Monday April 24th, 2017 - 02:59:21 PM
 

CAO Refuses Response to Allegation of Wrongful Council Conduct During Audit
Released for Public Information

The following letter was hand delivered to Chatham-Kent CAO Gerry Wolting. It makes several allegations about improper council conduct. No response was ever provided to the writer, despite the serious procedural concerns that were raised.

Summary:

  • Council found reasonable grounds to audit the campaign expenses of Mary Lee and Mayor Randy Hope.

  • An auditor, Bernard Nayman, was retained by the municipality.

  • The auditor announced to the media that he indeed found problems with the expenses. There was an outcry, and politicians moved quickly to protect the mayor.

  • A secret meeting of council was convened by councillor Frank Vercouteren, who had no authority to do so:

    • Chatham-Kent by-laws allow a council member to act as mayor (and convene a meeting) only if the mayor is sick or absent, except Hope attended the secret meeting in good health.

    • A council member can convene a closed-session meeting only upon presenting the clerk with a petition from 10 councillors.

    • A compliance audit is not a subject authorized by the Municipal Act to be held in closed session - this is confirmed in writing by the municipal clerk.

    • The meeting was convened less than 24 hours after councillors were notified.

    • Mayor Hope was present for at least part of the meeting despite being in conflict of interest.

    • Council issued directions that politically interfered with the terms of reference under which the auditor was engaged.

  • The auditor changed the findings in his final report to council that exonerated Mary Lee and Randy Hope.

  • The compliance audit reports were improperly marked "Confidential" contrary to the Municipal Elections Act. The report was kept from the public, and details of the altered findings that included 3 pages written by a certain local businessman were not reported by the media.

  • Council voted to take no legal action.

  • Council improperly debated recovery of costs from the applicant:

    • Each candidate was found to have contravened the Municipal Elections Act.

    • Council voted on July 9th that reasonable grounds existed to conduct the audit

    • Recovery of costs is only available under the law if there were no reasonable grounds to conduct the audit, and no contraventiones were found. Council revisited the debate on reasonable grounds without the obligatory 2/3 vote to revisit a previous decision.

    • Had the matter of cost recovery been discussed properly, the only method open to council was legal action, which council voted to not pursue in the previous meeting. This should not have even been on the agenda without a 2/3 vote.

  • Municipal administration altered the wording of the minutes in a way that changed a motion passed by council. They admitted to "word-smithing" it to make it more coherent, even though it completely changed a council vote.

  • The mayor, as Head of MFIPPA, refused to provide details of the closed-session meeting, even though the MFIPPA states that such information must be released if the matter - the Compliance Audit - is subsequently discussed in open session.

  • Council proceeded to defame the Applicant, thereby discouraging anyone with knowledge of malfeasance from coming forward in the future.

November 28, 2007

The Corporation of the Municipality of Chatham-Kent
315 King St. W.
PO BOX 640 Stn. Main
Chatham, Ontario N7M 5K8
(519) 360-1998


Attn: Gerry Wolting, Acting CAO

Council Procedural Concerns


Dear Gerry:

I wish to bring the following matter to your attention for your opinion and comments.

During the Open Session council meeting of July 9, 2007, the following motion was moved and carried following debate on item 9 (c):

That Council approve the compliance audit.”

That

  1. In accordance with Section 81(3) of the Municipal Elections Act, Council consider the applications submitted to the Municipal Clerk on June 29, 2007, requesting a compliance audit of the financial statements submitted by two candidates in the 2006 Municipal Election and that the request for a compliance audit be granted.

  2. Administration report back to Council on July 23, 2007 with recommendations on the appointment of an auditor.”


Section 81(3) of the Municipal Elections Act states:

Within 30 days after receiving the application, the council or local board, as the case may be, shall consider the application and decide whether it should be granted or rejected. 1996, c. 32, Sched., s. 81 (3).

In my correspondence to Elinor Mifflin and each member of Council dated July 9, 2007, I reminded Council that the application for a compliance audit, “simply has to demonstrate that reasonable grounds exist to appoint the Auditor, who will then be charged with finding the facts.” In order to assist Council in making a proper and impartial decision in a matter that's without precedence, the letter included the following Case Law, which applies to Council's decision whether it was mentioned to them or not:

The duty of a council member is solely to consider whether to grant the application based on the evidence I have presented. I would draw council's attention to the case of Chapman v. Hamilton, Court File No. 04-6083-97; 04-6083-98; 04-6083-99:

Compliance audit - council decision - In the case of Chapman v. Hamilton, the court noted that "the requirements of subsection 81(3) of the Municipal Elections Act, 1996, to 'consider the application and decide whether it should be granted or rejected' imposes upon council a quasi-judicial function, namely to determine whether or not there were 'reasonable grounds' that a candidate had contravened the provisions of the Act relating to election campaign finances as was alleged in the elector's application." And further the court was not convinced that the cost of the audit is an appropriate issue for council when it is considering the grounds placed before it by the elector. The only consideration is whether or not 'reasonable grounds' exist, having reference to the obligations imposed on a candidate by the Act. M.E., s. 81 (3.3). 
-Municipal Election Law 2006

By voting to proceed with the Compliance Audit, council in effect voted that “reasonable grounds” were demonstrated by the applicant. Had reasonable grounds not been found to exist by council, the following provision in Section 81(3.3) of the Municipal Elections Act applies:

The decision of the council...may be appealed to the Ontario Court of Justice within 15 days after the decision is made and the court may make any decision the council, local board or committee could have made. 2002, c. 17, Sched. D, s. 32 (2).

