Halifax auditor general Larry Munroe released his report on the concert loan scandal Tuesday. Mayor Peter Kelly, the city’s former chief bureaucrat Wayne Anstey and former and current Trade Centre Limited presidents Fred MacGillivray and Scott Ferguson are particularly implicated.
The report names names, assigns blame and provides explosive new details about how city and provincial officials exposed city taxpayers to millions of dollars of risk by improperly giving $5.6 million in loans to concert promoter Harold MacKay’s company, Power Promotional Events.
The loans violated the city charter, city financial controls and accepted bookkeeping practices, says Munroe.
Ultimately, the city lost $359,550 through the loans, but Munroe shows that at one point the city’s risk approached $8 million, and the city additionally spent almost $800,000 in “in kind“ support for the concerts, far beyond the amount approved by city council.
“It is our thought,” writes Munroe, “given the level of experience and involvement of Mr. Anstey and Mayor Kelly in the public sector, each of these individuals should have known something out of the ordinary was occurring and should have asked more questions to determine if what they were contemplating and/or doing was appropriate, especially given the method of arranging for payments to be made to Power Promotional Events.”
Munroe’s report makes clear that Kelly was directly involved in all aspects of the Common concerts, including the financial impropriety. “The Mayor’s Office initiated and participated in numerous meetings regarding potential and acquired concerts and responded to and was copied on many emails pertaining to the relationship with Power Promotional Events, HRM and Trade Centre Limited,” he writes.
But perhaps the most damning condemnation in the report is directed towards past and present officials at the provincial crown corporation Trade Centre Limited, including former president Fred MacGillivray, who retired in 2009, and current president Scott Ferguson.
“Had Trade Centre Limited not been an active participant in the process of providing cash advances through the Halifax Metro Centre bank account, this activity would not have been able to take place in this manner, much less continue for three years,” writes Munroe.
“Mr. Ferguson has agreed given his experience in the public sector, he should have known these transactions were out of the ordinary and should have asked more questions,” Munroe says in a later chapter. “Documentation suggests Mr. Ferguson was an active participant in the process of issuing the advances on ticket sales for the concerts on the North Common, and the advances in question were, in fact, made with his full knowledge and at least two advance payments were made by Mr. Ferguson without the written approval of Mr. Anstey. In addition, Mr. Ferguson personally signed a number of the cheques.”
Even though the loans to MacKay were made through a city bank account, Ferguson approved $650,000 in loans to MacKay without any approval from city officials, writes Munroe.
Munroe also calls out MacGillivray for Trade Centre Limited’s 2006 takeover of the city-owned Metro Box Office in order to create TCL’s Ticket Atlantic. “There is no documentation available showing the change—with respect to Ticket Atlantic—was officially approved by HRM, Regional Council or the TCL Board,” writes Munroe. “In addition, HRM staff were not advised of this change until after it had occurred.”
Even though TCL unilaterally lifted the ticket sales operation, it kept Ticket Atlantic using the same Metro Centre bank account MBO had used. The result is that TCL and city funds were hopelessly co-mingled; Munroe did not attempt to discover how much the takeover of MBO cost the city, but very likely on-going losses are in the millions of dollars.
And even though TCL claimed the bank account as its own, the loans to MacKay issued through the account were understood to be *city* money, not TCL money. The city was the ultimate chump player in this game—when the province agreed to loan $3.5 million for Paul McCartney’s upfront fee, for example, the money actually came from the Metro Centre bank account, through which the city had also loaned MacKay $350,000. The account was therefore down $3.85 million; had the show been cancelled, the city would have lost double that (both the costs of refunding ticket sales and of backfilling the account), or $7.7 million.
Munroe places ultimate responsibility for the improper loans right back on TCL. “If the available cash relates to advance ticket sales, it must belong to Ticket Atlantic and therefore should only have been released based on the approval of TCL officials,” he writes.
As such, Munroe recommends that the city undertake a legal challenge, presumably against TCL, to recover the lost $395,550.
Even after MacKay failed to pay back the $395,550, he hoped to produce another show on the Common this year. Early in 2011, writes Munroe, “Mr. MacKay wrote to Mr. Anstey and advised he had secured another artist. Mr. MacKay wrote, ‘I do have a financing problem which I would appreciate discussing with you.'”
This is a long and detailed story. See the entire report and more analysis at thecoast.ca/bites.
For The Coast’s complete coverage of the Common concert financing scandal, click here.
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Both Peter Kelly and Scott Ferguson should resign
This article appears in Jun 2-8, 2011.
Just all seems so Enronesque to me. Get it all away from prying eyes by using TCL rather than HRM.
as reference ENRON cooked the books by using off balance sheet transactions to hide bad news.
Anyway its no surprise to me that certain folks behind closed doors did as they pleased. CWG bid was same shit. AT same time noone ar City Hall staff was aware and likely didnt wantto be aware and didnt look and if they knew they just ignored this. Munroe has nailed it with the probloems with the corporate culture.
No one in the media has mentioned that Paul Dunphy, Director of HRM Community Services (responsible for events), put in his resignation. I wonder why he hasn’t had to publicly answer questions or be held accountable?
I’ve read a lot of the report and it reads like you tell it, Tim. I’m really surprised that reporters at the other fine news establishments are lacking in reading comprehension skills.
Time to step down, Kelly.
