External legal opinion suggests Peel Chair and CFO violated bylaw in commissioning Deloitte report

A new complication has arisen for embattled Peel Region Chair Nando Iannicca. A legal opinion sought by the City of Mississauga suggests he and Peel CFO Stephen VanOfwegen may have violated the regional procurement bylaw by dividing consultancy work between two companies to stay under the threshold that requires council approval.

The opinion, provided by external legal firm Cassels Brock, suggests the cost of a consultants’ report the region’s executives quietly procured from Deloitte, plus a portion parcelled out to another company, constitutes a single procurement that exceeded the $250,000 the chair is allowed to spend on such a commission without express approval.

The controversial Deloitte report, ordered in the midst of a provincial review of several regional governments, concludes that it would be far more costly to dissolve or amalgamate Peel Region into a single city than to maintain the status quo. The $325,000 spent on producing the hurriedly-produced report is now essentially wasted money, as the ensuing controversy led to a decision to hire a new firm, Ernst & Young, to repeat the examination of the financial implications of a breakup — this time, with the full involvement of the region’s four CAOs. The new report will cost $600,000, plus $60,000 for outside specialized resources, bringing the total cost of finding some clarity on the issues to nearly $1 million.

Mayor Bonnie Crombie and others from Mississauga who hope to see the city become a stand-alone municipality have repeatedly charged that the Deloitte report was improperly commissioned and then passed on to Brampton Mayor Patrick Brown before Mississauga councillors even knew of its existence. Crombie even dubbed those actions “immoral.”

Mayor Patrick Brown (left) and Mississauga Mayor Bonnie Crombie have been at odds over the Deloitte report.

“Based on the interpretation of the bylaw set out above, there is a good basis to conclude that the procurement for the financial impact analysis resulting in the report in relation to the Regional Government Review contravened section 7.2 of the By-law,” Cassels Brock’s legal opinion sums up.

The legal opinion cites sections of the procurement bylaw that, first, give the region’s Chief Financial Officer “authority to procure services by way of direct negotiation where the value of the procurement is between $100,000 and $250,000,” and second, state that any “procurements greater than $250,000 are to be authorized by Regional Council.”

Iannicca has repeatedly said it was his right as CEO of the region to direct staff to commission the report. “I don’t know how many times you have to hear it … legally I’m doing what I am bound to do,” Iannicca said during a fiery April 11 council meeting. Since then, he has explained that staff “approached me and said, ‘I think we need some analysis [of financial implications to the region],’ and I said ‘absolutely, go ahead.’ I want to make this very very clear: notwithstanding what staff did or did not do, I am the chair and CEO. I am fully responsible and accountable.”

The Pointer reached out to Iannicca’s office for comment on Cassels Brock’s findings, but a spokesperson said he was “unable to respond to your questions at this time.”

Regional Chair Nando Iannicca 

Acting regional Solicitor Michelle Wong verified during the April 11 meeting that $250,000 was the threshold that would require a council vote. That prompted Mississauga Councillor Carolyn Parrish to ask whether the hiring of Deloitte plus Watson & Associates considered “contract splitting” and whether that would violate section 7.2 of the law, which prohibits dividing up the price or value of goods and services in such a way as to “artificially reduce” their value, and states that “where goods and services of the same kind or type are required in connection with one project, all of those goods and services shall be included in determining the price or value for the purposes of this By-law.”

Wong gave her opinion at the meeting that staff and the chair did not violate that section of the bylaw. “Here, staff treated the Deloitte and Watson procurement as two separate ones and they interpreted that as not violating provision, and in our opinion, in legal’s opinion, that is a reasonable interpretation of that clause.”

Deloitte and Watson’s involvement in the report cost the region $225,000 and $100,000 respectively, which, if considered as a single procurement, puts that cost well above the threshold. Cassels Brock’s interpretation was that the two firms were being hired on one project and that “Watson is acknowledged as having provided input to the report.”

Data provided by both companies was consolidated into a single report, and data provided by Watson, acknowledged repeatedly as a contributor in it, included a sensitivity analysis of water utilities in the region and some examination of tax-supported services.

In response to questions, VanOfwegen told The Pointer he couldn’t comment on Mississauga’s conclusions, but what “I can comment on is our position, that it was a different scope of work and it complied with our bylaw.”

Peel CFO Stephen VanOfwegen

Mississauga Councillor Ron Starr disagreed with VanOfwegen’s assertion that the procurement was in compliance with the bylaw. “There’s always two, three sides to everything,” he said. “Where we came from, basically, is to make sure we had solid ground to pursue anything we wanted to take a look at.”

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