Multimillion-dollar contracts are under the microscope at City Hall after staff raise concern taxpayer money was misused

The city has initiated an audit into the work of construction firm Duron Ontario Ltd. The company did not respond to the Star’s requests for comment.

Ctvnews.ca
Aug. 29, 2023
Morgan Bocknek

The city of Toronto is looking into its contracts with a construction company paid tens of millions of dollars to upgrade city facilities amid concern taxpayer money was misused.

In August 2022, city staff “were made aware of inconsistencies” regarding the cost of work by Mississauga-based Duron Ontario Ltd., a city spokesperson confirmed.

The city has hired KPMG’s forensic services team to conduct the audit. Central to its investigation is a review of change orders sent by Duron to the city, the Star has learned. These orders are a kind of updated invoice, used when a contractor seeks payment for expenses beyond what was originally stipulated in a contract. The inconsistencies have to do with the number of the change orders, said Coun. James Pasternak, current member and previous chair of the infrastructure and environment committee.

“The city takes any potential instance of the misuse of funds very seriously. As soon as the inconsistencies were brought to light by a city consultant, the city requested an independent financial audit of all change orders be undertaken to understand the facts,” a city spokesperson stated in an email.

Duron directors Chris Economou and John Schenk did not reply to multiple requests for comment.

Duron’s city contracts worth $40 million
The construction work now under scrutiny was part of Toronto’s accessibility upgrades program, a multi-year effort to ensure the city’s services and facilities are fully accessible to people with disabilities.

Duron has held six contracts related to the accessibility upgrades program worth a total of $40.1 million. The upgrades are for various buildings across the city, including fire halls, civic centres and Toronto Police Service divisions. The Star does not know which project had invoices that raised the city’s concerns.

The audit is expected to be completed sometime in September, Pasternak said.

He said the concerns raised by the city consultant are troubling, and the city reacted appropriately.

“It’s a serious problem. And the city has acted on it pretty aggressively,” he said. “They’re going through everything,” he said.

Should the audit reveal duplicate billing or overcharging, the “logical response” would be to involve the city’s legal department, Pasternak said. If that’s the case, “we need recourse to recover those funds,” he said.

Calls for auditor general to investigate
Coun. Stephen Holyday, the chair of the city’s audit committee, said he hoped the auditor general’s office was looking into the matter.

“Situations like this undermine the public’s confidence in government,” he said. “It’s important to get to the bottom of the situation so that controls can be put in place so that it never happens again.”

The auditor general keeps its work secret until a report is complete, according to the city. In a statement to the Star, a spokesperson said they could neither confirm nor deny whether the office was probing the contracts.

Speaking generally about city contracts with private firms, Pasternak stressed the importance of having multiple levels of payment approval, as well as invoice matching techniques to compare invoices across all levels of vendor management so that taxpayer money is properly protected.