MLA enters office with company owing lenders $4 million

Rocky Simpson will begin his term as Hay River South’s MLA owing millions of dollars to a range of institutions, including the government he is about to help lead.

Simpson’s company, Concept Energy Services, owes nearly $2 million to the territorial government.

In addition, three people familiar with the company’s recent debt burden said Concept owed more than $1 million to the Canada Revenue Agency, more than $500,000 to the Métis-Dene Development Fund, and several hundred thousand dollars to the Town of Hay River in tax arrears.

Two people with knowledge of Concept’s borrowing said the company also owed money to the territorially backed Community Futures program.

In total, Cabin Radio understands Concept Energy Services owes at least $4 million to various lenders.

Sources at two lending agencies, asking not to be identified as litigation and financial recovery attempts are ongoing, said Concept had made little or no recent attempt to repay outstanding sums of which they had knowledge.

“He’s in big trouble,” a senior financial officer who once dealt with Simpson said, asking for anonymity to discuss the case. “This is a disaster of epic proportions.

“The level of debt is astounding. You would think something like that would disqualify you from running, but there doesn’t seem to be any mechanism for that sort of thing.”

The Elections and Plebiscites Act contains no provisions barring a candidate on the basis of debt to the NWT government or any other party.

‘I might be upset as well’

Reached by Cabin Radio late on Saturday afternoon, Simpson confirmed his company’s debt is in the range of $4 million.

“I’ve got a legal firm and an accounting firm working with me, working out how to deal with this,” Simpson said.

“The biggest problem is that the economy [is] just not here right now, especially on this side of the lake. It’s pretty tough to generate any significant amount of revenue when there’s not a lot going on.

“I guess that’s one of the reason I won: the economy has got to get dealt with in the North.”

Simpson said he could understand why residents might be concerned to hear an MLA was entering office with a multi-million-dollar debt load, much of it to the NWT government.

“I might be upset as well,” he said, “but I’d like to hear the facts and just see what transpired and what caused it.

“People have got to realize, in this last five years with the oilpatch going down, it’s taken such a toll on Alberta and the NWT. A lot of companies are months away from being in the same boat I am – maybe not to the same scale.

“If we don’t do something outside Yellowknife, we’re going to be suffering here over the next few years.”

This is something that happens in the NWT and maybe something we need to look at in future.JULIE GREEN, YELLOWKNIFE CENTRE MLA-ELECT

Fellow MLA-elect Julie Green said this was “not a great way to start” the new government, which has yet to meet. She suggested a review of the NWT’s candidate eligibility rules may be necessary.

RJ Simpson, Rocky’s son and the MLA-elect for Hay River North, told Cabin Radio he was aware of his father’s company’s debts “to a limited extent,” adding: “I don’t want to say too much about it because it’s his business, not mine.”

RJ Simpson continued: “He’s my father but it’s separate from me. I get the story. I understand the intrigue behind it. People are going to say what they will.”

Both father and son said they believed most of Hay River already knew about the debt, and had seen no reason to raise the topic during the election campaign.

Oilfield slump

Simpson defeated Wally Schumann, the incumbent in Hay River South, by 350 votes to 322. By phone on Saturday, Schumann said he could not comment as a minister since the debt matter remains before the courts. He declined to comment in a personal capacity.

Among Concept’s debts, the most likely to provoke concern is $1.89 million owed to the NWT government’s Business Development and Investment Corporation (BDIC) $1.89 million, as NNSL first reported (paywall) on Friday.

BDIC provides loans and contributions to help NWT businesses. Court documents show Simpson’s company was ordered to repay the money in June. In those documents, BDIC says Concept missed 59 out of 93 payments in the first seven years of the loan, originally taken out in 2011.

Simpson said his company had suffered when the Alberta oil economy slumped, suggesting 80 percent of his business – renting industrial equipment and manufacturing modular homes – was based in the province.

RJ Simpson said of his father: “He was in the energy services business. If you look at what happened in Alberta, a lot of them have gone under. He was providing services to the oilfield.

