Peter “Irregular Matter” Kelly’s reign of error in Westlock County, Alberta: Morning File, Friday, September 1, 2017

News

1. Peter Kelly

The municipal review of Westlock County, Alberta has been published.

The review looked at a wide range of governance issues that don’t concern us here in Halifax, but it also includes a detailed analysis of former Halifax mayor Peter Kelly’s term as CAO of Westlock County from September 2014 to March 2016.

The report notes early on that the county had no record management bylaw:

Westlock County staff indicated that document shredding logs were inconsistent over the last few years, except for the finance department. The policy was apparently revised in October 2015 by council resolution 366/15, although a signed copy of these council meeting minutes could not be located. One staff member indicated that former CAO Kelly “Put a policy in place as to what documents had to be kept and for how long, and then he started having the past EA shred documents and was adamant that it all needed to be done before the new CAO started.”

The report doesn’t say why Kelly felt he needed to shred county documents before he was replaced by a new CAO, but we do know that documentation around a county land deal that went awry went missing.

Soon after Kelly arrived in Westlock in 2015, he began reviewing county policies and hired some unnamed “individual from Nova Scotia” to assist. “Staff were uncertain if the individual undertaking the review was serving the county in an employment or contract capacity,” notes the report.

Here’s Kelly’s typically mealymouthed response to questions about the hire:

As the County was in need of updating its policies, as well as other research requirements, I sought out an individual that had the known qualifications and skill sets that I required… [This individual] was hired under an 18 month contract with inherent flexibility to extend or shorten as deemed appropriate…More policy updates and new policies were created in this timeframe than in any other previous comparative defined timeframes.

Continues the report:

Staff expressed concerns from email records showing that the individual engaged in the county policy review appeared to be concurrently working on a consulting project for the City of Charlottetown which former CAO Kelly was also concurrently engaged in during that time. Mr. Kelly acknowledged the concurrent projects and informed the inspectors that this individual:

“…did provide some research assistance [on the Charlottetown project]; and in lieu of such assistance, I provided Westlock County with One-and-One-Half Hours of unpaid overtime for every hour that [he] assisted. The overtime-in-lieu I provided to the County was done on evenings and on weekends… to the best of my recollection, [he] provided approximately 3 days of research; which in turn, I provided 45 to 50 hours of unpaid overtime to the County to make up for that timeframe.”

So, Kelly hired a buddy from Nova Scotia to do some undefined work; there was evidently no contract (or at least not one that anyone in the county knew about) defining responsibilities and deliverables, nor pay rates or even term of contract. The same unnamed guy was working with Kelly on another job with Charlottetown at the same time, which only deepens the suspicion that some budget-fudging (at the very least) was going on. When called on it, Kelly pulled a bunch of numbers out of his ass, none of which are documented in any county records. Kelly, we should note, was on an executive contract with Westlock, so the notion that he could work “unpaid overtime” is patently absurd.

Not only that, but the policy review Kelly and the unnamed guy from Nova Scotia conducted resulted in revised policies for departments with no input from the managers of those departments and “proposed policies sometimes contained surprises, such as a ‘draconian’ dress code policy as described by staff.”

And it turns out that Kelly hired two unnamed guys from Nova Scotia:

It does not appear that officials always abided by the purchasing policy to ensure competitive purchasing practices when managing operations. For example, engineering services were acquired by a sole-source contract in 2015 for the Tawatinaw Ski Chalet. Former CAO, Peter Kelly informed the inspectors that at the time, they couldn’t find an engineer to meet timeframes for the project so he brought in an engineer from Nova Scotia with Alberta licencing. Records show that related contract costs for this vendor totalled $31,970 for engineering services provided from December 2014 to September 2015.

