Alta. begins review of Westlock County and former CAO, now with city of Charlottetown

The Alberta Department of Municipal Affairs says it's begun a preliminary review into concerns raised by the council of Westlock County.

The council of thesmall farming community north of Edmonton asked the provinceto conduct a review of its operations, including the conduct of its former chief administrative officer, who is now Charlottetown's CAO.

The county's former chief financial officer allegesthat Peter Kelly, while serving as CAO, authorized development on countyproperty for a lessee without receiving the required spending authorization from council. That lessee was to be the Horizon North project.

From our review of the relevant documents and information gathered during the investigation by Westlock County, we conclude that Mr. Kelly has breached his duties to Westlock County as CAO.- Reynolds, Mirth, Richards & Farmer LLP legal briefing

As a result, the former CFOmaintainedthe community is out approximately $194,000 because the development costs exceed the value of the property.

Council asked the Alberta government to conduct a review and the Alberta Department of Municipal Affairs confirmed on Tuesday a preliminary review is underway, which will include confidential on-site interviews withcouncillorsand administrative officials.

At the conclusion of the review, the department says, the provincial minister of municipal affairs will decide whether to proceed to a full-on inspection of the county's affairs.

• Charlottetown mayor stands by beleaguered CAO Peter Kelly

• Peter Kelly spent hundreds of thousands without authorization, says Alta. county

'Significant breaches'

Meanwhile,WestlockCounty council has been provided with a briefing from its law firm citing"significant breaches" by Kelly, who was mayor of the Halifax Regional Municipality from 2000 to 2012.

CBC News obtained a leaked copy of the briefing, prepared by the law firm of Reynolds, Mirth, Richards & Farmer LLP.

"As a result of certain failures to follow the proper procedures with respect to Horizon North and the Horizon North project you have requested our opinion with respect to available remedies against Mr. Kelly," states the briefing, dated June 13, 2016.

"From our review of the relevant documents and information gathered during the investigation by Westlock County, we conclude that Mr. Kelly has breached his duties to Westlock County as CAO."

The firm concludes that while the county could commence legal action through the Alberta Court of Queen's Bench against Kelly, it says it could prove a costly, lengthy battle.

The letter goes on to say, "While the county has been able to deduce much of what occurred, the county does not have an original Horizon North file and Mr. Kelly may present a very different version of events."

The letter also suggests challenges with evidence and establishing damages could limit the likelihood of success to less than 50 per cent.

Kelly says he acted on council motions

In an email to CBC News about the latest developments, Kelly said there were two motions which resulted from many in-camera discussions.

Previously he toldCBC News thatWestlock council, "publicly passed the motion to enter into the lease agreement, with the works stipulation being contained in the lease documents ...I worked closely with the public works department and relied on their information and costings to provide myself and council with complete and accurate information."

Charlottetown awaits review

When contacted by CBC News this week, a spokesperson for the City of Charlottetown sent an email statement.

"At this point in time, the City of Charlottetown is awaiting the conclusion of the request by Westlock County to the Province of Alberta to conduct a review. If the review indicates any issues with Mr. Kelly, council will deal with the situation at that time."

Last month Charlottetown Mayor Clifford Lee said he supported the city's new CAO and the process followed to select him.

"There's a lot of issues in Westlock County, I'm not sure that they are issues that are relevant to the performance of Mr. Kelly," Lee said, adding he was "satisfied at this point in time," but noting the possibility of a review by the Alberta government.

"If it does in fact show that Mr. Kelly was in violation of the Act, then that's obviously an issue that concerns me greatly, and city council here in Charlottetown will deal with that."

• MORE P.E.I. NEWS | Kensington searches for history on horse-drawn hearses
• MORE P.E.I. NEWS | 150 mobile homes in Meadowvale affected by boil water advisory