how Franc was selling all the advertisements to people like Ron Ludahowski and people like that, that he never, ever spoke to before. That was all my department.
2060 And I have the e‑mails, all the e‑mails if you want to listen ‑‑ if you want to...
‑‑‑ Pause
2061 MR. BLAKE: Yes, so like it's just one small example. I didn't get a chance ‑‑ it's ironic that you ask, because the only ‑‑ the only advertisement that I got a chance to sell was the first week that we opened up the radio station after we got the extension, the seven‑year extension, August the 28th I believe that is when Gary Krushen sent over the seven‑year extension, August 20, 2004.
2062 And so then that's why we chose September to actually flip the format and bring it out to the community.
2063 So I had done a contract with The David Asper School of Business ‑‑ excuse me, the Asper School of Business. It was quite ironic.
2064 So that's the only ‑‑ but anyway, I spoke with the President and the Vice‑President of the Asper School of Business. We met several times down at the radio station. They never talked to Franc because Franc had nothing to do with the programming. And he often got mad about that because nobody wanted to talk to him.
2065 So we did a contract and we did the Pub Crawl. It is an annual event that the commerce student union they do there, and it is very successful and I was very proud of the fact that that year the Pub Crawl was sold out.
2066 What was it, Devol, 26 minutes?
2067 MR. DRYDEN: I can't remember the number.
2068 MR. BLAKE: I think it was under 30 minutes we sold 2,400 tickets in under 30 minutes on the radio.
2069 So, I mean, like they sold out and they was very happy. You know, the relationship was established and we was looking forward to working very, very long with the Asper School of Business.
2070 But that is the only ‑‑ it was only like maybe $1,000 ‑‑ like $400 that I got.
2071 You know, that is ‑‑ and I cut them a deal because I wanted to build a relationship versus trying to make money off it. So that's the kind of steps I was taking with the radio station, to try to put the radio station in a position ‑‑ hang on ‑‑ to put the radio station in a position to have great partners in the city.
2072 One other thing I would like to add. The day I got out on bail I came back down to the radio station and I had a meeting with Franc, and Franc said ‑‑ he said a couple of things to me that day.
2073 He said well, I called ‑‑ because at the time we have a contract on paper with Winnipeg Technical and Franc told me out of his own mouth, he said well, I called Trevor from Winnipeg Technical and I asked him did he see the paper and he said yes. I said well, you know Eddy got arrested and he said yeah, but you know, he is only accused of something. You know, what's the problem? Well, I could understand if you guys want to break your commitment with the student now, the school.
2074 So he encouraged him to break the commitment so that he would give me the impression that I would have to tear up the contract.
2075 You have to understand one thing. Franc did everything in his power, legally and illegally, to get me to break this contract. After the argument with Peter, he was adamant that he wanted out of that contract.
2076 But you are a grown man. You signed it, you took the money, obligate yourself.
2077 COMMISSIONER PATRONE: You are speaking with the agreement signed January 29, 2004?
2078 MR. BLAKE: Yes, sir.
2079 COMMISSIONER PATRONE: I'm just going to read, too, on that document.
"All assets of monetary value and non‑monetary value of Winnipeg Broadcasting Training Center and those of Harmony Broadcasting Corporation WAVE 107.9 CJWV, as agreed by Executive Officer of Harmony Broadcasting Corporation, Franc Capozzolo, will be the sole property of Winnipeg Broadcasting Center Inc." (As read)
2080 Was that the...
2081 MR. BJORKLUND: There are two companies there. The Winnipeg Broadcast Training Center was the attempt in the past to bring a technical collegiate forward. In order for us to proceed as boards and for Eddy to proceed, all of it had to be incorporated into the Winnipeg Broadcast Technical Center so we could provide direction and allow the radio station to function.
2082 COMMISSIONER PATRONE: I would like to ask another question, Mr. Blake.
2083 You have obviously had some success as a business person ‑‑
2084 MR. BLAKE: I have been very successful, thank God.
2085 COMMISSIONER PATRONE: ‑‑ over the years. But you seem to have sunk a lot of money into this undertaking for months at a time.
2086 MR. BLAKE: Yes, sir.
2087 COMMISSIONER PATRONE: Why didn't you call the plug very early on?
2088 MR. BLAKE: Because, okay. Very simple.
2089 The contract that we had, I had to provide a radio budget for the staff. Now, every year the amount would be ‑‑ what was it, Peter, $105,000? $105,000 that we had agreed on for the year. So the $83,000 that I gave Franc, I was actually ahead of schedule. I was ahead of schedule to have him covered well before the year was out.
2090 So the way I was looking at it was if you get your money before the year out, you spend your money and you ask for more money, we move into the next year of the contract because I knew the contract, the licence had just got a seven‑year extension.
2091 And I told Franc, every year, as long as the business does well, I will give you 15 per cent more on top of what I gave you last year. But that's it.
2092 You will receive a $60,000 salary as a General Manager and that's it.
2093 He was fine with it, because he said, you know, I'm not making anything with WAVE 107. It was WAVE 107 for 10 years, 10 years.
2094 Excuse me, but if Mr. David Asper wanted to get involved, why did everybody wait ‑‑ why did everyone wait until I changed the name and I put all the goodwill into it and then everybody wants to get involved.
2095 I just find it hard to deal with like that.
2096 COMMISSIONER PATRONE: I understand that you have filed ‑‑ that we have documents on file, but I just want to ask you: Do you have receipts for the cheques that you wrote Mr. Capozzola?
2097 MR. BLAKE: Everything, sir. I didn't give Franc a penny without him signing a receipt. Not a penny, because I know him. Even the cash,he signed a receipt on everything. He didn't receive ‑‑ he didn't receive any money from me unless he signed, because I know Franc am I just ‑‑ I couldn't trust him like that.
2098 COMMISSIONER PATRONE: That includes the initial $10,000?
2099 MR. BLAKE: Absolutely, sir.
2100 And you can compare Franc's signatures from all the signatures I have on my receipts to every signature he signed. And the fact that he would even mention, first, that there is not a contract; second, the police say I don't have to honour it; third, oh, it's not my signature.
2101 It just goes like I say, like wildfire. This wouldn't even have lasted this long, but I do appreciate Canada and the CRTC and I am here to adhere to any and all rulings that you guys give.
2102 COMMISSIONER PATRONE: I know my colleagues have some questions to pose to you, sir, and everyone else at the table there, so I'm going to move on and allow the Chairman to take over.
2103 Thank you.
2104 THE CHAIRPERSON: Commissioner Menzies...?
2105 COMMISSIONER MENZIES: Just to follow up on that, would you be willing to send us copies of those receipts?
2106 MR. BLAKE: What I have to do, sir, I have a meeting tomorrow morning with my criminal attorney, Richard Wilson, and most of the receipts that are available are in his office so I will ask him.
2107 He told me, based upon what Mr. Capozzolo has already done with the police and the monies, he said that, you know, just walk in with your eyes open because this man is still trying to set you up. So that's the reality of it.
2108 I would have came forth with my receipts, but Mr. Capozzolo ‑‑ and another thing that I want to add, if I would have knew that Franc gave the police one red penny of the money I gave him, I would have sued him. I would have sued him a long time ago.
