Thestar.com  > News                                                                                                       Dec. 22, 2001.

     Council fears it has lost control to staff

                                                               Jack Lakey

                                                       CITY HALL BUREAU 

                 A multi-million-dollar computer leasing fiasco involving the City of Toronto has left many councillors worried that they may be placing too much trust in bureaucrats who are not always acting in the best interests of the city.

                 Unless they can trust staff to fully and accurately represent business matters, councillors say, council is not really in control.

                 "I can't tell my constituents that we're in charge, because I don't think we are," says Councillor Bas Balkissoon (Ward 41, Scarborough-Rouge River), the audit committee chair.

                 "People want to know how we got into this mess and I'd like to be able to tell them," said Balkissoon, who has taken a lead role in trying to figure out how council got an $85 million computer contract when it thought it had approved a  $43 million deal.

                 "When the people who work for you say that they don't have to give you even basic documents, how can you know what's going on?

                 "I've been asking myself, how can I trust them? They say, we don't have to show you, just trust us that it is like we say it is. That's how we ended up with the computer deal, by trusting them.

                 "It is very frustrating, because the public thinks we are in charge. We have to explain this and take the heat for it, because we trusted them."

                 On the recommendation of former city treasurer Wanda Liczyk and former information technology director Jim Andrew, council approved what it thought was a three-year leasing contract with MFP Financial Services Ltd. of Mississauga for $43 million in computers, software and equipment.

                 But after questions arose about a leasing deal between MFP and the City of  Waterloo  for a sports complex, other municipalities began looking into their deals with MFP.

                 By last summer, the city had called in forensic auditors from the KPMG LLP accounting firm to investigate the computer leasing contract. After KPMG issued a confidential report to council, it was apparent the deal was far bigger than councillors thought.

                 Council eventually learned that most of the contracts had been extended to five years, with some extended a further three or six months. Liczyk has insisted her authority to extend the deals came from a curiously worded motion made at the July, 1999, council meeting by former councillor and budget chief Tom Jakobek.

                 The motion, which was approved, allows staff to "extend the life of the (computer) equipment," but is not specific about how to do it.

                    `It's crucial that the bureaucracy operates with ... integrity'

                 At a special council meeting Thursday to deal with a $3.2 million settlement proposal from MFP, confidential reports that outline some of KPMG's findings were made public. They paint a damning picture of the way the MFP deal was recommended to council for approval at its July, 1999, meeting.

                 It found Liczyk acted beyond her authority by arbitrarily extending MFP leases, editing out a key clause from the July report to council that warned the interest rates could rise after the first 90 days of the deal, and put herself in a potential conflict-of-interest situation by accepting favours from MFP.

                 Liczyk has consistently refused to be interviewed, but yesterday told The Star's Royson James she is "co-operating fully with the city and its investigations," adding: "I've had 16 years of municipal government service; I've accomplished a lot in my various roles; my team has had a lot of successes."

                 Liczyk left the city's employ shortly before the MFP scandal broke to join Toronto Hydro as vice-president of finance and treasurer.

                 Andrew has not returned calls from The Star.

                 The MFP deal brought Balkissoon and many other councillors to the uneasy conclusion that they may be placing too much trust in bureaucrats.

                 Some say Mayor Mel Lastman's office has far too much influence on senior bureaucrats, who believe their first duty is to please Lastman, and that if council differs from the mayor on a given issue, the bureaucrats will usually adopt Lastman's position.

                 "I think some of the blame would have to be on the mayor, because I think he wants commissioners to deal with him and not with councillors," said Councillor Mario Silva (Ward 18, Davenport). "I think there's certainly an understanding (among) the commissioners that they deal with the mayor and his staff.

                 "Certainly, Wanda had a very close relationship with Mel; there's no doubt about that."

                 Councillor Howard Moscoe, who served with Lastman for years on the former North York council (where Liczyk was also treasurer, before amalgamation) and at the old Metro council, also said bureaucrats are not acting entirely on their own.

                 "I don't for a moment think that the bureaucrats in (the MFP) case acted unilaterally," said Moscoe (Ward 15, Eglinton-Lawrence).

                 "Obviously, the politicians have to get control of the bureaucrats. The bureaucratic team has altogether too much power.

                             `Well, it doesn't appear to be council running things'

                 "And it's not because they consciously take the power," he added. "It's because the volume of business in operating the megacity has become so overwhelming.

                 "Politicians have to rely on the bureaucracy, and that's why it's absolutely crucial that the bureaucracy operates with the utmost integrity. There's been ample evidence in this whole fiasco that the politicians ... aren't getting the information they're required to make intelligent decisions."

                 Lastman, who rushed back to his Florida condo after Thursday night's special meeting, saying he wanted to be with his wife, could not be reached for comment.

                 One of the motions still to be voted on by council is whether to hold a judicial inquiry under Section 100 of the Municipal Act. A judge appointed to handle the inquiry would have the power to subpoena witnesses and compel truthfulness, as in a court of law.

                 Balkissoon provided an example of the authority senior staff such as Liczyk and Andrew could exercise freely, which was also mentioned in the confidential reports made public Thursday. In late 1998, before the deal currently under intense scrutiny, the information technology and finance departments arranged another $23 million leasing deal with MFP, one council never approved.

                 Councillor David Soknacki (Ward 43, Scarborough East) believes part of the problem is a "North York culture, or informal way of doing business," that permeates the senior bureaucracy, many of whom worked there.

                 Councillor Jane Pitfield (Ward 26, Don Valley West) says that since the scandal blew up, constituents are asking, "Who is in control, who's running the city? And the second thing they are saying is: Don't even think of giving us a tax increase in 2002.

                 "Who is in control?" asked Pitfield. "I would say that far too much has been approved by a small group of people on staff in the city. Some of those people are no longer with us, but the method is still there."

                 The fiasco is most frustrating to Councillor Doug Holyday, who is known for treating taxpayers' money as carefully as his own.

                 "Well it doesn't appear to be council running things," said Holyday (Ward 3, Etobicoke Centre). "It's incomprehensible that staff would make these major decisions without going through council."

                 Councillor Rob Ford fears results of the probe will be hushed up, and that underlying problems won't be fixed.

                 "The mayor and all his henchman are saying, `Support this (settlement).' I'm not supporting this. He's basically been caught with his pants down."

                                        With files from Bruce DeMara and Paul Moloney

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