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Thursday, March 17, 2011

Gig trouble Concert scandal rocks City Hall

City staff made unauthorized cash advances to promoter; taxpayers face $359,550 bill.

Posted by Tim Bousquet on Thu, Mar 17, 2011 at 2:00 AM

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The city’s CAO office improperly authorized millions of dollars in cash advances to Power Promotional Events, a private company that managed a series of concerts on the Halifax Common. The loans were initiated in 2008, and most of the money was repaid, but the city is stuck with a $359,550 bill from two loans made last year related to last year’s Black Eyed Peas and Country Rocks shows.

A total of $2.25 million was loaned to Power in 2010. The Coast has requested loan information for 2008 and 2009, but officials have refused to make those figures public.

The loans “clearly exceeded the authority of the Acting CAO, violated the HRM Charter, and exposed the municipality to financial risk,” says a report written by Cathie O’Toole, the city’s director of finance.

Because the loans were funnelled through the Metro Centre, a city-owned facility managed by Trade Centre Limited, a provincial crown corporation, they occurred outside normal city financial controls. O’Toole, who is required to sign off on all new loan processes, was left out of the loop until Trade Centre Limited presented the city with the final $359,550 bill, the amount still owed when Power Promotions went out of business last fall.

The loan policy was initiated by “a senior HRM administrative official,” says the report. Several councillors have told The Coast that official was former CAO Dan English, who resigned on July 9, 2010. English’s former deputy Wayne Anstey was immediately advanced into the position of “Acting CAO.” Anstey continued the loan policy initiated by English.

In 2010 some $2.25 million was advanced to Power Promotions, all of it authorized by Anstey, either in his capacity as Deputy CAO or as Acting CAO. The first $1.85 million, which was paid through July 16, was repaid in full.

But then an additional $400,000 was forwarded to Power Promotions in the form of two $200,000 “repayable grants”---one for each concert---that would be forgiven should ticket sales not reach 9,000 for the Black Eyed Peas show and 10,000 for the Country Rocks show. This arrangement was made on July 21, after a meeting between mayor Peter Kelly, Anstey, Harold MacKay of Power Promotions and Edgar Goguin, MacKay’s money man. The new deal was made because Anstey feared that cancellation of the concerts would result in “embarrassment and reputational risk,” says O’Toole.

In fact, only 8,362 tickets were sold for the Black Eyed Peas show, and just 10,009 for the Country Rocks show. Under terms of the agreement with the city, Power Promotions repaid none of the loan related to the Black Eyed Peas show, and just $40,450 for the Country Rock show.

Anstey announced his retirement Wednesday afternoon. “In every instance when I had a choice to make, I truly believed I was making the right choice on behalf of HRM,” he wrote in a statement. “Of course, if I had to do it over again, I would do things differently.”

For The Coast's complete coverage of the Common concert financing scandal, click here.

Tags: Common concerts