Insights into the “Who Sneaked What Past Whom Enersource Contract —And Who’s Capable of Doing It” Great Mississauga Brain Derailment
February 28th, 2010
Today’s video serves as a followup to the one we prepared and posted to YouTube for our February 27th Blog, “STONEWALLED” SUB-CONTRACTORS FALL VICTIM TO CITY OF MISSISSAUGA FACILITIES AND PROPERTY MANAGEMENT’S “DUE DILIGENCE” OF CONTRACTS.
In some respects the contracts debacle surrounding the construction of washrooms at Lake Aquitaine and Quenippenon Meadows Parks revealed at the last Council meeting has relevance to the upcoming Judicial Inquiry. Both, after all deal with contracts —and how contracts are handled at the City of Mississauga.
Enersource.
There are people who know exactly how the veto clause got into the Enersource agreement —a contract which the Toronto Star states, “gives veto power in the public utility to the minority shareholder, Borealis. Borealis owns 10 per cent of Enersource, compared to the 90 per cent owned by the City of Mississauga.” These people know exactly how because they put it there!
Also cut-and-pasted from the Toronto Star:
Things came to a head last year after councillors tried to cut salaries of Enersource board members, only to find they couldn’t because of the Borealis veto clause. It was then that they learned of two shareholder agreements for Enersource.
One of the deals was approved by council. The second was signed by McCallion and the city clerk, David O’Brien, a former city manager who was seconded to the utility.
McCallion said she didn’t do anything improper. “I never signed any agreement which was not authorized by council,” she said.
Yes, Councillors only found out about the veto clause in the Enersource contract seven years after the fact. (Oh to be a fly on the wall for that WTeF-moment!)
The circumstances surrounding Mississauga’s Who Sneaked What Past Whom Enersource Contract is one intriguing, challenging Who Dunnit—And Who’s Capable of Doing It.
By fortunate circumstance, I set upon researching the City of Mississauga’s governance, conduct and operations back in January/February 2006. Fast forward to February 28, 2010 and four years of hindsight, I can certainly answer the last question. There are plenty of people at the City of Mississauga Who Are Capable of Doing It.
Yes, I know. That’s allegation —speculation. It’s vital to stick with facts —irrefutable evidence.
But what if you weren’t there in 2000? (I don’t know about you but I couldn’t have even told you the name of my Councillor back then.) Ten years of “Trust Quality Excellence” has skulked past since.
Contracts.
Also by fortunate circumstance, I’ve attended City of Mississauga Audit Committee meetings since October 2006. All save a couple are fully-documented on videotape.
Contracts.
The May 11, 2009 Audit Committee meeting dealt with:
1. Capital Projects Contracts Audit, Facilities & Property Management Division – Corporate Services Department
The November 23, 2009 Audit Committee meeting with:
4. Final Audit Reports:
Transportation & Works Department, Engineering & Works Division – Capital Works Contracts Audit and Community Services Department, Recreation & Parks Division – Program Registration and Membership Revenue Audit
The September 28, 2008 Audit Committee meeting with:
2. Final Audit Reports:
Mississauga Transit Coin Room Audit – Transportation & Works Department
Payroll Audit – Fire Union – Community Services Department
Facility Rentals Audit – Community Services Department
etc etc all the way to back the October 10, 2006 Audit Committee meeting (the first I ever attended) with:
1. Final Audit Report: Transportation and Works Department Winter Maintenance Contracts Audit
Contracts…
You can learn a lot about contracts sitting in on the City of Mississauga Audit Committee.
You can also learn a lot about the leaky-ship operations of the HMS Mississauga by observing how Mississauga Council conducts business. Like Staff sneaking a half-dozen by-laws that apparently neither Mayor or Councillors had seen beforehand through at the end of an already impressive 31 By-Laws rubber-stamp session.
For the record, May 13, 2009, when handed additional By-Laws that she’d never seen before, the Mayor said (transcript):
“And one additional one. Oh my gracious! Okay, we have additional By-Laws and listen carefully —they were not on the agenda. So —Councillors that the Wards they affect. B-32, a by-law to establish certain lands as part of a municipal highway system…”
“Rubber-stamp” usually means, “approve, endorse, or dispose of as a matter of routine or at the command of another”. But what do you call rubber-stamping without even reading the thing?! Me, I’d call it Negligence.
Here’s the May 13, 2009 video record.
