Councillors surprised a senior administrator this morning when they suspended committee rules to question CFO Mike Ruta about the KPMG audit.
Couns. Russ Wyatt and Paula Havixbeck spent 50 minutes questioning Ruta over lingering issues from the damning audit into the conversion of the old downtown Canada Post warehouse into the new police headquarters building.
Several times, acting city solicitor Krista Boryskavich tried to shield Ruta from questioning – claiming questions were inappropriate because of council’s request for Manitoba Justice to review the audit; asking that questions be put to Ruta in writing and allow him time to respond, in writing; and that the questions were beyond the jurisdiction of the finance committee.
But Wyatt and Havixbeck ignored Boryskavich, and continued to question Ruta over what he knew about questionable management decisions on the troubled project.
"It’s important to ask questions why things happened and, more importantly, why other things didn’t happen, and why things happened for the reason they did," Wyatt said following the meeting, adding he didn’t warn Ruta ahead of time that he would be questioned.
"Why there wasn’t the kind of due diligence that should have been done to manage this project as it went forward is really shocking."
It was Wyatt, chairman of the committee, who requested the committee rule be suspended when the agenda was completed and kept the meeting going.
Only Coun. Grant Nordman didn’t ask Ruta any questions and he left after 10 minutes, citing he had to participate in a telephone conference call.
The project was approved by council in 2009 with a $135 million budget but that skyrocketed to $210 million. The conversion is nearly complete and police will begin moving in the fall.
The KPMG audit found civic officials failed to follow city procedures put in place to manage the design, procurement and construction of major projects; and, that the city lacks many essential policies and procedures to govern administrative handling of such projects.
The questioning of Ruta came a day after council accepted the KPMG audit but a motion to hold a special meeting next week, to question administration about the audit and the EY audit of 33 real estate transactions released last week, was defeated in a 4-12 vote. Wyatt and Havixbeck were on the losing side of that vote.
Mayor Sam Katz, who argued against a special meeting, said councillors could question the administration any time they wanted about the audit – which Havixbeck repeatedly told Boryskavich when she tried to stop the questioning.
When Boryskavich said the questions were going beyond the jurisdiction of the finance committee, Havixbeck said all the issues are relevant to the committee.
Wyatt said he hoped other councillors would use their committees to also question administration.
Wyatt said he remains concerned that the administration oversight committee for the $210-million project failed to keep notes or minutes of their meetings, except for one.
"This turned out to be a $210-million project and it seemed to me the project management was very loosey-goosey," Wyatt said.
Disclosures by City of Winnipeg Chief Financial Officer Mike Ruta
The following is an edited version of the exchange between CFO Mike Ruta and Couns. Russ Wyatt and Paula Havixbeck at the finance committee meeting.
Wyatt: Engineering firm AAR was hired in 2011, without tender, for a contract of $2.6M, but Ruta approved an additional $1.8 million in 2012; the same firm was awarded another $470,000 contract in December 2013, which Ruta approved in March 2014. The firm was paid a total of $5.465 million when the original contract was not to exceed $2.6 million.
Ruta: The administration has authority to exceed council-authorized individual contracts so long as the project is under budget.
Havixbeck: How was AAR chosen?
Ruta: Doesn’t recall who recommended the firm, probably staff in planning, property and development could answer that.
Wyatt: Why did the administrative oversight committee not keep minutes or notes from its meetings?
Ruta: All relevant issues were discussed but could not explain why minutes not kept.
Havixbeck: Do you have a letter from the Surety Association of Canada recommending the bond value on the project be reduced from 50 per cent to 25 per cent?
Ruta: This question was asked by the media. We do have emails going back and forth. The general theme was that the surety association and bonding groups said you could make it more competitive by lowering the bond value.
Free Press Note: The president of the Surety Association told the Free Press in November it had not advised the City of Winnipeg it was a good idea to lower the bond value. The association said lowering the bond value "would be irresponsible."
Havixbeck: The project director Dunmore Corp president Ossama AbouZeid was hired without tendering, on whose recommendation?
Ruta: Former CAO Phil Sheegl recommended the firm. He’s not sure if there was a written contract.
Havixbeck: Has any action been taken on staff for issues identified in the audits, like re-training?
Ruta: Staff are diligent professionals who exercise their best judgment.
Havixbeck: Who within the administration knew the designs of the project were only 30 per cent complete when presented to council in 2011 as a guaranteed maximum price?
Ruta: My staff are accountants... they get information from our engineers.