Deloitte Investigation related to the Burgovae Bridge Keplacement Project and Related Matters Regional Municipality of Niagara February 2017 Privileged and confidentialDeloitte. Doboine LP 1600-100 Queen Steet awe ON KAP STE Canad ‘Tet 619-751-5078 Fax 613-se9-204¢ ‘won dete ca. February 22, 2017 Privileged and confidential ‘Mickey Cruickshank Legal Counsel Regional Municipality of Niagara 1815 Sir Isaac Brock Way, PO Box 1042 Thorold L2V 477 Dear Mr. Cruickshank, ‘Subject: Assistance in the investigation related to the Burgoyne Bridge project and related matters Attached is our report setting out the findings from our investigation. Our findings are based on procedures undertaken as described in Section 3 of this report and are subject to ‘the restrictions and limitations in scope as set out therein, Should you have any questions or concerns, please do not hesitate to contact Gary Timm at 613-751- 5378. ‘Yours very truly, JS Lie HO Gary Timm Partner Deloitte EnclosureTable of contents 1. Introduction and Retainer... 4.1 Background. 1.2 Retainer of Deloitte LLP. 2 Executive Summary.. 2.4 Conflict of interest, if any, elated to a South Carolina property 2.2 Potential inappropriate procurement related to the BRP... 2.3 Concerns pertaining to the potential inappropriate procurement of Parsons and Amec. 2 3 3 4 6 7 2.4 Concems regarding other Niagara Region vendors... 2.5 Conflict of interest, if any, related to properties located on Hainer Street, a street affected by the BBRP oo nnnninentene sv severe A 2.6 Potential inappropriate hiring practices related to certain individuals. 3.2 Limitations in scope. 3.3. Restrictions.. 4 Allegations Relating to Confict of interest Related to a South Carolina Property 15 4.1 Background 4.2. Ownership and use of the South Carolina property 4.3 Nature ofthe relationship between property co-owners and other Niagara Region Public Works. staff. we 17 4.4 Niagara Region ethics, confidentialty and confit of interest policies and procedures for employess.. see 18 5 Burgoyne Bridge Replacement Project Procurement. 5.1 Burgoyne Bridge Replacement Project Overview. 5.2 Estimated costs and costs incurred to date 5.3 Potential inappropriate involvement by certain individuals related to the BBRP 6 _Concems Pertaining to Potential Inappropriate Procurement of Parsons and Amec. © Delote LLP and afsted ens, t6.1 Backgrouna 33 6.2 Niagara Region procurements related to Parsons... secs 33 8.3 Niagara Region procurements related to Amec. 38 7 Concems regarding other Niagara Region Vendors. 29 7.1 Background... 7.2. Circle P. Paving Inc. 7.3. Economy Paving... 7.4 Regional Trenching... 7.5 Procurement related to CRL Campbell Construction & Drainage Lid.. BBRP... 8 Conflict of interest, if any, retated to properties located on Hainer Street, a street affected by the 8.1 Background 82 Matt Robinson and the sale of 108 Hainer Street to Niagara Region .. 8.3 Mike DiPaola and the acquisition of Premier Conglomerate Group property on Hainer Street by the Niagara Region.. 7 55 9 Allegations Relating to Potential Inappropriate Hiring Practices. 57 8.1 Background... 87 9.2 Hiring practices relating to Nick Palomba... 9.3 Hiring practices relating to Paul Smeltzer..... 9.4 Manoj Ditwaria 95 Lisa Vespi.... 10 Observations and Recommendations... 10.1 Recommendations related to Niagara Region existing policies... 102. Recommendations related to procurement practices. 10.3 Recommendations related to conficts of interest... 10.4 Recommendations related to hiring practices. 10.5 Recommendations related to document maintenance, safeguarding and retention policies....71 Information. ‘Schedule 1 - Summary of visitors to the South Carolina Property based on Niagara Region Electronic 73 ‘Schedule 2 — Burgoyne Bridge Replacement Project chronology and procurement. 74 Schedule 3 - Summary electronic information identified in relation to the alleged contfict of interest involving Mike DiPaola and the Hainer Street property acquisition. ‘Appendix A — Glossary of Abbreviations and Definition of Terms. © Debate LLP and ated ens, 5Appendix B ~ Electronic Information Reviewed... a eo T8 Appendix C — Documents Reviewed ... Appendix D — Interviews and Discussions 82 (© Debate LLP and aflated entities, a1 Introduction and Retainer 44 Background 1. {© Delete LLP and afisted ents. ‘The Burgoyne Bridge (the “Bridge”) was a two-lane bridge that carried Regional Road 81 (St. Paul Street West) over Twelve Mile Creek and Highway 406, in the City of St. Catharines. The Bridge, which provides a critical link between Downtown St. Catharines and West St. Catharines, spans 370 meters and is the largest structure maintained by the Region. ‘The Regional Municipality of Niagara (“Niagara Region” or the “Region’) is curently undertaking a capital project to replace the Bridge (BBRP"). The procurement for the BBRP slarted in approximately February 2009, and the construction is currently scheduled to be: ‘completed in the Spring of 2017, with total costs currently forecasted to exceed $80 milion ‘A number of issues arose during the BBRP, which impacted project timelines and the Region's budget and funding allocations. As a result of these issues, the Burgoyne Bridge Replacement Task Force ("BBRTF) was ‘established by the Region to study and monitor the Burgoyne Bridge Replacement Project. Deloitte LLP (“Deloitte”) was engaged by the Region to conduct a performance assessment or Value for Money Audit (“VFM”), of the replacement of the Bridge. The purpose of the VFM ‘was to review selected decisions, procurements and processes to determine whether the Region received value for money in the delivery of the project. The VFM related to the period commencing with the Feasibility Study, Class Environmental Assessment (“EA”), and the procurement process for the detailed design and construction, up to, but excluding the tender ‘pening for General Contracting. Deloitte findings from the VFM Audit dated February 16, 2016 detail that the procurement practices reviewed for the Bridge Project were largely compliant with Niagara Region's purchasing policy; however, the transparency and competitiveness of the process could be improved. The VFM identified serious concerns around missing or non-existent project documentation, lack of project controls and oversight, lack of accountabilties, and poor reporting to Regional Council. ‘On May 19, 2016 Niagara Region Council passed the following resolution approving a forensic audit of the BBRP and related matters: “That a forensic audit of the Burgoyne Bridge be approved immediately to address the concems identified in the Burgoyne Bridge Value for Money Audit and the findings of the Burgoyne Bridge Replacement Task Force and funded from the Burgoyne Bridge Project Contingeney Fund; and that an independent investigation of potential fiduciary impropriety by identifiable individuals with the corporation be initiated.” Information provided by the Niagara Region Director Legal and Court Services identified ‘concems and allegations related to this project to be addressed. Specifically, the areas were: 2) Conflict of interest, # any, related to a South Carolina property; ) Potential inappropriate procurement related to the BBRP;)_ Potential inappropriate procurement related to vendors of interest; 4) Conflict of interest, if any, related to properties located on Hainer street, a street affected by the BBRP; and ) Potential inappropriate hiring practices related to certain individuals. 42 Retainer of Deloitte LLP 8. Deloitte LLP was retained by the Niagara Region to conduct the forensic audit of the above noted concerns. 