Hamilton city staff and vendors operate in grey area

There was a time when sending Christmas gifts to public-sector colleagues was common practice.

And nothing meant by it. It was just what we did," recalls Coun. John-Paul Danko, who worked in civil engineering before entering politics in 2018.

Then things changed.

In recent years, we would get replies from public-sector people, Oh no, sorry, we can't accept this anymore.'"

But for some at city hall, that hasn't sunk in, according to an auditor's report that found two senior City of Hamilton employees had inappropriately close ties with contractors who landed major municipal contracts.

In one case, a now-fired manager had two close relatives working for firms that were awarded $95 million in capital projects over two years.

The other senior employee, who left the city voluntarily, had a significant social relationship" with vendors who benefitted from favourable treatment" for several years.

Though concerned, and hopeful for remedies, Danko said he wasn't necessarily surprised by the findings of city auditor Charles Brown's office.

Inevitably, when you're working in an industry, whether you're public sector or private sector, you're going to develop social relationships with the people you work with on a regular basis."

The issue, however, is how those relationships noted in Brown's report might have influenced professional judgment," Danko said.

My biggest hope - and I know staff are committed to this - is just setting clear expectations about what's appropriate and what's not."

There is a collision" between public- and private-sector professionals at conferences and conventions, says Zachary Spicer, a York University public policy expert.

The walls kind of break down a bit between the contractors and the public-sector employees, and for the most part, they're not actually talking business there. It's socialization," the Hamilton resident said.

But you could be interacting with people who could be on the other side of a very large bid at some point."

That's not unusual, Spicer says.

It would be uncommon if you were sitting in your office and a contractor ... called you up and said, Hey, you want to come out for dinner tonight with me?' ... Saying yes to that would be kind of weird and that's not common."

Brown's summary of the cases in an annual report of his office's investigations doesn't explain exactly what social activities crossed the line.

But in the case of the manager who left voluntarily, the report noted multiple examples of fraternization, socializing and favours exchanged between the leader and various other vendors ..."

A chief problem is that the city's policy on conflict of interest is not clear, and does not lend itself to consistent, accurate and unambiguous interpretation," the report noted.

Moreover, the gifts and hospitality policy is silent" on the appropriateness of high levels of socializing with contractors or vendors."

Who was involved?

The auditor report paints a picture but it's hazy.

Senior leaders won't name the former employees to abide by privacy obligations under provincial legislation.

That also means keeping their positions, divisions and departments under wraps, Brown told The Spectator.

I can't do anything that would identify the employee. It just would not be meeting my obligations."

Guaranteeing anonymity to whistleblowers also factors into withholding details, city manager Janette Smith said.

One of the challenges is people won't come forward and talk to (Brown) if they feel it won't be confidential."

How were these problems discovered?

Brown's annual report doesn't specify how the allegations were brought to his office's attention.

But, generally, between July 2021 and June 2022, the office handled 107 reports. Of those, 65 were passed on via the city's anonymous fraud and waste hotline.

Another 42 reached the office directly. Of those, city staff made 20 reports; city management flagged 11; eight came from residents; two via councillors' offices; and one from the media.

In an email, a city spokesperson specified the two conflict-of-interest cases were flagged internally."

Who knew what and when?

Again, the picture is foggy.

Senior leaders haven't detailed when allegations were made, investigation timelines or when the employees under scrutiny left city hall.

The city spokesperson said one probe (it's not clear which) was sparked by information in late 2019" but there wasn't initially enough to start investigating until early 2022. The other probe started in the latter part of 2021."

The city manager, Smith, would be informed early in the investigation."

As for council, Brown noted his office doesn't flag an investigation for city politicians unless it's deemed a serious matter." In such a case, it's shared with them behind close doors.

A serious matter" could involve a number of scenarios, including fraud over $100,000, security threats or public safety concerns.

But the two conflicts-of-interest probes did not fit those criteria," Brown said.

So they were shared as part of the annual fraud and waste report during Thursday's audit, finance and administration committee, which has been the common practice.

In an interview, Danko, who acknowledged hearing rumours," said he absolutely" would welcome learning about such investigations earlier.

Nonetheless, the audit staff must be very careful" about the content and timing of disclosure for the sake of accurate reporting and the probe's success, he added.

It could compromise the investigation. Council could take action that is not actually the action that's needed."

Coun. Brad Clark, who took in Brown's presentation last seek, said the auditor tends to indicate if he's looking into something," but added that surprising the people at the end isn't necessarily a good thing."

Meanwhile, council can be limited to releasing information about serious matters" discussed in camera due to privacy legislation.

Coun. Cameron Kroetsch said 100 per cent" the city should release information about staff conduct issues as soon as possible, including outside the auditor's annual reporting cycle.

I think the city has to do a lot more to be transparent and part of this is earning trust with the public by making sure these things are out there in advance," said Kroetsch, another member of the finance, audit and administration committee.

It's standard practice" for municipal auditors, a relatively new office, to give a bad news dump" once a year, an annual reporting protocol that follows the practice of provincial and federal counterparts, Spicer noted.

That doesn't mean they can't break out of that."

Nonetheless, if scandals aren't disclosed earlier, it may be because auditors are still trying to piece together information in what can be lengthy investigations, Spicer said.

The question is: Is the value of reporting greater than the value of being able to operate or to investigate without a lot of public scrutiny?"

What's the remedy?

Each year, city hall employees must complete a training module on code-of-conduct policies.

But it's hard for some staff to wrap their head around" what constitutes a conflict of interest and how you mitigate that," Smith said.

Consequently, the city is conducting a comprehensive review" of its code of conduct policies and aims to improve staff training, said Lora Fontana, executive director of human resources.

That will involve case studies" to improve understanding and specific workshops," Fontana noted.

Staff expect to report back to councillors in March.

For Kroetsch, the sooner, the better.

I wish this was happening a lot faster, but I'm kind of hopeful based on the conversations today that we'll get there," he said after Thursday's committee meeting.

Teviah Moro is a reporter at The Spectator. tmoro@thespec.com