Winnipeg Free Press - PRINT EDITION

What cutting red tape looks like

Debacle shows role of due diligence

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Couns. John Orlikow and Paula Havixbeck at city hall Monday, among the buzz of the tabled audit.

BORIS MINKEVICH / WINNIPEG FREE PRESS Enlarge Image

Couns. John Orlikow and Paula Havixbeck at city hall Monday, among the buzz of the tabled audit. Photo Store

It's not like he didn't tell us this was coming.

When Sam Katz ran for mayor in 2004, he promised many things. Chief among them was a pledge to cut red tape at city hall for developers and entrepreneurs. "As a business owner who attempted to get a permit to build a small little ballpark, I have a fair amount of experience with the frustration, the hurdles you have to go over and the hoops you have to go through," Katz told a mayoral forum.

It was hard, way back then, to envision exactly what city hall would look like once it was liberated from all the needless red tape strangling the city's developers. This week, however, we finally got to see in graphic fashion more or less what Katz had in mind.

Consultants Ernst & Young delivered a long-awaited audit into city contracts awarded to Shindico Realty to design and build four fire-paramedic stations. It found city policies and business practices breached. The audit found corners were cut, questions were not asked, and council was deliberately and entirely left out of the process.

The debacle described by the auditor is, in all ways, the manifestation of Katz's war on red tape. This is a creation of a government that puts more emphasis on greasing wheels than due diligence. Where "getting it done" is more important than "doing it right."

This debacle proves one inescapable reality about efforts to cut red tape: Although it is often sold to voters as something that levels the playing field and makes government fairer for everyone, it really only benefits a select few. And so it was in this case.

The only true beneficiary in this instance of the red-tape-cutting was Shindico Realty, which got all the work designing and building the four fire-paramedic stations and even intends to sell the city some of the land to be used.

Consider how many hurdles and hoops were cut to benefit Shindico.

The original $15-million contract was split into four smaller chunks, largely to avoid the need for council approval. Then, those contracts were awarded to Shindico on a "non-competitive" basis. In other words, without a bidding process.

The high priests of streamlined bureaucracy could defend these as simple errors of expediency, especially since eliminating all those hoops and hurdles is theoretically supposed to save taxpayers money. In reality, this streamlined effort resulted in a $3.3-million cost overrun.

Despite his long, obvious connections to Shindico, Katz took no responsibility for this mess. In a news conference following the release of the audit report, the mayor said he was shocked, disappointed and resolved to make sure these "mistakes" never happen again. But at no time did he admit he knew what was going on. Nor would he speak ill of Shindico or former chief administrative officer Phil Sheegl.

The E&Y report clearly identified Sheegl, a longtime friend of both Katz and Shindico's Sandy and Robert Shindleman, as the driving force behind the ethically challenged deal. Despite Sheegl's earlier claim he only followed the fire-paramedic station replacement program from "50,000 feet."

The audit showed he was deeply involved in negotiations with Shindico, and directing the actions of former WFPS chief Reid Douglas, who had been given responsibility for managing the construction of the new stations.

It was more than a little ironic that Sheegl, who likely did more than anyone else to bring Katz's war on red tape to fruition, was in the end a beneficiary of streamlined bureaucratic process.

Sheegl, who was given a chance to review the audit report and respond prior to it being given to councillors on Monday, resigned suddenly last week. It is clear now that was done to avoid having to face any public grilling for his role in the fire-paramedic station debacle. In an unusual move, Sheegl was allowed to leave without any notice. Even more unusual was the fact executive policy committee met the same day his resignation was tendered to consider and approve a severance package reportedly worth more than $240,000.

It is impossible Sheegl did not have a requirement in his contract to give notice of an intention to leave. Someone decided to waive that requirement, and to hastily convene a meeting of EPC to approve his severance.

In his last moments at city hall, Sheegl truly showed Winnipeggers what bureaucratic efficiency really means.

Government bureaucracy can be frustrating, even counterproductive. However, there are many more instances where bureaucratic checks and balances are a reasonable expression of due diligence, and not a dirty, pointless trick played on entrepreneurs.

Katz will continue to run from this mess, expertly wielding plausible deniability to deflect allegations he knew, or should have known, about the ethical disaster his good friend Sheegl was authoring. In the end, Katz did promise to get rid of red tape at city hall. Most of us perceived that to be a promise. We've just found out it was more of a warning.

dan.lett@freepress.mb.ca

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Republished from the Winnipeg Free Press print edition October 22, 2013 A4

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