The GTH land deal you've never heard of and Bill Boyd won't talk about

Since the provincial auditor released her report on the Global Transportation Hubland deal at the start of summer the CBC's iTeamhas been investigating what she found and comparing it with documents obtained through access to information and extensive interviews.

This is the first featurein a two-part series detailing what we have learned.

In this story you'll discover that back in 2012 then GTH Minister Bill Boyd andCrown Investments CorporationMinister Donna Harpauermade the government's first attempt to buy the much-discussed 204 acres.

• They agreedto buy the land for450 per centmore than their ownappraisalsaid it was worth.
• They were relying on hurried and incomplete due diligence.
• They made the agreementwith a company owned by an Alberta land baron whosefamily has a business relationship with Bill Boyd.
• The deal fell apart moments before it reached the cabinet table because the GTH said it didn't know who owned the company that it had negotiated this multi-million dollar deal with.

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Most of us thought there was just one Global Transportation Hub land deal.

It turns out, most of us were wrong.

An elite, powerful few have known all along that the GTH actually tried to buy the much-discussed 204 acres of land twice.

This is the story of the first attempt an attempt which failed.

Documents obtained through access to information reveal that Premier Brad Wall's cabinet and senior staff were alerted to that first GTH-land-deal-the-rest-of-us-didn't-know-about back in November 2012.

Corruption is what goes through my mind.- Sister Veronica Dunne, Sisters of Our Lady of the Missions

The proposed deal collapsed minutes before it was to be discussed on the floor of cabinet falling apart under a cloud of incomplete due diligence, eyebrow-raising land prices and a concealed identity.

The whole thing has earned the disgust of Sister Veronica Dunne, a nun whose Catholic order, the Sisters of Our Lady of the Missions,used to own some land that wound up in the midst of this deal.

After reviewing the facts, she said "corruption is what goes through my mind."

A behind-the-scenes look at the-deal-we-didn't-know-about

The aborted firstdeal was uncovered by Saskatchewan's Provincial AuditorJudy Ferguson.

She came across it while conducting an audit of the well-known GTH land dealthat's been the focus of so much controversy since the iTeam broke the story in February.

In that much-publicized deal, Regina developer Anthony Marquart made about $5 million when he sold 204 acres to the GTH for two to three times more than government appraisals said it was worth.

In her audit report, Ferguson uncovered many previously unknown details, which have served as a trail of breadcrumbs for CBC's iTeam to follow.

• Government paid too much for GTH land: Sask. provincial auditor

• Provincial auditor's report: GTH and highways ministry land deals

Those tidbits, combined with interviews and a wide range of documents obtained by CBC, have enabled the iTeam to piece together a never-before-seen mosaic of how the first deal came together and fell apart.

What emerges is a picture of a GTH, headed by then- GTH Minister Bill Boyd, which was willing to pay an extraordinary price to acquire this 204 acres and an Alberta businessman who was trying to sell it while his identity remained unknown.

The story begins with a phone call Boyd refuses to discuss.

PART ONE

A powerful minister gets a mysteriouscall

In the spring of 2012, Boyd was flying high, as arguably the most powerful minister in Brad Wall's cabinet.

That very spring, Wall made Boyd head of a new super-Ministry of the Economy and appointed him minister responsible for SaskPower. He was also minister responsible for the GTHand chair of its board. Boyd resigned from cabinet over the summer and now sits as a backbencher.

At the time, his increasing power made Regina Leader-Post columnist, Murray Mandryk quip Boyd "may be one fluffy Persian cat and a remote desert island away from being the political equivalent of a James Bond villain."

It was that spring, when Boyd received the mysterious phone call.

We know about it because of this sentence in the provincial auditor's report.

"In April 2012, the GTH chair/minister (Boyd) received an unsolicited call from a third party (a private sector landowner) about selling the east parcels (the 204 acres) to the government for $65,000 per acre."

In summary, a private landowner the auditor doesn't say who called Boyd, offering to sell the 204 acres of land for $65,000 an acre. At the time, part of that property was owned by McNally Enterprises and the other part by theWinnipeg-based Sisters of Our Lady of the Missions.

