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On the morning of September 19,Toronto police fraud squad officers boarded the west tower elevator at City Hall and headed up to the Fair Wage and Labour Trades office on the 18th floor. Once there, the cops produced a search warrant and immediately began gathering files and computer records to be entered into evidence against Louie Gervasi, the FW< office manager. He’d been taken into custody even earlier in the day and charged with demanding a kickback from a supplier in exchange for municipal contracts.”We are extremely disturbed by the allegations that have been made against the city employee and are acting quickly to cooperate fully with the police,” Shirley Hoy, the city’s chief administrative officer, said in a memo sent out almost immediately to city council members and about a dozen senior staff .
“We are launching our own review of the allegations,” Hoy advised before cautioning everyone who’d received her missive to keep their lips zipped about the sorry situation.
But word of Gervasi’s arrest spread like wildfire through the parched ranks of a civic bureaucracy that was already badly distracted from its work by what was then the impending Toronto Computer Leasing Inquiry.
“Now we’re all going to be tainted by this rot,” one veteran civil servant told me. He, like a lot of other municipal staff, had been assured by superiors and politicians alike that the three-year information technology contract that grew from $43 million to more than $100 million without city council’s knowledge or approval was an easily explainable anomaly.
And all the controversy would simply evaporate once Madame Justice Denise Bellamy and her team of inquiry lawyers waded through the mountain of paper related to the deal former city treasurer Wanda Liczyk and several of her computer-savvy underlings cut with Mississauga’s MFP Financial Services.
No less an authority than His Washup, Mayor Melvin Douglas Lastman, was already busy blaming the whole affair on amalgamation. By the time the new year rolled around, the inquiry would see the light and life would return to what passes for normal at 100 Queen West.
But the police raid on the Fair Wages and Labour Trades office shattered the reverie. And when, the next day, Hoy used the corporate communications network to electronically broadcast a second message to all city staff on the subject of Internal Management Controls, there was a definite sense that all was not as it should be.
“It is the city’s intent to fully investigate any suspected acts of fraud, misappropriation or other similar irregularity,” the CAO said. “Any employee who has knowledge of an occurrence or irregular conduct or has reason to believe that the employee’s supervisor may be involved shall immediately notify their commissioner and the city auditor. Employees acting in accordance with the requirements of the policy will be protected from reprisal,” Hoy promised.
More than a few employees found the memo rather curious. For much of the past year, the mayor and his cronies on council and in the administration were busy accusing anyone who favoured using the judicial process to get to the bottom of the MFP scandal of being on a witch hunt. Suddenly, it seemed the CAO was herself advocating a very similar exercise.
“The minute I read that memo, I figured things are probably a lot worse than we’ve ever been led to believe around here,” said one senior staffer.
Such a realization may have insulated some employees (and even a few politicians) from the shock many others received when Justice Bellamy adjourned her inquiry on its opening day, Monday, so the OPP can conduct a criminal investigation of “one or more” witnesses who were scheduled to testify before the commission.
But the mayor refused to acknowledge that there could be a systematic problem linking what happened on the 18th floor of City Hall two weeks ago and the MFP mess.
“Hey, look, come on, these things happen,” Lastman said when reporters drew a line between the two separate incidents. “They happen in small towns, they happen with big cities, and they happen more so in big cities — particularly in big cities with 45,000 employees.”
Such dismissive remarks did little to impress councillor Bas Balkissoon, the audit committee chair who first raised concerns about the cozy relationships Liczyk and her colleagues had with MFP executives. Liczyk, of course, was also a Lastman favourite, going back to his old North York days.
Balkissoon blames Lastman for failing to keep senior staff in line and for doing virtually nothing to establish clear lines of responsibility and accountability. The city, he says, should not be waiting for judicial inquiries and police probes to figure out what’s wrong. “We should set up a staff/council body to consult quickly and implement the policies that are required.”
All the same, council now wants Justice Bellamy to expand her inquiry (if and when it ever reconvenes) to include contracts awarded to U.S. firms — Beacon Software Revenue Systems and Remarkable Software — without tender or council authorization.
Councillor David Miller, who along with Balkissoon was instrumental in getting council to call for the MFP inquiry, expressed hope that the poisoned atmosphere at City Hall will start to improve now that public attention has been focused on the way municipal business is being conducted.
“There’s this feeling that things are about to explode, and the truth will finally come out about how friends are made, deals are struck and influence is obtained at City Hall,” Miller said. “Do things get done because you’re friendly with people or do they get done because of their merits? There’s a tone to this, and ultimately it comes from the top. But you can feel that if any more facts break, we’ll finally be able to change that tone.”
Here’s hoping he’s right.