“There are a lot of businesses in the territory that are struggling. He hung on as long as he could, he kept people employed as long as he could.”

Recent examples

However, Rocky Simpson entering government while his company is being sued by the same government creates “a political liability,” Yellowknife Centre MLA-elect Green said.

Green had asked questions of then-housing minister Caroline Cochrane when, in 2017, Simpson’s company failed to deliver on most of a $9.3-million contract for modular homes with the NWT Housing Corporation. “Instead of being a game changer, the northern manufacturing of modular homes is a bust,” Green declared in the legislature at the time.

On Saturday, Green told Cabin Radio: “I don’t know [Rocky] at all. I don’t have any feelings about him being a colleague. Clearly, he has an issue that he needs to resolve.”

Green said: “There is a perception, at least, of a problem with a number of different debts that residents may not look at favourably when they’re looking to him to govern the Northwest Territories.

“I understand that small business is risky and it can all go sideways through factors that are beyond your control, like larger markets in Alberta, Canada and elsewhere. I think the honourable thing to do is to try to sort it out.”

Green pointed to two recent examples of MLAs entering the legislature in similar circumstances.

“It’s not a great way to start. We saw it happen last time with Michael Nadli,” she said, referring to the man re-elected as Deh Cho MLA in 2015 despite an assault conviction and jail time earlier that year. Nadli had admitted assault causing bodily harm in an incident that left his spouse with a broken wrist. He was defeated by Ron Bonnetrouge in this year’s election.

Green also cited the example of Daryl Dolynny, a Yellowknife businessman who entered office as the Range Lake MLA in 2011 while BDIC was suing Dolynny and several business partners for the return of a $100,000 loan guarantee.

Dolynny and partners reached an agreement with BDIC the following year. He remained an MLA until his election defeat in 2015.

How do you vote and pass bills in the House when you’re in litigation with the government?FORMER MLA

“I don’t know if the Legislative Assembly has ever looked at a provision like that: that if there was a debt to the GNWT or one of its entities, that’s a disqualification,” said Green.

“That’s the kind of thing that could be reviewed. This is something that happens in the NWT and maybe something we need to look at in future.”

Recouping the money

Cabin Radio understands some of Concept Energy Services’ assets could be seized if debts remain unpaid.

RJ Simpson acknowledged he currently rents a property from his father – believed to be on land owned by Concept – but could not say whether that property was at risk of seizure.

“I don’t know what’s going on,” the Hay River North MLA-elect said. “I imagine BDIC’s going to try to recoup that money somehow, and I imagine that would be by selling assets.”

Rocky Simpson said he was “not as concerned” about the prospect of assets being seized.

“If BDIC wants repayment and they want to take the assets, that’s fine,” he told Cabin Radio.

“I’ve been trying to work with them, really, to no avail. Probably two years ago, the assets were worth 50 to 75 percent more than they are today.”

Simpson said if his accounting and legal firms cannot devise a rescue plan, “an option is to put the company under and go from there.”

Meanwhile, Cabin Radio understands all MLAs-elect will be expected to attend sessions with the NWT’s conflict of interest commissioner, David Phillip Jones, as they begin their three-week orientation at the legislature. The orientation process starts on Tuesday.

One former territorial politician, asking for anonymity to discuss a sensitive matter, said Simpson will be expected to divulge his business assets and liabilities to Jones.

“My question,” the former MLA asked, “is how do you vote and pass bills in the House when you’re in litigation with the government, and you’re representing it? It’ll be a challenge to manage that.”

The garnishing of Simpson’s wage as an MLA was raised as one prospect by both the former politician and the senior financial officer. Whether that process is applicable in these circumstances was not immediately clear.

Simpson and other MLAs are expected to attend breakfast with a range of reporters on Friday morning at the legislature, their first official media engagement of the new four-year term.

Sarah Pruys contributed reporting.

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Update: October 5, 2019 – 17:18 MT. Rocky Simpson was reached by phone shortly after this article was first published. Our report has been updated with his views.