A remarkably timed phone call

Here's what's surprising about the call.

That very month, April 2012, provincial cabinet had confidentially told the GTH to attempt to buy that very 204 acres.

The curious timing makes forensic accounting instructor Marc Tasswonder if someone tipped off the mysterious private landowner.

"We cannot blame the person [for] maybe being quick. But we can ask the person, 'Did you benefit from privileged information? How come you knew it?'" said Tass, who teaches at the Canadian Centre of Excellence for Anti-Corruption at the University of Ottawa.

"Was there some confidentiality requirement that was breached?" Tassasked.

He also wanted to know how someone could have so easily connected with such a powerful minister.

"You ask yourself,'Would a normal person actually have gone through that process so quickly, so rapidly?"

Who was the mystery caller?

Tasssaid for the sake of transparency, the government should reveal who called Boyd.

But neither Boyd nor the Premier's Office will answer that question, nor any other question about the GTH or the auditor's report.

Boyd said he hasalready cooperated with the auditor and conflict of interest commissioner, in addition to doing an interview with the iTeam in December 2015 so "I will not be communicating further with you on this matter."

A spokesperson in Wall's office directed the iTeam to a media scrum Wall did hours after the 72-page report came out last June. She said "the premier's scrum response to the auditor's report is the government's response."

(not applicable)0:00Premier Brad Wall responds to auditor's report on GTH land deal

Premier Brad Wall says he accepts the provincial auditor's recommendations and would be acting on them

Wall acknowledged that mistakes had been made by the GTH and cabinet and he said the government accepted the auditor's recommendations. Wall also pointed out thatin the auditor's news release, she said she "did not find evidence of conflicts of interest, or indications of fraud or wrongdoing by the GTH management or board of directors."

However, the issue of the mysterious call didn't come up in that scrum.

The auditor said she learned about the "unsolicited call" from some correspondence she obtained from GTH officials.

Ferguson's investigators interviewed Boyd but didn't ask about who made thephone call because, she said, the identity of the caller "was deemed not germane to the purpose of the audit."

Ferguson pointed out that she was conducting a process audit, aimed at learning if the government had appropriate procedures. This was not, she emphasized, a forensic audit.

According to the Government of Canada, forensic audits are "designed to identify and gather evidence to support or deny an assessment of possible irregularities, including the misappropriation of funds or assets, reported fraud or specific allegations on the part of a recipient or an individual."

Was Robert Tappauf the mystery caller?

Ruth Eisworth, president of McNally Enterprises, whoused to own some of the 204 acres, thinks that "unsolicited call" must have come from Robert Tappauf or someone acting for him.

Tappauf is an Alberta land baron whose family owns more than 100,000 acres of farmland in Alberta and Saskatchewan. He also has business connections to Boyd. His family has leased thousands of acres to Boyd's farming operation.

Eisworth pointed out that just one month before that phone call to Boyd, Tappauf signed option agreements to buy the 204 acres, and he registered an interest on the properties.

He signed a conditional agreement with Eisworth's company to buy 87 acres of her land and signed a similar agreement to tie up 117 acres owned by the Catholic Sisters. The two parcels add up to 204 acres.

Eisworth said given that she had signed the agreement with Tappauf he was the only onewho could have legally offered her land for sale.

"I don't know who that would have been other than Tappauf or an agent on his behalf," said Eisworth.

Gord Mertler, a realtor who was voluntarily helping the Sisters with the transaction, agrees with Eisworth.

Mertler said Tappauf was the only one who had the legal right to sell both McNally Enterprises land and the Sisters properties together in April 2012. So he couldn't imagine who else would have been calling Boyd about the land.

"There's only one party that's in play here and that's the Alberta group," Mertler said.

EisworthandDunneconfirmed with CBC that no one from their organizations called Boyd.

'Too much of a coincidence to be a coincidence'

Dunne said the fact that Tappauf secured rights to the land just one month before cabinet told the GTH to buy it "just seems too much of a coincidence to be a coincidence."