10. For purposes herein, all amounts are stated in CDN Dollars, unless otherwise stated © Delite LLP and afiated entities, 224 2 Executive Summary 111. Based on the scope of work, scope limitations and subject to the restrictions noted herein, the findings from our examination are summarized in the following sections. Conflict of interest, if any, related to a South Carolina property 412. Joe Cousins, Nick Palomba and Paul Smeltzer have co-owned a property in South Carolina Since June 25, 2008, at which time Mr. Cousins was employed by the Niagara Region as a Director of Transportation Services and Messrs. Palomba and Smeltzer were employed in Senior roles at vendors to Niagara Region, Parsons Inc ("Parsons") (formerly Detcan Corporation) and Amec Foster Wheeler Inc. (Amec’), respectively. 19, Messrs. Palomba and Smeltzer advised us that each of the three co-owners had contributed ‘equally to the down payment on the property, and we noted that the mortgage is registered in all three names. Messrs. Palomba and Smeltzer advised us that all three co-owners ‘contribute equally to monthly mortgage and other expenses of maintaining the property, which is supported by electronic evidence provided by the Niagara Region. 14. The Niagara Region issued payments totaling $6.3 milion to Parsons and $3.7 millon to ‘Amec between June 2008 and May 2014, when Mr. Cousins retired from the Region. We ‘noted that Niagara Region procurement and finance records identify that during these periods Mr. Cousins had involvement in projects that Messrs. Smetzer and Palomba were also involved in as vendors to the Region. The procurement and finance files indicate that Mr. Cousins’ involvement at least related to review and approval of Expenditure Authorizations (Our review of Niagara Region electronic information did not identify any communications between Messrs, Cousins, Palomba or Smelizer regarding Niagara Region business with Parsons or Ames. 15, Messrs, Palomba and Smeltzer advised us that they reported their ownership of the South Carolina property to thelr respective organizations; however, they were not aware of their organizations disclosing this information to the Niagara Region during procurement or contracting where they were involved, as required in by Niagara procurement and contracting documents. The Niagara Region was also not able to locate any such disclosure. 16. The former Commissioner of Public Works, Ken Brothers (who Mr. Cousins directly reported to), advised us that Mr. Cousins verbally communicated this information to him before the selection review process began for the engineering design services for the BBRP, but did not recall the date. The Niagara Region was not able to locate any writen disclosure of this, potential conflict of interest. 17. Though interviewees represented to us that Mr. Cousins had verbally disclosed his conflict of interest, it does not appear to have been formally documented, and it does not appear that Mr. Cousins removed himsetf from all transactions involving Mr. Palomba and Mr. Smetzer, or their vendor organizations. 18, Mr. Cousins did not respond to our requests for an interview. ‘© Deloite LLP and aflited ene. 322 Recommendation 49. In order to address these issues going forward, we recommend that the Niagara Region reviews its policies related to conflict of interest to ensure that they are sufficient and ‘appropriate, and performs periodic testing to ensure that these policies have been properly implemented and are operating effectively. Refer to our specific observations and recommendations in sections 10.1 and 10.3 of this report for further detail. Potential inappropriate procurement related to the BBRP 20. The Niagara Region raised concems regarding potential conficts of interest pertaining to the BBRP procurement in relation to: ()) pecuniary interest between Messrs. Palomba and Cousins; and (i) Niagara Region employees, who had previously worked on the BBRP as vendors. 21. The BBRP estimated cost for planning, design and construction has escalated from an original estimate of $49.5 milion to an approved cost by Council of over $91.3 million. A. significant portion of the increase for planning, design and construction relates to: 1a) Bridge construction increasing from an original estimate of $34 million to $69.9 million representing the lowest tender received; and b) Detailed design, geotechnical investigation, and contract administration fees increases. 22. In terms of the BBRP, Parsons was awarded the three following contracts: a) Class Environmental Assessment Study and Prefiminary Design ("EA"); ) Detailed Design and Preparation of Contact Drawings and Specifications (‘Detailed Design’); and . c) Contract Administration and Inspection Services (‘Contract Administratior 23. Mr. Cousins Involvement in the BBRP — Mr. Brothers advised us that Mr. Cousins verbally disclosed a potential conflict of interest with respect to his co-ownership of the South Carolina Property, and as a result Mr. Brothers indicated that he advised Mr. Cousins and Senior ‘Transportation staff that Mr. Cousins was not to be involved in any selection process regarding Parsons. ‘We did not identify documentation or information indicating that Mr. Cousins was involved in the evaluation of Selection of Parsons for the BBRP contracts, however, we did identify his invotvement/knowledge of: (i) changes to evaluation criteria for the Detailed Design and (i) procurement methodology for the Contract Administration; both of which appear would be beneficial to Parsons. ° 1) In terms of the Detailed Design, we identified that Mr. Cousins was involved in ‘communications related to changing the evaluation weighting used for the EA to place more emphasis on the interview stage of the detailed design RFP. We note that Parsons scored the highest in the interview ratings for the EA, but also had the highest price for the EA. Given that the same three bidders for the EA were the invitees for the Detailed Design RFP, it would appear that this change would be beneficial to Parsons. )_Interms of the Contract Administration, we identified that Mr. Cousins was involved in communications related to procurement of a supplier for the Contract Administration. Ina November 2012 communication, Mr. Cousins indicates that he wants to use an RFP process using the same three firms invited for the EA and Detailed Design contracts to ensure a competitive price from Parsons. He further notes that Parsons should get the assignment, given how the evaluation criteria is setup. We noted that the contract was effectively sole sourced to Parsons by amending the Detailed Design contract in January 2014, approximately one year after the above-noted communications. © Deloite LL? and aftistod enties, 4In a memorandum from Mr. Cousins to the Public Works Committee dated December 20, 2013 states “As approved by Committee, Delcan has been retained to perform the Contract Administration for this project. While we were very disappointed with their understated tender estimate, we fee! confident that Delcan has the qualifications and ‘experience to complete this Contract Administration assignment. It also maintains 2 critical link between the engineering aspects of design and construction. We are also ‘pursuing the option of retaining an independent third party advisor to assist in the ‘negotiation and resolution of any claims for additional work that may occur on this project. This is @ common practice on a project ofthis size." 24, As of November 2016, the Region had entered into contracts totaling $78.2 milion and had paid out $60.6 milion in relation to the planning, design and construction of Burgoyne Bridge. Based on the information provided by the Niagare Region, there were increases in costs to four stages of the planning, design and construction ofthe BBRP. Of these increases, in two cases totaling $841,773 ($740,410 related to Parsons and $101,363 related to Golder ‘Associates) the requests for additonal funds were identified in appendices to Niagara Region Public Works reports, which Niagara Region Procurement indicated to us was ouiside of typical practice. Further, they advised us that including the requests only inthe append to the reports did not make it clear that there were additional fees to be approved within the Repor, and that the