Submitted by Martin Ruben, FCPA, FCGA who runs a consulting business in Victoria-by-the-Sea, PE and has a background in public sector and not-for-profit corporate governance.
Subsequent to being fired as Deputy Chief Administration Officer in January 2019, Scott Messervey, provided members of the Charlottetown City Council with a list of concerns about the administration he believed needed to be addressed. This included members of council double dipping when claiming the costs for travel expenses, unauthorized spending, and city property not being returned by employees.
When the whistleblower letter by Messervey, who is a Chartered Professional Accountant, was made public earlier this year, it was unclear why city council did not make it public when they received it in 2019, or why they did not act on the information contained in the letter. City council voted 7-3 in early 2019 to dismiss the whistleblower letter and, according to the minutes at the time, declared “the personnel issue discussed in closed sessions now be considered closed.”
The matter was closed without investigation. Included in the letter from Messervey was also a complaint of harassment lodged against the former CAO. This, too, appears to have been dismissed without investigation.
It appears only media and public pressure prodded the action recently taken by city council to investigate the matters raised more than three years ago.
At a meeting on August 22, city council adopted a motion by a unanimous vote to accept a proposal by the national firm BDO Canada LLP to “provide forensic investigation and fraud risk assessment/internal controls assessment for the City of Charlottetown,” which I will refer to as “the investigation.”
It appears the investigation team will focus only on the issues noted in Messervey’s letter and report to the acting CAO. The final report will be sent to City Council, but will not be made public.
It will be costly. The investigation has no set price or limit and is based on the amount of time spent by the firm’s employees. According to the proposal provided to council, a deposit of $25,000 is required upfront. Fees range from $600 per hour for a partner to $160 for an analyst. An additional 8 per cent is added for “internal charges.”
The contract for this investigation appears to have been awarded without a public tender as required by the city’s own procurement policy dated August 13, 2018, which requires all procurement actions greater than $25,000 to be publicly tendered unless it is deemed in the best interest of the city to do otherwise. Recent public reports from the city’s Finance, Audit & Tendering Committee do not include reasons for why this tender was not publicly offered.
The Municipal Government Act (2022) (MGA) guides the governance and administrative practices of municipalities on Prince Edward Island, including the City of Charlottetown. This act includes provisions for the provincial government to intervene in the affairs of municipalities under certain conditions. Unfortunately, the conditions for provincial intervention have never been defined by the provincial government through regulation or policy. As a result, Minister Fox refused to intervene earlier this year in the affairs of the City of Charlottetown when it became known information was being made public about city council not acting in the interests of residents.
While the provincial government has not created the necessary provisions for enforcement, the MGA is clear on its intent. When a municipal government has not implemented appropriate governance and administrative practices and the council has not taken appropriate action, the provincial government should step in.
The provincial government should have acted to conduct an independent review when Messervey’s letter was written in 2019, and again when it was made public in 2022. Also, according to the MGA, the scope and nature of an investigation by the province should be determined by the province, not city council. The report should be made public.
The investigation being conducted by the City of Charlottetown is, therefore, neither independent nor transparent. City council, which failed to act in a timely manner, is effectively conducting an investigation of its own affairs.
Good practice for municipal administration should have, for example, a city auditor appointed by city council carrying out independent audits and making them public when they are issued. The independence of a city auditor should be embedded in a by-law such that the auditor would determine the nature and scope of the audits being conducted. An investigation such as what is being carried out by city council at this time could be requested, but the final determination of how the audit would be conducted should be left to the independent city auditor.
Other capital cities across Canada have an independent city auditor or auditor general as part of their administrative framework that ensures administrative practices are in compliance with laws, and the programs and services residents receive provide good value for the residents. The City of Charlottetown does not have any kind of audit function, including an internal auditor who can help identify improvements to the city’s business practices.
The mayor and city council should be held to account for not implementing the most basic of business practices needed to manage the city’s operations on behalf of its residents.
While it is unclear what the BDO investigation will cost the taxpayers in the City of Charlottetown, one thing is quite clear; this investigation will not allow residents to determine if the observations made by Messervey in 2019 have credibility, and if they resulted in the necessary changes to the city’s governance and administrative practices.
Without an independent audit function, residents will never know if they are getting good value from the programs and services provided by elected and non-elected officials working for the City of Charlottetown.
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