The MFP Scandal

Madam Justice Denise Bellamy released her report yesterday on the MFP scandal. The full report is available at the Toronto Computer Leasing Inquiry website. A $43-million computer contract somehow ballooned to more than $100-million. A summary of the MFP scandal can be found here.

I know one of the founders of MFP. He sold his interest in the company many years ago. And I also had business dealings with MFP in the past. I know several of the former board members and some of the executives. The company has since changed its name to Clearlink.

The report is comprehensive and very hard hitting. The executive summary alone is 132 pages. An excerpt from the executive summary:

The events examined in the inquiry were six large IT transactions between the City of Toronto and outside suppliers before, during, and after amalgamation and Y2K. Serious questions arose about all of these transactions. Investigating them thoroughly, calling all the witnesses, and writing this report took the better part of three and a half years, which included 214 public hearing days, 124,000 pages of documents, 156 witnesses, some of whom testified in both inquiries, 22 parties with standing, and over 60 lawyers.

As the stories in this report will make very clear, people made mistakes. Some people disgraced themselves, failed in their duty to their City, lied, put self-interest first, or simply did not do their jobs.

I found the report fascinating and upsetting. Jim Andrew, formerly responsible for the IT group at the City, demonstrated inappropriate conduct with suppliers:

Jim Andrew’s prodigious appetite for corporate freebies was not limited to MFP’s offerings. Between 1998 and 2001, he averaged at least one outing a month courtesy of other suppliers: golf, hockey games, a ski day, parties, lunches, dinners, cocktails. And then there were the big trips. One supplier flew him to the Masters golf tournament and paid for his ticket to the tournament, hotel and meals. Another flew him to England and put him up for two nights, all for a brief meeting at its London office. Knowing his supervisor would not approve these trips, Mr. Andrew didn’t tell her. The message he sent by accepting all of this corporate entertainment is clear and troubling: Jim Andrew, a public servant, was for sale.

When you deal with suppliers, there is a fine line between accepting nominal gifts and outings and putting yourself into a position of compromise and a conflict of interest. Corporate policies outline acceptable boundaries. And, when in doubt, you can and should refer to your management.

There is simply no excuse for the conduct displayed by some of the key decision-makers at the City. Nor, for that matter, the conduct of some of its suppliers.