2109 COMMISSIONER MENZIES: Okay. So you will get back to us tomorrow with an answer to whether you can or whether you can't?
2110 MR. BLAKE: Yes, sir.
2111 MS BLAKE: We need to speak to the criminal lawyer because of ‑‑
2112 COMMISSIONER MENZIES: Yes, I understand.
2113 MS BLAKE: ‑‑ at this time he has told us not to submit because it will affect his criminal case.
2114 COMMISSIONER MENZIES: Right.
2115 I also just want to understand, without getting into the whole thing because it's not really our thing, that what you are saying is the reason you have had a low profile on this matter, and civil action, is related to advice from counsel engaged to handle your criminal matter?
2116 MS BLAKE: Yes, sir.
2117 COMMISSIONER MENZIES: Thank you.
2118 There are a couple of articles that can be found if you are Googled in September 2004 that refer to you as the owner of ‑‑ one says that you recently sold Fat Daddy's. It's a Winnipeg Sun story. It says:
"Blake, a boxing promoter, recently sold Fat Daddy's Cabaret to start up Flava 107.9, a radio station devoted to hip‑hop and R&B music." (As read)
2119 There is another one from the Manitoba one that refers to you as being the new owner of the station.
2120 So were you being represented in the community as the owner of the station at that time?
2121 MR. BLAKE: No, sir. No, sir. That is one of the areas that I'm sure everybody is going to have problems with.
2122 If you are on a certain level in society people ‑‑ you know, people say I own like 20 different nightclubs in this city and I don't know nothing. I didn't even own Fat Daddy's. I leased Fat Daddy's on a monthly basis from Sam Katz who is now the Mayor of the city.
2123 So, you know, I can't really speak on what people will say about what I own and what I don't own, I just know on paper I never say I own Flava. I never said that.
2124 COMMISSIONER MENZIES: Okay. No, I learned long ago not to believe everything you read in the paper.
2125 MR. BLAKE: Yes.
2126 COMMISSIONER MENZIES: But there must have been something out there in terms of ‑‑
2127 MR. BLAKE: Well, what happened was, when I got arrested I said that I have interest in several businesses in the city because certain monies was taken from my house ‑‑ which I'm still not charged with proceeds of crime, which I am awaiting to get back right now ‑‑ and Flava, the programming for Flava 107.9 was mentioned. But I never told nobody I own no radio station, especially a not‑for‑profit radio station.
2128 COMMISSIONER MENZIES: Yes. I wasn't saying that you had said that.
2129 MR. BLAKE: Oh, okay.
2130 COMMISSIONER MENZIES: I was just saying that there was obviously some link between you and the station that was out there in 2004.
2131 MR. BLAKE: Yes, sir. Yes, sir.
2132 COMMISSIONER MENZIES: I think if you do this yourself, I think there is even a reference on Choclair's MySpace about you.
2133 MR. BLAKE: Absolutely.
2134 What happened is, I got a letter from ‑‑ hang on, babe.
2135 I got a letter from Google not too long ago, they said my name since '04 has been Googled over 187,000 times in Manitoba. So, you know, that's just one of those things that this scenario has brought to light is in the fact that people want to ‑‑ I can't, you know, it's just a weird scenario. It's just hard to explain, sir.
2136 COMMISSIONER MENZIES: Yes, okay. No, that's fine. I'm just trying to get a sense from that.
2137 Because Wikipedia has ‑‑ Winnipeg media has you listed as the owner of Flava 107.9 as well.
2138 MR. BLAKE: Yes.
‑‑‑ Pause
2139 MR. BJORKLUND: Excuse me, sir, did you say Wikipedia?
2140 COMMISSIONER MENZIES: Yes.
2141 MR. BJORKLUND: Wikipedia can be changed by anybody ‑‑
2142 COMMISSIONER MENZIES: Yes, I know. I'm just saying that there is something ‑‑
2143 MR. BJORKLUND: ‑‑ at any time. So somebody may be planting. Sorry.
2144 COMMISSIONER MENZIES: I'm not accusing you of anything.
2145 MR. BJORKLUND: No, no, no, I understand. No, no.
2146 MR. BLAKE: It's just that we get very, very paranoid, sir. Sorry about that.
2147 COMMISSIONER MENZIES: Okay.
2148 MR. KOVNATS: Perhaps, Mr. Menzies, you would then recognize that it was Mr. Blake's position in the community ‑‑ the people had the technical ownership right, that's irrelevant. What was relevant was that he brought the hip‑hop concept to the station. He helped develop it.
2149 COMMISSIONER MENZIES: Yes, that's what the stories are about.
2150 MR. KOVNATS: That's what he did.
2151 So the technical ownership, they may not know the niceties.
2152 But yes, he was the ‑‑ the words just came from behind, the celebrity face. He was the promoter that knew hip‑hop, he was the one who had run a hip‑hop club, and yes, he was the one bringing this segment to society.
2153 COMMISSIONER MENZIES: Okay.
2154 This is really what I need to get at. I will ask the question and then I will explain why.
2155 What do you want us to do? We are not a court of law, we are not a debt collector, we hand out radio licences and TV licences and that sort of stuff.
2156 I'm not saying I'm unsympathetic or sympathetic, either way it's a heck of a story. But we are the CRTC and certainly there are some things we can do, but from what I have heard today there is ‑‑ a licence is pretty much all that is left of a station that has gone dark, that has $890,000 in debts that we heard today, plus. And I'm assuming if I were to add yours onto it, what you say is owed back to you, it goes on and on.
2157 We could say you are right, we could say you are wrong, and how does that make anything better?
2158 MR. KOVNATS: Well, what we were hoping to have today, number one, was your recognition that your administrative staff made an error in sending letters and/or notices to the wrong party.
2159 Number two, to allow the licence to continue.
2160 We would then take whatever action we had to if necessary ‑‑ and when I say "we", I certainly won't be doing it, but someone else will take over the action in the civil court, because you haven't allowed the licence to transfer to anyone else so it would be a contest between Mr. Capozzolo and the Peter, Paula and Molly, and they would have to take legal action and immediately. They would tell the CRTC they would take legal action immediately.
2161 They will put in effect the teaching program. They already have additional people who will come on as directors, they already have three students waiting in the wings to participate in the program, and they will reinstitute the program. They will use their resources to go on the air immediately and they will ignore Mr. Capozzolo.
2162 And now that this has come out in the public light, I don't think any police department is going to come and try and kick them out of where they set up the station.
2163 COMMISSIONER MENZIES: So Mr. and Mrs. Blake and Mr. Bjorklund and ‑‑
2164 MR. KOVNATS: No, no, not Mr. and Mrs. Blake. Mrs. Blake, Peter and Paula as directors will get this going.
2165 COMMISSIONER MENZIES: Okay. Just let me finish.
2166 They have the resources to ‑‑ you are saying they have the resources to revive the station ‑‑
2167 MR. KOVNATS: Yes, they do.
2168 COMMISSIONER MENZIES: ‑‑ and have it conduct itself ‑‑ I mean, you heard this long list of things we went through this afternoon ‑‑
2169 MR. KOVNATS: Yes.
2170 COMMISSIONER MENZIES: ‑‑ into policies and procedures and Campus Radio Policies and Canadian content and 504 minutes of whatever it was ‑‑
2171 MR. KOVNATS: Yes.
2172 COMMISSIONER MENZIES: ‑‑ of advertising a week, and that sort of stuff.
2173 You have the resources to do that?
2174 MR. KOVNATS: I am advised they do, yes.
2175 COMMISSIONER MENZIES: The financial capacity to revive the station and basically that's what you are looking for, is you believe the licence rightfully belongs to the board.