Since Council voted to proceed with the Compliance Audit, the matter was not appealed to the Ontario Court of Justice. Therefore, the decision of Council to proceed with the Audit amounted to a determination that “reasonable grounds” existed for the application.

During the Council meeting of October 29, 2007, the Final Compliance Audit Report was received from Bernard Nayman. He reported that both candidates were not in compliance, however, the non-compliance was, in his opinion, trivial. Some of his findings of compliance that disproved certain other allegations were based on broad interpretations of rather vague legislation, where he chose to give the candidate the full benefit of the doubt. Some of these interpretations may be in error as they introduce a paradoxical double-standard. Further, the Audit report provided a specific disclaimer that “error, fraud, and other irregularities may not be detected...” This made a Compliance Audit ill-suited to properly investigate some of the allegations. The Applicant mistakenly believed that the Compliance Auditor had an obligation to look beyond simple errors in arithmetic. There was apparently no provision nor obligation for any testimony to be provided under oath.

Councillor Fluker moved, seconded by Councillor Faas, that, “No further legal action be taken as a result of the information supplied by the compliance audit report.” An addition to the motion was appended that, “any action regarding recovery of costs be deferred pending a report from administration detailing the total cost for the audit.” Councillor Brown added as a friendly amendment, “That a report be attached with the avenues available for recovery.”

It should be noted that after the above motion was put to the floor, Councillor Sulman directed editorialized questions to the auditor seeking his opinion about the trivial value of the Mayor's campaign spending in relation to his overall spending limit. The original motion discussing the audit had already been put to vote, and a new motion was supposed to be under debate. Councillor Sulman did not speak to the motion on the floor and should have been ruled out of order by the chair. In addition, his comments appeared to be making a mockery of the right of an elector to ask questions about a candidate's campaign spending that was some arbitrary fraction of total allowable spending, suggesting that scrutiny of such spending wasn't worth it. This sent a poor message to the public.

In addition, the motion on the floor was improper for three reasons:

  1. Section 9.15 of the Procedural By-law states that a motion to defer shall;

    1. include a fixed date for the question to come back before Council for consideration

    2. be made while the main motion or an amendment is on the floor, and takes precedence over that motion or amendment

    3. be debated, however, the debate must be limited to the advisability of the proposed postponement

    4. only be amended to change the length of the postponement

    The motion to defer appears to have been improperly lumped in with another motion, and did not include a fixed date. Further, as noted with regards to Councillor Sulman, the debate that took place subsequent to the motion did not even address the deferral.

  2. The amended motion was contradictory to the original motion. During the July 9, 2007 meeting, Councillor Pinsonneault sought clarification of how the cost of the audit would be recovered from the applicant. The Clerk noted that “if the results of the compliance audit determine that there was no contravention of the Municipal Elections Act, Council may take legal action against the applicant for the cost of conducting the audit.” The October 29, 2007 motion declared that, “No further legal action be taken as a result of the information supplied by the compliance audit report,” which precluded legal action against the applicant as well as the candidates, notwithstanding the subsequent contradictory amendment.

  3. The matter of recovering costs from the applicant was not an available option for Council to consider. By virtue of the two criteria that must be met in order to be entitled to recover costs, this option was statute-barred by section 81(11) of the Municipal Elections Act.

Item 6 (a) of the Council Agenda for November 5, 2007 requested that, “Council provide instruction as to the recovery of costs incurred for the compliance audit from the applicant, Austin Wright.” The report listed three options for recovery:

  1. Recover the full cost of the compliance audit from the applicant.

  2. Recover partial cost of the compliance audit from the applicant.

  3. Opt not to recover any cost from the compliance audit from the applicant.

These options appear misleading because only the last option was actually available to Council. Several motions proposing unavailable options were made by Council regarding recovery of costs, which were defeated by recorded vote. Section 81 (11) of the Municipal Elections Act states:

If the report indicates that there was no apparent contravention and the council or local board finds that there were no reasonable grounds for the application, the council or local board is entitled to recover the auditor’s costs from the applicant. 1996, c. 32, Sched., s. 81 (11).

The Act clearly allows for the provision of recovering costs only under the circumstance where two specific conditions were both not met:

  1. There was no apparent contravention;

  2. There were no reasonable grounds.

The Auditor's reports indicated that both candidates were not in compliance. The Act does not specify any threshold below which findings of non-compliance become inconsequential. There are no degrees of non-compliance – either they were compliant, or they were not. The Audit reports had already been debated by Council during the October 29, 2007 session, so much of the November 5th debate amounted to a revisiting of a matter that was previously decided. In your letter to me dated October 31, 2007, my request to make a deputation to Council ostensibly to defend myself against the imposition of costs for the audit, and to issue a public apology, was refused on the grounds that a decision had already been made by Council.

