Ten months ago, I published Talking tough, empty words and empty head, a piece mocking Attorney General Shirley Bond in her role as lead ICBC overseer. Shortly after, Finance Minister Kevin Falcon took responsibility for the insurance company from Bond.
In August, a Ministry of Finance review confirmed what Northern Insights readers already knew from Where the money goes – ICBC top 50 – 2010. The not-so-secret story was that senior ICBC executives were plundering the corporation.
Of course, management claimed entitlement because they’d met or exceeded operating targets. This was my comment last February:
“They’re running a monopoly insurance company selling liability insurance that every driver in the province must buy, by law. They can set rates at whatever level it takes to earn a profit but even that is irrelevant because the ICBC accountants have reserves for reserves and they can even defer their deferrals and come up with a paper profit. It’s a well practised art where they build wiggle room into wriggle room.
“Of course, you say, executives don’t earn full bonuses unless they meet their targets. That brings forward a simple question. Who set the targets? Well, the executives who take home the bonuses set the targets. It works the same way at PavCo where the top folks earn regular bonuses despite unending financial losses from operations. Amazingly though, they always make their targets.”
When the ministry review was published, ICBC President and CEO Jon Schubert resigned. However, his generous friends agreed to continue paying him as a consultant until summer of 2013. (What’s another half million when they’ve paid out $25 million in severance during the last five years?)
Pushing the CEO out the door was a start but the Board of Directors is in need of an overhaul. They collectively failed to manage and supervise the activities and affairs of the corporation. Perhaps this is not surprising because there seems to be a distinct shortage of experienced managers of organizations actually involved in tangible activities.
The recent ICBC Board included chartered accountants, finance industry people, an advertising man, an HR person and two prominent political hacks: Paul Taylor and Rick Thorpe.
Imagine how different ICBC would be if the Board of Directors included a couple of single moms who have been raising three children on about $1,000 a month or a pensioner trying to survive on even less. I guarantee the company would not have paid $25 million in severance pay or allowed one executive hired to cut costs to bill $188,681 in expenses in his second year of employment.