Audit shakes Region foundations: Sendzik
The forensic audit of the Burgoyne Bridge replacement project has uncovered issues that “shake the foundation of government” in Niagara, says St. Catharines Mayor Walter Sendzik.
The Deloitte Canada report, which examined relationships between regional staff and contractors that worked on the bridge and other projects, found Niagara Region’s conflict of interest, procurement and hiring policies need to be reviewed and revamped.
It also said that further investigation into three issues — one pertaining to the bridge contracts, and contracts awarded to two companies unrelated to the project — will require assistance from law enforcement.
The report was given to Niagara Regional Police for investigation, but the police services board asked NRP Chief Jeff McGuire to hand it over to the RCMP or Ontario Provincial Police. McGuire has requested the OPP handle any police investigation arising from the report.
Sendzik said the issues in the report — including conflict of interest issues and the manipulation of work orders to avoid open bidding for contracts — “are a demonstration of what happens in government when you don’t have proper controls in place.”
“The issues we are looking at here did not just take place during the years of the bridge project. They go back many more years than that,” Sendzik said.
He said the Region suffered from a culture of “learned behaviour” that allowed for some of the issues to happen. If some staff or a contractor got away with it, someone else might try to get away with it, too, he said.
“So you are left asking: ‘What policies did they have in place? Why wasn’t this caught?’” Sendzik said. “If you had better controls in place, you likely would have seen much different outcomes.”
Although the Region has made progress over the past few years in addressing systemic issues, Sendzik said regional council must be willing to revamp the way it operates.
“And councillors have to be willing to take a step back from the finger pointing in some cases and look at how to improve the system for the benefit of taxpayers,” he said.
That is a job that will require intense focus from regional council for some time, he said.
The $500,000 Deloitte report was kept secret by regional council, but has been obtained by The Standard.
Deloitte was asked to investigate five areas of concern by council. The first examined if there was a conflict of interest issue related to a South Carolina condo co-owned by former transportation director Joe Cousins, ex-transportation director Nick Palomba and former employee of Parsons Inc, the company hired to do work on the bridge, and Paul Smeltzer, the ex-water and wastewater director and former employee of Amec Foster Wheeler Inc.
The employment of Smelter and Palomba at the Region recently ended, but the reasons for their departure are unclear.
The report did not find a conflict of interest in the property, but recommends the Region review its policies.
The report also looks into Cousin’s relationship with Palomba when contracts were being awarded to Parsons, where Palomba worked at the time.
The report says Cousins verbally disclosed his relationship with Palomba, but Diolette auditors could find no documentation to that effect. In an interview with The
Standard Thursday, Cousins said he told his supervisor, but did not know what that supervisor did with the information.
The report says it cannot determine if Parsons received any undue benefit in the contracting and that further investigation would require assistance from law enforcement.
It similarly says police assistance will be required to further investigate contracts awarded to Circle P. Paving and Regional Trenching unrelated to the bridge.
The fifth issue the report looked into, a property owned by a member of regional staff on Hainer Street near the bridge, found no conflict of interest issues. The report makes no claims of criminal wrongdoing.
St. Catharines Coun. Tim Rigby said he is concerned that Deloitte auditors did not interview Cousins, who appears as a significant figure in the report.
In an interview Thursday, Cousins described the report as a “witch hunt” by councillors embarrassed by the bridge’s escalating cost who are looking for someone to blame.
“He could have been using my words,” Rigby said.
The report said Cousins did not respond to interview requests, but Cousins told The Standard he never heard from the auditing firm. “If I had, I would have told them what I am telling you,” Cousins said Thursday.
Rigby said he assumed Cousins had declined to speak to Deloitte and his absence in the report may call into question the validity of its conclusions.
“I would have also assumed they would have put more effort into attempting to reach him,” Rigby said.
Sendzik said the audit wasn’t a witch hunt and said Deloitte is a reputable firm.
“I am sure they made extensive attempts to reach Mr. Cousins and have catalogued those attempts,” he said. “Which is more than I can say about Mr. Cousins.”
The report does not indicate how Deloitte may have tried to reach cousins.
Deloitte auditors interviewed 49 people during their investigation, including nine regional councillors, current and past regional staff and parties external to the Region.
The report does not discuss how the costs of the bridge rose from an original estimate of about $50 million to more than $90 million.
However, Sendzik said better controls and policies would result in contracting that would “respect the taxpayers’ dollars.”
“So instead of a $90-million bridge, we might be looking at a $72-million bridge,” he said.
Sendzik said he will suggest regional council hire an internal auditor.
“I will tell you that when I was with the chamber (of commerce), we recommended an internal auditor, but were shot down by both staff and council,” he said. “If an auditor had been place, some of these issues would have been caught.”
The Deloitte report says information about the costs increases were presented to council in the appendices of public works reports. Those reports, their appendices and recommendations, were approved by council.
Sendzik, who was not on regional council when the cost increases were approved, said an elected council is only as good as the information it receives from staff.
Nevertheless, he said elected officials have to be mindful of the reports they receive.
“I can tell you that in my experience as mayor what sometimes happens in a council is that someone may say ‘Well, my seat mate must have read that report and is voting for it, so I will vote for it, too.’”
Regional chair Alan Caslin declined to be interviewed for this story. A spokesperson emailed a statement in which Caslin says the leaking of the Deloitte report to The Standard is “a clear breach of regional roun-cil’s Code of Conduct, S239(2) of the Municipal Act, and the recommendation of Niagara Regional Police Chief Jeff McGuire who stated ‘I would be strongly recommending that no disclosure of these reports be made while the investigation was still underway’ as reported by the St. Catharines
Standard on March 3rd.” “It is unfortunate that this reporting may compromise an important ongoing police investigation.”
Niagara Falls Coun. Selina Volpatti, the chair of council’s bridge task force, would not discuss the contents of the report.
View of the nearly completed replacement of the Burgoyne Bridge.