EY to steer government-ordered MPI review

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This article was published 18/07/2023 (807 days ago), so information in it may no longer be current.

Manitoba Public Insurance has hired consulting firm Ernst and Young to conduct a government-ordered review of its business.

On Tuesday, the Crown corporation confirmed the international organization will scrutinize the provincial auto insurer’s expenditures, major projects, investment and revenue projections, and delivery of services.

A report from EY is due by the end of the year.

The organizational review was ordered April 3 by Justice Minister Kelvin Goertzen, following a series of controversies for MPI and former chief executive officer Eric Herbelin.

Herbelin was fired by the corporation’s board of directors May 21, following an internal investigation into “work-related conduct.”

The investigation was ordered under former board chairman Michael Sullivan, who resigned from his post in early May, after Goertzen directed MPI engage a third party to review its operations between April 2021 and March 2023.

Sullivan’s resignation followed a Free Press report Herbelin received a three per cent pay bump last year, and spent 38 business days travelling, even as the price of MPI’s information technology program project ballooned and the Public Utilities Board ordered increased financial reporting and oversight.

Ward Keith was appointed board chairman shortly thereafter.

MPI also faced significant criticism for awarding $12 million in untendered contracts to consulting firm McKinsey and Company to get its IT modernization program, Project Nova, on track.

Nova is expected to cost $290 million — up from an initial budget of $100 million and a three-year completion timeline in 2019 — and is now set to be finished in the 2025-26 fiscal year. Cost overruns and delays have been blamed on incomplete advice from consultants hired to prepare the initial business case and necessary changes to successfully roll out the program.

The PUB, Manitoba’s independent rate setting authority, raised concerns over the expense and management of the project in its 2023-24 general rate application decision, and ordered additional oversight and financial reporting.

The organizational review will include a look at MPI’s lines of business; allocation of resources; senior management complement and spending on management initiatives; operational expenditures; and procedures for issuing projections and forecasts.

MPI has also hired consulting firm MNP to provide governance and risk advisory services specifically for Nova, after the McKinsey contract came to a close in March.

MNP is expected to provide “expert advice and coaching that will result in measurable gains” to successfully deliver Nova on time and on budget, according to the tender for services.

The two contracts are expected to be covered by Nova’s approximately $3-million governance and advisory budget, and both firms were hired through a competitive process.

Opposition NDP Leader Wab Kinew criticized the provincial government for ordering additional consulting expenses at MPI.

“So far (Premier) Heather Stefanson has let costs at MPI balloon by nearly $200 million, handed over another $12 million to McKinsey to report on that mismanagement, and now we learn she’s going to spend even more money to hire even more consultants,” the Fort Rouge MLA said in a statement.

“When will the PCs’ mismanagement at MPI end, and when will they start taking action to keep Autopac rates affordable?”

Goertzen, minister responsible for MPI, previously said the organizational review is necessary to ensure Manitobans are getting the best value for money and quality of services from MPI.

The PUB previously recommended MPI continue to use an independent governance consultant to “mitigate the risk of further budget increases and project delays” with Nova.

danielle.dasilva@freepress.mb.ca