2176 MR. KOVNATS: Yes.
2177 COMMISSIONER MENZIES: And then you would be willing to revive it financially ‑‑
2178 MR. KOVNATS: Yes.
2179 COMMISSIONER MENZIES: Just by pouring money into it or by loaning it money?
2180 MR. KOVNATS: By lending it money, number one; by getting the advertising sold to operate, number two; by forming alliances with other parties who have already come forward and said if you have control we will help put up the money to make sure it works.
2181 COMMISSIONER MENZIES: Why?
2182 MR. KOVNATS: They have ‑‑ pardon?
2183 COMMISSIONER MENZIES: Why?
2184 MR. KOVNATS: Why?
2185 MR. BLAKE: He said why would we want to do that.
2186 Okay, the reason why we would do that is, the amount of effort and resources that it would take a group behind us to do the things that we can do, it's the same as asking a fisherman ‑‑ it's the same as asking a fisherman why do you fish, because he knows how to do it. I mean hip‑hop radio is very easy to a person like me; it would come very hard to person like that.
2187 It's simple, I have lived it. I have lived it. The things that I can do, the volunteers that I can get involved in the radio station, other people would have to pay lots of money to do that. My resources are unlimited in the hip‑hop world and this is a hip‑hop radio station and the addition to the curriculum that I can provide cannot be provided by Mr. Asper, Franc, or anybody back there, because they don't know ‑‑ they have not lived that life.
2188 I have lived it. This is very easy for me. I'm not bragging, I'm just lucky.
2189 COMMISSIONER MENZIES: Are you a wealthy man, Mr. Blake?
2190 MR. BLAKE: God said I am.
‑‑‑ Laughter / Rires
2191 MR. BLAKE: No, I'm saying like wealth is ‑‑ you know what, I have ‑‑ I have been very blessed. I signed a million‑dollar contract in the NFL when I was 21 years old and I have been playing professional football nine years after that. I am blessed with a great family, my mother and father‑in‑law are very well off and I have friends.
2192 Like I say, I don't know a lot of people with $100 million, but I know a lot of people with $1, $2, $3, $4 and $5 million and they would be easily and readily available to help me, as long as Franc has not got nothing to do with it.
2193 COMMISSIONER MENZIES: Okay.
2194 Have you ever talked with the group that we talked to this afternoon? Have you ever taken their case to them and said why don't we all work together or something like that?
2195 MR. BLAKE: As a matter of fact we have. But regardless of what anybody will say, the programming was at the top of the food chain in the conversation, because even though it was proven that it was purchased and it was operated by me, it was non‑negotiable in the negotiations.
2196 So it lets me know, you know ‑‑ my mama didn't raise no fool and, you know, I know for a fact that, you know, people want to get their hands on this programming, but it would never be utilized the way that I would.
2197 For an example, for the last 3 1/2 years I have been the Building Supervisor at the YMCA downtown. In that job they kind of put me in charge of dealing with at risk kids in the city, mostly gang members and stuff like that under the age of 18, and I have ran eight or nine workshops with different kids of at‑risk lifestyle and I have also ran 40 or 50 youth athletic camps because my football background gives me an edge on talking to the kids who have anything to do with sports. They automatically listen to me.
2198 I have helped so many kids without having a radio station and I challenge Mr. Capozzolo to match that with the radio station.
2199 So if you allow a person like me to be in charge of the programming that can reach out to the community that I'm supposed to be here to serve, it's a done deal and I guarantee you my results will speak for themselves.
2200 COMMISSIONER MENZIES: Thank you.
2201 THE CHAIRPERSON: I just have two or three questions to follow up.
2202 I'm just trying to understand who you believe the GM was when on March 10, 2005 Peter Bjorklund, Manjit Blake and Paula Bjorklund signed a document removing him as the GM.
2203 MR. BLAKE: Sorry about that.
2204 Franc would be the person of removal and the addition of the GM after he was gone would be Mr. Peter Bjorklund. That was already discussed and agreed upon by everyone.
2205 THE CHAIRPERSON: So, Mr. Bjorklund, you were the President of the corporation?
2206 MR. BJORKLUND: That would be correct, as a temporary situation.
2207 It is not my desire to be a long‑lasting board member on Harmony, other than to provide direction with my wife, the other board member, and Molly.
2208 THE CHAIRPERSON: When you say on an interim basis, as of the date you were, based on these three signatures, appointed President of the corporation.
2209 MR. BJORKLUND: That's correct.
2210 MR. KOVNATS: Mr. Douglas was the lawyer who prepared those documents and Mr. Douglas, that is why again ‑‑
2211 THE CHAIRPERSON: I understand that. I understand that. You have already made that case, you don't have to make it again.
2212 MR. KOVNATS: All right.
2213 THE CHAIRPERSON: I want to continue on with my thought processes, though.
2214 In the capacity of President, did you approve budgets and make operating decisions as the President, and one of the major shareholders I guess, of the corporation?
2215 MR. BJORKLUND: No, sir, I was not allowed to enter into the presence of the Harmony Broadcasting in the building. Johnny G. said no, you can't have keys. Franc threatened me if I came up there. I said, do you know what, I'm just going to ‑‑ it is not worth that risk to my family or to myself.
2216 THE CHAIRPERSON: But you had this document signed and yet you wouldn't pursue the next step and take responsibility for what you presumably bestowed upon yourself?
2217 MR. BJORKLUND: Well, we tried to, sir, until threats were made.
2218 THE CHAIRPERSON: But I mean you tried to, but there are courts.
2219 MR. BJORKLUND: Well, I'm a volunteer member, sir, okay, and I'm trying to ‑‑
2220 MR. KOVNATS: Mr. Chairman ‑‑ Mr. Chairman, you have already had this question answered, all right.
2221 They were advised by Eddy's criminal lawyer not to get into a big fracas. That's why they went to the CRTC, that's why they met with Mr. Krushen. That's what the situation was.
2222 THE CHAIRPERSON: But Mr. Bjorklund is not involved in any criminal matters.
2223 MR. KOVNATS: Except that he needed Molly and he needed Eddy and he needed Eddy's money and this was all part of it. Also this was explained and Mr. Douglas is the one who can answer this better than anyone.
2224 THE CHAIRPERSON: Okay. Those are my questions.
2225 Does counsel have any questions?
2226 MR. McCALLUM: Just for the record, in your conversation with Commissioner Petrone there was reference to an application I guess that was filed by Earhole at one time. For the record it appears that the Commission returned that to Ms Molly Blake on the 17th of October 2006.
