Keiko Nakamura, Toronto Community Housing's Chief Executive Officer (L) and David Mitchell, Chair of Toronto Community Housing's Board of Directors attend a press conference to announce the company's response to the report made public by Toronto auditor-general Jeff Griffiths in Toronto, February 28, 2011.Fernando Morales/The Globe and Mail
Minutes after publishing an auditor's report detailing a spendthrift culture, Canada's biggest public-housing organization declared everything was under control: Those responsible for the misspending had departed and steps had been taken to ensure this would never happen again.
Not good enough, said Mayor Rob Ford. He is asking all members of Toronto Community Housing Corp.'s board of directors who aren't politicians or tenants -including chairman David Mitchell - to resign.
He plans to go further, he said, and will meet with CEO Keiko Nakamura "to discuss her future" and with her predecessor, Derek Ballantyne, who now runs Build Toronto, the organization responsible for selling (and profiting) off the city's thousands of surplus properties.
"It's very, very frustrating when you see this," Mr. Ford said of the inappropriate expenditures and the potential waste uncovered. "There's a sense of entitlement that has to go. It's time for it to change immediately. And change starts at the top."
It's the Ford administration's first real chance to make good on its anti-waste message. After spending a decade in municipal politics calling for an end to waste, and after the first budgetary process of his mayoralty neither exposed overspending nor offered any feats of fiscal restraint, Mr. Ford is finally in charge of cleaning up a demonstrably wasteful public body. According to auditor-general Jeff Griffiths's report, profligate spending at the housing corporation ranged from $200,000 in inappropriate expenditures to undocumented millions in improperly sole-sourced contracts.
The message from Mr. Ford and his brother, Councillor Doug Ford, was clear: You wondered where the gravy was? Here it is. And we intend to get rid of it.
"If I've said it once, I've said it thousands of times," the mayor said. "We have a spending problem - not a revenue problem. And this is yet another example of what I mean. Today's report shows thousands of dollars have been squandered. This money could go towards helping the people that need it the most. … Time after time after time, the excuse is, 'We don't have enough money.' Well. Obviously, that excuse does not hold water."
The corporation is an arm's-length organization responsible for Toronto's social-housing stock. It's the amalgam of three preceding organizations from various levels of government, and has more than 100,000 tenants across the city.
Mr. Ford's political opponents fear the audit provides his administration an easy scapegoat in the form of an organization he's never liked. Both Ford brothers have railed against the housing corporation: Doug Ford said on Sunday, even before seeing Mr. Griffiths's report, that he's been saying for years the organization is a "hotbed" of misspent funds.
Rob Ford spent much of last year's mayoral campaign arguing for the TCHC to be replaced with a subsidy-based system reliant on private-sector rental stock. Neither he nor his brother would get into specifics on Monday of what they hope a "complete overhaul" of the housing corporation will be. But several councillors and members of the TCHC's board said they're worried about what drastic action could mean for public housing in the city.
"It would be a tragedy, and tragic, if these findings - as appalling as they are - were used to undermine the importance of social housing," Mr. Mitchell said.
The audit spans January, 2009, through June, 2010; Ms. Nakamura noted she became CEO in February, 2010, and that she sought to put more checks and balances in place after that.
She added that people responsible for repeated violations of expenses and procurement policy had left the organization, but couldn't say how many people had been let go, or what their positions were.
Mr. Ballantyne, now Build Toronto's chief operating officer, said he "worked closely" with Ms. Nakamura during his tenure as CEO of TCHC from 2002 to 2009.
"I share the concerns of the CEO and the board of TCHC regarding the report and the need to take immediate steps to address the issues raised by the auditor-general," he said. "Based on the media reports I have read, I am encouraged that TCHC has already taken significant action."
Mr. Ford intimated he'd like to see similar overhauls throughout the city's hundreds of arm's-length bodies.
"We have to take a long, hard look at the way our agencies, boards and commissions are spending taxpayers' money," he said. "The party's over. And we have to put an end to it. And that's what I'll be doing as quick as possible."
Paula Fletcher and Giorgio Mammoliti, two of the councillors who sat on the board during the time covered by the auditor's report, said they'd been totally in the dark about the spending improprieties: Staff-related expenditures wouldn't have come before the board, they said, and their lack of knowledge about the procurement problems indicated the organization wasn't following its own policies.
Ms. Fletcher called the improper expenditures the "growing pains" of a huge and complex organization facing serious challenges in housing the city's most vulnerable population.
Mr. Mammoliti said he "raised a number of questions" about contracts he wanted re-opened during his term as a board member, but said he can't specify which he found problematic.
The clean-up attempt is also a key test of whether Mr. Ford can deliver when it comes to overhauling public organizations, said retired councillor Brian Ashton. But the mayor will have to prove he possesses managerial subtlety.
"It's an opportunity for the Ford administration, on a very large portfolio, to prove it can get its own financial house in order," Mr. Ashton said. "To go in and simply start lopping off heads speaks more of revolution than evolution for a large organization.
"You can't run a city like the Queen of Hearts."
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Spas and cruises: Where some of the housing corporation's money went
$800
Four "chair massage practitioners providing short relaxation massages for staff"
$1,000
Holt Renfrew chocolates
$1,850
Four-hour boat cruise for "staff training and development"
$1,925
"Divisional planning meeting at a local spa"
$6,000
Planning session in Muskoka
$200,000
Total amount auditor-general estimates could have been saved if staff expenditures had been handled properly
$5-million
Toilets, sinks, faucets, ceramic tiles, light bulbs and fixtures purchased since 2006 from a supplier in China without sufficient documentation. "Contracts with both the supplier and the agency do not exist," the audit said.
$25-million
Three-year refurbishment contract awarded based on a vendor's unsolicited proposal
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Who's who
Jeff Griffiths
The city's auditor-general had a procurement review of the Toronto Community Housing Corp. on his plate - his first audit of the agency - when he found numerous "inappropriate expenditures" in addition to evidence the agency wasn't following its own procurement policy. What was supposed to be one audit spanning January, 2009, through June, 2010, became two.
Keiko Nakamura
Served as TCHC chief operating officer before becoming the housing corporation's CEO in February, 2010. She noted during a press conference on Monday that the auditor-general's report found her free of wrongdoing - but that didn't prevent Mayor Rob Ford from suggesting a meeting to "discuss her future."
David Mitchell
The chairman of the TCHC's board and a former Lawrence Heights resident, Mr. Mitchell calls himself a social-housing success story. He said he felt "betrayed" by the findings in Mr. Griffiths's report, adding he trusted people he shouldn't have. Mr. Ford called for his resignation along with the other six members of the housing corporation's board of directors who are not politicians or tenants.
Derek Ballantyne
Served as chief executive officer of TCHC from 2002 to 2009, during which time he said he "worked closely" with Ms. Nakamura. Mr. Ballantyne is now chief operating officer of Build Toronto, the arm's-length agency responsible for selling properties the city has declared surplus. Mr. Ford said he'd like to chat with Mr. Ballantyne as well.