entire report was approved by Council, so the additional fees outlined in the appendix were assumed by the Niagara Region staff to have been seen and approved as well 25. Mr. Palomba's involvement in the BBRP — While at Parsons, Mr. Palomba was identified by the Region as Parsons contact for the EA RFPQ, involved with traffic rerouting, and attended proposal presentations for the Detalled Design. He was identified as the Project Director in Parsons January 2012 EA report Mr. Palomba advised us that Delcan, which was an employee owned entity, had recently been bought by Parsons, and that as a result, he was still owed some money from the sale of Delean that he would be receiving in full, within two years. When he joined the Niagara Region, he had agreed with Mr. Tripp that he would not be involved in the BBRP, however, there were a number of email communications and meeting invites sent to Mr. Palomba related to BBRP. However, we understand that he did not attend these meetings. Messrs. Tripp and Palomba advised that Mr. Palomba only attended a traffic rerouting meeting with various individuals, including MTO and emergency services. ‘We did not identify any communication between Mr. Palomba and Parsons. 26. Mr. Ditwatia's involvement in the BBRP — Mr. DiWvaria advised that he worked on the BBRP ‘while he was with Parsons. Mr. Ditwaria indicated that a few months after he joined Niagara Region, he was told by Mr. Palomba not to work on the BBRP. However, he advised that he ‘was copied on some emails pertaining to the BBRP prior to this notice. He also attended the St Catharines meeting for the 406 rerouting closure due to its importance. We did not identify any communication between Mr. Dilwaria and Parsons. 27. Niagara Region conflct of interest policies were not fully followed with respect to Messrs. Cousins’ and Palombe’s relationships with Parsons. In particular, potential,conflcts of interest ‘were not formally documented, nor were the steps required and/or taken to mitigate any ‘actual or perceived conflicts of interest documented or formally communicated. Subsequently, the involvement of Messrs. Cousins and Palomba in aspects of the BBRP have raised questions regarding a perceived potential conflict of interest; however, based on the limited information available we were unable to determine if this resutted in an inappropriate benefit to Parsons. © Deloitte LLP and aflted enities. 523 Furthermore, as noted above, the normal process for obtaining Council's approval of project cost increases does not appear to have been followed in two cases, which may have resulted ina lack of transparency regarding counci’s knowledge and approval of these project costs increases. Recommendation 28. Further investigation of procurement, contracting related to Parsons’ involvement in the BRP is warranted based on our analysis, which will require assistance from law enforcement authorities. 29, In order to address these issues going forward, we recommend that the Niagara Region review their policies related to conflict of interest and procurement to ensure that they are ssulficient and appropriate, and perform periodic testing to ensure that these poficies have ‘been properly implemented and are operating effectively. Refer to our specific observations ‘and recommendations in sections 10.1, 10.2, 10.3 and 10.5 for further detail Concerns pertaining to the potential inappropriate procurement of Parsons and Amec. 0. The Niagara Region issued payments totaling of $10.4 million to Parsons and $6 million to ‘Ammec from January 1, 2008 to September 2016. 31. In addition to the above notad actual or perceived conflict of interest regarding Messrs. Cousins, Palomba and Smelizer, we noted that procurement, contracting and invoicing with respect to Parsons and Amec, a8 well as other vendors discussed in Section 2.4, was often rot in compliance with the Niagara Region procurement by-law in place at the time, including: 2) Expenditure authorizations did not appear to be approved by individuals with sufficient signing authority; b) Payments issued exceeded the authorized value of the Expenditure Authorization, and approved change orders (or other appropriate approvals) regarding the overages could not be located and provided by the Niagara Region: ©) Invoices did not appear to be approved by individuals with sufficient authority; 6) Invoices lacked supporting documentation; and ) One invoice did not bear the signature of an approver. 32, Based on a review of electronic information obtained from the Niagara Region together with an analysis of payment data, subject to certain Niagara Region data limitations, no patterns ‘were identified that would suggest Parsons and Amec received a disproportionate amount of ‘work or received more favourable treatment. Recommendation 3, Niagara Region conflict of interest policies were not fully followed with respect to the pecuniary relationships of Messrs. Cousins, Palomba and Smeltzer. tn particular, potential Conflicts of interest were not formally documented, nor were the steps required andlor taken to mitigate any actual or perceived conflicts of interest documented or formally communicated. Subsequently, the involvement of Messrs. Cousins, Palomba and Smeltzer in procurements of Parsons and Amec have raised questions regarding perceived and/or potential conflicts of interest; however, based on the limited information available we were Unable to determine if this resulted in an inappropriate benefit to Parsons or Amec. © Deloite LLP and atated entities. 624 244 Furthermore, based on the sample of transactions reviewed, Niagara Region procurement policies were not always followed, and adequate supporting documentation was not retained. In order to address these issues going forward, we recommend that the Niagara Region review their policies related to conflict of interest and procurement to ensure that they are: sufficient and appropriate, and perform periodic testing to ensure that these policies have been properly implemented and are operating effectively. Refer to our specific observations ‘and recommendations in sactions 10.1, 10.2, 10.3 and 10.5 for further detail Concerns regarding other Niagara Region vendors 34. Information provided by the Niagara Region included an allegation that companies Circle P. Paving Inc. (‘Circle P") and Economy Paving Company Ltd. (‘Economy Paving") contributed financially to the construction of the South Carolina Property 136. In addition, during interviews with Deloitte, both representatives of Niagara Region and current and former vendors to the Niagara Region (identified to us by Niagara Region Councillors) reised allegations that certain Niagara Region Public Works staff requested kickbacks of money and other benefits (e.g. paving of personal driveways) in return for providing preferential treatment in contracting with the Niagara Region. Circle P. Paving Inc. 36. Circle P. Paving Inc. is @ road building and maintenance company that we understand primarily provides pavement repair and patching services. The Niagara Region issued payments totaling of $3.7 million to Circle P from January 2008 to September 2016. 37. We understand that Circle P is owned by Dwight Phibbs and is managed and operated by Rick and Jim Phibbs. Messrs. Palomiba, Smeltzer and Tripp have advised that they and Joe Cousins are personal friends of Rick Phibbs and have attended annual spring got trips to South Carolina together, dating back at least to 2001. 