Liquor board reviews controversial distillery scholarship

"Spirit of Education" contest awards $3,000 for essay on responsible drinking

A scholarship that Canada’s distilleries hand out to the sons and daughters of workers at Ontario’s liquor agency has come under scrutiny as a possible breach of ethics.

The $3,000 prize has been awarded 12 times since its founding in 1998, including once to Roslyn Peter, daughter of Bob Peter, president of the Liquor Control Board of Ontario. The most recent winner was announced in May.

The award, restricted to post-secondary students whose parents work at the LCBO, may violate tough conflict-of-interest guidelines imposed on the agency last August by the Ontario government.

The guidelines have dried up the flow of hundreds of free tickets the big distilleries and breweries had been giving to LCBO staff, for hockey games, concerts, curling matches and stage shows. Business meals worth less than $50 are still allowed.

The tighter rules are intended to ensure government workers don’t use their employment for personal enrichment by suppliers and clients.

But the so-called Spirit of Education scholarship was allowed to continue this year, despite the new restrictions outlined in the amended Public Service of Ontario Act.

Asked about ethical issues surrounding the scholarship, a spokeswoman for the LCBO said the agency is “reviewing our practices to ensure they are compliance with this legislation.”

“The Spirit of Education scholarship program has been scheduled as part of this review, and as a result, LCBO’s participation in this scholarship program may change,” Linda Hapak said in an email response.

“The review will include a legal perspective on this matter.”

The scholarship was created by the Association of Canadian Distillers, representing Canada’s major liquor producers, also known as Spirits Canada. The organization includes Corby Distilleries Ltd. and Diageo Canada Ltd.

Jan Westcott, president of Spirits Canada, said the award is intended to “encourage young people to consider careers in the hospitality industry.”

Spirits Canada pays the Ontario Hostelry Institute, with experience in scholarship programs, to administer the award.

Applicants must prepare a 1,000-word essay on responsible drinking, and a panel of judges picks a winner without knowing the identities. The panel includes an LCBO employee, which for the last two years has been Elizabeth Kruzel-D’Cunha, senior policy analyst at the agency.

Westcott said the winner is also offered a summer job in Toronto with the Student Life Education Co., a charity that promotes responsible consumption of alcohol among students.

An ethics consultant says the scholarship is a “significant” sum and raises serious issues that the LCBO’s board of directors – rather than the president and his staff – must resolve.

Having president and CEO Bob Peter investigate “would lack credibility” because his daughter benefited from the program in 2004, said Jane Garthson.

She also said the scholarship raises the possibility that LCBO employees might favour certain suppliers when they are purchasing stock for the stores.

“The perception is too strong that the supplier choice would be influenced down the road,” Garthson said from Toronto.

Garthson advises charities and associations on governance and ethics, and helped write the conflict-of-interest guidelines at the Ontario Racing Commission.

One of the judges for the Spirit of Education scholarship is Rowland Dunning, who has registered in Ontario as a lobbyist for the Association of Canadian Distillers. The registration says he lobbies the LCBO, and cites the Spirit of Education scholarship as one of his lobbying activities.

But both Dunning and Westcott said he is not a lobbyist for the distillers’ group. Dunning said he is paid by Spirits Canada only for sitting on the award selection committee – not for lobbying – but “was advised by the registry to register.”

Late last month, the LCBO reached a four-year deal with its union, averting a strike. The union bargaining team is recommending acceptance in a ratification vote set for July 13-14.

– The Canadian Press