"To me, it sounds like there was some kind of a plan involved."

She recalled that Tappauf seemed to be in a hurry to buy her land, and it appeared money was no object.

In February 2012, Tappauf's realtor asked Dunne if she'd be willing to sell. She said no. But when pressed, she agreed to entertain an offer.

The bidding started at $15,000 an acre, then $25,000, $30,000, $45,000...

As the price soared Mertler thought "there's something cooking here."

"I couldn't understand, like, what in the world was an Alberta company doing here and close to what's going on with the GTH?"

The pressure was on.

Tappauf's lawyer wrote to the Sisters lawyer insisting "we have to close by month's end" and "it is all on a very tight time frame."

Dunne didn't understand what the rush was about.

In early March 2012, the Sisters agreed to a conditional sale for $55,000 an acre - almost $6.5 million. Tappauf secured a similar deal with Eisworth for about $4 million. The deals allowed Tappauf several months for "due diligence" before they would formally close.

Highways planned to build an interchange on the 204 acres

A couple months after the conditional sale to Tappauf, Dunne and Eisworthwere notified by the Ministry of Highways that the government would be building an interchange on their land for the West Regina Bypass.

On June 15, land manager Nicole Anderson told them the ministry "will be requesting appraisals to value the land and will be looking at purchasing the required land in the near future." An attached map showed that the government would need muchof their land.

This is what Eisworth feared. A year earlier, the ministry purchased some of herland in this area, under threat of expropriation, for $11,000 an acre, and she feared that might happen again.

"Our thought was, 'oh my god this is going to ruin our deal with Tappauf,'" Eisworth said.

An email obtained by CBC shows Anderson passed on the same information to Tappauf's lawyer.

According to the agreements with Eisworth and the Sisters, in the middle of June Tappauf still could have killed the deal and gotten back his deposit.But he didn't back out, despite the risk of expropriation.

"Instead, it was around the same time he removed the conditions so that his deposit became non-refundable," said Eisworth.

Sister Dunne said she was also concerned. But she asked her lawyer to notify Tappauf's lawyer that the government saidit waspreparing to take some of this land. "I didn't want to put them in a difficult position. I would sure want someone to do it for me so i wanted to do it for them."

She was surprised that despite the warning, the deal went ahead.

"I just thought well they must have a way of negotiating this that we didn't have," she said.

When contacted by CBC's iTeam in December 2015, Tappaufsaid he had no idea that the government was thinking of building a highway through his land until after he sold it in 2013.

"My realtors really didn't do their job neither on that one," Tappauf said. "If I never sold it [to Anthony Marquart in February 2013] I would have had a road going through it and it would have been a mess probably."

In her investigation, the provincial auditor never did speak with Tappauf or any of the private land owners. In an email she explained "those individuals were not interviewed as it was deemed not necessary given the objective of our audit."

Tappaufwon't discuss mystery phone call

CBC attempted to speak withTappaufabout that unsolicited phone call Boyd received but he didn't respond.

But back in December 2015, long before CBC knew about that mysterious call, Tappauf did speak with the iTeam.

Personally, I've never ever met Bill Boyd to tell you the truth.- Robert Tappauf, Alberta businessman

Heexplained that when he signed the agreements with Eisworth and the Sistersin March 2012, he had no immediate plans to re-sell the land.

"I was planning on holding it and developing it some day. I'm a farmer so I know how to sit and hold,"Tappaufexplained.

When asked about his connection to Boyd he said "personally, I've never ever met Bill Boyd to tell you the truth."

Boyd won't talk about Tappauf

Boyd won't discuss Tappauf or anything else related to the land deal.

However, back in January when the iTeam first raised the issue of Boyd's landlord/tenant relationship with Tappauf's family a spokesperson in the Premier's Office responded.

"We hope you are not implying or insinuating that Minister Boyd somehow used his influence or knowledge to assist Mr. Tappauf," the spokesperson wrote.