38. Our review of Niagara Region electronic information identified that Mr. Palomba was invited to five social events by Mr. Higgins, a representative of Circle P, while employed by the Niagara Region. Mr. Palomba advised us that he attended four of these events, three of which were paid by Mr. Higgins during the period November 13, 2014 to June 2015. ‘We note that in a November 7, 2014, email from David MacLeod, Manager of Transportation Operations and Technology, t6 transportation managers (copying Mr. Palomba) MacLeod states the following: “Nick has asked me to advise you about a forthcoming updated policy relating to receiving or ‘accepling any gifts or gratuities, including lunches, from suppliers, tradespeople or contractors. The new policy speaks directly to zero tolerance for accepting anything in the orm of gifts or gratuities; this can be considered lobbying or soliciting which are directly prohibited under our purchasing policy. Therefore, pleese advise your staff that they are prohibited from taking, receiving at work, at home or at any off site location, gifts or grotuties from suppliers, tradespeople or contractors. This wil bo strictly enforced and will result in disciplinary action. A more detailed memo is 10 {ollow clertying what is and isn’t acceptable. ‘Also, please explain to any suppliers, tradespeople or contractors offering gifts or lunches that they cannot be accepted by staff.” 39. Our review of Niagara Region supporting documentation for payments identified that procurement, contracting and invoicing with respect to Circle P was often not in compliance ‘uh the Niagara Region procurement by-law in place atthe time, similar to the other vendors examined. For example, 17 invoices during 2014 and 2015 totaling $147,408 were issued by ‘© Dele LLP and ated enites. 7Circle P for sequential days of work at the same locations. Invoices for this work were below the $10,000 pre-tax threshold that required a competitive bid process. The Niagara Region was not able to provide any procurement documentation related to these payments. The invoice approver advised us that, the procurement may have been split into inerements less than $10,000 to avoid a competilve bid process in order to expedite the procurement and ‘ensure that the work would be completed before winter. 440. Sherry Phibbs has been an employee of the Niagara Region in various roles since June. 2008. Electron information provided by the Niagara Region identified email during 2013 and 2014 between Ms. Phibbs and her colleagues in the Housing department regarding the Housing department's procurement of paving services in relation to Circle P. Ms. Phibbss ‘advised us that she has not declared a confit of interest, and was not aware that it was required 41, Our analysis of Niagara Region payment data from January 19, 2008 to September 19, 2016 ‘Paicated that Cirele P was awarded the majority of work ($2.4 milion in payments) pertalning to the top five types of activities that they undertook for the Region. Economy Paving was the next largest vendor ($1.0 million in payments) for the same activities. 42. A Niagara Region representative advised us that Circle P and Economy Paving were the only two paving companies in the area that could take on small patchwork or piecemeal projects bia reasonable price. Larger paving companies had large mobilization costs and would often fum down small projects. He advised us that since approximately 2013 this work has been ‘estimated on an annual basis end competitively tendered as one contract for the year. Further he noted that since batching the jobs into larger contracts, there are approximately four vendors who bid for the work, and prices have come down by approximately 30%, which was more than anticipated. 43. In addition, Niagara Region confit of interest policies were not fully followed with respect fo Mr Pelomba’s activities with Circle P. These activities continued after an email ‘communication that was apparently sent out on his behalf (and copying Mr. Palomba) providing specific direction to his staff with respect to participating in activities with vendors, ‘and which precluded the activities that he subsequently undertook. |44, Furthermore, based on the sample of transactions reviewed, Niagara Region procurement policies were not always folowed, and adequate supporting documentation was not retained ‘with respect to the procurement of Circle P. - Recommendation 45, Further investigation of procurement, contracting and payments to Circle P is warranted pased on our analysis, which will require assistance from law enforcement authorities. 46. In order to address these issues going forward, we recommend that the Niagara Region revew their policies related to confict of interest and procurement to ensure that they are ‘Sufficient and appropriate, and perform periodic testing to ensure that these policies have been properly implemented and are operating effectively. Refer to our specific observations ‘and recommendations in sections 10.1, 10.2, 10.3 and 10.5 for further detail 24.2 Economy Paving ‘47. Economy Paving Company (St. Catharines) Limited (‘Economy Paving’) operated as @ redium sized paving company that provided pavement repair and patching services unt 2013 when the company ceased business. © Detotte LLP and afilated ents. 824.3 ‘48, Electronic information provided by the Niagara Region and interviews did not identify any connection between Economy Paving or its owner in regards to the South Carolina property, ‘or personal relationships with Niagara Region staff. 49, Our review of Niagara Region supporting documentation for payments identified that procurement, contracting and invoicing with respect to Economy Paving was often not in Compliance withthe Niagara Region precurement by-law in place atthe time, similar to the other vendors examined Recommendation 50. In order to address these issues going forward, we recommend that the Niagara Region reviews its policies related to procurement to ensure that they are sufficient and appropriate, and performs periodic testing to ensure that these policies have been properly implemented land are operating effectively. Refer to our specific observations and recommendations in sections 10.1, 10.2 and 10.5 for further detail. Regional Trenching 61. Regional Trenching Inc. (Regional Trenching’) is a general contracting company that was, incorporated on August 1, 1985. Concems were relsed indicating that Regional Trenching received a disproportionate amount of Niagara Region work related to electrical contracting {for road lights and signals. 52. Given that this area Is outside the scope of our existing engagement, we performed & preliminary review in order to determine if the concems may warrant further investigation by the Niagara Region. ‘53, During the period January 1, 2008 to September 2016, payments to Regional Trenching totaled $6.3 millon. For the top seven activities performed by Regional Trenching, we found that Regional Trenching received 66% ($2.3 milion) of the payments to all suppliers for these activities. 54. Howard Murray, the project manager at Niagara Region who most frequently managed work pertaining to street lights and traffic signals indicated that when he fist started at Niagara Region, 90% of the work went to Regional Trenching. Mr. Murray wasn't eure why but ‘assumed pricing was a factor. 55, Murray Krajewski, a former project manager of Niagara Region testified that Regional TTrenching was directed to make sure their work orders were under $10,000. Mr. Krajewski also explained that he, Howard Murray, Traffic Operations Manager at Niagara Region and Chris Thomas of Regional Trenching met in September 2009 to “come up with a more descriptive description as to whet exactly was being done” on the work orders Regional TTrenching submitted. Mr, Krajewsk! testified that “te concer that was brought up was the fact thatthe invoicing [received in September 2009] was in excess of $50,000 and that set off flags...and there was @ need to rework the work orders in a form that wouldn't exceed $10,000 each.” 56. During our review of a sample of Regional Trenching procurement, contracting and payments, we observed that Regional Trenching was often not in compliance with the Niagara Region procurement by-law in place at the time, similar to the other vendors examined. ‘© Delote LLP and afiated eres, 8244 (© Delatte LLP and afatd ens. or. 59. 61 62. 