2227 I assume you have seen the letter?
‑‑‑ Pause
2228 MS BLAKE: I would have to go through my papers. I can't recall.
2229 MR. McCALLUM: Can I take it from your answer that you will get back to us if it turns out that you have no knowledge of it, but otherwise we can assume that, given that it was addressed to you, it was in relation to Earhole Inc. and there was discussion about an application related to Earhole that was never proceeded with, that the inference would be that this was indeed return to you?
2230 MS BLAKE: Yes. We will contact you either way to let you know whether I have or haven't seen it.
2231 MR. McCALLUM: Thank you.
2232 You also referred to documents being returned I think a second time to yourself, and would that be indeed a letter that is on file dated the 9th of April 2008 in which materials were returned to Mr. Eddy and Mrs. Manjit Blake?
2233 MS BLAKE: Yes, sir.
2234 MR. McCALLUM: And at that time of course the Commission advised that there was a process and you could intervene, which indeed you have done?
2235 MS BLAKE: Right.
2236 I guess, again to bring back the point, there is a process for Franc to be submitting the stuff that was requested of him, but there was accommodation made so that he could submit past the date or past the deadline and that same accommodation wasn't made for us.
2237 MR. McCALLUM: Thank you.
‑‑‑ Pause
2238 MR. McCALLUM: Mr. Chair, I just wonder if some process should be established for the additional documents that will be received following the date of this hearing.
2239 THE CHAIRPERSON: Certainly, if you want to enlighten us.
2240 MR. McCALLUM: Well, the other group that was heard earlier has certain undertakings to fulfil and they have asked for 14 days to fulfil it, which takes it, according to my calculations, to the 18th of June. I suggest that they should file all the materials to us by the 18th of June and serve a copy of those on Mr. Kovnats.
2241 My suggestion is that Mr. Kovnats would have until one week later, which is the 25th of June, to file any responding materials, if so advised.
2242 And then I would suggest that the other group would have a further five days to file any rebuttal materials, if so advised, by the 30th of June.
2243 That is what I suggest, Mr. Chair.
2244 THE CHAIRPERSON: Mr. Kovnats, do you ‑‑
2245 MR. KOVNATS: Yes.
2246 Mr. Chairman, I came today because the parties couldn't get a different lawyer. I had referred them on when this got litigious a few years ago to Mr. Douglas and I will not be continuing to represent.
2247 I would prefer the documentation went to them. They are going to have to retain counsel who is more familiar with the situation that I.
2248 I had tried to help them write some letters, I did not participate in this whole situation. I came as a courtesy to them because ‑‑ Eddy, just stay out of it.
2249 Eddy and I are friendly and the only way to tell Eddy to curb his exuberance is to tell him straight, and I can do that because we are friendly.
2250 I can tell you that we have no problem in arranging to have the Blakes served with the information.
2251 The documentation that we were to provide will take a little longer than two weeks because we have to check with the criminal counsel and he will have to go through what I understand is 27 boxes of documentation. Now, I understand some of this may be indexed, I don't know, but when the question was asked the response was "There are 27 boxes there, you try and find some of this stuff."
2252 In any event, I would submit to you that you should forward it directly to Molly Blake and she will provide you with her address. She will send you a letter tomorrow telling you exactly how to forwarded to her, and she will retain appropriate litigation counsel for this and they will respond. I came only as a last resort today.
2253 MR. McCALLUM: That would have to be communicated to the other group, of course, so they know where to send the materials.
2254 MR. KOVNATS: Yes.
2255 THE CHAIRPERSON: I think, as well, if there are delays we would like to know and then the Commission will take a look at the relevance and the importance of the information in making the decision that we need to make before us beyond the other issues that have been dealt with here as well.
2256 So if there is going to be a delay, we would like to know that as well.
2257 MR. KOVNATS: They will try to minimize the delay, but the other thing is, we still have the issues before you of being able to subpoena people to come and give further and even better evidence on the issues that I discussed with you earlier.
2258 You have indicated there will be a ruling. I don't know when that ruling will come down, but I would imagine that is going to affect things as well.
2259 THE CHAIRPERSON: It May, and the ruling will come down.
2260 MR. KOVNATS: Well...
2261 THE CHAIRPERSON: The other thing I want to touch on is, I at minimum ‑‑ and I'm not sure about my colleagues ‑‑ do want to ask an additional set of questions to the panel that was here earlier, so I would like to get some assurance that all the people that were here this afternoon will be arriving again tomorrow, if that's possible.
2262 So I am looking that way because I see there is a number of people here. I just want to make sure that they will all be here tomorrow as well.
‑‑‑ Pause
2263 MR. ASPER: Mr. Chair, David Asper for the record.
2264 Unfortunately, Mr. Lewis is leaving town, I have a teaching engagement actually tomorrow morning with a number of senior federal officials who are coming into town as part of the Public Service Alliance Deputy Minister Leadership Program, so no, we are not a whole group tomorrow.
‑‑‑ Pause
2265 MR. McCALLUM: I'm wondering if the reply phase should happen this evening.
2266 THE CHAIRPERSON: Are you all prepared for reply this evening?
2267 MR. ASPER: We would not ‑‑ we do not intend your reply.
2268 THE CHAIRPERSON: You do not intend to reply at all?
2269 MR. ASPER: No.
2270 THE CHAIRPERSON: We do have questions, though.
2271 So are we prepared to take a 15‑minute break and perhaps reconvene again with your panel here, given they are still here right now, and we can post some clarifying questions to you all?
2272 MR. ASPER: That would be great, yes.
2273 Thank you.
2274 THE CHAIRPERSON: Okay. We will reconvene in 15 minutes.
‑‑‑ Upon recessing at 2048 / Suspension à 2048
‑‑‑ Upon resuming at 2116 / Reprise à 2116
2275 THE SECRETARY: Mr. Chairman, this completes the list of appearing interveners in Phase II.
2276 We will now proceed to Phase III in which Harmony Broadcasting Corporation can reply to all comments submitted on their application.
2277 Harmony Broadcasting Corporation has indicated that they do not wish to appear in Phase III.
2278 I would, therefore, like to call upon Harmony Broadcasting Corporation to answer a few questions from the Panel.
2279 THE CHAIRPERSON: Thank you.
2280 Ms Stiver, during your forensic investigation did you ever identify the possibility of Mr. Blake as being a creditor?
2281 MS STIVER: Yes, I had flagged that as a possibility.
2282 THE CHAIRPERSON: Is it in the financials that you filed with us?
2283 MS STIVER: I should check with Louise Nebbs on that.
2284 MS NEBBS: Let me ‑‑
2285 MS STIVER: Could I get her to answer that?
2286 THE CHAIRPERSON: Certainly.
2287 MS STIVER: Thank you.
2288 MS NEBBS: We did review the financial statements. On the financial statements prepared by the company there is no record of Mr. Blake being a creditor.
2289 There was an item recorded on the financial statements which was called a deposit, and when we went back to look for the support and back‑up for that number there appeared that that related to Mr. Blake.
2290 The balance recorded on the financial statements is $70,000, however, when we went back and looked at the components of that number, approximately $42,000 we can see being attributed directly to either Mr. Blake or DSH, the balance is unknown.
2291 THE CHAIRPERSON: And you couldn't identify the magnitude of the money that he has indicated to us he believes he is owed?
