Charlottetown council receives forensic audit report, but details under wraps for now

Charlottetown City Council was briefed behind closed doors Monday night on the results of a forensic audit examining financial concerns raised regarding former CAO Peter Kelly's tenure.

The accounting firm BDO was hired by the city in September to look into financial concerns brought forward by the city's former deputy CAO Scott Messervey, who detailed them in a letter sent to councillors just after he was fired in January 2019.

At the time, Messervey told councillors he was fired by his boss, former CAO Peter Kelly, in retaliation for raising those concerns.

Kelly was terminated without cause by council last May.

While arguments were made Monday night by councillors Mitchell Tweel and Bob Doiron to stay in an open meeting and immediately make the audit report available to the public, council voted 8-2 to go into closed session.

After the presentation by BDO, councillors were required to sign non-disclosure agreements in order to take copies of the report home with them.

Public release could have changes

The city wants a legal opinion before releasing the report, said Mayor Philip Brown.

"[We're] getting our legal counsel to look at [the report] and then we'll be back at it again to hopefully release it in the next few days or within a week," said Brown.

The city's lawyer will be looking for the potential of any legal liabilities against the city from an individual or from a corporation, he said.

Brown was asked if the version that will eventually be made public will differ from the report councillors reviewed Monday night.

"That is what we're waiting for from our legal counsel, and we'll wait to see what they have to say about the legal liabilities that could be there," he said.

Messervey is an accountant who, prior to working for the city, had worked in the office of P.E.I.'s auditor general. Among the 18 concerns he raised in his letter to council:

• that millions of dollars in cost overruns had been approved by the city's CAO when, under the Municipal Government Act, that authorization had to come from council;

• that a "large number of material errors" cited in the city's audited financial statements resulted from the CAO ignoring the advice of finance staff;

• that some members of council were expensing meals including booze and paying for their spouses, putting all the expenses on the taxpayer dime.

In February 2019 the council of the day met in closed session to discuss Messervey's letter. Afterward they voted 7-3 to take no further action on the matter.

Messervey's concerns were not made public until reported by CBCNews last year.

In a statement released Monday night the city said it had provided more than 10,000 documents to auditors with BDO, including policies, council minutes and purchase orders spanning a seven-year period from 2015 to 2022.