66. Recommendation Further investigation of procurement, contracting and payments to Regional Trenching may bbe warranted based on our preliminary analysis, which will require assistance from law enforcement. In order to address these issues going Torward, we recommend that the Niagara Region review their policies related to procurement to ensure that they are sufficient and appropriate, ‘and perform periodic testing to ensure that these policies have been propetly implemented ‘and are operating effectively, Refer to our spectfic observations and recommendations in Sections 10.1, 10.2 and 10.5 for further detail CRL Campbell Construction & Drainage Ltd. RL Campbell Construction & Drainage Ltd. (‘CRL’) is a general contracting company that ‘was incorporated an April 8, 1997. The registered director is Glenn R. Cooke. . Concerns were raised regarding potential inappropriate procurement practices pertaining to ditching work in relation to CRL and that CRL received a disproportionate amount of Niagara Region work related to ditching. Given that this area is outside the scope of our existing engagement, we performed & preliminary review in order to determine ifthe concems may warrant further investigation by the Niagara Region. Our review of Niagara Region payment data for the period January 2008 to September 2016, identified that payments to CRL represented 93% ($1.4 milion) of the ditching services provided to Niagara. During an interview with Deloitte, Ron Tripp noted that CRL is owned by Glenn Cooke, who is ‘a vendor to the Niagara Region, as well as many other municipalities. Mr. Tripp stated that he thought Mr. Cooke used to attend the Spring Golf Trip to South Carolina prior to Mr. Tripp attending. He advised us that their primary business is ditching and drainage, and that they have *...have a unique piece of equipment called @ Gradall, n fact they have a whole fiest of them..." When questioned about CRL during an interview with Deloitte, Mr. McCauley (Associate Director (Current Acting Director), Public Works Transportation Services) advised us that + that’s our Gradall... our ditching contactor. He at the time was the only Gradal in the systom. We owned a Gradall for a point of time. We didn’ find it very efficient because of the quali of operators that we had, so we sold it... He would supply two Gradalls per year - ‘one on the east side and one on the west side for five months... We found in the last two years there were a couple more local bidders. This year and last year we hired two ‘companies...” During an interview with Deloitte, a retired vendor to the Niagara Region advised us that while he was in business, he was a ditching contractor with five Gradalls. He stated the following regarding Niagara Region employees “...! questioned them on a number of ‘occurrences, why they didn't measure what a contractor gave them in day, and they said they were told not to do that by Joe Cousins, because these other contractors ~ they'd pay. hhim off, they'd give him a thousand bucks a crack, and I saw that happen once — probably in the late seventies... everybody else does it, but 'm not going to do it...” When questioned by Deloitte regarding if he saw a payment being made to Mr. Cousins, the retired vendor stated "Yes, | saw the envelope changing hands. | didn’t see what was in it, but | assumed that i was money, and on a number of occasions the foreman on my job would say [retired vendor ‘name] things would go much smoother if you just handed him a grand cash” 1026 26 © Deloite LLP and fated ents. Recommendation 66. Further investigation of procurement, contracting and payments to CRL is warranted based (on our preliminary analysis, Conflict of interest, if any, related to properties located on Hainer Street, 2 street affected by the BBRP 67. Two Niagara Region employees, Matt Robinson and Mike DiPaola, were identified by the Niagara Region as having potential conflicts of interest regarding property sales on Hainer Street that were acquired by the Region as part of the BBRP. Mr. Robinson had a home that was purchased by Niagara Region and Mr. DiPaoia had family a member whose business had sold vacant land to Niagara Region. {68, Based on the information we reviewed, there does not appear to be inappropriate activity in ‘elation to the acquistion of the properties, regarding Messrs. Robinson and DiPaola. Potential inappropriate hiring practices related to certain individuals 69, The Niagara Region raised concerns that certain employees of vendor organizations, who ‘were subsequently hired by Niagara Region may not have been hired in accordance with Niagara Region's hiring policies and/or had been hired inappropriately. Information provided by the Niagara Region identified hiring concerns related to the following individuals, previously employed by vendors to the Niagara Region: a). Nick Palomba formerly of Parsons; b) Paul Smeltzer formerly of Amec; and ©) Manoj Ditwaria formerly of Parsons. 70. During our investigation we also identified Lisa Vespi formerly of Amec, who was hired by the Niagara Region. 71, We noted that the Niagara Region has high-level policies in place related to hiring; however, that they do not provide specific processes or guidelines for candidate evaluation, selection and retention of related documentation. 72, We observed inconsistency in the evaluation and selection processes that we reviewed, including the number of interviews, attendees to interview panels, and scoring and selection of candidates. 79. We noted no policy regarding conflict of interest between evaluators and candidates. We observed cases where evaluators were personal fiends of candidates, and in one case held a pecuniary interest with the candidate. 74, We noted the following issues, with respect to the hiring of the above noted individuals: a). Nick Palomba -Mr. Palomba was encouraged to join Niagara Region by Ron Tripp, @ fiend, whom he gave his application to, From the records on file, Mr. Palomba was not the leading candidate going into the second round of interviews. There were no scores tecorded for the second round. Mr. Tripp was on the evaluation committee for Mr. Palomba, and made the ultimate hiring decision. b) Paul Smeltzer - Mr. Smeltzer was hired after one round of interviews by Mr. Tripp. His interview panel consisted of Mr. Tripp, Ms. Habermabl, an HR representative and Mr. Palomba, whom he co-awned a South Carolina property with. ) Manoj Ditwaria — No issues were noted with respect to the hiring of Mr. Dinwaria ”4)_Lisa Vespi- Ms. Vespi said she heard of the role through the Niagara Region website, however records show that Mr. Smeltzer sent Ms. Vespi a link to apply for the job on the day it was posted. Review of electronic records show that Ms. Vespi and Mr. Smeltzer wwere personal friends. Ms. Vespi was hired by Mr. Smetzer after one round of interviews. Mr. Smeltzer further negotiated her salary, even though he was not the hiring ‘manager for the role, There were no scores recorded for the interview. Recommendation 75. In order to address these issues going forward, we recommend that the Niagara Region. (er thet policies related to hiring, including candidate evaluation, selecting and conflict of interest during the hiring process to ensure that they are sufficient and appropriate, and perform periodic testing to ensure that these policies have been properly implemented and bre operating effectively. Refer to our specific observations and recommendations in sections 10.4 for further detail © Detotte LLP and affliated enies 234 3.2 3.3 3 Scope and Restrictions Scope 76, Our investigation covered the period from the approximate inception of the Burgoyne Bridge Replacement Project in approximately 2008 to September 2016 (the "Review Period") and ‘was limited to the issues described in this report. This period was selected based on discussions with the Niagara Region. 