2292 MS NEBBS: No, we couldn't find anything near that amount.
2293 THE CHAIRPERSON: Okay.
2294 MR. ASPER: Mr. Chair, there have been ‑‑ there has been some dialogue among the parties in the weeks leading up to this proceeding, and I believe it was the middle of May when, through counsel, the first request was made of Mr. Blake and that group for the production of receipts so that we could begin to ‑‑ or that we could incorporate it into the process of reconstructing the financial affairs of the company.
2295 THE CHAIRPERSON: Thank you.
2296 Mr. Capozzolo, there is a document here that was filed dated January 29th, 2004 that bears your signature.
2297 Do you have any comments you want to make with regard to this document?
2298 MR. CAPOZZOLO: That is my signature. I did not sign that document.
2299 It would be ‑‑ you know, what they're suggesting here is that I would sign over the radio station then tell them that it's not done. I mean, it's ridiculous.
2300 I went to ‑‑ now, you can go to the companies office, ask for any file and change the board of directors names.
2301 I never resigned from the corporation, I never made them board members of the corporation. They just went down to the companies office and changed the names and then asked for a piece of paper that showed that they were now the directors. The companies office is just a registry.
2302 I went down there when I discovered that, I asked for the gentleman they wish to subpoena and he came and I said, "What's going on here?" And he goes, "Well, you know, that's the way it works here. We're just a registry." So, he goes, "Maybe you should call the Crimes Division."
2303 I did. They said, no, you can't just go down to the companies office and do that, and they were shocked to discover that, in fact, you go down to the companies office, pay $20, ask for any file and you can change the names on that file.
2304 THE CHAIRPERSON: But that's not what I'm asking about. I'm asking about this document which was not a companies document, it's the document that was never filed with anybody, as far as I know, other than with us and it bears three signatures on it.
2305 MR. CAPOZZOLO: Yeah. I've found that that signature of mine appears on several documents, that exact signature.
2306 The Police Department put together a file saying, okay, this is basically...
2307 Mr. Kovnats contacted me, now listen to this time line, in October 19th and I believe ‑‑ I don't know if the document is here today ‑‑ but I believe it was October 19th or thereabouts of 2004 saying that he was going to sue me for a million two hundred and fifty thousand dollars because Mr. Blake wasn't receiving his air time.
2308 Then two months later, in January of 2005 there was a filing at the companies office that claimed that they were the board of directors since January of 2004.
2309 THE CHAIRPERSON: Mr. Capozzolo, we're off topic here. I want to pursue my line of questioning.
2310 MR. CAPOZZOLO: No, I didn't sign that paper.
2311 THE CHAIRPERSON: Okay. Mr. Asper, have you seen this piece of paper?
2312 MR. ASPER: Yes.
2313 THE CHAIRPERSON: Is it relevant to this proceeding, do you think?
2314 MR. ASPER: I've actually seen two pieces of paper that I was told were supposedly the same agreement and the two pieces of paper are actually quite different.
2315 We made inquiries of Mr. Capozzolo, he indicated that he had never signed that document and I suspect may be the subject of civil litigation if possible, but I don't think it's relevant here.
2316 There are two documents and I would encourage the Commission ‑‑ of the same day that are different documents.
2317 These are these so‑called PharmaSave documents. You'll see there's a stamp.
2318 On one document the stamp is at the top right‑hand corner, on the other document it's in the middle of the page.
2319 On one document there's a handwritten copy of original on the right‑hand side, on the other document there is no such handwriting.
2320 And then if you go through ‑‑ sorry, on page 2 of the document, on one document you have PharmaSave in the top right‑hand corner, and on the other document you don't.
2321 On one document you have handwriting and the stamp of PharmaSave on the bottom below the signatures, and on the other document you don't.
2322 THE CHAIRPERSON: And you didn't think commenting on this issue was relevant to this proceeding?
2323 MR. ASPER: No.
2324 THE CHAIRPERSON: I mean, you have completed your evidence, your submissions, your Phase III and everything else as well.
2325 MR. ASPER: Correct.
2326 THE CHAIRPERSON: And the fact that there's a document on the public record that basically suggests that there was an understanding of two parties that relates to this proceeding, and you were going to leave that on the record without my asking the question?
2327 MR. ASPER: No. Actually as we proceeded and we heard the story from Mr. Capozzolo and we did further due diligence, we took the position that the Commission took in the transcript from, I believe the 2006 hearing, as to what the state of affairs was with regard to this company.
2328 THE CHAIRPERSON: But this was filed in this proceeding as well.
2329 MR. ASPER: I understand that but, Mr. Chair, you hear, there's a lot of noise and when you try to find out what one can rely on, as we looked through it, given the potential lack of credibility as to one or both of these documents, we took the view that the Commission took.
2330 THE CHAIRPERSON: Mr. Capozzolo, who is Mr. Kowalson?
2331 MR. CAPOZZOLO: Mr. Kowalson is our news guy, I think he's still here. That's Mr. Kowalson right there.
2332 THE CHAIRPERSON: He was involved in the station prior to its being suspended ‑‑ its suspension?
2333 MR. CAPOZZOLO: Yes.
2334 THE CHAIRPERSON: And the proposal, Mr. Asper, is that he be reigned again as the news director responsible for news and editorial direction of the radio station?
2335 MR. ASPER: Yes.
2336 THE CHAIRPERSON: This may be a rhetorical question. What is different? If this application is approved, what really changes?
2337 It appears to me that the same people who were involved and doing the same activities, Mr. Capozzolo who was the morning man in the previous regime would continue to be the morning man here; Mr. Kowalson who was formerly employed by Harmony would remain in the news and editorial direction as well.
2338 I thought your proposal was to bring this thing back into compliance with the CRTC.
2339 MR. ASPER: There's a huge amount that's different, Mr. Chair.
2340 The governance and the oversight and the day‑to‑day monitoring of this operation will be far out of the hands of Mr. Capozzolo or Mr. Kowalson, and it never was in Mr. Kowalson's hands, and we will ‑‑ we have the capacity and our plan proposes to put in all of the safeguards, the checks, the balances that exist, not only in a business, but for regulatory compliance purposes.
2341 That is a major difference, including an active board of directors and management.
2342 I mean the flaw, as I think you've heard from Mr. Capozzolo, is one‑man shop trying to do everything, obviously conflict all around, and what we're trying to do is isolate what Mr. Capozzolo does best and bring to this operation stability and the talents of what we can do best, which is to act as oversight and what Mr. Wortley can do, which is to act as manager.
2343 THE CHAIRPERSON: Is Mr. Penner still here?
2344 MR. ASPER: Unfortunately not.
2345 THE CHAIRPERSON: Okay. Those would be all my questions.
2346 Counsel.
2347 MR. McCALLUM: A few questions about programming. If this station is allowed to resume programming, you would be broadcasting some open line programming?
2348 MR. WORTLEY: We would.
2349 MR. McCALLUM: Do you have a policy ‑‑ open line policy for hosts?
2350 MR. WORTLEY: We don't at this time.
2351 MR. McCALLUM: Would you be thinking of, for example, a tape delay?
2352 MR. WORTLEY: We were thinking the seven‑second tape delay, yes.
2353 MR. McCALLUM: Any other screening procedures?
2354 MR. WORTLEY: No.
2355 MR. McCALLUM: You've got 14 days to come up with materials. Could you provide something on open line programming within 14 days?