"This is categorically untrue and such an assertion would be defamatory if published or broadcast."

After the iTeam's story was published in February, Boyd issued the following statement.

"I have never met Robert Tappauf. At no time did I ever speak to Robert Tappauf about anything regarding the Global Transportation Hub or any land pertaining to that project."

• Sask. politicians call for review of puzzling land transactions uncovered in iTeam investigation

A spokesperson told CBC not only did Boyd not speak to Tappauf about the land but Boyd "was not aware that Robert Tappauf ever had any involvement with this parcel of land prior to your email yesterday."

PART TWO

A costly deal with an anonymous landowner

As promised, in June 2012 the government had the 204 acres appraised.

The appraisal, obtained by CBC,considered30 comparable sales and concluded the land's market value was $15,000 to $20,000 an acre.

On Oct.15, 2012, a GTH briefing note from management to the minister pointed outthat $15,000 to $20,000 an acre was too expensivefor the GTH.

"The financial resources required to obtain the property will create a high risk of exceeding the GTH's current $40-million borrowing limit."

In addition, GTH management told Boyd that the Ministry of Highways was planning to build an interchange on the property and "the design is estimated to consume the majority of the two identified parcels for construction of the interchange."

That meant therewouldn't be muchland left for the GTH to develop.

So management recommended to Boyd that the Ministry of Highways "be directed to assembly (sic) these parcels as soon as possible."

And then something surprising happened.

The very next month, November 2012, the GTH signed a conditional agreement to buy the land from Tappauf's company, 139 Land Corporation, for $78,000 an acre; more than four times its appraised value.

It's unclear why the price increased so rapidly.

Sudden flip-flop puzzles Canadian Taxpayers Federation

ToddMacKay, with the Canadian Taxpayers Federation, wonders whythe GTH agreed to pay four times more than appraised value for the land.

"We need a consistent, fulsome explanation on this one because it doesn't appear that simple market fluctuations are the issue here,"MacKaysaid.

"There's more to it."

He also wonders whythe GTH didn't follow its own advice and ask Highways to buy the land. It had deeper pockets and the power of expropriation.

"Why was that tool left in the toolbox?"MacKaywondered.

MacKay pointed out that buying land for highways and interchanges is typically and appropriately the job of the Ministry of Highways. In fact, until this point the Ministry had purchased all land for the GTH.

"Highways has folks that buy millions of dollars worth of land all the time. It's routine for them. It's their core competency," MacKay said.

Auditor doesn't explain sudden flip-flop

In the iTeam's interview with Ferguson, she said this was a process audit not a value-for-money audit, so she didn't explore this issue.

"We've clearly indicated that we didn't establish estimates for fair value," said Ferguson.

The GTH did not keep documentation of its due diligence or support for this offer.- Judy Ferguson - Saskatchewan's Provincial Auditor

Her report does note that during this time "the GTH did not keep documentation of its due diligence or support for this offer." In fact, it didn't even keep a copy of the conditional offer to Tappauf.

While the auditor didn't report what motivated this particular change, she did note that cabinet failed to give clear direction as to which government entity should buy the land.

In addition, she found that rapidly increasingly land prices may have been motivating a sense of urgency.

PART THREE

Land deal collapses because of a concealed identity

Though the GTH negotiated the multi-million dollar deal, it couldn't afford it.

So in November 2012, Boyd asked the minister responsible for Crown Investments Corporation, Donna Harpauer for help. And she agreed.

The auditor found that onNov. 28, Boyd and Harpauer jointly submitted a request to cabinet "for its approval for immediate [purchase] of the land."

CIC officials were given just a few days toslap together the multi-million dollar deal.

Documents obtained through access to information reveal the chaotic "due diligence" process.

Slapping together a multi-million dollar deal

CIC officials first learned about the GTH's request for help about six days before that looming cabinet meeting.

Emails show that CIC president Dick Carter had been told"that GTH may be approaching CIC about financing some land options."

He explained "that could mean any number of items ie lending, purchasing property with an option for GTH to buy etc."