77. In preparing this report, we reviewed electronic information from the Niagara Region corporate email systems, laptop computers, and mobile devices, and USB storage devices for 16 custodians as set out in Appendix B. The data ingested into the document review too! (Clearwell) was approximately 552,128 documents. Documents loaded into Ciearwell were. ‘searched using 150 unique keywords with up to 210 unique searches and other ad hoc terms per keyword, Of these documents approximately 57,800 documents were reviewed and ‘approximately 3,300 documents were identified and tagged as relevant. 78. We specifically reviewed andlor relied upon the documents listed in Appendix C. 79. We interviewed and held discussions with the Niagara Region councillors, employees, and. vendors listed in Appendix D. Limitations in scope 80. Our review was based on available documentation collected in the course of our investigation and the interviews we conducted as set out in section 3.1 above. To the extent that we receive additional information, our findings herein may require revisions. 81. Joe Cousins, Former Director Transportation Services, Niagara Region has not responded to requests from Deloitte to be interviewed in relation to this investigation. 82. Electronic information was requested from the City of St. Catharines (the “City’) related to two individuals who were previously involved with the City. The City advised us that any information provided requires their review in order to determine which information couki be provided in accordance with the Municipal Freedom of Information and Protection of Privacy ‘Act (MFIPPA") requirements. The Niagara Region advised us that given the limitations. regarding the information that can be provided by the City under MFIPPA, it would not pursue obtaining the information. Restrictions 83, This report is not intended for circulation or publication, nor is it to be reproduced for any other purpose than for the use of the Niagara Region, without our prior express written permission in each specific instance. We do not assume any responsibilty for losses suffered by any party as a result of circulation, publication, or reproduction of this report contrary to the provisions of this paragraph. 64, Deloitte assumes no responsibilty to the Niagara Region if any other party misuses any confidential information obtained from their review of this report © Deloite LLP and aftited ene 1985, Our work wos not designed to identity all circumstances of fraud or other irtegulaiy, if any, ‘which may exist. The information contained in this report is based on analysis of data Collected during our investigation. The procedures performed by Deloitte do not constitute @ financial audit and should not be taken to supplant any additonal inquiries and procedures that Niagara Region may consider to undertake in continuing to investigate ths issue. We make no representations regarding the sufficiency of the procedures performed and no representations regarding questions of legal interpretation. 86. Deloitte was not engaged to, and did not perform a financial statement audit, review or ‘compilation for the purpose of expressing an opinion on historical financial statements in ‘accordance with standards established by the Chartered Professional Accountants Canada (CPA Canada’). Accordingly, Deloitte does not express such an opinion or any form of assurance. 87. The forensic examination procedures undertaken were consistent with the “Standard Practices for Investigative and Forensic Accounting Engagements” (effective date March 1, 2007) developed by the Alliance for Excellence in investigative and Forensic Accou CIFA Alliances") on behaf of CPA Canada, 188. For the purposes of this report we have had to assume that the information disclosed to us is reliable and complete. Our review was dependent on the completeness and validity of the data that we received and analyzed. 89. This report is based on information in our possession as at the date of this report. We reserve the ight, but will be under no obligation, to review this report, and if we consider i necessary, to revise our report in light of any information, which becomes known to us subsequent to the date ofthis report. 90. Should any of the information provided to us not be factual or correct, or should we be asked to consider different information or assumptions, any conclusions set out in this report could be significantly different. {© Deloite LLP ond afated entities. “4 Allegations Relating to Conflict of Interest Related to a South Carolina Property 441 Background 94 92, 93. |. The Niagara Region Proceedings of Council Open Session meeting minutes of May 19, 2016 record thatthe Niagara Region Council moved to a closed session to receive confidential information about identifiable individuals. Details of the closed session were not recorded however, the Director Legal and Court Services was present and summarized pertinent, details from the meeting, which included the following 2) [twas reported that that Joe Cousins, who had been a Niagara Region employee until May 31, 2014 co-owned a vacation property in South Carolina with Nick Palomba and Paul Smeltzer, who when the property was purchased, were employees of Parsons Inc. (‘Parsons’) (formerly Delean Corporation) and Amec Foster Wheeler Inc. (‘Amec*), respectively. b) Parsons and Amec were vendors to the Niagara Region, and Mr. Cousins’ position regularly required that he retain and work with transportation consultants, which included oth Parsons and Amec. ©) Mr. Palomba and Mr. Smettzer had both since been hired by the Niagara Region. 4) During the closed session, the Council moved to immediately suspend with pay, Nick Palomba and Paul Smeltzer. . According to the Region’s human resource files, Joe Cousins was an employee of the region from July 4, 1977 to May 31, 2014, holding the following positions: 2) July 4, 1977 = Maintenance Coordinator, ») November 23, 1981 ~ Budget/Systems Administrator ©) October 1, 1982 ~ Superintendent of Operations, Roadway Division; 4) September 1, 1992 — Acting Assistant Director, Transportation Services; ©) September 1, 1993 - Assistant Director, Transportation Services; f) June 14, 2001 - Director of Transportation; 9) May 31, 2014 — Retire from Niagara Region; and 1h) May 27, 2014 - Temporary contract to provide parttime Itigation consultant services ‘elated fo the iigation between Niagara Region and Weinmann Electric Ltd. ‘The Region's human resource files indicate that Mr. Palomba was employed by Parsons from 1989 until he was hired by Niagara Region as Director, Transportation Services effective June 8, 2014; Joe Gousin's former role. Refer to Section 9.2 for information regarding hiring practices related to Nick Palomba. {© Dotote LLP and atte ents. 642 94. The Region's human resource files indicate that Mr. Smeltzer had worked for Niagara Region, as an Assistant Director in Public Works and Environmental Services Division from September 1992 to May 1998. Mr. Smeltzer was employed by Ontario Concrete Pipe ‘Assocation from May 1988 to March 2006, and by Amec from March 2006 unt he was hired by Niagara Region as Director, Water and Wastewater Services effective January 19, 2015 Refer to Section 9.3 for information regarding hiring practices related to Paul Smeltzer. Ownership and use of the South Carolina property 95. According to Horry County Land Records, Messrs. Cousins, Palomba and Smeltzer purchased 6015 Catalina Dr Unit 732, North Myrtle Beach SC, 295829515 in Horry County (the “South Carolina Property”) on July 7, 2008. All three individuals are named on both the property deed and the mortgage registered against the property. 