Aftermath of a Scandal: Former City of Toronto CFO Suspended from CA Membership
Neil's been on vacation, which has no doubt given me an additional chance to cry "First!", as I write about an interesting little feature in Checkmark, the magazine of the Institute of Chartered Accounts of Ontario. The Summer 2007 issue came out and I skipped right to the back for the profession's version of "true crime" stories, although it's not necessarily a matter of "crime", it's definitely more of the kind of thing you'll see Dennis or to a great extent, Francine writing about on a regular basis.
The interesting feature I'm referring to is the ICAO's "Disciplinary Notices" page - or section, if it's been a rough period - which functions like a police blotter for Chartered Accountants.
One name jumped right out: "Wanda A. Liczyk, North York."
She has been "found guilty of three charges under Rule 201 of failing to conduct herself in a manner which will maintain the good reputation of the profession and its ability to serve the public interest." The notice goes on to explain how she signed contracts without proper authority for "a friend" with whom she was having a relationship that impaired her independence.
As a punishment, Wanda "was fined $15,000, charged costs of $7,000, and suspended from membership for six months."
What did she do? She was the CFO and Treasurer of the City of Toronto during the MFP Leasing scandal (link working until September 2011). Quite a fuss got kicked up about this whole thing - Wikipedia has a quick summary if you're unfamiliar with it - basically a $40 million contract ended up costing over $100 million. Read that if you want the details - rest assured, taxpayer dollars got thrown in a big hole.
Before we move onto what Wanda did - or who she did, as some would put it - a quick note on MFP: they got Toronto to sell MFP its computers to MFP. This meant MFP technically "owned" them. Then MFP leaseed them back to the city. A completely pointless transaction, anyone can see - and one that ripped off the city by about $80 million.
The media didn't forget about Wanda - they mentioned last year that the ICAO initially figured that the risk of Wanda doing Bad Things was low, but a review of that decision pointed out that it's important to uphold the reputation of CA firms by punishing those who do wrong. And so disciplinary hearings took place over the past year.
David Nickle, a local city hall reporter, wrote up the start of the ICAO investigation, and he reminded readers about what transpired: as David explains it, "the institute has charged her in connection with the somewhat seamier,
secondary matter of the related external contracts inquiry: her
relationship with Michael Saunders, a married computer consultant who
Liczyk hired, and hired again, to create first North York’s and then
Toronto’s tax collection system. The charges indicate that Liczyk “knew
or ought to have known” she was compromised in dealing with Saunders
(when we say relationship, it was, of course, that kind of
relationship). Also, that she signed those contracts without proper
authority."
Discipline, Goodness and Knowledge
As with any profession, people screw up. Some don't have enough
training, some have lapses in judgement, and sometimes what happens is
a mystery. I'm reading about how these problems also affect the medical
profession in Complications, by Atul Gawande right now.
While
the medical profession, Gawande writes, has a fair bit of trouble
balancing the need to police itself and avoid destroying doctor's
careers, the Disciplinary Notices seem to indicate that the CAs are
capable of identifying whether people have hope of rehabilitation or
have irreparably disgraced and destroyed themselves.
A six month suspension is not thrown around lightly. It was the
harshest of any punishments reported in Checkmark this month, and it
shows they really meant business. A CA with her experience would
usually be in the prime of their career but a black mark like that will
definitely tarnish whatever reputation she has left - the Notices
always have a preamble which states that "The Discipline Committee applies the principles of rehabilitation, specific deterrence and general deterrence to determine sanctions appropriate to the particular circumstances of each individual case and in the public interest."
When I see that, I see it was saying, "we'll try and make you learn from your mistakes, punish you if you deserve it, and make the flogging sufficiently public if the the people are justly baying for your blood." Well, the "flogging" part is probably be taking a bit of artistic license with my interpretation, but you get the idea. Wanda's already gone through the embarrassment of having her affair revealed to the entire city, has been fired and now has bloggers pointing at her. And judging from David's site, probably laughing too.
That's my somewhat facetious interpretation of serving the "public interest".
Aside from a longer suspension or larger fine, the other alternative would be to expel Wanda from the Institute. No doubt some people figure that wouldn't be a Bad Idea. The ICAO reserves that ultimate punishment, though, for people who it believes are "incapable of being rehabilitated or are otherwise ungovernable". Considering that it's rather unlikely she'll make a mistake this huge again, it's safe to say the ICAO exercised its judgment wisely in this case. While I don't, I wonder if anyone wants to play Devil's Advocate and thinks she was punished too much?
Sideshow Scandals
There were additional people dragged into the mess, including the city's former budget chief, a politician named Tom Jakobek. The amazing thing was that despite being heavily implicated in alleged bribery related to MFP he was arrogant enough to try and run for mayor of the city while the scandal was fresh in everyone's minds!
Although that claim wasn't proven, he admitted to lying about some of his involvement in the case - as a result he only got 5000 votes in an election for mayor of a city of about three million people.
To make matters worse, yours truly was televised nailing Jakobek with hard hitting questions at a mayoral debate - essentially asking "where do you get the idea it's worth running if you've just been through a scandal like that?" I must admit, it was a cool moment - which I promptly documented in my college newspaper. His answer was beyond unimpressive. He said he had apologized repeatedly. And as a result, we should offer him a second chance?
Right, so that's how he got 5000 votes.
Politicians don't seem to have the kind of recovery methods that CAs or even doctors have access to, it's clear to see - but ballot box justice might be just as efficient, when you think about it.