Video: MISSISSAUGA “WHO LET THE KNOBS OUT?” COUNCIL RUBBER-STAMPS SECURITY GUARDS BY-LAW (8:15 min)
(Click here to go directly to the clip on YouTube)
So why sneaked-through By-Laws matter? They matter because that Staff would even consider such behaviour/strategy speaks to a far greater institutional problem —no oversight/accountability.
That’s just one of several reasons why I say that City of Mississauga elected officials have no control of City Staff.
The Enersource Contract…. well, there are suspicions that that contract was also sneaked through.
In the public meeting, Councillor Carolyn Parrish stated:
the Enersource agreement that was signed in 2000 was altered two days before it was signed on direction from the lawyers from OMERS and accepted by then City Manager.
and continued:
The City Manager of the day slipped the papers to her (ed: Mayor McCallion), said go ahead and sign them [inaudible word] the same as the ones Council looked at.
Contracts…even altered minutes. Not so mysterious mysteries that I’ve come to call the “Who Sneaked What Past Whom Enersource Contract —And Who’s Capable of Doing It” Great Mississauga Brain Derailment”! (or “WSWPWEC—AWCoDIGMBD” for short)
Today, through video, we peer into the City of Mississauga’s Corporate Culture of Non-Compliance to Policy (aka “Policy? What Policy?”). We see Mayor Hazel McCallion discover that Internal Audit could find no trace of the City’s Vendor Contract Review Policy —a Policy passed “ten years” ago and assumed being implemented for a decade.
Today, we offer video of the complete discussion of the May 11, 2009 Audit Committee meeting’s Item 1. Capital Projects Contracts Audit, Facilities & Property Management Division – Corporate Services Department. Video intact from beginning to end except Audio suppressed on names of two specific projects.
That May 11, 2009 Audit discussion is another reason why I say that City of Mississauga elected officials have no control of City Staff.
Seriously. Watch it. Then ask yourself, in such a Culture of Non-Compliance, is it plausible that “the Enersource agreement that was signed in 2000″ could be “altered two days before it was signed on direction from the lawyers from OMERS and accepted by then City Manager” and in such a Culture of Non-Compliance is it plausible that “the City Manager of the day slipped the papers to her (ed: Mayor McCallion), said go ahead and sign them [inaudible word] the same as the ones Council looked at”?
A long video this time. Almost 15 minutes (actually had to post it to Facebook because YouTube maxes at 10)
So. As always, the video —followed by the transcript.
FACEBOOK Video: Mississauga Capital Projects Contracts Audit (May 11, 2009) [HQ] 14:52 min
(Click here to go directly to the clip on Facebook)
VIDEO TRANSCRIPT of May 11, 2009
Item 1. Capital Projects Contracts Audit, Facilities & Property Management Division – Corporate Services Department (full video record)
COUNCILLOR PAT MULLIN (Chair, Mississauga Audit Committee, May 11, 2009):
Is [sic] there any other questions then? There’s a recommendation then to receive—
COUNCILLOR NANDO IANNICCA (Mississauga Audit Committee, May 11, 2009):
Move it.
COUNCILLOR PAT MULLIN (Chair, Mississauga Audit Committee, May 11, 2009):
It’s been moved by Councillor Iannicca. All those in favour? Thank you very much then.
Item number 1, I believe is a presentation “Capital Projects Contracts Audit, Facilities and Property Management Division —Corporate Services Department”.
SENIOR INTERNAL AUDITOR, AL STEINBACH (Mississauga Audit Committee, May 11, 2009):
Good morning, (inaudible) brief presentation for this Audit.
The Capital Projects Contracts Audit represents a (inaudible) phase of a series of audits in the Facilities and Property Management Division area.
The first few Audits involved Capital maintenance (inaudible) contracts area and they have been presented to the Audit Committee recently.
In their Capital Projects area, individual projects have been budgeted up to fifteen million dollars (inaudible). As well these projects themselves have (inaudible) and operations —they’re very complex, they’re multiple contracts, multiple skateholders and they involve joint ventures with other organizations.
The Audit objectives are very similar to other contract audits we’ve performed through The Corporation, including that contracts and subsequent changes of contracts are properly approved, that the payments have been properly approved, properly processed and adequately supported for payment and that (inaudible) properly recorded to the Project accounts.
Other Audit objectives include that Costs for Work to Third Parties’ recoveries is properly funded and recorded. In this Audit we just had the one —for the one project and that was dealing with Promissory note.