Back to the policy review, current CAO Leo Ludwig, who is left cleaning up the Kelly mess, wrote that:

During this review in 2015 to early 2016 [i.e., during Kelly’s term as CAO], a number of policies were given new numbers that were already assigned to other policies and there were several drafts of the same policies that were signed that were not identical so it became a very convoluted and difficult exercise to determine which actual version was presented to Council because of this and that there were four different policy binders in the EA’s office that contained these different signed and even many unsigned iterations.

This is classic Peter Kelly: nothing is written in stone. If something is written down, the words don’t mean what they say because something else is written down somewhere else, and who’s to say, really?

After those preliminaries, the report zeroes in on the Horizon North deal:

Some actions were taken by Mr. Kelly in the absence of an authorizing council resolution, such as negotiating an industrial land lease and authorizing site improvements. Mr. Kelly seemed to feel that direction given in camera was sufficient for action, which is not accurate and contravenes the MGA which requires a council to act by resolution or bylaw.

At times, it appeared that Mr. Kelly did not exercise reasonable oversight of capital project costs. For example, he told the inspectors that he “wasn’t going to question the numbers” provided by a county staff supervisor related to the Horizon North industrial park lot improvements.

At other times, Mr. Kelly apparently bypassed managers and directed subordinate staff, such as requiring a clerk to create and cancel certain invoices for the Horizon North project. Mr. Kelly informed the inspectors that “To say that I dealt directly with all employees and regularly bypassed department directors would not be correct; but rather said, that when the need arose, I took the opportunity and/or responsibility to do so.”

Let’s just look at that sentence again:

“To say that I dealt directly with all employees and regularly bypassed department directors would not be correct; but rather said, that when the need arose, I took the opportunity and/or responsibility to do so.”

So he bypassed staff, but not “regularly,” just “when the need arose,” whatever that means.

Time and again, people are taken in by Kelly’s pitter-patter ah-shucks bullshit. Notes the report:

Former CAO Peter Kelly was held in high regard by some Westlock County council members who truly appreciated his style. In one comment shared with the inspectors, a council member stated that Mr. Kelly was “very responsible.”

Even now, even after everything that has happened, Kelly still has his following. On Good Friday, Kelly will serve fish at John’s Lunch — because serving greasy fried fish and limp frozen french fries at a has-been diner on Good Friday proves one is a Christian, I suppose — and the line of well-wishers will wrap around into the parking lot. I’ll be damned if I understand that appeal. I had him pegged as a grifter zero point zero-zero-two nanoseconds after I first caught glimpse of him, but I’m an uppity CFA, so what do I know?

I digress. Back to the Horizon North deal. The report continues:

The county entered into a lease agreement effective April 1, 2015 with Horizon North Camp & Catering Partnership (Horizon North, a.k.a. Swamp Mats) for an 8.55-acre lot in this industrial subdivision to be used as a laydown yard. This one-year lease agreement was for $2,500 per month, with rent to continue on a month-to-month basis after the March 31, 2016 expiration date.

The agreement also contained a “right of first refusal” for the tenant to purchase the lands if the county received an offer it was willing to consider. This April 1, 2015 agreement was approved by council on July 28, 2015 … and was signed by former-CAO Peter Kelly on September 9, 2015.

[…]

It is an irregular matter that the project began and significant work was completed on the property prior to formal approval by council and endorsement of an agreement by both parties.

Records indicate that related site enhancement work was largely completed in August 2015 and that Westlock County incurred project costs of $375,707 at the Horizon North lot. This project was not approved in either the 2015 budget or by council resolution in 2015. Spending money without budget approval is an irregular matter and contrary to the MGA.

[…]

Mr. Kelly appeared to be the key point of contact for the Horizon North project, assisted by the public works supervisor. County directors felt left out of the loop as former CAO Kelly communicated directly with Horizon North officials, engaged a public works supervisor to arrange site work, and directed an office clerk to produce, edit and cancel related project invoices.

