More questions asked as Charlottetown councillors keep lid on forensic audit

The report from a forensic audit examining financial concerns at Charlottetown City Hall would already be in the hands of city residents if it had concluded there was nothing wrong, contends one former councillor.

"If the audit report completely vindicated the council and the city with respect to all the observations that Mr. [Scott] Messervey made, the report would have been released long ago," said David MacDonald, who spent eight years as a Charlottetown councillor and now works as a private investigator.

Messervey, a chartered professional accountant and the city's former deputy chief administrative officer, sent a list of 18 concerns to councillors in January 2019.

At the time, Messervey told council he had been fired by his boss, the city's former CAO Peter Kelly, in retaliation for raising the concerns. Kelly denied the assertion.

Within weeks, councillors voted to take no further action on the matter. But after details from Messervey's letter became public last spring, the Charlottetown council first fired Kelly without cause, then commissioned a forensic audit from the firm BDO Canada.

City Hall hasn't said how much the BDO audit cost, but Mayor Philip Brown has made it clear the number will reach six figures. Some councillors have pegged the cost at about $300,000.

Legal counsel reviewing

The report from that audit was delivered to council on Feb. 6, but still has not been made public.

At first, Brown said the city was "getting our legal counsel to look at [the report] and then we'll be back at it again to hopefully release it in the next few days or within a week."

At the time, Brown said there was a need to determine "the potential for any legal liabilities against the city from an individual [or] from a corporation."

This week, a city spokesperson told CBC News it will be another two weeks before the audit report will be released, in some form.

"The BDO report is still under review by our legal counsel and we hope to bring this matter back before council within the next two weeks," the spokesperson said via email. "The matter before us pertains predominantly to our obligations to [the Freedom of Information and Protection of Privacy Act]."

Councillors have spent hours in closed-door sessions discussing what to do with the forensic audit, starting even before the city had received the report.

Democracy advocate has questions

Duff Conacher, a former law professor and co-founder of the group Democracy Watch, said P.E.I. should have legislation that would compel municipal councillors to release the report of any audit, similar to the way reports from the provincial auditor general are made public.

He said the city doesn't have to worry about being sued for libel over the audit, because the report and any resulting conclusions would be protected as fair comment in any defamation suit "as long as the findings were based on solid evidence."

Conacher said he feels there would be multiple layers of conflict of interest at play in allowing members of Charlottetown council to take part in decisions, behind closed doors, about what parts of the BDO audit to make public.

"Any councillor who has continued from the previous council, they're in a clear conflict of interest, especially if it makes them look bad at all," Conacher told CBC News.

All but one of the councillors who ran for re-election in last year's municipal vote were successful. Brown and six of the 10 current councillors served on the previous council.

Conacher said there is also a "systemic conflict of interest" at play if council is able to decide what to do with "any report that would make council look bad, because that would cause the public to call for reforms for greater accountability and transparency."

Looking bad is something politicians at all levels try to avoid, Conacher said.

"You can't have politicians deciding what kind of information comes out of their own governments with regard to allegations of wrongdoing, especially."

When CBC News asked whether conflicts had been declared by Charlottetown councillors, or what steps had been taken to avoid them, a city spokesperson responded by email saying: "There are no conflicts or perceived conflicts within our Corporation."

Issues raised by Messervey

Messervey initially provided councillors with a list of 18 concerns in January 2019, but that list grew longer as he filed harassment and whistleblower complaints with the city, along with a small claims case seeking an extension of his severance pay.

Some of his concerns have been reported in the past, but many have not.

Among them: 

• Messervey claimed some members of council may have been in a conflict of interest and in violation of the Municipal Government Act regarding spending on paving that went almost a million dollars beyond the tender amount councillors had authorized.
• He said the city allowed the owner of a private dwelling in the downtown core to access a property tax rebate for commercial development, and the rebate continued to be applied even after he advised Kelly the eligibility of the property should be reviewed.
• He said former elected officials and staff left the city without returning laptops, cell phones, and in the case of one former official, multiple tablets. Messervey said in some cases people were allowed to purchase their devices; in others they simply weren't recovered by the city. Either way, Messervey said the moves were contrary to city policy, and in some cases posed a security risk, as some devices did not have data erased.
• Messervey said the city was providing free snow removal and salting services for a private business with no written agreement to do that, and in possible violation of the Municipal Government Act.
• He said the city had agreed to provide revenues from naming rights and concession sales at the Eastlink Centre to the Charlottetown Islanders, but without having the money first go through city hall, to then be recorded as grants to the hockey team. That's an arrangement he said lacked transparency and accountability to residents, who he said "should be aware of the amount of taxpayer money provided to the sports team."

'Disappointed... not surprised'

In a written statement to CBC, Messervey said he is "disappointed that residents are still waiting for the completed BDO report to be released but I am not surprised."

Messervey said he found it "very concerning" that it's taken more than four years for the issues he raised to be property investigated, but said he's confident the results "will substantiate the concerns I raised during my brief employment with the city."

Messervey also said his lawyer has requested an unredacted copy of the report.

Vote should 'never have happened'

MacDonald, the former councillor, said that if even one of Messervey's concerns is backed up by the audit's findings, that will cast doubt on the actions of the previous council, including members who were re-elected.

In particular he cites how councillors voted in February 2019 to take no further action on Messervey's list of issues.

"If one of the concerns he brought forward… turns out to be valid, then that vote was — well, the vote should never have taken place like that in the first place. It should just never have happened," said MacDonald.

"Agreeing not to take action on the recommendations of a professional employee who brings concerns of that magnitude to council — I just don't understand it."

If you have information about this story, or a news tip to share with CBC Prince Edward Island, please email kerry.campbell@cbc.ca or compass@cbc.ca.