2356 MR. WORTLEY: Certainly.
2357 MR. McCALLUM: What do you have in place ‑‑ I'll let you write that down.
2358 MR. WORTLEY: I'm sorry.
2359 MR. McCALLUM: What do you have in place, or what are you thinking of doing vis‑a‑vis abusive comment. There's regulations dealing with abusive comment.
2360 MR. WORTLEY: Well, hopefully the seven‑second delay will stop that, but in terms of punishment or in terms of ‑‑
2361 MR. McCALLUM: Preventive.
2362 MR. WORTLEY: Preventing it?
2363 MR. McCALLUM: Preventing it.
2364 MR. WORTLEY: That's a difficult question. Radio's live for the most part and obviously with one announcer live on the air before the students arrive he would obviously be watched very closely as to what he says and does.
2365 However, there are stipulations within the agreement with Mr. Capozzolo that outline that kind of conduct on the radio station.
2366 MR. ASPER: Counsel, are you referring to abusive comment respecting Mr. Capozzolo, or generally?
2367 MR. McCALLUM: I'm referring to the regulation that prohibits abusive comment.
2368 MR. ASPER: Right.
2369 MR. McCALLUM: And all I'm trying to do is make sure that there would be mechanisms in place to prevent abusive comment as contemplated in the regulations from occurring.
2370 MR. ASPER: Yes, and we will include that in the outline of the policies and procedures that we will provide the Commission.
2371 MR. McCALLUM: Great, super. That's ‑‑ right.
2372 You're also aware as a standard condition of licence for a student instructional station that you have to provide a minimum of 25 per cent spoken word content as measured across a broadcasting week; right?
2373 MR. WORTLEY: Correct, yes.
2374 MR. McCALLUM: And you've given us the proposed programming grid. So, could you just go through it briefly as to when the 25 per cent spoken word will be scheduled?
2375 MR. WORTLEY: Monday to Friday, 6:00 to 10:30, see the purple and the yellow.
2376 MR. McCALLUM: Yes.
2377 MR. WORTLEY: That would be ‑‑ part of ‑‑ that would be our spoken word content.
2378 And on Saturday 6 a. to 7 a. ‑‑ sorry, 6 a. to 8 a. would be spoken word. My apologies, 6:00 to 11:00 on Saturday and Sunday spoken word.
2379 MR. McCALLUM: Is that 25 per cent?
2380 MR. WORTLEY: I believe we exceed that.
2381 MR. McCALLUM: I haven't done the calculations, but...
2382 In terms of the description of the spoken word, it will be the morning show that's illustrated in yellow for the most part?
2383 MR. WORTLEY: Correct. And the news.
2384 MR. McCALLUM: Right. And the news, yes, of course.
2385 MR. WORTLEY: Yeah.
2386 MR. McCALLUM: Would the spoken word include song intro and outros or exits or...?
2387 MR. WORTLEY: Back sells?
2388 MR. McCALLUM: Yeah.
2389 MR. WORTLEY: Yeah. No.
2390 MR. McCALLUM: No.
2391 MR. WORTLEY: No.
2392 MR. McCALLUM: So, starting at 11 o'clock in the morning, right through to midnight there's no other spoken word content?
2393 Can you review that, because I doubt that you're up to 25 per cent of the week.
2394 MR. CAPOZZOLO: The morning show only plays four songs an hour between 7:00 ‑‑ four songs in the seven o'clock hour, four songs in the eight o'clock hour and then the rest of it's all spoken word.
2395 The 6 to 7 a.m. hour is all news, no music. Seven o'clock hour has four songs and we'll say they're three and a half minutes, say 15 minutes worth of music in the two hours, that's 15 in one hour, 15 in the other hour, right. Seven o'clock hour there's 15 minutes worth of music and then the eight o'clock hour there's 15 minutes worth of music.
2396 The morning show is from 6:00 to 10:30 minus the half hour worth of music per morning, that's four hours a morning, right.
2397 MR. McCALLUM: Right.
2398 MR. CAPOZZOLO: Five days a week, that's 20 hours. Saturday and Sunday, that's five straight hours of talk, no music whatsoever, and that would be 31 hours, and then the rest of ‑‑ I think it's 31.5 hours worth of music ‑‑ worth of talk is 25 per cent. Well, 25 per cent of 128 hours.
2399 MR. McCALLUM: Is roughly 32.
2400 MR. CAPOZZOLO: 32. So, there would easily be a half hour's worth of talk in terms of weather surveillance, artist information, local empathy during the course of the day because there would be two breaks per hour from 11 a.m. until midnight Monday to Friday and the same with Saturday and Sunday.
2401 MR. McCALLUM: Can you file a detailed programming description that would illustrate how this will be done?
2402 MR. CAPOZZOLO: Sure. Well, Mr. Wortley...
2403 MR. McCALLUM: Could you say a bit more about how you're going to differentiate yourself from other commercial broadcasters?
2404 MR. WORTLEY: Well, I think with the music format of an urban format is ‑‑ certainly starts to differentiate stuff. There's only one other radio station that would even play any of that ‑‑ most of that music, or part of that music and that would be CKMM.
2405 So, the urban flavour of the format certainly distinguishes itself. Secondly, I think the ‑ if I may add, I noticed when I was doing my due diligence on the radio station when we first looked at it was, the number of local urban and hip hop artists that were being played on the radio station was extremely high.
2406 So, I think in that case when we looked at the artist count there was a large number of local artists. So, again, that would differentiate from the other commercial stations.
2407 By the sheer nature of the conditions of licence, Mr. McCallum, would distinguish itself from the commercial stations, the amount of spoken word, the educational program component, the news component.
2408 I think... And the students conducting the on‑air ‑‑ being part of the on‑air component, that would definitely differentiate itself from any commercial radio station in Winnipeg.
2409 MR. McCALLUM: Could you give a bit more detail about the formal educational programming?
2410 When we discussed this earlier, you said that there were the three blue spots that we see in the schedule. Could you explain a bit more about what will be involved for educational programming?
2411 MR. WORTLEY: Let's frame it in more of a real‑life situation. The students will be producing and writing most of that educational programming, if not all of it, and a topic in the course might be "Greenhouse Gas Effects". We want to do a piece on greenhouse gas effects. That would be an assignment for the students ‑‑ certain students to write, to research, conduct interviews on it with experts, and then produce it back at the radio station, to be used for airplay.
2412 The definition is a little vague; however, we deemed it as anything that would be aired that would educate the student, or the listener for that matter.
2413 We could use the economy, we could use the environment ‑‑
2414 I am just giving you examples so you get a flavour of what you might hear.
2415 Mr. Capozzolo had alluded to the fact that he has a relationship with the Manitoba Museum, a geologist there.
2416 There might be a story on geology in Winnipeg, and we would want the students, as an assignment, to go and interview the geologist, and write a story, and come back and produce it.
2417 Those are the things that we felt would be educational programming, and that's what you would hear on those departure segments.
