Auditor General slams Moncton wastewater commission

The chairman of the Greater Moncton Sewerage Commission being scrutinized for its spending defended his board's actions Wednesday afternoon.

Chairman Ron LeBlanc defends his board's spending

The chairman of the Greater Moncton Sewerage Commission being scrutinized for its spending defended his board's actions Wednesday afternoon.

Auditor General Kim MacPherson is calling on the provincial government to strengthen the governance and accountability of wastewater commissions after a review raised significant concerns about the one in Moncton.

"The board members serve as volunteers, but we're not expected to pay for the expense that we incur on behalf of the commission," said Ron LeBlanc, chairman of the Greater Moncton Sewerage Commission.

"Now for my personal point of view, I've had just by correspondence point of view, over 9,000 correspondents that I deal back and forth with different people in managing this in the last three or four years, so that's just to offset some of the cost that I incurred. Not all of it, because I subsidized quite a bit of it."

Moncton mayor responds

Moncton Mayor George LeBlanc said he will study the auditor general's report into the Greater Moncton Sewerage Commission.

He said the report raises a number of concerns that he'd like to see addressed.

"I would hope that we can work with the province of New Brunswick to address those deficiencies," LeBlanc said.

The commission covers the municipalities of Moncton, Riverview and Dieppe.

The auditor general's report, which was released on Wednesday, found a series of problems ranging from excessive travel to financial mismanagement.

MacPherson said she has concerns about a lack of oversight for Greater Moncton Sewerage Commission's board of directors, accountability of the commission and questionable financial practices in her report, tabled in the legislative assembly Wednesday.

"We do not believe that this commission is subject to sufficient monitoring and oversight," she wrote.

"There have been some financial decisions taken that should have been questioned, and in our opinion overturned by the board.

"We believe that involved municipalities and local ratepayers should be concerned with the current situation."

MacPherson reviewed the three largest commissions in the province — the Greater Moncton Sewerage Commission, the Greater Shediac Sewerage Commission and the Fredericton Area Pollution Control Commission — following concerns by members of the public as well as a former minister of environment.

Significant expenditure differences

A line-by-line comparison of revenues, expenditures and reserves reported in the financial statements of the three commissions showed some "significant differences" in the expenditure patterns and reserves in Moncton, the report states.

Insurance, commissioners' expenses, travel and continuing education were all "significantly higher" for the Greater Moncton Sewerage Commission, which serves Moncton, Dieppe and Riverview, the review found.

Some of the questionable financial practices include:

  • Five international trips to Europe and Asia by the chair, other board members and senior management staff, with a net cost of nearly $87,000.
  • Personal payments of $9,600 annually to the chair coded as "reimbursement of office expenses" for which no invoices were filed and $5,800 in claims for travel by the chair, which did not include supporting invoices.
  • The chair's BlackBerry usage charges averaged $550 per month between 2007 and 2010, for a total of more than $20,000.
  • Christmas parties for a board of six and staff of 13 and guests costing up to $7,000 three years in a row.
  • The commission sponsored and hosted an International Water Association conference in Moncton in 2007 at a net cost of more than $530,000, exceeding the commission's conference budget by 160 per cent, not including significant staff time spent on the conference.
  • The commission has not tendered or solicited quotes for insurance services for at least 10 years and is paying $189,000 a year in premiums, a much higher rate than other large commissions.
  • Capital reserves of $8.5 million as of Dec. 31, 2009, in a savings account, no documented investment policy, and contributions to the reserve in 2008 and 2009 being well in excess of what the commission bylaws allow.

"Based upon our findings, we have concluded the chair/board of directors has made a number of questionable financial decisions on behalf of the Greater Moncton Sewerage Commission, and financial management at commission needs to be improved," the report states.

"The chair/board of directors has assumed a management role in initiating many significant financial transactions on behalf of the commission."

"We believe that this role is inconsistent with the board's responsibility to govern the commission. In particular, because the board is also responsible for approving the financial transactions it has initiated, there is no effective internal oversight relating to those transactions."

Liberals call for review

The Liberals pounced on the auditor general's report and are demanding immediate action.

Liberal MLA Donald Arseneault said Ron LeBlanc, the Moncton commission's chairman, should be immediately removed from his position.

Arseneault is also calling for a public inquiry into the wastewater commission report.

"There is no doubt to me that he should be ordered to step down. There is no doubt in my mind," he said.

"There should be a public inquiry into the activities of this commission and this chair. The AG revealed many things in this report. You could go deeper into some of these items and we should go deeper into these issues. This is alarming."

Arseneault said he was concerned about the chairman's BlackBerry bills that totalled $20,311 between February 2007 and January 2010.

As well, the Liberal MLA said he was concerned about the auditor general's findings that in two cases, totalling $5,800, the chairman made an email request to be reimbursed for travel expenses and did not provide any supporting invoices.

Arseneault said he believes the ratepayers and local councils in greater Moncton will have serious questions about the commission.

The chairman was appointed in 1983. The auditor general said all appointments to wastewater commissions should have term limits.

The report said the longest serving board members, for instance members who have served for 20 years or longer, should be "replaced immediately." And other board members who have been in office longer than the upcoming legislated term limits should also be replaced "as soon as practical."

In the auditor general's report, the department said it agreed with that recommendation.

'Accountability is not functioning effectively'

MacPherson notes the Moncton commission is in a healthy fiscal situation, with sufficient annual revenue streams to cover operations, as well as ongoing capital projects necessary to maintain infrastructure, no debt and a $8.5-million reserve account.

She also notes that it offers "a valued service" and has achieved national and international recognition since it was established in 1983, particularly with respect to the biosolids composting operations.

"However, our concerns with this commission stem from the fact the board of governance and accountability is not functioning effectively," the report states.

The board and management should each have specific powers, resulting in a clear separation of duties, it suggests.

In addition, the commission approves annual budgets, capital projects and rate increases with little or no prior consultation or formal approval from the municipal councils, the report found.

MacPherson makes a number of recommendations to the Department of Environment regarding the Clean Environment Act, the legislation under which the commissions are created.

Among them:

  • Attach specific term limits to all appointments to wastewater commission boards. Anyone who has served 20 years or more should be replaced immediately and those in place for longer than maximum legislated term limits should be replaced as soon as practical.
  • Prescribe the role, responsibilities and accountabilities of government, board members, municipalities and key stakeholders.
  • Set annual reporting requirements for wastewater commissions as well as procedures for annual budget and business plan approvals.
  • Require all executive members of the board, including the chair, be elected from among appointed members.
  • Require all commissions to set up a technical steering committee that, where possible, involves engineering staff from the municipalities they serve to ensure plans for capital projects are acceptable and as a source of technical advice.

In addition, she recommends the department consult with the three local governments to evaluate the composition of the Greater Moncton Sewerage Commission board in light of the findings.

MacPherson said her office decided to conduct the review given the "apparent lack of oversight by the province," "uncertainty about the level of oversight provided by municipalities" and the fact that "the commissions had never been looked at in terms of the value for money the provide to ratepayers."

The review focused on ensuring that the revenue commissions generate is being spent in a manner that follows appropriate financial practices, that expenditures are consistent with the mandate of the commissions, and making recommendations to improve the accountability.