96. Deloitte received the following information from Niagara Region, whiich we have independently verified through public record searches: a) Warranty Deed dated June 25, 2008 for the State of South Carolina in the County of Horry indicating Messrs. Smeltzer, Cousins and Palomba as Grantee's of the property having the legal description of the South Carolina Property and the purchased price of Us$164,750. : ) Affidavit for Taxable or Exempt Transfer for the State of South Carolina in the County of Horry indicating that the South Carolina Property transferred to Messrs. Smeltzer, Cousins. and Palomba on June 25, 2008 for US$164,750. ©) Mortgage dated June 25, 2008 held by RBC Bank (USA) in the amount of US$131,800 for the South Carolina Property. The Mortgage details the names and apparent signatures of the borrowers as Messrs. Smeltzer, Cousins and Palomba. 4) Copies of seven Horry County online tax payment screen shots for the South Carolina Property for tax years 2009 to 2015 inclusive under the name "Smeltzer, Paul D et a". ‘97. During interviews with Deloitte, Messrs. Smettzer and Palomba confirmed that they had jointly Purchased the property with Mr. Cousins in 2008. They represented that during an annual golf trip to South Carolina in 2008, approximately eight individuals had discussed jointly Purchasing a property in the North Myre Beach area of South Carolina as a vacation Property. he eight indivi, Messe, Smoker, Cousins and Paloma undertook to ‘identify and purchase the South Carolina Property. Messrs. Smelwzer and Palomba represented that each of the three co-owners paid one third of the approximately $32,000 USD down payment, and entered into a mortgage for the balance of the purchase price. ‘According to Mr. Smeltzer, the property ownership has not changed since the purchase in 2008. This agrees with our review of Horry County records. 98, Niagara Region email correspondence includes messages pertaining to the equal sharing of various costs related to the South Carolina Property. Messrs. Smeltzer and Palomba advised us during interviews that Mr. Smeltzer has managed the financial aspects of the South Carolina Property since 2008, and that he sends monthly emails to Messrs. Palomba and ‘Cousins advising them of amounts they each owe for their third of the monthly expenses. 99. Niagara Region email correspondence between Messrs. Cousins, Palomba and Smetzer discuss items related to the South Carolina property, including scheduling of visitors and property usage. Visitors included: a) Messrs. Smeltzer, Palomba and Cousins and their spouses; ) Family members and friends; ©) Employees of Niagara Region; 4) Employees of other municipaities; © Delolte LLP and afta entities 162) Employees of Amec; ) Donation of a week at the property for a charity fundraising auction; and 9) The owner of Circle P Paving, a vendor to Niagara Region, and who is listed in Niagara Region human resource files as the spouse of a Niagara Region employee. Refer to Section 7.2 for more information regarding Circle P. 100. Mr. Smettzer explained during his interview with Deloitte that other than direc family attending at the property, the property is rented to friends and other family members, charging between $400 to $500 per week, and the donation to a charity fundraising event. Refer to Schedule 1 fora listing of usage of the South Carclina Property during the period 2011 to 2016" identified during our review of Niagara Region electronic information, Nature of the relationship between property co-owners and other Niagara Region Public Works staff 101, Mr. Smettzer advised us that he has known Mr. Cousins since first working with him at Niagara Region between 1992 and 1997, and that they have remained friends since. He reported that he hasn't known Mr. Palomba as long, and that they have been personal friends for a shorter period of time, During our interview with Mr. Palomba, he advised us that Mr. Cousins was an acquaintance ‘through the Niagara Region and Mr. Smettzer through industry associations prior to his attending a spring got trip with them in 2007, and that they have since become personal friends. 102, Deloitte's review identiied a number of social acivlies between the South Carolina Property co-owners, including the following @) Scotland Trip - Social media searches indicated that in Fall of 2012 Mr. Cousins and Mr. ‘Smeltzer had vacationed together in Scotland, during which time Mr. Smeltzer worked for Parsons. During an interview with Deloitte, Mr. Smeltzer confirmed that he and Mr. ‘Cousins had vacationed in Scotland with two other individuals who he and Mr. Cousins ‘had met during a fall gof outing in Myrtle Beach, South Carolina, and that they each paid for their own trip, ) Annual Spring Golf Tip-Smettzer, Palomba and Ron Tripp (Commissioner of Public Works) all advised Deloitte that they, along with Mr. Cousins attend an annual spring golf {tip to Myrtle Beach organized by Mr. Cousins (the “Spring Golf Trip”). According to Mr. ‘Tripp the Spring Golf Tipp started in the 1990's, and is attended by between four and 12 people, which includes a variety of indlviduals from Niagara Region, municipalities, ‘consultants and from industry. Each participant pays their own expenses, ‘Mr. Smelzer advised us that he has altended in Myrtle Beach for over 20 years. Mr. Palomba advised us that he has attended since 2007. Mr. Tripp advised us that he had attended from 2001 to 2004, ©) Fall Golf Forum - During our interview with Messrs. Smelizer and Palomba they advised us that they attend an annual fall gof trip organized by the Myrtle Beach Golf Desk (the “Fall Golf Forum”) with Mr. Cousins and one other individual. Mr. Smeltzer advised us that each participant paid their own greens fees, and the “non-owner” paid the.cleaning fee for the South Carolina property. 4) Cousins Wedding - An email dated January 14, 2015 from Mr. Smeltzer to Mr. Cousins ‘copied to Mr. Palomba states “Joe, whal are the plans for your wedding? Family Only?" ‘Mr. Cousins replied “Wedding is Friday May 1 at The Dye Club and you are both " Records were not Mente’ forthe pio 2008 to 2010, © Debit LLP and ated ens. 7invited....along with Rick, Charlie, Sal, Tim and Nick Murphy. Invitations should be out next week.” ‘An email dated March 4, 2015 from Paul Smeltzer to Brian Noblin of Myrtie Beach Gott Packagers, stating "Hi Brian. A few of us are going to MB for Joe's wedding. Any suggestions for accommodations? Probably only stay for a couple of days.” e) Osler Blutt Ski Trip - Emails dated from February 2 to 7, 2016 between Mr. Smeltzer, Mr ‘Tapp and a number of other individuals from other municipalities, Amec, and Cima Canada Inc. discuss arrangements for a sk trip to Osler Bluff Ski Club. According to our interview with Mr. Tripp, this activity was the Ontario Public Works. ‘Association annual ski day, which hes been conducted for approximately ten years. Mi. ‘Tipp advised that he had been attending for approximately ten years. He advised us that al times a8 a guest of Mr. Smeltzer, while Mr. Smeltzer worked for Ontario Concrete Pipe ‘Association, who would pay Mr. Tripp's sking (approximately $100). More recently, Mr ‘Tripp advised that he and Mr. Smeltzer had each paid for their own attendance at the event. ) Guy's Golf Trip in Muskoka - Emails dated between April 20 and May 2, 2016 between Mr. Cousins, Mr. Palomba, Mr. Smeltzer, Rick Phibbs, Brent Shedden, Bill Cousins, Charlie Finlay and James Mackay with subject “Guy's Golf Trip” discusses and confirms arrangements for a gol trip in the Huntsville, Ontario area. 44 Niagara Region ethics, confidentiality and conflict of interest policies and procedures for employees 403. Niagara Region has a Code of Ethics/Confict of Interest Policy (the "Ethics/COI Policy") that is dated September 20, 2007, and applies to all employees. The Ethics/COI Policy section titled “Principles” states the following “Employees shall not use their position within the Region to gain any particular interest, personal or family advantage or benefit in utilizing any service provided by the Region or jn conducting any business on behalf of the Region. ') Employees shall not be involved as an official of the Region in judging, inspecting or ‘making a decision on any matter in which they have a personal or family interest. Any ‘employee involved in such a matter shall declare a conflict of interest as soon as such conflict is identified." ‘The Ethics/COI Policy section titled “Procedure” states the following: “ia potential or real conflict of interest exists because of an employee's persons! OF family interests in a matter involving a service provided by the Region, a business dealing with the Region or similar circumstances, the employee must notify in writing, their Division Director / Commissioner or CAO as appropriate, of the situation, detailing their conflict. The Director / Commissioner or CAO wil then ensure that someone who is not personally involved in the situation makes the judgment, inspection or decision using the ‘ame objective criteria that would be used for that situation if a non-employee client were using the particular service.” 