Furthermore, the matter of “reasonable grounds” was already decided by Council during the July 9, 2007 session. At that time, Council voted that “reasonable grounds” did exist, because the only option available to Council was to determine whether or not “reasonable grounds” were proven by the information in the applications. The applications did not have to prove any allegations; the only criteria was to “set out [in writing] the reasons for the elector's belief” that there were reasonable grounds a candidate had contravened the Act. The ensuing Compliance Audit was triggered by Council's finding that the contraventions believed by the applicant to have occurred had indeed demonstrated the necessary burden of proof required to proceed according to the Municipal Elections Act section 81 (1) and 81 (2).

It would appear that the only circumstance where the issue of “reasonable grounds” could be legitimately debated is during the consideration of the Applications. If Council voted to proceed, reasonable grounds existed. Likewise, a vote to dismiss the applications would amount to a determination that there were no reasonable grounds. In the case of an application being rejected, the decision could be appealed by the Applicant to the Ontario Court of Justice within 15 days. Even if the Court orders the audit to proceed, the decision to reject the application would stand as a Council's finding that no reasonable grounds existed, which might later be used to determine whether Council is entitled to recover costs from the Applicant if no contraventions were found. Therefore, it would appear that the option of cost recovery could only be invoked if the Court ordered the Audit and nothing was found, and Council debated the issue of recovery immediately following the presentation of the findings without revisiting the matter of “reasonable grounds” unless they first voted to reconsider the original decision.

In each case, the two factors that must be determined by Council prior to having any entitlement to debate the recovery of audit costs from the Applicant, had already been determined by Council. The original vote that reasonable grounds existed to proceed with the audit, combined with the Auditor's findings of non-compliance precluded further debate without holding a two-thirds majority vote on a Motion to Reconsider. According to the procedural By-law governing Chatham-Kent Council:

9.17 Motion to Reconsider

  1. A motion to reconsider

    1. is not debatable

    2. is not amendable

    3. requires a two-thirds majority vote

    4. shall be in writing

Therefore, the conditions were not met to entitle debate about the recovery of costs.

During the apparently unauthorized reconsideration of whether the Applications for Compliance Audit constituted “reasonable grounds,” many Council Members who originally supported the motion to proceed with an audit based on the affirmed reasonable grounds presented by the applicant, made great attempts to distance themselves from the decision the second time around. We heard all kinds of excuses and grandstanding about why the audit should have never proceeded in the first place that were not presented in July. This debate amounted to a reconsideration of the July 9th vote, which some Members took advantage of to revise their previous stance and “save face.”

While Council was debating whether I should pay for the audit, my name was mentioned on a number of occasions with contempt and thinly-veiled hostility. The hostility was perpetuated by most media reports and additional op-ed material in a less-veiled manner, without opportunity for rebuttal. The net result of all this negative attention lowered my reputation in the community, damaged business relations, and subjected me to hatred, contempt, and ridicule. Given the harm this has caused to my good name, it should come as no surprise that I am questioning the entire process, including the conduct of Council.

It is worth noting that there was much more to the audit request than appeared in the applications, or in the media. The original issue that precipitated the compliance audit remains unresolved, which means that anything to do with the audit, including the people behind it, will be subjected to some intense scrutiny. Research has uncovered further problems. It is possible that higher authorities will be asked to look into things.

There is already an outstanding MFIPPA inquiry regarding an in-camera session of Council conducted on August 17, 2007. The media reported that the meeting was convened to discuss the Compliance Audit, which is not one of the permissible items for Closed Session. I do not know if the audit was mentioned in any other Closed Session meeting, but the audit findings certainly seemed predisposed towards convenience subsequent to this particular secret meeting. I was even accosted in public by individuals who purported advance knowledge of the audit results.

Over the coming weeks, I will be investigating various municipal matters and requesting relevant information that is freely available to the public, and information that is subject to the MFIPPA. I trust that I can count on the complete cooperation of staff and administration to ensure that my inquiries are answered in a complete and expedient manner. Much of this will be very time-sensitive.

I also have concerns with a recent By-law that has made Mayor Hope the Head of the municipality for MFIPPA purposes, which apparently allows him to review copies of my applications and the responses. Given his involvement, I do not consider it appropriate for this to happen with my requests, since it is a clear conflict of interest. It should be noted that the public has never been informed that this is now the case with respect to MFIPPA requests, and the change in policy has recently compromised some highly personal information that had no business being reviewed by the mayor. I am already aware of several instances where Council Confidentiality Rules have been breached. Regardless of the mayor's apparent need for outside advisement, no member of Council has any business divulging private and confidential material to unelected private citizens.

Please review the material I have supplied in the strictest of confidence. I look forward to hearing your comments and opinions on the matter as outlined. Any assistance would be appreciated.

Sincerely,
Austin Wright

 
 

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