2418 MR. McCALLUM: There is a whole volume ‑‑ Volume 2 ‑‑ which has the curriculum of Robertson College. Can you tie anything that you just said to that curriculum?
2419 MR. WORTLEY: I'm sorry, I didn't hear you.
2420 MR. McCALLUM: I said that there is a whole volume ‑‑ Volume 2 ‑‑ of materials on the curriculum of Robertson College. That has been placed on the public file ‑‑ a whole volume, thick, with several hundred pages.
2421 Can you tie what you just said to anything in that curriculum?
2422 MR. WORTLEY: Can I tie anything I just said to that curriculum?
2423 MR. McCALLUM: Yes.
2424 MR. WORTLEY: In one section ‑‑ you would start in the journalism section of a journalism module ‑‑ writing stories.
2425 It would also tie in with production, producing a story, or producing a feature on a radio station.
2426 Interviewing ‑‑ proper ways to interview.
2427 MR. McCALLUM: Thank you.
2428 MR. WORTLEY: Are you missing ‑‑ is that the only binder that you have?
2429 MR. McCALLUM: No, there are several binders.
2430 MR. WORTLEY: All right. I thought you might be missing one.
2431 MR. McCALLUM: No, there is a full binder of correspondence, and there is a second full binder with the curriculum.
2432 And because it's a full binder with the curriculum, it has a table of contents at the beginning, and it has details on the whole curriculum.
2433 All I wanted to do was draw a link between what you were saying and the volume that is the curriculum, and I was hoping for something specific.
2434 MR. WORTLEY: Did I answer your question, or were you looking for more?
2435 MR. McCALLUM: Perhaps Mr. Capozzolo could complete the response.
2436 MR. CAPOZZOLO: I put the curriculum together. I designed the curriculum so that it would address avenues which someone might want to pursue in a radio station outside of being on the air.
2437 All too often people begin on the air, and then they fall off the air, because they decide that they are a better salesperson, or a better copywriter, or a better newsperson.
2438 Also, part of the curriculum ‑‑ and I don't know if you gentlemen have seen it, but I put together a case that would include a board ‑‑ a mixer board ‑‑ a microphone, and all of the necessary cabling, so that students could go home and work on their voice‑over technique, could work on interviews, could work on their production skills, editing interviews, et cetera.
2439 They could also take that home and voice their telephone messages, or little commercials for their parents' businesses, or friends' businesses, et cetera.
2440 I have made, probably, more money doing freelance voice‑over work than I have actually been paid in radio stations.
2441 Today, we are sitting here, and we are surprised that I would be making $60,000. I was making more than $60,000 20 years ago. This is a step back for me.
2442 And after all of the effort that I have put into it ‑‑
2443 And I want to say one more thing, because I just can't keep quiet about this. I have never used the "N" word to anyone. Considering that these gentlemen all stand about a foot above me, it would be next to insane to suggest that I would do such a thing, and I am incredibly insulted that they would even say that I would do something like that.
2444 MR. McCALLUM: Thank you.
2445 MR. CAPOZZOLO: Thank you.
2446 MR. ASPER: Counsel, maybe I will try to be very specific on your question.
2447 If you look at the general course outline, the course contemplates helping the students transform themselves from whatever they were doing into radio broadcasters.
2448 The educational component will require, to some degree, some outreach. They will have to make calls.
2449 There is a module that talks about communication for radio, which speaks about how to present yourself, how to communicate with small groups, how to present yourself and make the entree.
2450 There is a broadcasting tools component, which is a lab, which is the mechanics of recording and how to do it.
2451 There is voice development.
2452 There is production for broadcasting.
2453 There is the journalism component for radio, which will touch specifically on the educational component.
2454 And, I guess, to some degree, if you look beyond what the student may be assigned to do: Is what they are doing of potential interest to a broader market?
2455 In other words, might it have some commercial marketing capacity in their next career in the commercial world.
2456 I think that all of those things touch specifically on aspects of the curriculum.
2457 MR. McCALLUM: Thank you.
2458 I take it from your response a little earlier that there will be a little bit of music in the morning programming.
2459 Is that right?
2460 MR. CAPOZZOLO: Actually, the music is only there so I can go out and have a cigarette.
2461 So it's three minutes worth of ‑‑ between 7 a.m. ‑‑ it's a full hour of news between 6 and 7. A half‑hour of that newscast is pre‑recorded from the day before. The reason is that Mr. Kowalson has to take the bus in, and the bus doesn't get in until about 6:20.
2462 So that first hour is news. Then, at the top of the seven o'clock hour, at the bottom of the seven o'clock hour, at the top of the eight o'clock hour, at the bottom of the eight o'clock hour, and at the top of the nine o'clock hour there is a three‑minute newscast.
2463 That is not including sports, that is straight news, most of it local.
2464 MR. McCALLUM: Okay. Just a couple of housekeeping things in terms of filing requirements.
2465 Have you got a Certificate of Name Change that would change the name from Harmony Broadcasting to YO FM Inc.?
2466 MR. ASPER: It's interesting that you ask that question.
2467 No. We were advised early on in the process that we couldn't do that.
2468 It was part of the discussions about whether there was a change of control.
2469 MR. McCALLUM: I see. So there is no name change.
2470 MR. ASPER: No.
2471 MR. McCALLUM: Can you provide home addresses for the list of directors that you have provided?
2472 MR. ASPER: Certainly.
‑‑‑ Pause
2473 MR. ASPER: I'm sorry, for Harmony directors or YO management?
2474 MR. McCALLUM: Harmony.
2475 MR. ASPER: Certainly.
2476 MR. McCALLUM: What I don't recall is whether there was a reporting made for the management agreement between Harmony and YO Radio.
2477 MR. ASPER: I am not aware that there has been, no.
2478 MR. McCALLUM: Does a draft management agreement exist?
2479 MR. ASPER: Yes.
2480 MR. McCALLUM: Could you file it, please?
2481 MR. ASPER: Yes.
2482 MR. McCALLUM: Thank you.
2483 In terms of a list of students, does such a list exist yet, or is it too early?
2484 MR. ASPER: It's too early. I think that Mr. Penner could probably provide you with, for what it's worth, names of expressions of interest, but he is not in a position to convert them to reality, as it were, in terms of enrolment.
2485 MR. WORTLEY: Mr. Penner has 31 names of students who either inquired about the course or met with counsellors from January 1st, 2008 to the present, but none of them have signed up. He just has a list of names of those students who have inquired about the course.
2486 MR. McCALLUM: Will membership be expanded?
2487 Right now it's a sole‑member company. Is there any plan to expand membership?
2488 MR. ASPER: I don't have a specific plan, but as I said earlier in the proceedings, I have never precluded that, and I am happy to do it.
2489 MR. McCALLUM: Will any of the morning news be repeated during the day?
2490 MR. CAPOZZOLO: No. We hope, as the students become proficient, to perhaps introduce, maybe, a newscast in the 12 o'clock hour, and perhaps something in the drive home, once students become proficient at producing the news.