As well liability insurance coverage and contract performance securities are in place for these projects and contracts. As well as departmental contract management processes are clear and documented and are being complied with.
The Audit scope we used for this Audit was we wanted to focus on (inaudible) management and contract management processes. We also wanted (inaudible) projects that were completed or nearly completion so that we could look at the overall project documentation.
And we selected three projects for review for a total, projects of approximately seventeen and a half million dollars. So quite large projects. And we also wanted to make sure that we weren’t keying in on one project manager, so we selected different project managers in that area for review.
During the course of the prior two audits and this audit, we’ve observed improvements in the overall control environment including areas we had previously commented on —including areas like segregation of duties, supporting documentation for payment and an active project management manual in effect in that area.
However we do have recommendations to improve those processes including payment processing for tax codes, applicability of those tax codes for those payments, overhead and profit rates that are stipulated in the contract as well as the recovery of security deposits that are paid to contractors that —who pay the Region and Enersource —that sort of thing for these security deposits.
Each of these items by themselves are not significant. In total relation to the seventeen and a half million dollars budget, they’re not big dollars, we’re talking thousands of dollars here so it’s important to put that in proper context.
We’ve also recommended that in future joint venture agreements, that the (inaudible) clause for —between the final payment and the substantial completion that that be defined because some of these payments can take upwards of two years (inaudible) that project.
So in the (inaudible) we’re recommending that feasibility clause be defined in terms of a time period.
Lastly, we also —we have informal performance evaluation criteria here at the City for Vendor Performance so we’ve recommended that that be formalized and documented throughout the Corporation.
During the course of the audit, we worked with management so that there’s no surprises at the end of the audit. We don’t just simply give a final report and say “Surprise, these are observation we’ve made and concerns that we have.”
We sit down with management as we go through the Audit and say exactly what our concerns are so that they have time to address them. And as you can see, by the end of June of this year, five out of seven of the recommendations will be completed.
And also that formal Vendor Evaluation Criteria will be developed by mid-2010.
[cross zoom]
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
But on that point—
SENIOR INTERNAL AUDITOR, AL STEINBACH (Mississauga Audit Committee, May 11, 2009):
[inaudible]
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
On that point—
SENIOR INTERNAL AUDITOR, AL STEINBACH (Mississauga Audit Committee, May 11, 2009):
Yeah.
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
There was a procedure set up years ago on Vendor [requisitions? inaudible]. Did you find any trace of it?
SENIOR INTERNAL AUDITOR, AL STEINBACH (Mississauga Audit Committee, May 11, 2009):
It’s just an informal vendor performance review right now [inaudible] it’s not being —there’s no formal process in there. The first thing—
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
There was —there was a policy established. Every vendor, and especially on major contracts, that when we had bad experiences —and we have had some bad experiences—
SENIOR INTERNAL AUDITOR, AL STEINBACH (Mississauga Audit Committee, May 11, 2009):
Yes.
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
There was a policy established years ago that the vendor would be categorized. And in fact some would be cut off for future contracts.
SENIOR INTERNAL AUDITOR, AL STEINBACH (Mississauga Audit Committee, May 11, 2009):
That’s not—
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
Did you find no trace of it?
SENIOR INTERNAL AUDITOR, AL STEINBACH (Mississauga Audit Committee, May 11, 2009):
No, it’s not in there.
COUNCILLOR PAT MULLIN (Chair, Mississauga Audit Committee, May 11, 2009):
No, the answer’s no. So I guess [inaudible]
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
Well it was set up, I can tell you.
COUNCILLOR CARMEN CORBASSON (Mississauga Audit Committee, May 11, 2009):
I remember the discussion.
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
Do you?
COUNCILLOR CARMEN CORBASSON (Mississauga Audit Committee, May 11, 2009):
I remember the discussions.
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
Some of you who’ve been around long will remember? It was set up. So obviously it got lost in the shuffle somewhere. Cuz we ran, we ran into some bad examples. And that’s when we set the policy. That’s years ago. That’s not —ten years ago, would I be right? At least. So where did that —what happened to it?
DIRECTOR INTERNAL AUDITOR, SALLY ENG (Mississauga Audit Committee, May 11, 2009):
There is some mention of a purchasing By-law where we would be able to —or the purchasing agent has the authority to, prevents [sic] the bidder from bidding in future contracts. But we have not been able to find any detailed processes relating to what you’re talking about.