104, Niagara Region Public Works policy tiled “Consulting Engineers — Conficts of Interest” that was last revised July 16, 1998 relates to“... agreements with private consulting fengineering firms to provide engineering services for various Niagara Region projects.” The “Policy Statement section ofthe policy states: "The intent of this poficy is to provide ‘guidelines to ensure that consulting engineering firms do not have a deemed or potentol Confit of interest related to any engineering agreemenv/assignment undertaken on behalf of the Region * The policy provides a definition of confit of interest, and states in the “Policy” section *Consulling engineering or architectural fms shall disclose to the Regional ‘© Delotte LLP and afizated ents. 8‘Municipality of Niagara any potential confict of interest, prior to and during any assignment undertaken on behalf of the Region.” 105. _ The Niagara Region issued payments totaling $6.3 million to Parsons and $3.7 million to ‘Amec between June 2008 and May 2014. We noted that Niagara Region procurement and finance records identify that during these periods Mr. Cousins had involvement in projects that Messrs. Smeltzer and Palomba were also involved in as vendors to the Region. The Procurement and finance files indicate that Mr. Cousins’ involvement at least related to review ‘and approval of Expenditure Authorizations. Our review of Niagara Region electronic information did not identify any communications between Messrs. Cousins, Palomba or ‘Smettzer regarding Niagara Region business with Parsons or Amec. 108. Mr. Smeltzer, he advised us that he was involved in two or three procurements with the Niagara Region, while Mr. Cousins was a Niagara Region employee. He advised us that he was not aware of any time that Mr. Cousins was involved with an Amec procurement, and that Amec communicated with other Niagara Region representatives who reported to Mr. Cousins. Mr. Smeltzer advised us that he had not had conversations with Mr. Cousins pertaining to procurement or contracting between Amec and the Niagara Region, Refer to Section 6 for further information and analysis regarding Niagara Region contracts with Parsons and Amec. 107. Niagara Region was unable to locate documentation which disclosed a conflict of interest for Mr. Cousins related to his ownership interest in the South Carolina Property. Mr. Palomba, advised Deloitte that around the time of the South Carolina Property purchase, ‘Mr. Cousins had advised Messrs. Smettzer and Palomba that he had informed Ken Brothers (the Niagara Region Commissioner of Public Works at the time) of the co-ownership of the South Carolina Property with Messrs. Smeltzer and Palomba, and that he would remove himself from any consultant proposal assessments of Amec and Parsons. Mr. Palomba further advised that Mr. Brothers had separately confirmed to him that Mr. Cousins had made ‘a verbal disclosure regarding the South Carolina Property. 108. The former Commissioner of Public Works, Ken Brothers (who Mr. Cousins directly ‘eported to), advised us that Mr. Cousins verbally communicated this information to him before the Selection review process began forthe engineering design services forthe BBRP, but did not recall the date. The Niagara Region was not able to locate any written disclosure ofthis potential confict of interest 109, _ Messrs. Smelizer and Palomba advised us during their interviews that they did not formally disclose a conflict of interest pertaining to the South Carolina Property when joining the Niagara Region, as Mr. Tripp was already aware of the co-ownership of the South Carolina Property and felt with Mr. Cousins’ retement a conflict no longer existed. During our Interview with Mr. Tripp, he advised us that he had known about the co-ownership of the property since approximately 2008 or 2009. 110. Mr. Smettzer advised us that Amec was aware of the South Carolina Property ownership With Mr. Cousins, and that certain individuals from Amec had visited the property. Mr. Palomba advised us that he reported the co-ownership of the South Carolina Property to his, immediate supervisor at Parsons while employed at Parsons. Neither Messrs. Palomba nor ‘Smeltzer were aware of their organizations disclosing ths information to the Niagara Region {during procurement or contracting where they were involved, as required in by Niagara Procurement and contracting documents. The Niagara Region was also not able to locate any such disclosure. 111, An email dated June 1, 2016 from Councillor Andrew Petrowski to Ms. Feren, copying Mo Lewis (Acting Chief Administrative Officer) and Alan Ceslin (Niagara Regional Chain, states’ © Detote LLP and afated erties. 19“Be advised | raised the issue of Joe Cousins and Nick Palomba owing a “cottage” together with both CAO Schlange and Commissioner Tripp several times since their (Schainge’s & Tripp's) hire at the Region. | was told by both the CAO and Commissioner that Cousins and Palomba did not own a cottage together NOTWITHSTANDING they (Schlange AND Tripp) both admitted in closed session at our ‘most recent Couneil meeting that they both knew Cousins and Palomba have owned {with Paul Smeltzer) a vacation condo in the States since @ date which predates Schlange’s and Tripp's hire to the Region.” In response to a direct question to a Councillor at the May 19, 2016 Council meeting (closed ‘session), Mr. Schlange said "You asked me, ifthey owned a cottage together. They didn't. It's ‘a condo." When specifically asked by a Councillor on May 19, 2016 (closed session) if they knew about the South Carolina property, Mr. Schlange and Ron Tripp (Commissioner of Public Works) advised Niagara Region Council that they each knew of the condo ownership for more than a few months, with Mr. Tripp specifically indicating even longer. [As noted above, during our interview with Mr. Tripp, he advised us that he knew of the co ‘ownership of the South Carolina Property since approximately 2008 or 2008. Mr. Schlange advised during an interview that he had been advised by Mr. Tripp of the co-ownership of the South Carolina Property shortly after hiring Mr. Palomba, but that the co-ownership was ‘common knowledge among Niagara Region staff prior to Mr. Palomba’ hiring. - Mr. Schlange advised us that in late 2013 or early 2014 Councillor Bart Maves asked him about a potential cottage co-owned by Mr. Cousins and Circle P Paving. Mr. Schlange ‘advised that he had not been asked about co-owmership of the South Carolina Property, and that he didn't connect the request regarding a potential co-ownership of a cottage with the co- ‘ownership of the South Carolina Property which he leamed of later, and at which time Messrs. Smeltzer and Palomba were Niagara Region employees, and Mr. Cousins had retired. 112, Though interviewees represented to us that Mr. Cousins had verbally disclosed his ‘conflict of interest, it does not appear to have been formally documented, and it does not ‘appear that Mr. Cousins removed himself from all transactions involving Mr. Palomba and Mr. ‘Smeltzer, or their vendor organizations. 4143, Mr. Cousins did not respond to our requests for an interview. ‘© Detote LLP and atiated ents, 20