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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.