2491 MR. McCALLUM: How will you gather the news?
2492 MR. CAPOZZOLO: If you don't mind me answering these questions, because this is the way we have been doing it ‑‑ Mr. Kowalson gathers the news. He does a fabulous job. He puts together a half‑hour newscast, with the majority of the news being local, the second most being national ‑‑ Canadian news, and the least, filling up the half‑hour, would be international news from around the world.
2493 He does that through television, the internet, and newspapers. He rewrites everything, and we have gone through it, and he is actually quite proud of the work he does.
2494 Mr. Kowalson, I must say, is an exemplary employee. In the entire time that I have known him, he has never been late once. He has never shown up without his news done. He is the kind of guy that you would want to have on your team.
2495 MR. McCALLUM: Will there be any role for students in the news?
2496 MR. CAPOZZOLO: Absolutely.
2497 MR. McCALLUM: What will that role be?
2498 MR. CAPOZZOLO: Their roles will be giving news, presenting news ‑‑ again, once they get good enough in gathering news ‑‑
2499 We don't have a BN newswire, so it's not that they can just walk in and rip it and read. There will be an element of rewrite ‑‑ how to rewrite from a newspaper, how to rewrite from a television newscast.
2500 Once they are good enough, we will introduce them in the afternoon.
2501 We also have to keep in mind that having the students in too early in the morning wouldn't be good for their classes. That is a practical thing, and we expect to award those students who show proficiency and an eagerness to want to be on the air ‑‑ we would give them the prime time opportunities.
2502 MR. McCALLUM: In terms of staff, you have talked about yourself and Mr. Kowalson. Will there be any other paid professional staff?
2503 And Mr. Wortley, of course.
2504 MR. WORTLEY: Are you referring to on‑air?
2505 MR. McCALLUM: Yes, I am referring to on‑air.
2506 MR. WORTLEY: No. Mr. Capozzolo would be the only paid, professional, on‑air announcer.
2507 MR. McCALLUM: Will there be other paid professionals of the station?
2508 MR. WORTLEY: Yes. Myself, an administrative assistant, a producer, and one salesperson.
2509 MR. McCALLUM: And a traffic manager?
2510 MR. WORTLEY: The administrative ‑‑ the job that we have designed under the administrative assistant is traffic, bookkeeping, and part‑time receptionist.
2511 So that person would be involved and would be responsible for those duties.
2512 MR. McCALLUM: Is there any engineering staff?
2513 MR. WORTLEY: There will be a contract with an engineer, but there won't be one on staff as an employee.
2514 MR. McCALLUM: In relation to yesterday's process, where YO Radio made a presentation, yesterday there was a discussion of some synergies between YO Radio and Harmony, and I believe you said that traffic functions would be shared between the two stations, but I think, today, you said that the traffic functions would be distinct to Harmony staff.
2515 Could you address if there is an inconsistency, first of all, and if there is one, how could it be addressed?
2516 MR. WORTLEY: I did not state that today, that there would be any ‑‑
2517 I did say yesterday that there could be some synergies administratively with YO and Harmony, but I didn't suggest that traffic would be exclusive to one station or the other.
2518 MR. McCALLUM: By administratively, then, what did you mean?
2519 MR. WORTLEY: I think that I am talking about more on the accounting side, in terms of a receptionist ‑‑ obviously, there would be a shared duty there for both stations in a reception area ‑‑ copywriting, production, sales management, and general manager.
2520 MR. McCALLUM: If both are given a green light, would the stations be co‑located?
2521 Is that the idea?
2522 MR. WORTLEY: The idea is to have the two stations in the same building.
2523 We are looking at one floor right now in a building for Harmony, and there is the option of a second floor for 106.3.
2524 To answer your question, they would be housed in the same building. The operations would be separate, though.
2525 MR. ASPER: Part of the space issue with the present application is that there needs to be classroom space, and those assets exist.
2526 The desks exist, and part of what Brian has been trying to do is find the kind of space that actually will accommodate a teaching space, which makes co‑location a little bit difficult.
2527 MR. McCALLUM: Thank you, Mr. Chair.
2528 THE CHAIRPERSON: Thank you all very much.
2529 We will be rendering the decision, as I said earlier, with regard to the request this morning regarding subpoenas shortly. I can't commit to a date or time yet, but we will be rendering that decision, as well.
2530 So this file is not complete until the disposition of that request, and any follow‑up that may be driven by that, as well as the submissions by both parties with regard to the follow‑up information.
2531 Mr. Kovnats, do you have ‑‑
2532 MR. KOVNATS: Mr. Chairman, there is one issue arising out of your questions.
2533 I have the original contract here, with two other documents with original signatures, and I am prepared to turn them over to the Commission, on the understanding that they will be returned to me, so that the Commission can perform a forensic audit on signatures to find out whether or not this original contract is there.
2534 The fact that Pharmasave was used for faxing ‑‑ you know, if you put it in one way, it turns one thing or another, I don't know. I can't explain why "Pharmasave" is on it. It's not on the original document.
2535 I have the original contract, and two other contracts bearing Mr. Capozzolo's signature. If you are prepared to have a forensic audit performed on those signatures, or however you have handwriting experts do it, we are prepared to have that given to you. I would just like copies right now, and an undertaking to return them to me after you have done that forensic audit.
2536 But if there is going to be any question as to credibility, we are prepared to hand it in and let it be tested. We have no reason to hold back, and no reason not to tell the truth, and I have the original papers in my hand.
2537 THE CHAIRPERSON: Counsel?
2538 MR. McCALLUM: Are there any objections on the other side?
2539 MR. ASPER: No, we have been asking for it for some time.
2540 MR. McCALLUM: I guess we can receive it, and we can decide what to do with it upon receipt.
2541 MR. LEWIS: Counsel, I just have one question. I just wanted some clarification on the 25th of June date for Mr. Blake and associates for filing their materials, specifically receipts.
2542 We are concerned that this controversy over the documents and the boxes not cause that date to slip well into July, given the necessity of trying to resurrect this course.
2543 I just wanted to raise that issue.
2544 THE CHAIRPERSON: I raised that issue, as well, and said that if, in fact, it will be a longer process, we would like to know that sooner, and then we will decide on the relevance and the importance of it toward this specific file, and render a decision there, as well.
2545 MR. LEWIS: Thank you, Mr. Chair.
2546 THE CHAIRPERSON: Madam Secretary.
2547 THE SECRETARY: Thank you, Mr. Chairman.
2548 This completes Phase III and the consideration of this item.
2549 I would like to indicate for the record that the intervenor who did not appear, and who was listed on the agenda as an appearing intervenor, will remain on the public file as a non‑appearing intervention.
2550 This completes the agenda of this public hearing. Thank you, Mr. Chairman.
2551 THE CHAIRPERSON: Thank you.
2552 I want to thank everybody for their patience and their cooperation and their support. It has been a long day and a long process, but hopefully we have been as complete and as all‑encompassing as we possibly could be.
2553 Thank you all.
2554 MR. CAPOZZOLO: Thank you.
‑‑‑ Whereupon the hearing concluded at 2156 /
L'audience se termine à 2156
REPORTERS
____________________ ____________________
Ada DeGeer‑Simpson Jennifer Cheslock
____________________ ____________________
Jean Desaulniers Fiona Potvin
____________________ ____________________
Sue Villeneuve Beverley Dillabough
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