Au­dit shakes Re­gion foun­da­tions: Sendzik

The Niagara Falls Review - - NEWS - Sendzik GRANT LAFLECHE glafleche@post­media.com

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.

BOB TYMCZYSZYN/POST­MEDIA NET­WORK

View of the nearly com­pleted re­place­ment of the Bur­goyne Bridge.

Rigby

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