Did CRD staff commit fraud and/or a breach of public trust?

A shadowy group has launched complaints with the RCMP and several other public agencies.

IN EARLY SEPTEMBER, Metchosin Mayor and CRD Director John Ranns, in the midst of an on-air conversation with CFAX’s Adam Stirling about the CRD’s sewage treatment project, dropped a bombshell: “There’s a group of engineers and lawyers that have put together the most remarkable chronology of events through this whole process and have filed complaints with the police. I have been interviewed by the police. They filed complaints with the ombudsman, with the society of engineers, I don’t know where that complaint has gone. Nobody wants to touch this.”

Ranns later introduced me by email to the person acting as the voice of the mysterious “group of engineers and lawyers.” In exchange for a promise not to reveal Voice’s name, I was forwarded all the documents that had been sent by the group to the Victoria division of the RCMP’s Federal Serious and Organized Crime office, the Association of Professional Engineers and Geoscientists of BC, the CRD Board Chairperson Barb Desjardins, the BC Attorney General’s office, and Ombudsperson Jay Chalke. Voice also provided me with an email exchange between RCMP Constable Erin Bajic and Voice.

The documents confirmed who was behind the complaints.

While Ranns had obviously been impressed by the information presented, the RCMP was blunt in its assessment. Staff Sergeant Steve Wetter of “E” Division Federal Serious and Organized Crime Section informed Voice by letter, “In thoroughly reviewing the correspondence you provided, and in speaking with witnesses you have named, our review has found no evidence of a fraud, breach of trust by a public officer, or other offence in this matter.”

Read the RCMP's response to the complaint

Why did Wetter come to that finding? He told Voice, “You have indicated that it is your belief, based on your research and received sewage treatment plan proposals from Pivotal, a competing company to Stantec, that the sewage treatment plan proposed by Stantec is not financially prudent to the taxpayer.”

Wetter seems to be suggesting that the complaint of criminal and professional wrongdoing had actually been motivated by commercial competition between Stantec and Pivotal.

The “Pivotal” Wetter referred to is Pivotal IRM, a Victoria-based company that has represented both a gasifier manufacturer and a Norwegian company that builds wastewater treatment plants. Pivotal isn’t, strictly speaking, a “competitor” to Stantec in the sense that Wetter seemed to mean. Stantec was appointed as the CRD’s treatment program management consultant. Its role was to guide the CRD toward decisions on what technology to use and the most suitable capacity of the treatment plant, sludge processing facility and conveyance systems. Stantec created the “indicative design” for a secondary treatment plant at McLoughlin Point and advised the CRD to use anaerobic digestion to reduce the sewage sludge that plant would produce. Stantec’s consultant role excluded them from being involved in any consortium of companies that would eventually bid to build the system.

Pivotal, on the other hand, represented one company that wanted to play a major role in building the treatment facility, and another that wanted to supply gasifiers to burn off the sewage sludge created by the treatment process.

From mid-2013 onward, Pivotal’s Chief Executive Officer Chris Corps criticized the program that Stantec had developed, both in public and in private, and promoted a distributed, multi-plant system equipped with gasifiers to burn off sewage sludge.

By mid-2014, even though the contract to build a plant at McLoughlin Point in Esquimalt had already been awarded, the CRD board was forced to consider other options after BC Minister of Environment Mary Polak declined to require Esquimalt to allow the project to proceed. Esquimalt had voiced several objections to the project, and one of Esquimalt’s appeals to Polak was that there appeared to be cheaper alternatives than the one the CRD had chosen.

A grassroots organization had emerged—The Rite Plan—that promoted Corps’ vision of many small distributed plants and gasifiers. Led by Richard Atwell, The Rite Plan claimed Corps’ approach would be significantly less costly than Stantec’s McLoughlin-Hartland plan. Corps appeared to be closely involved with that group and Atwell. That could reasonably be seen as an attempt by Pivotal to use a grassroots organization to apply pressure on CRD board members to shift the project away from Stantec’s recommendations so that the technologies that Pivotal represented might be considered for the project. So while Staff Sergeant Wetter’s assessment that Pivotal was in competition with Stantec was presented in blunt terms, it wasn’t wrong.

I recently asked Corps if he had instigated the complaints. In an email Corps wrote: “It’s not coming from me.”

