Inspector general blasts Denis Coderre over Formula E race for ignoring legal advice, bypassing rules
Steve Rukavina | CBC News | Posted: May 28, 2018 7:26 PM | Last Updated: May 28, 2018
'I'm very disturbed by this,' said Mayor Valérie Plante, but former mayor insists he did nothing wrong
A damning report from Montreal's inspector general concludes that former mayor Denis Coderre ignored the advice of the city's own lawyers and circumvented rules to pull off the city's controversial Formula E electric car race.
Denis Gallant found that the non-profit company created to promote the race — Montreal it's electric, also known by its French acronym, MCE — was essentially a shell, and that in fact, most of that work was done by Coderre's hand-picked private promoter, Evenko.
"MCE was used to circumvent the rules for awarding contracts spelled out by law," Gallant said in his report.
"The mayor's office ignored the warnings and recommendations of the city's legal department, and MCE was ultimately used only as a communication channel between the city and Evenko," the report said.
Coderre championed the race personally. However, Formula E was, in the end, a dismal failure and contributed to his election loss last fall.
Evenko initially uninterested
The inspector general found that Coderre approached Evenko personally in 2015 with the idea of being a partner in a Formula E race in Montreal.
"From the outset, Evenko wasn't sure that Formula E would be profitable and was aware that the concept would be difficult to sell," the report said.
Evenko estimated that even in a best-case scenario, the race would run a deficit of somewhere between $11 million and $20 million for each of the three years of the event.
The company decided it wasn't worth it.
"The mayor and his cabinet, however, were confident of receiving grants from the provincial and federal governments and insisted on keeping Evenko in the project," the report reads.
Coderre ignores legal advice
The report says that subsidies from other levels of government could only go to a non-profit organization, and that's why the mayor's office decided to create MCE to promote the race.
According to the report, the city's legal department had serious concerns about this approach and issued "numerous warnings" to the mayor's office about it.
The legal department said in order to conform to the rules, MCE should have a broader mandate than simply organizing the Formula E race.
It advised that the non-profit should not serve simply as a go-between for the city and Evenko, and it should not be used to transfer government subsidies to a private company.
The report says despite those legal red flags, all of those things appear to have happened — largely due to the personal interventions of Coderre.
Mayor's office pulling strings
Montreal it's electric had only a single paid employee, the inspector general said.
He found the mayor's office made all major decisions, including choosing the organization's executive director and board members.
The mayor's office also prepared all the written requests to other levels of government for subsidies.
All other daily tasks involved in promoting the event were eventually handled by Evenko, which signed a contract to be the event's "local promoter."
Evenko sold the tickets, managed sponsorships, handled programming and the production of events on race weekend. It also was responsible for all marketing, promotion and communications.
The non-profit — Montreal it's electric — seemed to do very little.
"It is clear from the facts gathered during the investigation that the mayor of Montréal and his office entrusted Evenko with the organization and promotion of the race, although to do so, another entity [MCE] assumed the financial risks resulting from the event," the inspector general concludes.
Blameless, says Coderre
Coderre said he doesn't believe Gallant's report blames him, and he doesn't think he did anything wrong.
"I believed since day one that what we've been doing was according to the regulations, and it was ok," said the ex-mayor, speaking to Radio-Canada at his Montreal office Monday afternoon.
He said he disagreed with Gallant's interpretation of the role of MCE.
"He felt the creation of MCE was only to do indirectly what you cannot do directly. I disagree with that. The role of MCE was also to promote of the electrification of transport," Coderre said.
He noted part of the Formula E race weekend events was an interpretive display, focusing on the benefits of electric vehicles.
Coderre said he still thinks the race was a good idea.
Plante: 'Unacceptable'
Mayor Valérie Plante, speaking to reporters Monday afternoon, said Coderre's behaviour was "unacceptable" and inappropriate.
"I'm very disturbed by this," Plante said. "A lot of people decided to close their eyes and not to look in [that] direction and not question the mayor.
"Now we are paying the price for that, and this should not be happening. We're elected officials. We are accountable to citizens, and what they did was wrong."
She said the city's legal department would review the report and consider all options.
Evenko responded in a statement on Monday afternoon, saying it co-operated fully with the investigation.
"It is clearly established that Evenko did not act as the promoter of the event, but as a service provider," reads the statement. "Evenko did not fund the event and did not collect ticket revenue."
It added that the company believed the project was financially risky from the beginning, but "chose to participate in the process knowing that sometimes it is necessary to invest for a few years to make large project succeed."