With the exception of Ward Seven Councillor Donna Skelly, the rest of Hamilton City Council went home after last month’s GIC meeting, apparently satisfied that the agency’s affairs were not only completely in order, but so much so that no questions were necessary. Skelly had triggered an appearance by HWT before the committee when she balked at an HWT presentation earlier recommending a change in its governance structure to eliminate the board position now held by the Hamilton Port Authority and instead have all five board members appointed by the City. What council learned as a result of the meeting, is that despite the fact that it will appoint all of the HWT’s board, despite the fact that HWT is dependent on sole-sourced contracts from the city for its survival, the city has actually no jurisdiction over the HWT whatsoever. In the end Skelly’s attempt to have the HWT undergo a value-for-money audit died when she was unable to secure a seconder for her motion.
The meeting started with HWT Chair and long-time board member Bob Charters angrily correcting a series of what he termed “falsehoods”. He declared that no one on the HWT is a city employee, that the HWT is not tasked with the entire $150 Million dollar Pier 8 Development and that the HWT is not a residential developer. As forcefully as they were denied, none of these accusations appear to have been made in local media, and Charters then suggested that the HWT was subject to “innuendo” that was being picked up by the media. “To suggest a forensic audit is offensive,” the HWT Chair said, “and you better be able to back that up with some significant evidence.”
Skelly attempted to do just that when she began referring to an adverse audit opinion from 2007 (Bay Observer passim) which pointed to a number of accounting breaches, serious enough that the auditor concluded, “due to an absence of adequate internal controls we are unable to satisfy ourselves that all revenues and expenditures of the organization had been recorded nor were we able to satisfy ourselves that the recorded transitions were proper.” Under questioning, the HWT’s current outside auditor Ed Brink of BDO, who is the third auditor to handle the HWT file, admitted that in 24 years of practice he has never issued an adverse opinion adding that adverse audit opinions are “not very common.” Under questioning by Skelly, HWT Executive Director Werner Plessl said the adverse audit opinion had been reported to council, but Skelly said she had been unable to find a record of that. What council did receive at that time, was a set of financials from a new auditor covering the same period as the adverse opinion using the same numbers, but nonetheless giving the HWT a clean bill of health.
Referring to a management letter accompanying the 2007 adverse audit, Skelly attempted to raise a reference to a possible conflict of interest that the former auditor raised, but she was interrupted by meeting Chair Matthew Green who suggested Skelly should share all of the documents she had with fellow councillors. Skelly was referring to an approximately $3 Million deal between the City, HWT and the Hamilton Conservation Authority that saw the Lakeland pool and community centre constructed in Confederation park in Ward Five. The Auditor was concerned that the Conservation Authority Board member, Chris Firth-Eagland was involved in approving the deal from the HCA perspective, while at the same time acting as a contractor for the HWT. In addition HWT Executive Director Plessl was also a member of the Conservation Board as was Chad Collins, the Ward Five councillor who was at the same time, chair of the HWT. In addition Collins was also a member of city council’s appointments committee that appointed members to both the HWT and the Hamilton Conservation Authority. HCA board minutes show no one declaring conflicts during this period. Skelly attempted to ask if these previous concerns about potential conflict had been addressed as she noted that an HWT work plan for work on the upcoming Pier 5-7 work showed Firth-Eagland would be providing services for the project.
No one was able to answer Skelly’s question about the timing of the award of $15 Million in contracts for Piers 5-8 to the HWT. Council gave its approval to the contracts at its July 14 meeting, yet the documents showed the city had already written Plessl advising him of the contract award two months earlier in May.
Questioning HWT Chair Charters who had taken offense at the use of the term “forensic audit,” Skelly asked if he would object to a value-for-money audit; to which Charters replied such an audit “is more of a provincial thing…it’s a little excessive.” Skelly questioned why there was an unwillingness to take a thorough look at all aspects of the city’s relationship with HWT, including bringing its operations back in-house, adding, “I don’t believe there is a negative to a value-for-money audit.” She concluded by advising that her motion for an audit did not have a seconder. It is the fourth time in recent years when an individual who has questioned HWT has been isolated by the rest of council. Fred Eisenberger found himself on the wrong end of a 15-1 standing recorded vote in his first term as mayor when he questioned HWT finances, as did Bob Bratina, in his term as mayor. Gary Santucci, a private citizen also received a hostile reception when he attempted to raise similar concerns in 2012.
Council Sam Merulla, who, in recent years, has supported more than half a dozen audits and operational reviews of the DARTS accessible transit system at a cost of over $500,000; and who is a member a permanent subcommittee established to continuously monitor the agency’s performance; nonetheless wondered if there could be some mechanism instituted to prevent any future council from again raising Hamilton Waterfront Trust issues. “It’s gotta stop,” he told councillors. Following the HWT discussion the committee moved on to discuss a motion on open government.