Corruption in Public Agencies—Never Ending

Bob Elliott, Half of the Deadpan Bob and Ray Comedy Team, Dies at 92. Their comedy routines amused me as a teenager. The importance of laughter cannot be overestimated. Farewell Mr. Elliott.

   Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

     The Toronto Community Housing Corporation is a government agency designed to provide low cost housing. It has always been filled with corruption and inefficiency–this report is from 2011–and continues to the present day. It’s not their money, of course they’ll waste it.

Toronto Housing Corp, expenses include spa meeting, $90k on Christmas parties
Natalie Alcoba

Mayor Rob Ford called on civilian board members of the Toronto Community Housing Corporation, including its chairman, to resign Monday after two scathing audits revealed staff at the public housing authority have ignored rules for awarding contracts while expensing spa treatments and boat cruises.

The future of CEO Keiko Nakamura, who has held the job since last February, also appeared to hang in the balance, after the Mayor told reporters he will meet with her to “discuss her future.” As well, he said he will be “dealing with” Derek Ballantyne, CEO of the housing authority until May 2009, who is now chief operating officer at Build Toronto. The audits looked at the TCHC’s books from Jan. 1, 2009 to June 30, 2010.

Among the most flagrant “inappropriate” expenses Auditor-General Jeffrey Griffiths identifies: $53,500 spent on a Christmas party in 2008 and $40,000 in 2009; $1,925 for a planning meeting at a local spa that covered manicures, pedicures and water therapy services; $1,850 for a boat cruise for “staff training and development”; and $1,000 on chocolates from Holt Renfrew.

“A greater concern is a culture at the TCHC which allows such expenses to occur,” wrote the auditor, who released reports on the agency’s expenses and procurement practices on Monday.

Mr. Griffiths also raised alarms about “single tendering” in which contracts are awarded without getting competitive bids. Moreover, purchase orders were “routinely split to circumvent procedures,” he found.

The TCHC spends $200-million a year on procurement. Mr. Griffiths estimated that obtaining competitive bids could “conservatively” save $4-million to $10-million.

“This money could go to helping people that need it the most, the people I have monthly meetings with to try to get people’s units fixed, get them transferred. Time after time after time, the excuse is we don’t have enough money. Well, obviously that excuse does not hold water,” said Mr. Ford, who continued to muse openly about overhauling the public housing system.

Councillors of all stripes were aghast at the audit’s revelations. The procurement findings were especially troubling, given that a $17-million inquiry and 2005 report into the MFP computer leasing scandal addressed many of the issues.

“We’ve got over 100,000 tenants in Toronto Community Housing who are waiting for repairs. We’ve got bedbugs, we’ve got issues that we need to deal with and we have a city that is going through austerity measure. For this to come out I think is disgraceful, I think it’s a slap in the face to tenants, and it’s a slap in the face to every Toronto taxpayer,” said Councillor Josh Matlow (St. Paul’s).

In his audit, Mr. Griffiths found that purchase orders were divided to circumvent procedures that require board approval for contracts in excess of $500,000. For example, there were 37 separate orders totally nearly $3-million over 18 months to buy kitchen, bathroom and lighting fixtures from a China-based supplier.

Six orders totalling more than $700,000 were placed in one month alone, the auditor wrote. In another case, a single-sourced purchase of solar panels worth more than $500,000 was ordered from a supplier in China through an overseas-based agent who, the auditor found, was a long-time friend of the TCHC staff recommending the agency. In another example, nearly $25-million in work was awarded based on one vendor’s unsolicited proposal.

“I am angry and indignant as to what the auditor general found,” David Mitchell, chairman of the TCHC board of directors, said Monday at a press conference, before Mr. Ford called on him to step down. But he said it would be “a tragedy” if the findings were used to “attack Toronto Community Housing’s mission.”

He said the board has “full confidence” in Ms. Nakamura, who expressed outrage at the “poor judgment and unacceptable actions of a few individuals.”

She was a member of the executive team reporting to Mr. Ballantyne. She said the audit showed she conducted herself with “complete integrity” and vowed to correct the ills. The agency intends to recover funds from inappropriately claimed expenses, she said, and some members of the 1,400 staff have been “terminated,” but was unable to recall how many.

When pressed by reporters, she said her entire five-person executive team has been replaced although it was not clear if it stemmed from the audit.

In a brief statement, Mr. Ballantyne said he shares the concerns over the findings, and is “encouraged” by the TCHC’s response.

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     Public servants doing well while pretending to do so much good. Never will end. Do not be surprised to find corruption–be astounded not to find it.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.”
Cui Bono–Cherchez les Contingencies

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