The city has authorized a forensic audit of contracts with four consulting firms, and will continue to investigate possible irregularities in an $85 million computer lease deal.

It will also examine spending around Toronto's hiring of consultants in the late 1990s to prepare its computer systems for possible Y2K problems — which went on well after the start of 2000 and totalled about $160 million.

City council's audit committee met behind closed doors for nearly four hours yesterday to discuss the four consulting contracts to be the subject of the forensic audit, and auditor Jeff Griffiths' preliminary research into the city's computer lease deal with MFP Financial Services of Mississauga.

Councillors refused to discuss details of a confidential report into the MFP contract, but emerged from the private meeting saying that a further investigation of the deal is essential.

And a report that outlines measures being implemented by chief administrative officer Shirley Hoy to tighten the use of consultants, who decides if they are needed and how they are paid was criticized by some councillors as too soft.

"It's quite clear there was no structure and no discipline in the system, and one scandal after another, which everybody is trying to downplay," Councillor Michael Walker (Ward 22, St. Paul's) told the committee later in its open session.

"This, in my opinion, is the tip of the iceberg. It's millions and millions of dollars of public money that nobody seems to know what happened to. It is almost criminal and absolutely ridiculous."

Concerns were raised about the four consultants in a random audit of 90 consulting contracts done by Griffiths last spring. The audit found that the money paid to the consultants exceeded their contracts with the city, and that there were no limits on the personal expenses paid to some.

Scarborough computer consulting firm Ball Hsu & Associates was paid $10.1 million by the city last year, even though the value of the purchase orders in the city's accounting system was only $2.1 million.

Beacon Software Inc. another small, U.S.-based technology firm, was paid $535,807 plus $8,000 in hotel bills for consulting work with the city in 2000. Just $180,000 of that payment was covered in purchase orders.

The forensic audit will also probe contracts with Remarkable Software and Synerware EDP Services Inc.

The MFP deal, which was for computers and other equipment for the city's information technology department, was originally tagged at $43 million but has apparently risen to $85 million.

"It is hard to understand how one individual could have been on the payroll for at least three years and was brought in to design a water and tax bill," Councillor Jane Pitfield, who sat in on the private meeting, later told the audit committee, referring to Michael Saunders, the principal of Beacon.

A report distributed after the closed-door meeting noted that in preparing for Y2K, Mike Garrett, the city's former chief administrative officer, "was given broad authority to extend existing contracts, sole source and undertake emergency spending in order to prepare the city's emergency systems and facilities."

It goes on to say that day-to-day responsibility for the project was delegated to a Y2K steering committee which included former city treasurer Wanda Liczyk and Jim Andrew, the former head of Toronto's information technology division. Both have now left the city.

It adds that a preliminary review by city staff of Toronto's Y2K spending has found "there is a need for a more comprehensive examination of certain elements of spending and contractual arrangements ... (and) that there is reason to believe that the spending may have exceeded that necessary to bring the city to a responsible level of preparedness."

Hoy told the committee that some Y2K consultants had to be hired because the city was anxious to get rid of employees after amalgamation to reduce costs, then realized it didn't have the expertise needed to deal with the problems.

The Star

-- Anonymous, December 12, 2001