City of North Vancouver mulls financial disclosure requirement for top officials

Proposed bylaw follows naming of former chief administrator as respondent in BCSC investigation of alleged illegal stock scheme

BIV files

The City of North Vancouver is considering a new bylaw that will officially designate three senior officials as employees required to file financial disclosures.

It’s a move welcomed by former mayor Darrell Mussatto, who said he was surprised to hear about financial work conducted on the side by former chief administrative officer Kenneth Tollstam, who is now subject to a BC Securities Commission (BCSC) investigation into an alleged, widespread illegal share distribution scheme that has many retail investors crying foul.

Mussatto said that although Tollstam diligently performed his duties as CAO while directing several startup firms, he would have liked to have been kept abreast of any work being done outside the city by his top official.

The city presently provides for senior staff to voluntarily file disclosures but Mussatto called this “almost useless” since council could not look at them.

A new bylaw is being proposed by the city clerk’s office led by Karla Graham, who commenced a review of disclosures independent of Tollstam being named as one of more than two dozen respondents to a BCSC notice of hearing last November.

By implementing a bylaw designating the city’s three statutory officers (CAO, clerk and CFO) as municipal employees under the province’s Financial Disclosure Act, such disclosures will be mandatory by law and presented to council members annually.

Mussatto said Tollstam never recused himself from any meetings and the city has indicated it has not identified any recent conflicts of interest by staff. Mussatto noted there would be nothing wrong with Tollstam working elsewhere so long as it didn’t interfere with his CAO duties and it didn’t present a conflict.

Tollstam moonlighted for various publicly listed companies from 2014 to his retirement last summer.

For instance, Tollstam was once CFO of Bravura Ventures (now named Quantum Cobalt). Corporate filings signed off by Tollstam in September 2017 show Bravura Ventures happened to sell shares to a number of BCSC notice of hearing respondents, including Justin Liu. Both Liu and Tollstam were listed as consultants for Bravura Ventures.

Liu has ties to a marijuana dispensary that operated illegally for years in the city. In June 2015 he co-founded WeeMedical Dispensary Society but resigned that August. Directed by his mother May Joan Liu, WeeMedical was issued bylaw tickets in June 2016 by City of North Vancouver inspectors. Despite being denied a business licence in March 2016, it continued to operate until spring 2018, when the city filed a court injunction.

As a director, Tollstam also helped SVT Capital Corp. complete a reverse takeover of cannabis firm Delta 9 Cannabis in October 2017. He resigned upon completion of the takeover.

Corporate records show SVT’s past CEO was Tollstam’s son-in-law, Anthony Kevin Jackson, who is also a subject in the investigation.

According to SVT records, Tollstam “serves as director and chief financial officer of several private and publicly traded companies. Mr. Tollstam has spent a number of years at Deloitte Touche, where he obtained his CA before going on to hold various executive management and director of finance positions throughout his career.”

Tollstam’s more public LinkedIn profile does not indicate his work for many shell companies such as Leo Resources Inc., Bravura Ventures Corp., Adent Capital Corp., Element 79 Capital Inc., Montego Resources Inc. and Intact Gold Corp.

“I had no idea he was a director of any companies,” said Mussatto.

A February, 2017 shell summary report described Tollstam as “the busy Mr. Tollstam.”

As it relates to the investigation, Tollstam is named as one of more than two dozen respondents the commission’s executive director, Peter Brady, is investigating as to whether they purported to be consultants for 11 companies listed on the Canadian Securities Exchange. Brady claims the so-called consultants and companies engaged in “cash swaps” whereby shares were issued in concert with consulting contracts. Allegedly the consultants, having not performed consulting work, then quickly sold the shares to retail investors, who were left with devalued and diluted stock.

Filings for respondent company Green 2 Blue Energy Corp. show Tollstam purchased $500,000 worth of $0.35 shares in April 2018. The Polish wood pellet company now trades for $0.05.

A BCSC panel noted in January that there is no evidence that Tollstam sold shares after entering into a consulting agreement. The panel nevertheless extended Tollstam’s trade orders.

Tollstam would not comment on any matter before the city or BCSC via his lawyer, Lisa Ridgedale, who said Tollstam “filed what he needed to file with the city.”

The Financial Disclosure Act calls on designated employees to file annual disclosures of “the name of each business located or carrying on business in British Columbia” that is “financially remunerating” him for services performed as an employee.

Disclosures are not accessible to the public but are provided to council members.