Correspondence shows that both county council and the lessee appeared to be left in the dark at times due to poor communication. When asked by council in a July 2015 council meeting, former-CAO Kelly apparently did not properly inform the council, although an update had been anticipated and a former director had diligently prepared this update for him and council. Correspondence from Horizon North officials in November 2015 indicates their surprise upon receiving an invoice for over $190,000 when they expected a $55,000 cost for site improvements. It appears that former CAO Kelly acted outside his authority by approving unbudgeted site development work for the Horizon North industrial subdivision lot.

You can read the report for further details, but the short of it is that the county had to eventually write down $234,000 related to the deal. The report notes:

Weak leadership in both council and administration created an environment that was ripe for chaos with site development work being completed and commitments being made without proper authority and council approval. In apparent enthusiasm for economic development, former CAO Kelly acted without proper authority and failed to advise council of their legislative responsibilities, such as requiring advertising when considering selling land for less than market value, and approving unbudgeted expenditures.

The report then turns to Kelly’s first action as CAO:

An irregular matter was identified in September 2014 where all staff were offered severance packages of three-months’ salary if they voluntarily terminated their employment with Westlock County. This irregular matter caused union challenges and was widely reported in the local news. A limited number of staff took this package, and the county was obliged to honour the severance offered by former CAO, Peter Kelly.

The severance package initiative was apparently discussed by CAO Kelly and Westlock County council without consulting finance staff, HR, the local union, or legal counsel prior to the September 24, 2014 county-wide offering. There was no council resolution authorizing this broad action, no record of a contingency plan for county operations, nor any budget consideration approved to absorb the financial impact that could have resulted.

[…]

The broad severance initiative led to the need for immediate damage control. Finance and HR staff were surprised at the severance offer and expressed concern for organizational risk. CUPE representatives filed a complaint to the Alberta Labour Relations Board on October 10, 2014 citing an unfair labour practice and contraventions of the Alberta Labour Relations Code.

Kelly refused to meet with the union, but the lawyers eventually got involved and put the severance offer on hold. A few months later the Alberta Labour Relations Board issued a consent order and “acknowledged that the employer (Westlock County) breached the Alberta Labour Relations Code by offering the ‘Voluntary Severance Program’, and incorporated terms of settlement reached by the parties” into the union contract.

The report notes that Kelly isn’t entirely to blame for the severance fiasco — the county council apparently wanted to “clean house” and discussed the severance policy in camera with Kelly. But the way it was implemented — without consulting any staff whatsoever, without running it by the finance department or the lawyers, much less discussing it with the union — is entirely on Kelly, whose job, after all, was Chief Administrative Officer.

“The September 24, 2014 severance package offer caused a tense working environment where many staff became uncertain about their employment and felt uncomfortable working under Mr. Kelly’s leadership, which started on September 1, 2014,” notes the report dryly. “The staff culture suffered tremendously during this time as staff appreciation reached an all-time low.”

The report also notes an “irregular matter” involving Kelly and the county’s planning board. I won’t get into the details of that issue, but I’m beginning to get amused by the term: Peter “Irregular Matter” Kelly.

Were this not enough, there’s yet another “irregular matter” involving Kelly and the building of a new fire hall. County councillors and Kelly first went to the existing Baptiste Lake Fire Hall, then told staff they wanted a new Fawcett Fire Hall to be built, based on the Baptiste design but with some additions.

In November 2015 the county issued a Request for Proposals for building the new Fawcett Fire Hall. “It is unclear if this RFP was advertised in compliance with provincial trade agreements or made available to other contractors,” reads the report. “Only one bid was received by E & D Kuzyk Konstruction, in the amount of $498,300.”

But then — after the Kuzyk Konstruction bid had been received, and after the RFP period had closed — Kelly took the Baptiste Fire Hall engineering drawings and sent them to two other companies, asking them to submit bids.