Here’s the “group of engineers and lawyers” own summary of their complaint to the RCMP, verbatim:

• CRD staff have known, and been repeatedly advised, that the sewage project is over-scoped, which now calculates to at least 75 percent. Staffs are documented agreeing in writing that the project is over-scoped. Challenges by CRD Directors on the scope were overridden, even while multiple independent engineers documented the excess;

• Staff failed to act on evidence from potential providers that the project could be done more cheaply. Published evidence by CRD’s own advisors illustrates the excess scope is at least $280M ($192M conveyance avoidance plus $88M savings through gasification rather than digestion);

• Staff stated they did so in order to keep federal and provincial funding levels even though they knew the scope was falsely high, yet there are provisions at CRD and provincial level that require bureaucrats be fiscally prudent and minimize costs for the taxpayer - unless there is a reasonable justification to do so;

• Recently, the CRD’s Project Board was appointed by the province to verify the project. Not only did they ignore what the engineers have said, but they also based their decision on the original and flawed CRD mandate to arrive at their conclusion;

• The Project Board then forced acceptance on CRD, they direct-awarded and sole-sourced the project (via the original group) ignoring all standard procurement transparency and fairness practices and refusing to go out to tender, which prevented the issue from being exposed.

• Because the staff and Directors were aware of the flawed calculations and potential savings, this is a Breach of the Public Trust.

Now each of these claims can be refuted with evidence, but it’s not necessary. There’s an easier way to show that the overriding complaint—taxpayers are paying too much as a result of CRD staff’s wrongful actions—is at odds with reality. Consider the following:

At the same time as the CRD was responding to a federal deadline for creating a land-based secondary sewage treatment system for Victoria, Metro Vancouver Regional District was doing exactly the same thing. It had been ordered by the federal government to build secondary sewage treatment for the municipalities of North Vancouver and West Vancouver by 2020. Both the project on the North Shore and the one here are now at the same stage—construction contracts have been awarded and some work has begun. Because of similarities in the timing, size and technologies used in the two projects, it’s easy to compare their relative overall cost. If, as the “group of engineers and lawyers” claim, Victoria’s project is greatly “over-scoped” and more costly than it need be, then that would be obvious in any comparison with the Lions Gate project in Vancouver.

The Lions Gate project will serve an area with a residential population of about 158,000 (2016). The estimated project cost is $700 million. On a per capita basis, that’s $4430 per resident.

The McLoughlin-Hartland treatment project will serve areas with a residential population of about 298,000 (2016). The estimated project cost is $765 million. On a per capita basis, that’s $2570 per resident.

If Victoria’s project has been “over-scoped” by “at least 75 percent,” then Vancouver’s has been “over-scoped” by twice that percentage. Yet no one is claiming that project is too large or that there has been fraud or breach of trust in Vancouver.

The contracts for both projects were won—in separate, open, competitive procurement processes—by the same consortium of companies, Harbour Resource Partners. In Victoria, the initial cost estimate and indicative design was produced by Stantec. Stantec was not involved in the Lions Gate project. 

Specific differences between the two projects suggest the Victoria system should, in fact, be considerably more expensive, per capita, than the Lions Gate project. For example, the Lions Gate anaerobic digester will be located right beside the wastewater treatment plant, whereas McLoughlin’s digester will be located 19 kilometres away at the end of a pipeline that is estimated will cost $90 million. As well, the Victoria project involves a costly under-the-harbour force-main tunnel. The Lions Gate project has no such tunnel or cost.

If anything, the CRD has likely underestimated the required capacity of the system and underestimated construction costs. We shall see.

Any responsible authority considering the “remarkable chronology of events” outlined in the complaint, in the context of the wider world of wastewater treatment construction projects, would come to the same conclusion that Staff Sergeant Wetter did: There’s no evidence of a fraud, breach of trust by a public officer, or other offence in this matter—unless it’s in Vancouver.

CRD staff and most elected directors did, however, commit an act of utter foolishness. They ignored what local marine scientists and public health officials told them about the existing, already-paid-for, tidal-powered, source-controlled marine-based treatment system and instead followed orders given by senior government bureaucracies who had little knowledge of the actual environmental conditions here. Those scientists and health officials made it clear that no evidence had been provided that the approximately $800 million project would produce an environmental or public health benefit. The CRD proceeded anyway. Now that should be a crime.

David Broadland is the publisher of Focus.