LCBO execs blindsided by Ontario cancelling pilot to scan customer ID's at some stores, documents show | CBC News (2024)

Michelle Allan · CBC News

· Posted: Jun 17, 2024 4:00 AM EDT | Last Updated: 4 hours ago

LCBO executives said they were blindsided by the Ontario Ministry of Finance's decision to cancel an LCBO anti-theft pilot not long after it was announced, according to documents obtained by CBC News.

Finance Minister Peter Bethlenfalvy quashed the "controlled entrances" pilot less than 48 hours after the LCBO announced it,despite after already having been briefedabout it weeksin advance, according to the documents.

The pilot would have seensecurity guards scancustomers' identification and their personal datacollected at the controlled entrances of six stores in Thunder Bay, Sioux Lookout and Kenora starting this spring.

It would have been similar to security measures Manitoba Liquor and Lotteries (MBLL) rolled out in 2020 at certain provincially run Liquor Mart stores in response to a surge in thefts. Since then, there has been a major reduction in thefts and robberies, the MBLL says.

Emails between LCBO executive managers that were obtained through a freedom-of-information request show confusion and exasperation with the ministry's decision.

"Frustration and disappointment were very apparent" amongst LCBO leadership, said chief retail officer John Summers in an email to president/CEO George Soleas on Feb. 15.

"It honestly felt like we had every base covered in advance of this one and there wasn't anyone or any area that was giving us the red light," Summers saidinresponding to a 4:17 a.m. emailfrom Soleas.

The documents show senior LCBO executives briefed the Ministry of Finance on the pilot and shared details of the plan multiple times in the weeks leading up to its announcement.

CBC News requested interviews with ministry officials and the minister, but instead was sent an emailed statement.

"Following the announcement of LCBO's pilot program, the ministry heard concerns from stakeholders and community partners and requested the program be cancelled,"said the statement.

The LCBO denied CBC's request for an interview and refused to answer emailed questions about specific pilot details. CBC also inquired about how much time and money was spent on the now-cancelled pilot program, but has not received that information.

"The government's decision to cancel our planned controlled entrances pilot program came as a surprise," said notes prepared for a Feb. 28 meeting between Soleas andDeputyFinance Minister Greg Orencsak.

Province 'interfering' damagesbusiness: associate prof

The pilot's cancellation isamongvariousexamples of provincial moves causing problems for the LCBO, said Ian Lee, an associate professor at the Sprott School of Business atOttawa's Carleton University.

In April, Premier Doug Ford,in a Sunday night email to the CEO,ordered the LCBO to bring back paper bags immediately, according to documents obtained earlier by Radio-Canada. The order caught LCBO executives by surpriseand sent its management scrambling to procure new supply.

Two weeks ago, the province order the LCBO to give discounts to private-sector retailers like grocery and convenience stores, whichwill soon have the right to sell beer, wine, cider and ready-to-drink beverages at prices lower than those at the LCBO.

The provincial order is expected to reduce LCBO sales by an estimated $150 million to $200 million per year as a result of the changes, according to officialMinistry of Finance and LCBO figures obtained by CBC News

"They're interfering with the day-to-day management of the LCBO," said Lee.

He said government actions impacting profits can be particularly dangerous for Crown corporations. Unlike privately owned companies, Crown corporations cannot declare bankruptcy,which means they couldkeep losing money indefinitely.

"It's owned and backed up by the taxpayer, and so the losses are as long as and deep as the government is willing to pay. There's no market discipline."

No public figures on theft at LCBO

The LCBO saidtheID pilot program was meant to tackle issues of violence and theft at its retail locations.The Crown agency won't reveal how much revenue it loses annually to theft, but it does make public how much money it hands to provincial coffers.Last year, it contributed a $2.58-billion dividend to the Ontario government, according to its 2022-2023 annual report

Also obtained under CBC's freedom-of-information request were notesprepared for a Jan. 23 meeting between Soleasand Orencsak. The notes saythe LCBO chose the six locations in northwestern Ontario because "these stores are geographically isolated from other LCBO storesand experience a high incidence of theft."

In an email to LCBO leadershipthe day the pilot was announcedon Feb.12, Summers wrote:"The politicians were appreciate (sic) of the effort to help curb what is a societal problem in some of these markets."

Kathleen Novak, who's based in Kenora and sits on the LCBO board of directors,wrote an email to Soleas after learning the pilot had been cancelled. It said, "Thank you to you and your staff George for the hard work you have put into this pilot.I am disappointed with the minister's decision. A pilot is just that, a test to ensure it is inclusive for everyone."

"I have also talked to leadership in Kenora and they are frustrated with this decision as they have spent many months lobbying for the safety of their community and felt this was a step in the right direction," Novak's email said.

The emails also refer to Kenora—Rainy River MPP Greg Rickford, minister of Indigenous affairs and Northern Development.

"The minister's chief of staff conveyed that they have received substantial negative response from Minister Rickford and local stakeholders on the cancellation of this pilot and the impact on the health and safety of customers and staff —and has asked us to consider how we approach rolling out this initiative in the next few months," read LCBO draft notes written for a meeting betweenSoleas and Orencsak.

I feel like any controlled entrance or lock devices, or having to purchase alcohol behind the locked door, whatever it's going to be, I think those are Band-Aids to a more critical illness.- Kristin Oliver, Thunder Bay councillor

In Thunder Bay, city Coun. Kristin Oliver said she also was surprised the pilotwas cancelled so quickly, even though she did hear negative reaction to the plan after it was announced.

Oliver, a member of the Thunder Bay Police Services oversight board from 2018-2022, saidlocal LCBO staff were "constantly inundated" with unsafe situations.

"From my time being on the police services board, certainly the calls of theft that were coming from the LCBO were substantial," said Oliver. "That is putting pressure on our police services and our supportive resources."

But Oliver said the issue with theft is too multifaceted to be solved by prevention efforts alone.

Increased community supportive resources could help reduce theft or disturbance calls that involve people experiencing addiction or mental health crises.

"I feel like any controlled entrance or lock devices, or having to purchase alcohol behind the locked door, whatever it's going to be, I think those are Band-Aids to a more critical illness."

If you have any more information relatedthis story, contact Michelle Allan at michelle.allan@cbc.ca

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