No fraud in city contracts: manager

Calgary's city manager says no fraud was found in the awarding of untendered contracts, andshared the mayor'sfrustration at how criminal allegations snowballed out of an audit report.

"The last few weeks have been hardest timeI have spent in service. I'mdisappointed that council jumped to conclusions and attackedthe corporation and staff withouta phone call to confirm [the] legitimacy of allegations," said Owen Tobert, who presented a report to city council Tuesday.

Tobert's report is in response to submissions by the city auditor, Tracy McTaggart, last month that claimed systemic problems in how the city hands out contracts.

In an audit of the city's procurement process, McTaggart said millions of dollars in contracts for projects such as a new $25 millionpedestrian bridge over the Bow River were awarded without any competition, and resulted in dramatic cost overruns. She also found little paperwork to support some of those decisions.

McTaggartraised the spectre of city employees benefiting from fraudulently awarded contracts but provided no specific evidence.

But Tobert told city council Tuesday that an initial review by the chief financial officer of contracts and purchase orders between 2006 and 2009found a small number of potential problems that are less serious than the audit indicated.

Tobert pointed out that paperwork McTaggart said was missing is actually available in electronic form.

Among the highlights of Tobert's presentation:

• Of 462 contracts valued at $151 million, all but 29 of them had appropriate paperwork. The remainder, worth about $4.8 million, need to be further reviewed.
• Of 70 contracts for goods and services between 2006 and 2009, all but nine had sufficient documentation and explanation.
• City administration looked at about 600 of the 747 contracts that went over budget mentioned by the auditor. Of those examined, every penny was accounted for and had been authorized by council.

No cases of fraud were uncovered in the CFO's review, said Tobert, but he recommended a thorough independent investigation to clear the shadow cast by McTaggart's claims. City council approved the hiring of an external auditor on Tuesday.

Tobertadded that he's disappointed by McTaggart's report because it has hurt the city's reputation and staff morale.

City council originally planned to discuss Tobert's report behind closed doors, but changed its position on Tuesday afternoon, allowing the discussion to be open to the public.

Feisty councilexchanges

Mayor Dave Bronconnier held testy exchanges with fellow council members, clearly unimpressed with their "inflammatory comments" about potential fraud made at the audit committee last month.

McTaggart had said the city's whistleblower program which protects employees reporting inappropriate conduct by colleagues was investigating allegations of fraud relating to city contracts.

But Tobert said records in the city manager's office show there has been no tip related to procurement fraud in the last four years.

"That was a comment that was made and blown up into epic proportions," said Bronconnier, who chastised aldermen several times during Tuesday's meetingfor speaking to media about the fraud claims last month.

When Ald. John Mar said he had to answer to his constituents about the two seemingly contradictory reports from the auditor and the city manager, Bronconnier snapped: "Maybe instead of speaking out so quick, you would wait until you had an informed answer."

McTaggart had no comment on Tuesday.

The city said it's improved its contract process since April 2009, with 92 per cent of projects over $100,000 awarded competitively.