The fallout of financial irregularities continues in the city of Chestermere, Alta., immediately east of Calgary.
The city-owned utility had millions go unaccounted for from their books.
Two city employees received ten times the normal payout for their resignation.
And now a trio of councillors are being investigated for alleged code of conduct violations.
A third-party investigator has been hired to look at a trio of potential violations: a Facebook post from Coun. Ritesh Narayan, a letter posted in the Chestermere Anchor by councillors Narayan, Shannon Dean and Sandy Johal-Watt, and the documents apparently released by the same trio.
“We’re looking into that with a third party investigator to determine if the information that was presented was correct or incorrect,” Mayor Jeff Colvin told Global News.
That trio of councillors was the same trio that voted against investigations into Chestermere Utilities Inc. (CUI), a corporation created in 2010 to exist outside city operations and oversight.
“The oddness of why you would do something like that is to try and skirt around your debt limits,” Colvin said. “In my opinion, you shouldn’t be skirting around what the government says is what your allowable debt limit should be, because that determines whether a city is viable or not.”
Colvin said that’s more than tripled the city’s debt in the CUI’s existence, to $50 million, “which is substantial for a city of our size.”
Six years ago, a petition with 5,400 signatures – nearly the entire voting population of Chestermere – was presented to city council urging them to investigate CUI.
Chestermere is in the process of dissolving the corporation and reincorporating it back into the city’s organization.
“Financial irregularities” over a decade were discovered by staff while preparing for a public hearing on the dissolution of the utility company.
The irregularities included city transactions shown as city expenses, around $4.2 million in missing earnings, and $9.2 million in lost equities from 2017 to 2020, among other unaccounted-for funds.
Colvin said the increased debt load the city now carries threatens Chestermere’s ability to operate and provide services and amenities to its citizens. Colvin said the city could need to find ways to repay those debts, possibly via increased taxes or utility rates.
“If you’re raising the rates incorrectly or when it shouldn’t be, that’s not appropriate.”
Colvin said the trio of councillors allegedly cast aspersions on whether the investigator would be impartial.
A subsequent letter published in the Anchor said they are “strongly in favour of an investigation.”
Colvin said council meeting minutes and recordings are on the record to show exactly what was said about the investigations.
“We’ve got the requirement to look into irregularities as we become aware of them. I don’t believe in wiping anything under the rug,” the mayor said. “We’re in a transparent situation: this is government work, so everything should be public.”
The Chestermere mayor noted the city has been in close contact with the Ministry of Public Affairs since November, and is working with Minister Ric McIver’s office for a provincial investigation.
Golden severance
Nearly $600,000 in employee pay-out packages raised alarms in Chestermere last week, and the city is investigating how the “unusual” employee severances were given to two former staff members who resigned.
A press release from the city on July 26 said the amounts – around $400,000 and $200,000 each – were in violation of the city’s policy to approve any payments over $75,000. Under the Alberta Employment Standard Code, the employees were entitled to two weeks’ pay, totalling around $56,000.
Chestermere city council was informed of the extraordinary amounts at a special meeting of council last week.
Councillors unanimously voted to approve a third party to assist city officials to investigate the payouts.
“If it’s determined that there has been some kind of malfeasance, then that would be referred to the proper authorities,” Colvin said.
Council also directed administration to report on why the severance was paid out without council’s approval and whether there were any other “irregular severances” that were paid out without council’s approval.
The report is also expected to evaluate employment and severance templates, and to change the payroll and banking policy to require the city’s Chief Administration Officer, finance manager and mayor to sign off on all payment releases.
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