CIC'sChief Financial Officer, BlairSwystunnoted CIC may not have the legislative authority to invest in or lend to the GTH.

DougKosloski,CIC'slegal counsel also raised concern. "This is starting to fall outside CIC mandate."

CIC officials are rushed and concerned

Less than 48 hours before the looming cabinet meeting, the GTH started providing some of the very basic information about the potential deal.

Swystun received what he described as a "very early stage draft" of a "cabinet decision item" (CDI) from the GTH. A CDI is supposed to contain the confidential information ministers need in order to make good decisions.

Swystun found the draft lacking and shot back with some questions.

He pushed the GTH to justify "the appropriateness of the premium being offered."

You'll remember, the GTH offered Tappauf's company $78,000 an acre while the GTH's own appraisal said the land was worth $15,000 to $20,000 an acre.

Swystun also wanted to know who owned 139 Land Corporation, which was selling the property.

Although it's clear now that Tappauf owns the company, that fact apparently wasn't spelled out in the documentation the GTH provided CIC.

At the time, 139 Land Corporation was registered in the name of Tappauf's lawyer, David McKeague, who was listed as the only director and shareholder. Tappauf's name did not appear in the corporate registry.

At one point, in the midst of the chaos, Swystun sat down and wrote a note to himself detailing CIC's efforts to find out who owned the numbered company efforts that were apparentlyunsuccessful.

He concludes his note: "I insert a caution in cabinet item that cabinet should not rely on CIC due diligence because it was very limited due to time constraint, and should rely primarily on GTHdue diligence."

The GTH's due diligence had problems of its own. The auditor found the organization didn't have formal policies and procedures for doing due diligence and had no direct experience buying land.

Last minute scrambling 'a bit of a goat show'

The night before the Nov. 28 cabinet meeting, officials from CIC and Harpauer's office were scrambling to get the land deal CDI onto cabinet's agenda.

Raynelle Wilson, Harpauer's chief of staff, described her last minute efforts.

Aftera bit of a goat show, I did receive a paper copyof the CDI last night and I secured the minister's signature.- Raynelle Wilson, then Chief of Staff to Minister Donna Harpauer

"After a bit of a goat show, I did receive a paper copy of the CDI last night and I secured the Minister's signature," Wilson wrote.

That night, Tuesday Nov. 27, the cabinet secretariat wrote an email to Premier Brad Wall's senior staff, all cabinet ministers, and their chiefs of staff. It said the GTH land deal item "has been approved as a "walk-in" for the Wednesday, Nov.28meeting of cabinet."

The author noted the CDI "has been uploaded to the cabinet reader", meaning it was available for those with access.

Early on Wednesday morning, a secretariat official wrote "I suspect that due to time constraints, this item bypassed the usual steps."

GTH deal yanked from cabinet table

From the auditor's report and access requests, a picture has emerged of the deal Boyd and Harpauer sent to cabinet.

• It was a request that cabinet approve the immediate purchase of the 204 acres.
• The GTH was offering to pay $78,000 an acre for land that was appraised between $15,000 and $20,000 an acre.
• It was a last-minute deal, with hurried and incomplete due diligence.
• The multi-million dollar deal was between the GTH and Robert Tappauf's company, 139 Land Corporation.
• It was a deal in which the identity of the owner of 139 Land Corporation, Robert Tappauf, wasunknown.

The auditor found that last point became a problem for the GTH land deal.

"When it went to cabinet, [GTH officials] weren't finished their due diligence," she explained in an interview with CBC. "And before cabinet met, they were unable to identify who the underlying owner of the numbered company was."

"And so then they pulled it from cabinet."

The auditor said the GTH did the right thing in killing the deal.

"You need to know who you're buying things from so that you can ascertain whether or not you have a conflict of interest," Ferguson told CBC.

I would say it stinks or I would say it's mind boggling because it's both.- Ruth Eisworth - Former Landowner

The auditor said the GTH tried to find out who owned the company.

