Quirk not ending Pelham scrutiny
The chair of Niagara Region’s audit committee plans to continue delving into Pelham’s finances, despite a special town council meeting last week intended to answer concerns.
Grimsby Coun. Tony Quirk said a KPMG audit presented at the Pelham council meeting on Wednesday has only added to his concerns.
Quirk introduced a motion that was ultimately supported by Niagara Region council to take a number of actions, including notifying the town’s creditors about financial concerns, based on uncorroborated allegations from former town councillor Marvin Junkin who alleged the town had $17 million of debt that had not been disclosed on financial reports.
Junkin later said he did not have any evidence to back up his claims.
And despite information presented at last Wednesday’s meeting by KPMG auditor Karen Grogan, who told an audience of more than 200 people that “there is no unreported debt,” Quirk said he intends to press on — alleging that the information KPMG presented Wednesday is not the same information town councillors received at a September closed-doors meeting, when Junkin said the information about the unreported debt was initially provided.
“I think if you talk to former councillor Junkin, I think you’ll appreciate that’s not the presentation they received on Sept. 5.”
Explaining the differences, Quirk said the KPMG report provided in September was dealt with behind closed doors because it contained information about an identifiable individual.
“If that is the exact same presentation, why wasn’t it in closed session?” he asked. “That presentation had nothing to do with an identifiable individual. If that’s the case, then it doesn’t ring very true, does it?”
Pelham Mayor Dave Augustyn said the town had asked KPMG to withhold information about that identifiable individual, so the financial information that was the subject of Junkin’s allegation could be publicly released.
Lisa Papas, a spokesperson from KPMG, said the accounting giant’s policy is not to comment on client reports.
Augustyn did point out one difference between the information provided during last week’s meeting and the information presented in September. Although the Sept. 5 report identified $17 million of approved but unborrowed debentures, Augustyn said KPMG later determined that the unused debt was actually about $7 million less than originally believed.
Augustyn also pointed out that the Region has about $130 million of authorized yet unused debt, “just like this $9.9 million for Pelham.”
“For them to say it’s a problem is disingenuous,” Augustyn said. “So don’t try to make something that’s not a problem a problem. The Region should stick to its own matters and deal with them. There are many challenges across the Region that people want us to be involved in and we should concentrate on that, instead of looking into communities.”
Quirk said KPMG’s presentation on town finances was “a nice dog and pony show.”
“I think it told the story that town of Pelham council wanted to tell, but I don’t think it answered any of our questions at all,” Quirk said. “In fact, I think it opened up more questions.”
Although KPMG determined that Pelham’s financial transactions did not violate the Municipal Act or bylaws, the audit did indicate some areas of concern.
For instance, the KPMG audit ranked the town’s financial challenges as “high” regarding its total cash compared to operating expenses, as well as its working capital as a percentage of expenses.
Quirk said the audit “confirms our suspicions and our concerns” about the state of the town’s finances.
“The fact that the Ministry of Municipal Affairs is now involved because of their high ratios and the fact that they are a moderate to high risk in seven categories is really concerning,” Quirk said.
But the Ministry of Municipal Affairs is not involved. In an email, ministry spokesperson Praveen Senthinathan said ministry staff have not been asked to “speak with municipal staff or council on this matter.”
Although the Municipal Affairs Act allows the provincial government to conduct an audit of a municipality’s finances, which can lead to assistance putting sound financial procedures in place, Senthinathan said “provincial municipal audits are rare.”
The ministry is also aware that Pelham had commissioned its own audit of its financial records, he added.
Senthinathan said the provincial government “considers that municipal councils are responsible for making appropriate decisions for the benefit of the whole community and are ultimately accountable to the citizens who have elected them.”
Municipal councils are also in the “best position to assess their financial capacity,” and are encouraged to resolve concerns locally, he added.
Augustyn said Quirk is “alleging things that aren’t true.”
“He says that the province signalled a problem and demanded a meeting. That’s false and misleading,” Augustyn said. “I don’t know why the councillor is doing that.”
The only concern the Region should have regarding town finances, Augustyn added, is if Pelham is within the province’s debt repayment limit — capping debt payments at 25 per cent of revenue.
“There is no worry of that, even if we include the $9.9 million of approved yet not issued debt,” he said. “It’s clear that we’re within the debt repayment limit. That should be the only concern for the Region and nothing else.
“It’s sad that regional council is trying to get bogged down into town affairs. The town has already said that it’s not their sphere of jurisdiction, and we expect them to stay out of these matters for all municipalities.”
If the Region is interested in assisting the town, Augustyn said he’d welcome the opportunity.
But that’s not the motivation behind the scrutiny, he added.
“Unfortunately, some regional councillors don’t want to do that. They want to go around and point fingers, and that’s not how I operate. That’s not how Pelham council operates,” he said. “We want to work together with people, and we’d be willing to work with the Region. Unfortunately, the majority of regional council appears to want to paint Pelham as a problem.”
Pelham council will discuss its response to the Region’s motion at tonight’s town council meeting.