After reading the AG report, I conclude that the HRM, WTCC and Halifax Metro Centre should take “universal precautions” (like health authorities do with possibly-infected blood) in all dealings with business. Notably silent in this whole private sector/public sector scandal is any criticism by business groups of the outrageous entrepreneurial practices of Harold MacKay. Or do these private sector groups think its good business practice to take any government to the cleaners whenever you have a chance (construction, consultants, contractors, developers, convention centre boosters).
So, will Mayor Kelly be presiding over the Council meeting when this comes back for discussion? He refused to step down from the chair yesterday, even though he knew what the report said. Conflict much?
Yep.
Analyst, what more do you expect from Kelly? Didn’t step down yesterday due to COI; in the Metro newsbite he says he will not resign, he wants to take another $150,000 in salary until 2012. Apparently as his employer, we have no say in his eyes (except for election time).
Which councillor was driving around blaring out Beatles tunes ?
My guess would be Hendsbee, he’s quite a clown.
Which councillor sat in on one of the secret meetings with Kelly & Harold ?
Cannot remember the relevant pages of the report but both items are mentioned.
As one wag who is very dear to our hearts, but shy to take credit for her wit, has said:
“The AG report on concerts on the Common is here …… where I read with surprise about ‘group think’.
I did not think any form of ‘think’ came into it!”
Alan Ruffman
Call in the RCMP.
Mentally retarded people like Peter Kelly are not fit for public office.
Ultimately, the city lost $359,550 through the loans, but Munroe shows that at one point the city’s risk approached $8 million, and the city additionally spent almost $800,000 in “in kind“ support for the concerts, far beyond the amount approved by city council.
The next spin will be – hey look how smart we were, we limited the damages to a paltry $360K when it could’ve been $8Million – ya think?
Sad that the only thing the citizens of HRM will remember of our mayor Kelly is this scandal..all those years will be of naught,he should do the honourable thing and resign..a real man would take responsibility,but I guess Peter Kelly is no man!
So fast Freddie is the mastermind behind this working with the old CAO and then deputy CAO anstey.
Fast Freddie pulled the scret CWG bis shanaigans. Scott ferguson was his right hand man all thos years.
Can you imagine what sort of disaster the CWG would of been if we had these folks running a Billion dollar event of the style that normally run way over budget anyway. Triple taxes could of been an outcome.
add in the TCL folks want a new CC?? scary scary scary
Let the RCMP do an investigation and see who (if anyone) broke the law. No city cops, please.
That beetle was driven constantly by Dawn Sloane. Night & Day. Major groupie.
I also think that the Power promotional company should have a judgement set against it which could force the seizure of assets and/or banlruptcy of that company – if a company cant pays its obligations then it generally is forced into bankrupcty by creditors. Why hasnt this happened yet?
I must take leave of this fooolishness – HRM management is a mess of incompetence
Good commentary Wally. I agree with you.
Quebec recently set up a commission (Operation Hammer) to investigate influence peddling and corruption in government and problem relationships in near-government agencies, developers and promoters.
They’ve just decided to have a full-time corruption squad. Its mandate will be to prevent and fight against the use of influence, corruption and collusion in the province. The Commissioner of the new organization will be required to disclose methods used by crooked individuals and companies in order to bring corrupt practices to the attention of the public.
I think we should learn from their lessons and do the same thing here.
Yesterday, Percy Paris, Minister responsible for TCL, made some broad statements of support for and confidence in Scott Ferguson and the Board of TCL, indicating that he thinks tey are doing “a great job”.
These statements are absolutely astounding in their ignorance. No wonder NS always remains so far into the ditch with political leadership like this. To say that TCL Management and Board have done a great job in light of the evidence in the A-G’s report is frankly shocking. It seems to be a prime example of the kind of boosterism and groupthink that Mr. Munroe discussed in his findings. Reading the report it is hard to see what they could have done that would have been more wrong.
We need a full investigation and some true accountability here. Mayor Kelly needs to do the honorable thing and resign, and management heads need to roll for incompetence and abandonment of their fiduciary responsibilities.
If this was private enterprise and not taxpayer money, what would have happened to Kelly? Certainly he would have been dismissed from his duties at the very least, and sure to be facing criminal charges as well. Why is this any different? The fact that Percy Paris made those ebarrassing comments supporting Scott Ferguson shows us exactly what’s wrong with our system. As a lifelong citizen of HRM and a taxpayer, I hope this investigation goes the full course with Kelly et al facing some real consequences. The “mistakes were made lessons were learned” BS is a complete slap in the face to each and everyone of us.
You are right Bo Gus,
The mandate and performance of TCL has never been reviewed. There has never been a value for money performance audit let alone a serious consideration of the swollen mandate.
There is no possible way the Minister could know with any certainty what he is talking about and he seems to be speaking for the government.
The lack of critical thinking is breath taking and a great example of the very ‘groupthink’ the auditor said was epidemic in government.
To a citizen observer it can only give the impression of a culture of corruption.
I am worried.
“I am worried.”
You and every other taxpayer should be worried! but how will that translate into everything of substance……………
The part I understand the least, is how Harold McKay year after year has no money to promote events, but CONTINUES to be able to PROMOTE EVENTS. And even after the details of his ripoffs become public who is promoting the METALLICA concert this summer? right? AND he has the balls to say he “has financing problems which he would like to discuss”…..
I submit that anyone who speaks with this man about his financing problems should be forced to resign. God I am so pissed. Get off of my lawn!