“It appeared that the Baptist Lake Fire Hall design drawings were being used in an attempt to avoid hiring an engineer or architect to design a facility for the Fawcett location,” reads the report. “This was an improper matter which could have violated copyright infringements on the design drawings held by the architect or engineer. It could have also led to liability issues as the design was prepared for a different site which may not have been compatible with the proposed site in Fawcett.”

Of course, you can’t just willy nilly take the engineering drawings from one building and use them for another building somewhere else — there are too many site-specific variables to contend with. But Kelly forged on anyway, and directed staff to ask the engineering firm if the county could steal their Baptiste plans for the Fawcett Fire Hall. “County staff advised the inspectors that they felt embarrassed sending this email because the reply would obviously be ‘no.’”

Sure enough, Rocky Mountain Engineering Inc told Kelly to take his idea and shove it:

As far as any permission to use our drawings for Baptist Lake Fire Hall: No permission will be given by our firm to use our copyright drawings in whole or part. The design for structural components is site specific and requires new engineering for every new building. The reasons for this include but are not limited to wind loads, snow loads and soil characteristics. Our position on the drawings extends beyond the mentioned construction use. Any drawings that we have issued on previous projects or portions of this RFP Package are not to be used for pricing, preliminary designs, conceptual design or construction without written consent directly from the principles at Rocky Mountain Engineering Incorporated.

The county went on to muck up the fire hall construction in other ways, but that’s too long of a story to tell here.

I’m glad the full story of Kelly’s tenure at Westlock has been documented, but the municipal review disappoints me in that it doesn’t get to the liability issue. As I reported in August 2016, a lawyer hired by the county suggested that Kelly should be personally liable for $194,000 related to the Horizon North deal, and the review sidesteps that issue entirely. Neither does it discuss Kelly’s relationship with Horizon after he left the CAO position, when he was allegedly still conducting county business and covering his own tracks without authority. I think at the very least the review should have said those matters should be referred to the RCMP.

Still, consider this: in just 18 months on the job, Kelly managed to:

• screw up union relations and get a Labour Standards Board judgment against the county
• hire two people from Nova Scotia without employment contracts and without clearly defined duties
• piss off county staff with unreasonable policies like a “draconian” dress code
• muck up the county’s policies by not running proposed changes past staff and by having duplicate written policies that also duplicated numbers of existing policies
• cost the county $200,000 in a botched development deal
• improperly insert himself onto a county planning board
• nearly get the county sued for pilfering engineering drawings

That’s an impressive record.

Mark my words: “irregular matters” will happen, and probably already have happened, in Charlottetown. And that crash is going to be spectacular.

Government

No public meetings this week.

On campus

No public events.

In the harbour

5am: Brotonne Bridge, container ship, arrives at Fairview Cove from Fos Sur Mer, France
6am: NYK Artemis, container ship, sails from Fairview Cove for Dubai
11am: Asklipios, container ship, arrives at Pier 41 from New York
11:30am: Brotonne Bridge, container ship, sails from Fairview Cove for New York
3pm: YM Moderation, container ship, arrives at Fairview Cove from Subic Bay, Philippines
4:30pm: Nolhanava, ro-ro cargo, sails from Pier 36 for Saint-Pierre
8pm: Oceanex Sanderling, ro-ro container, sails from Pier 41 for St. John’s
11:30pm: Asklipios, container ship, sails from Pier 41 for Kingston, Jamaica

Footnotes

I’m going on vacation. Right now.

I’ll be out of town for two weeks, connecting with family and friends. I’m calling this a “working vacation” but I’m trying to minimize the “working” part and maximize the “vacation” part. In practical terms, this means we’ll have a bunch of guest writers for Morning File — there are still a couple of holes in the schedule so I might have to jump in, but hopefully not. There are news stories lined up, including a fascinating piece by Linda Pannozzo. And the regular columnists will appear.

But besides editing and minimal administrative duties, I’m hoping to mostly not work. I’m going to stay off social media and avoid the comments.

I’ll see you in a couple of weeks.