The Risk of Doing Business without Maintaining  Records

Records management obligations got more important than ever for senior civil servants in Ontario on New Years Day, 2016.  That’s when the Public Sector and MPP Accountability and Transparency Act, 2014 came into force.

The Act amends both the Ontario provincial and municipal Freedom of Information laws, by making the head of each government institution responsible for ensuring that appropriate records management systems are in place.  A new offence is created for intentionally concealing, altering or destroying records.

No record of $950 million decision

The Ontario government’s gas plant cancellation provides an instructive glimpse into the internal government culture that drove enactment of the new law.  The political scandal rocked the McGuinty government and continues to plague the Wynne administration.

In response to a Parliamentary Committee requirement to release relevant documentation about the cost of the construction contract cancellations, the Ministry of Energy and the Ontario Power Authority eventually released a cumulative total of 56,000 pages of records. But nobody in the Minister of Energy’s office had any relevant documents at all.  Not one.

Deleting critical business e-mails – just a good work habit?

When questioned by the Justice Committee as to why the Minister didn’t have a single relevant record to disclose, Craig MacLennan, his former Chief of Staff responded that it all came down to good work habits.  He was a very busy man and always deleted his emails just to keep things nice and tidy.  “All I can speak to is what my work habit is, which is to keep a clean inbox. I always have worked that way. I don’t know what my colleague’s work habits are,” he testified in the official record.

Government in Ontario is required by the Archives and Recordkeeping Act, 2006 to preserve virtually all records of business, with exceptions for things like drafts that have been superceded, multiple duplicates, and records of a political (rather than government) nature relating to election and constituency activities, for example.

Verbal decision-making culture

When questioned by the Information and Privacy Commission (as documented in a Special Investigation Report, Deleting Accountability: Records Management Practices of Political Staff), Mr. MacLennan claimed he had no knowledge of the records management requirements or practices of his office despite existence of a guidance memo from the government’s CIO specifically advising him of same.  He further advised that they had a “verbal” office culture and tried to manage issues by conversation, without creating any form of records whatsoever.  He simply didn’t keep hard copy records.

The Information and Privacy Commissioner concluded that while there was no positive proof of deliberate wrongdoing, it was virtually unthinkable that somebody at that level of seniority would have no awareness of their record keeping obligations.  Archival records documenting major government decisions are important to permit public oversight and scrutiny, as well as practical continuity to effectively manage routine staff turnover and periodic change of government.

Fraud and failure to produce emails

Although ordinary private companies are not covered by legislated archival requirements, organizations are required to keep business records reasonably available for a certain period of time should they be required as evidence in future litigation that might arise.  In one of the most famous examples, Morgan Stanley had to pay Ron Perelman $604 million plus $850 million in punitive damages in 2005 arising from failure to produce emails which it said could not be found in in the course of civil litigation related to a disputed corporate transaction.  Morgan Stanley had certified to the court that it had produced all relevant records without searching approximately 1,400 back-up tapes that had been found in a cupboard.

5 Key Lessons Learned About Records Management

The following records management tips are relevant to the public and private sectors:

1. Accountable Individual:  Make sure someone in your organization is in charge of records management.  While it is understood that many daily records management tasks will be delegated to an administrative or clerical person, someone at a management level or higher with authority to get things done needs to be responsible for making sure that the system is put in place and implemented.
2. Compliance culture:  To build an organizational culture where people understand why the rules are important, you need to model good behaviour from the top.  The IPC’s Special Report into the deletion of emails related to the gas plant closure included a directive for the Premier to personally issue a message to all staff in the Premier’s and Ministers’ offices.  The message was to advise that the Premier personally took records management seriously and expected staff to do so as well.  Further, the Premier was to take steps to ensure that an individual responsible for records management oversight at a senior level was appointed in each office.
3. Records Retention Schedule:  Do you even know if your organization has one?  Find out.  If there is one, review it periodically to make sure that it is up to date and appropriately lists the different types of records that your organization currently creates.
4. Content is King: The format of the record – hard copy; email; yes, even voice mail – is not relevant.  Records are classified by the type of information they include and their future value to the organization and to external stakeholders, including the courts as well as the public and the public archives (in the case of the civil service).
5. Training is Key:  Ensure your staff are up-to-date on your organization’s records management framework and understand the expectations you have for them to keep records properly.  Make training new staff on records management part of your routine on-boarding package at the time of hire.

If you need help developing an effective records management practice, or a retention schedule that meets legal requirements and meets the needs of your business, contact Privatech. We’re here to help!