City Auditor Charles Brown’s annual reports on fraud and waste are always a refreshingly candid peek behind the curtain at the City of Hamilton’s various departments and this year’s is no exception.
Robbing Peter to Pay Paul
One of the worst-kept secrets around works projects and one of the most prevalent issues is the practice of charging costs of projects that are running over budget to projects that have come in under budget, Wrote Brown “ budgeted funds from completed projects with unspent/surplus balances were used to pay for two unrelated contracts at different locations where there was no budget remaining. The appropriation to move funds between these projects was not approved, contravening the Capital Projects’ Budget Appropriation and Work-in-Progress Transfer Policy.” The Bay Observer wrote about this in connection with the Hamilton Waterfront Trust. In one instance we reported costs were added to a project to inflate its final price tag in order to increase the amount of subsidy coming from the province in a cost-sharing formula.
Another issue that keeps popping up in these reports is the practice of paying contractors even though no invoice has been submitted. This could suggest a need for staff and the contractor to put their heads together before the final bill is submitted.
But nobody got hurt…
Then there were the usual types of petty larceny—a city employee arranging for work to be done to curbs and sidewalk in front of their house. This was stopped when somebody on the crew put a halt to the work and complained to the auditor.
Two employees were fired for “improper usage of parking passes,” another was caught using information in a city database to support an outside business they were operating. Another employee was approving invoices for a vendor for whom the city employee’s spouse was working.
Improving their short game
Golf plays an inordinate role in these reports. The report reads, “a City Councillor received a report from a citizen that alleged that two City of Hamilton employees were out golfing, during business hours, with a City vendor who was in the process of submitting a proposal for a live, competitive City of Hamilton procurement (Request for Proposal, RFP) that was worth about $2M in services over 3 years. The Reporter also alleged that there was additional and substantial socializing between various City of Hamilton staff and this vendor. They had concerns that this “coziness” could influence the City’s procurement processes.”
The auditors investigated and found out there were a whole lot more city employees golfing, socializing, accepting free booze and other gifts from city vendors, not to mention the time theft aspect of golfing during working hours.
“On top this,” the report continued, “one of these three employees wrote a reference letter for the firm they were found to be golfing with, to support their RFP submission, and subsequently participated in the evaluation of that firm as part of their duties as a member of the RFP evaluation committee, the committee that chose the successful vendor.” A neat closing of the loop.
Another employee was found to have gone on five international trips with vendors in recent years, including one where they were supposedly a representative of the City of Hamilton, while failing to obtain authorization to attend on City business, and did not inform any of their superiors because they took vacation time for the trip. That same employee unilaterally increased the rates paid to one of these vendors which ended up costing the City substantial additional fees. The employee also hired and paid the executive of a vendor to provide advice on contract terms and specifications for the very RFP the vendor would be bidding on.
Brown says the Waterdown Gardens investigation on allegations that thousands of loads of contaminated soil taken from City sites were illegally deposited on its lands and that this illegal dumping was facilitated by two City employees, is just about finished and will be reported in December.