Winnipeg Free Press - PRINT EDITION

Auditors expose the dirt

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An external audit into the bungled construction of four new fire halls did not find criminal activity or even breaches of the employee code of conduct, but it found enough dirt to warrant further investigation.

winnipeg free press / dale cummings

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winnipeg free press / dale cummings (DALE CUMMINGS / WINNIPEG FREE PRESS) Photo Store

The audit by Ernst and Young discovered gross mismanagement, but also troubling evidence that the city's largest real estate firm, Shindico, received preferential treatment in the process to build the new stations.

The findings expose the city to potential lawsuits from other companies that did not receive equal treatment in what was supposed to have been a transparent process based on well-established legal principles.

The report largely exonerates former fire chief Reid Douglas, who has since been fired, but points the finger at Phil Sheegl, who was himself forced to step down as chief administrative officer just last week following an ultimatum from city council's executive policy committee.

The city has apparently granted him a severance equal to one year's pay, but that decision should never have been made until the audit was made public. The audit's findings suggest the city could have dismissed him for cause.

Mr. Sheegl has previously said he was only remotely connected to the fire-hall building program, but the audit said he was deeply involved from the beginning.

He took "an active role in the project since the early stages and was involved in the design and construction budgets... " the auditor found. "Our review indicates that the majority of project oversight, where oversight occurred, was done by" Mr. Sheegl.

According to Mr. Douglas, Mr. Sheegl told him in 2009 when the city was seeking qualified firms to compete for a contract to build the stations: "I want Shindico to build these fire halls." The then-fire chief's only response was: "Then let's hope they're the lowest bidder."

Subsequent alterations of the original terms meant Shindico was the only qualified bidder, and the contracts were sole-sourced to the firm. The contracts were also broken into four parts to circumvent council scrutiny. The law department also failed in its role as a gatekeeper, but the auditors said that was understandable considering the city's lawyers reported to the chief administrative officer, a situation that should be changed.

The power of the CAO, a position that replaced the old board of commissioners, must also be reviewed.

While others were involved in managing the flawed fire-hall process, Mr. Sheegl bears the brunt of the administration's responsibility.

It's unclear what members of executive policy committee may have known because the auditor did not interview them or Mayor Sam Katz.

Mr. Sheegl, a close friend and former business partner of the mayor, was an unpopular choice when he was hired in 2008 as the city's director of the city's property and planning department.

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(DALE CUMMINGS / WINNIPEG FREE PRESS)

In selecting Mr. Sheegl and then elevating him to the CAO's position, the mayor and his supporters at the time were signalling they wanted the city to be more entrepreneurial and more aggressive in encouraging development.

Unfortunately, both Mr. Sheegl and Mayor Katz forgot the city is not a business, but a public service, where rules and red tape matter.

The fire-hall construction disaster has undermined confidence in the city by the general public and by contractors and developers who respond to its tenders, assuming a level playing field.

The mayor says all of council bears responsibility for what happened, but the comment is disingenuous and merely another distraction from his own, still-undefined role in the messy affair.

The city's internal auditors have said in the past civic government must be guided by transparency, accountability and integrity. This audit has shown the public was betrayed on each of those points.

Editorials are the consensus view of the Winnipeg Free Press’ editorial board, comprising Catherine Mitchell, David O’Brien, Shannon Sampert, and Paul Samyn.

Republished from the Winnipeg Free Press print edition October 22, 2013 A8

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