"The queries were made and they were unable to ascertain who the underlying people were," said Ferguson. When the iTeam asked why they wouldn't reveal themselves she said "that's their decision."

Eisworth said if the GTH really wanted to know who owned 139 Land Corporation, it would have been a simple matter.

It could have asked her.

After all, she said, it was public record that she was still the legal owner of some of this land and the GTH could have asked her who was now trying to sell it.

But the GTH never did call.

"I would say it stinks or I would say it's mind boggling because it's both," Eisworth said.

Ministry of Highways learned of Tappauf's connection to GTH land

While the GTH may not have known who owned 139 Land Corporation it did have some reason to believe that Robert Tappauf maybe connected with the land.

Emails obtained by CBC's iTeam show that the GTH's Chief Operating Officer Blair Wagar had been told Tappauf was "the potential purchaser" of the land about five months before the deal went to cabinet.

In June 2012, Nicole Anderson with the Ministry of Highways wrote an email Wagar identifying Robert Tappauf Enterprises Ltd. of Alberta as "the potential purchaser."

She said she had reached out to the Sisters and McNally Enterprises to let them know the government would be needing some of their land for an interchange. She said she delivered the same message to the contact person for 139 Land Corporation, David McKeague, which had the registered interest on the land.

As an aside, she noted that "in discussion with the realtor, I got the name of the potential purchaser which is different than the contact associated with the registered interest Robert Tappauf Ent. Ltd. out of Alberta. I have not contacted this potential purchaser."

So, in June, the Ministry of Highways told a senior GTH official that Tappauf was the potential purchaserof the land.

It's not clear if that information was passed on to other officials in the GTH.

PART FOUR

Tappauffinds another buyer

Tappauf did eventually sell the 204 acres, just three months later, but not to the GTH.

Regina developer, Anthony Marquart bought the property near the end of February 2013.

In an interview back in December 2015, the iTeam asked Marquart how he and Tappauf first connected.

"I had heard about it in the real estate world that there could be an opportunity to develop some industrial land," Marquart said.

It was an opportunity, he explained, that Tappauf was no longer able to pursue.

"They weren't in a condition to go further with the deal," Marquart said. "So yeah, that's when I became involved."

The land was still technically owned by Eisworth and the Sisters, with Tappauf holding an option to purchase the property.

In a single day, Feb. 26, 2013, Tappauf closed the deal with the Eisworth and the Sisters and sold the property to Marquart, without ever taking title.

Tappauf made about $6 million that day.

But his name doesn't show up in the official record of the transaction.

Forensic audit needed says expert

Sister Dunne said reading the auditor's report has been both eye-opening and troubling.

"Knowing what I know now it seems like there was, from the beginning, there must have been a plot, a larger plan than just getting our land," Dunne said.

"Somehow our land was part of a scheme to make a windfall out of those particular parcels of land."

CBC's iTeam contacted Boyd, Tappauf, Harpauer and the Premier's Office highlighting the facts and concerns raised in this story and requesting an interview.

The only response CBC received was an email from the Premiers' office, reproduced in its entirety here.

"The provincial auditor was given complete power and latitude to conduct her review," wrote an official in Wall's office. "She and her team of experts were provided with complete access to all information and all areas of government involved cooperated with the audit. The government accepted the provincial auditor's report and steps have been taken to address the auditor's recommendations."

Somehow our land was part of a scheme to make a windfall out of those particular parcels of land.- Veronica Dunne- Sisters of Our Lady of the Missions

Forensic accounting instructor Marc Tasse said the auditor's report does a good job of highlighting many problems with the GTH land deal.

But he says the audit doesn't uncover why all those problems happened.

"Did it result from mismanagement? Did it result from conflict of interest? Did it result from people trying to get their own benefits from it?" Tasse asked. "We don't know because there was a process audit that was done. Not a forensic audit"

He said given the many unanswered questions a forensic audit is what's needed in order to clear the air.

"I would really ask to have a forensic audit done in order just to clear up all kinds of allegations or suspicions that people might have," Tasse said.

Coming soon - Part two of our series