CBC News has obtained a confidential report prepared for University of Regina officials which outlines "serious concerns" over a mysterious company that has been linked to litigation involving the school.

In November, the university sued two private companies for allegedly misappropriating carbon capture technology developed at the institution.

In its statement of defence, one of those companies — HTC Purenergy —  references a research program called Gen Five Carbon Capture Research.

That was a funding proposal attempting to secure $7.75 million dollars in research funding from Doosan, the other company named in the U of R lawsuit.

That proposal appears to have caused significant confusion and friction between the university and the private companies.

Lawyers for the university submitted a report to administration about the matter, in May 2011.

"The university developed serious concerns... with the discovery of a third-party entity by the name of Gen Five Carbon Capture Research Inc.", the report said.

The report outlined how Gen Five was a private company which appeared to be attempting to do business on behalf of the university.

What is Gen Five?

According to the report, Gen Five first came to the attention of the Rod Kelln, the U of R's vice president of research in July, 2010.

That's when he was inadvertently given a copy of a mysterious document called Gen Five Carbon Capture Research Inc.Funding Proposal.

Kelln had never heard of it, so he asked a member of his staff to investigate.

He discovered the proposal was prepared by Ian Bailey, a university employee and the director of the University Industry Liaison Office (UILO), and the university's Dean of Engineering, Paitoon Tontiwachwuthikul. 

The report says Bailey told Kelln's investigator that Gen Five was a private company and therefore was "none of his business".

That's when the U of R asked its law firm, McDougall Gauley, to conduct a more extensive probe into the matter.

Probe findings 

That probe found that Gen Five was a for-profit company and all five of its directors were U of R employees.

They were also all Gen Five shareholders.

Ian Bailey was the president; Paitoon Tontiwachwuthikul was the vice-president; Malcolm Wilson — at the time the director of the university's office of energy and environment — was the secretary.

Two other directors were U of R researchers Raphael Idem and Don Gelowitz.

The incorporation documents said the company was set up do "carbon capture research".

The report noted there was little evidence that senior administrators of the university were notified about the existence of Gen Five and no evidence that its corporate structure was ever disclosed.

Ian Bailey set it up

According to the report, the Gen Five directors said Ian Bailey was the one who incorporated the company.

Bailey told the university's lawyers that Doosan would only provide research funding if it was research they would own exclusively. He also told the lawyers that everything would have to be approved by the university before it was finalized.

The report's authors described Bailey as a reluctant and difficult interview subject.

They said he was "defensive, aggressive, bordering on belligerent".

In the course of an interview he told investigators to "get off my back", that he was a "smart guy", that "the university doesn't know how to do business" and that "basically everything to do with universities sucks".

Why was Gen Five set up?

The Gen Five funding proposal, obtained by CBC, says Gen Five was created for two purposes.

First, it was to do exclusive carbon capture research for HTC and Doosan, "and to make product improvements of existing licensed products".

Second, it would develop the "next generation" of carbon capture technology "exclusively available to our licensed partners." Those partners were HTC and Doosan.

According to their report, the university's lawyers also found that Gen Five would "manage the existing and arising intellectual property currently licensed to Doosan/HTC."

If it had been approved, the funding proposal would have seen $7.75 million dollars flow from Doosan to carbon capture research over five years.

It's not clear from the proposal if that money was to flow to Gen Five through the university or to Gen Five directly.

Directors speak

CBC attempted to interview the directors of Gen Five, but only two of the five provided comments.

In an email, Malcolm Wilson said, "Since this was something that never went anywhere or did anything I had totally forgotten about it."

Contact CBC News reporter Geoff Leo about this story:

geoff.leo@cbc.ca

Don Gelowitz told CBC News he wasn't involved in setting up Gen Five and didn't know much about it.

He said he believed the university was part of the company, even though the U of R is not mentioned in the incorporation documents.

Gelowitz said he believes the Gen Five concept could have made money for everyone involved.

"If that would have went ahead,

[it] could have stood to make lots at the university and [for] the researchers," he said.

Gelowitz added he hoped to eventually get a job with Gen Five and double his salary, which was part of the Gen Five proposal.

He said he was interviewed by university lawyers about Gen Five.

Gelowitz believed they were focused on the potential of a conflict of interest involving employees of the U of R and Gen Five.

He said, as far as he knows, they found no conflicts.

"It was all legit from what I understood," he said.

Gelowitz said eventually Gen Five died, as a corporate entity, because the university learned about it and decided not to support it.

Excerpts from the report relating to the Gen Five directors:

pic-160-2-paitoon-tontiwach

Paitoon Tontiwachwuthikul

Paitoon Tontiwachwuthikul — Gen Five VP:

  • Gen Five would own all of the [carbon capture intellectual property] and do the licencing as needed.
  • Gen Five would be owned 50% by the researchers and 50% by the university.
  • At some point, [Gen Five] could be sold for a profit.
pic-160-raphael-idem

Raphael Idem

Raphael Idem — Gen Five Director:

  • The Gen Five program is a university initiative but the research would be done by Dr. Paitoon, Dr. Idem, and Mr. Gelowitz.
  • Dr. Idem is a shareholder but the company does not do anything.
  • Does not think the university is on board with the proposal, so Gen Five will probably die.

pic-160-don-gelowitz

Don Gelowitz

Donald Gelowitz — Gen Five Director:

  • Gen Five was founded to get funding from HTC and Doosan, although not sure why the company is needed for this purpose.
  • No one ever really told him why a company was being formed or that he would be a director of it.
  • Does not recall being told that he would be a shareholder.

pic-160-malcom-wilson

Malcom Wilson

Malcolm Wilson — Gen Five Secretary:

  • Gen Five could do specific research for a specific project.
  • Gen Five was only to supply specific research and was not designed to own the patents.
  • Thought [Gen Five] would be a not-for-profit corporation.

pic-160-ian-bailey

Ian Bailey

Ian Bailey — Gen Five President:

  • Gen Five was proposed because Doosan said it would pay for research — but only their own research.
  • Gen Five would contract with Doosan. Doosan would provide research money to Gen Five which would hire the researcher support people.
  • No money would be in it for Gen Five specifically. [The investigator, in the report added this comment, calling it "somewhat counterintuitive given this was a for-profit company".]