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
Okay.
COUNCILLOR PAT MULLIN (Chair, Mississauga Audit Committee, May 11, 2009):
[inaudble] that we should look into, I guess for the future. Because I remember the discussion.
[inaudible —several speakers at once]
CITY MANAGER, JANICE BAKER (Mississauga Audit Committee, May 11, 2009):
That’s what one of the recommendations is.
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
I’m getting a little frustrated as Mayor as we set up policies and then they’re not followed. And that’s what bothers me. I was in the business —in the private sector and we had millions of dollars in contracts. And it’s been something I’ve been promoting —is control of the contracts. And that policy was set up because we ran into one vendor who were [sic] behind two millions dollars, I remember.
Anyway.
So now we’re going to set up one up. Fine.
Someone:
Yeah.
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
If we set one up, it better be followed. That is the key. No use setting it up if it’s not going to be followed. You know, I don’t know why there’s such a disregard for policy.
SENIOR INTERNAL AUDITOR, AL STEINBACH (Mississauga Audit Committee, May 11, 2009):
Just to conclude. Working with Facilities and Property Management, we’ve had a good rapport with them and I just want to thank Ken—
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
The guy that did the renovations at the [audio suppressed]. I hope he never sees another contract.
SENIOR INTERNAL AUDITOR, AL STEINBACH (Mississauga Audit Committee, May 11, 2009):
Yeah.
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
Am I right?
COUNCILLOR CARMEN CORBASSON (Mississauga Audit Committee, May 11, 2009):
And the one at the [audio suppressed]
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
And the one at the [audio suppressed]
COUNCILLOR CARMEN CORBASSON (Mississauga Audit Committee, May 11, 2009):
That was a bad one.
SENIOR INTERNAL AUDITOR, AL STEINBACH (Mississauga Audit Committee, May 11, 2009):
And I’ll be honest with you that’s—
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
Now that was a bad one.
COUNCILLOR CARMEN CORBASSON (Mississauga Audit Committee, May 11, 2009):
I think that’s when it was raised.
SENIOR INTERNAL AUDITOR, AL STEINBACH (Mississauga Audit Committee, May 11, 2009):
[inaudible] of this audit, Madam Mayor they, ah, that contractor again, there was no formal evaluation for those contracts. And that’s why we recommended that that be formalized and documented.
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
There was even an evaluation form used many years ago because of our bad experience with contractors and we’d see their name pop up again being awarded a contract.
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
There was even an evaluation form used many years ago because of our bad experience with contractors and we’d see their name pop up again being awarded a contract.
COUNCILLOR PAT MULLIN (Chair, Mississauga Audit Committee, May 11, 2009):
Any other questions on this? Councillor Corbasson.
COUNCILLOR CARMEN CORBASSON (Mississauga Audit Committee, May 11, 2009):
Again, I’ll raise the issue that I raised under the external audit. I don’t expect an answer today but I think that this is probably the appropriate forum to bring a report back to. I’m surprised that it wouldn’t be caught through audits in the past —notwithstanding how do we get to twelve years of not charging utilities. And of course now we’re going to try and play catch up. And I’d like some answers how we got to where we are today and what we put in place to ensure that it doesn’t happen again.
I know there’s more besides the two in my ward. Plus staff did confirm that. I didn’t go into the details but there are others that have fallen through the cracks so to speak. So I’d like a report to come back to audit.
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
Well, I’m not happy with the report, I can tell you. I’m not happy with the contents of the report. There seems to be a complete disregard for policy —following policy.
[reading] “There is no [inaudible] to evaluate vendor performance.” There was. Not followed. In my opinion.
And then it goes on. I mean there’s so many things in this report -that indicates-
[reading] “The contract could receive double credit for the deposit and is eventually refunded by the region.” I mean [inaudible] This is not a good report on the management of the finances of contracts, I’m sorry. It is a very poor report. Very poor performance.
And we’ve dealt with contracts over the years. It’s been one of the —one of the things that the Audit Committee —cuz we’re issuing contracts for millions of dollars. And here we have one guy approving —[inaudible] is that? Where’s the one where there’s one person has been given authority —or has assumed authority.
Sales taxes. We don’t know where we’re going on sales taxes. You know I read this report —very discouraging, I have to tell you as Mayor, of the control of contracts.
