Audit of 'financial discrepancy' at Riverview construction project still secret
A financial discrepancy related to construction work at a waste water treatment plant in Riverview has been confirmed by a forensic audit, though the details remain secret.
The TransAqua waste water treatment plant is undergoing a five-phase, $90-million upgrade funded by taxpayers.
Quebec-based Pomerleau Inc. was awarded a $12.25 million contract in 2017 to serve as general contractor for the first two phases of construction work. TransAqua handles sewage and wastewater for Moncton, Dieppe and Riverview.
TransAqua said its staff discovered a "financial discrepancy" related to the upgrade work last June. Pomerleau issued a news release last July saying it fired an employee who "engaged in unethical behaviour."
Seven months later, TransAqua general manager Kevin Rice won't get into the specifics of the discrepancy.
"I'm not at liberty to explain exactly what that was or what the amount was, other than to say that our staff did a great job in uncovering this issue and bringing it forward to the municipalities, our funding partners," Rice said.
Rice referred several times in an interview to "change orders."
A change order is a term used in the construction industry to refer to work added or removed from the scope of the original contract. Such changes can increase the cost of a project.
"We wanted to undertake a forensic audit to ensure that what we found was validated, which it was," Rice said.
Pomerleau declined to comment, citing its contract with TransAqua.
Results kept secret
TransAqua has kept the results of the audit secret so far.
CBC requested a copy of the audit report over several months last fall, eventually filing a Right to Information request.
TransAqua refused to release the document, citing provisions of the province's Right to Information Act that allows it to block access to information that could financially harm a third party.
Pomerleau in a news release last fall promised to "fully collaborate with any investigations" that arose following the firing of its employee. A company spokesperson said last July that police were not involved.
Rice said he couldn't comment when asked last week if police investigated the issue.
The upgrade work is expected to be complete by the end of 2020 to comply with federal clean water standards.
The province and federal governments are spending a combined $45.2 million on the upgrade. TransAqua ratepayers — resident and businesses in Moncton, Dieppe and Riverview — paid the remaining $45.2 million through increased waste water rates.
Rice said legal and audit costs as well as "change order discrepancies" won't be paid by ratepayers.
"The ratepayers will be made whole," Rice said. He said he couldn't comment on who would cover the cost.
'Overpayments'
Documents obtained by CBC last year through a Right to Information request suggest the issue relates to overpayments.
Eric Gaulin, vice-president of Canadian building operations for Pomerleau, sent a letter to TransAqua on July 4 expressing dismay with the situation.
Gaulin wrote that Pomerleau hired Ernst & Young to conduct a "forensic accounting investigation associated with the irregularities that led to [redacted] termination."
The letter doesn't elaborate on the nature of the irregularities.
"Rest assured that if the results reveal any overpayment, Pomerleau will reimburse such amounts to TransAqua without delay," Gaulin wrote. His letter doesn't state where any overpayment may have gone.
TransAqua carried out a separate audit that was completed last year and presented behind closed doors to TransAqua's board.
Jennifer Dingman, TransAqua's treasurer, said at the organization's annual general meeting last week that TransAqua's revenue was down $1.4 million last year, primarily because of the audit.
Dingman said the audit held up funding from the federal and provincial governments. She said TransAqua accepted the findings of the audit and funding would be provided this year.
CBC contacted both levels of government Friday. The province did not provide a response.
An Infrastructure Canada spokesperson said in an email the department is aware of the financial discrepancy, but deferred comment to TransAqua.
Rice said the aspects of the work overseen by Pomerleau were 11 months behind schedule.
"We're not entirely pleased with how this project was managed," Rice told CBC. He said TransAqua made the decision last year to carry out management of the remainder of the project by in-house staff.
"We want to control our own destiny and make sure from an accountability perspective that we ... meet those regulations by the end of 2020," Rice said, referring to the federal clean water rules.
