The mess at the top of MPI
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So, the provincial cabinet minister responsible for Manitoba Public Insurance has declared his government is “absolutely not defending” the pay raises the Crown corporation’s chief executive officer received during a period in which a major technology-upgrade project’s budget spun wildly out of control.
Well, that’s encouraging. But the mere fact Kelvin Goertzen has declined, on behalf of the current Progressive Conservative government, to endorse the salary increases and bonuses afforded to CEO Eric Herbelin does not in any way absolve him or the government from responsibility for this latest chapter in the ongoing MPI debacle.
Mr. Herbelin was hired as the public insurer’s top executive in 2021 and, as such, has been in charge while the information-technology upgrade known as Project Nova has fallen years behind schedule and seen its budget, originally pegged at $128.5 million, spiral upward to nearly $290 million.
A recent investigation by the Free Press revealed that while Project Nova was unravelling, Mr. Herbelin received annual increases to his salary, which was $363,263 when he assumed his current role. That figure rose to $375,563 in 2022 — an increase of more than three per cent — and while MPI has refused to disclose his salary for 2023, sources confirmed for the Free Press that the CEO’s pay increased again after an external compensation review.
The increases occurred while rank-and-file MPI staff were subject to a two-year wage freeze (negotiations are under way on a new collective agreement to replace the one that expired last September).
According to the Free Press investigation, during the last two years management-level executives at MPI — including Mr. Herbelin — also received performance and retention bonuses.
The CEO also spent 38 days — the equivalent of 7 1/2 weeks — away on what is described as business-related travel in 2022-23. MPI declined to provide the reasons for, or the costs of, those trips, but current and former MPI staff told the Free Press the amount of time Mr. Herbelin spent on business travel has raised concerns within the organization, and that few people within MPI knew where he was or what he was doing.
In January, the Public Utilities Board ordered additional oversight of MPI’s technology upgrade, citing concerns that Project Nova’s costs will continue to rise as a result of an “apparent lack of management control over expenses.” One source suggested to the Free Press that this is “less a case of it being poorly managed or mismanaged, and more a case of it being unmanaged,” and that Mr. Herbelin’s frequent absences “had a huge impact on the project.”
The CEO declined numerous requests from the Free Press to be interviewed regarding his salary increases and travel, and MPI has offered little clarification. And while the minister responsible for the Crown corporation has expressed concern over goings-on at the public insurer, he also has failed to offer anything in the way of an explanation that might help the public understand what has gone wrong — or, if it’s warranted, right — at MPI.
That’s unacceptable. As its name clearly describes, MPI is a publicly owned insurer that is fully accountable to Manitobans for the way it is run and the manner in which it spends the taxpayer and ratepayer dollars that fund its operations. It’s time for someone — preferably, the CEO at the centre of this latest controversy — to step forward and answer the questions.
The nature of Mr. Goertzen’s non-defence declaration suggests changes may becoming at MPI, and soon. There’s a good reason he was unable to defend the CEO’s pay raises and bonuses: in the current context, they’re indefensible.