It’s hard to determine whether [inaudible] came out at the top or came out way at here: [reading] ”In general there’s segregation of duties in the processing of approval of payments.” We dealt with that years ago. That there should be a process of approval of payments —not one individual given, well [inaudible] [reading] “Project Manager is the only one involved in clarifying, processing and approving payments for cash allowance and [inaudble]“
That’s one that you looked at. How many more that you didn’t look at has [sic] the same arrangement, I don’t know.
I’m very disappointed, I have to tell you. This is not a good report. And boy there needs to be some tough action taken to implement financial control, I have to tell you. It’s just not a good report.
COMMISSIONER OF CORPORATE SERVICES, BRENDA BREAULT (Mississauga Audit Committee, May 11, 2009):
Just a clarification on [inaudible] Madam Mayor, that is being highlighted in here that the staff have to take action on. But some of the things that have been identified have been corrected [inaudible]. There have been some significant improvements since the whole audit process has begun.
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
When?
COMMISSIONER OF CORPORATE SERVICES, BRENDA BREAULT (Mississauga Audit Committee, May 11, 2009):
2007, they started—
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
Yeah!—
COMMISSIONER OF CORPORATE SERVICES, BRENDA BREAULT (Mississauga Audit Committee, May 11, 2009):
Now these projects began before some of the corrections and improvements have been made in our project management processes. I have staff now from our financial services group who are going in and taking a look at the projects as well in the interim —[inaudible] interim audit to ensure that they have a project manual in place now. And that things are being followed and that the proper documentation and authorization and all the rest is occurring.
These projects, two of the three, started before we got all these pieces in place before we got all these improvements that they’ve been working on over the last couple of years in place.
The most recent project, which was the Vic Johnston, was completed after we’ve made all these improvements —and certainly it was much better managed. You can speak to Internal Audit on that —that we have made significant improvement in how we are handling our processes.
That’s not to say that there’s not still work to be done, there is. I mean taxes tend to be a complicated area where many of our operating departments are not clear on when, you know PST vs GST and what’s refundable. And we’re working on that as well as the whole legislation is going to change on that when we go to a harmonized tax.
So that will impact how we apply tax as well. But we are still working on that and I wouldn’t want to give you the impression that things have not gotten significantly better since some of the shortfalls you’ve seen in these projects which will impact audit in this report. Because it’s not the case. There have been significant improvements.
MAYOR HAZEL MCCALLION (Mississauga Audit Committee, May 11, 2009):
Brenda. That is now.
A lot of these items that are in here were dealt with years ago. The Policy. The corrections. The advice, etc at Audit Committees. So if any improvements have been made, it’s only recently. And that to me doesn’t answer my question.
A lot of things in here were dealt with years ago and it’s a complete disregard for policy. Following policy, in my opinion.
Why would anybody on a major contract be the one signing officer to approve all payments and all credits and everything? Not acceptable. And that has been in place for years and years.
You know there’s audit reports —I have a stack of them like this [gestures] and I’m going to go through, when I have time, to point out that many of the things in here were dealt with years ago. Dealt with years ago. And are not being followed.
Long long pause….
COUNCILLOR PAT MULLIN (Chair, Mississauga Audit Committee, May 11, 2009):
Any other questions? Comments? In the Item #1 it just simply Receipt for Information.
We’re assuming the recommendations are going forwarding. We’re talking about Item #1
DIRECTOR INTERNAL AUDITOR, SALLY ENG (Mississauga Audit Committee, May 11, 2009):
The recommendations for the Committees were received for information.
COUNCILLOR PAT MULLIN (Chair, Mississauga Audit Committee, May 11, 2009):
Right.
DIRECTOR INTERNAL AUDITOR, SALLY ENG (Mississauga Audit Committee, May 11, 2009):
The Audit recommendations are being worked on.
COUNCILLOR PAT MULLIN (Chair, Mississauga Audit Committee, May 11, 2009):
OK.
COUNCILLOR CARMEN CORBASSON (Mississauga Audit Committee, May 11, 2009):
So moved.
COUNCILLOR PAT MULLIN (Chair, Mississauga Audit Committee, May 11, 2009):
Moved by Councillor Corbasson then. All those in favour? Carried.
[WATCH SHOWS TIME: 9:35 am]
Sorry, I should have gone with Item number three (inaudible) so we’ll move on to Item number three
[cross fade, LOGO]
TRANSCRIPT ENDS
Signed,
The (if anyone notices errors in this transcript, I’d appreciate being advised) Mississauga Muse
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