Feds probing $5M in green transit funding claims

OTTAWA - Federal auditors are on the hunt for $5 million of claims being questioned in a "showcase" program designed to cut greenhouse gases in cities across Canada.

A Transport Canada audit raises red flags about a series of claims made by officials in Vancouver, Winnipeg and Halifax for urban transportation projects partly financed by the federal government.

"Approximately $5M in project costs incurred by the recipients and their funding partners were reimbursed without receipt of sufficient supporting documentation," says the newly released report.

"Consequently, the eligibility of such project costs could not be clearly determined."

The projects were among eight funded by the $35.5-million Urban Transportation Showcase Program, created by a Liberal government but extended to March 2009 by the Conservatives shortly after they were elected to government. The money was earmarked to make public-transit systems cleaner and more energy efficient.

In addition to Halifax, Winnipeg and the transportation authority for greater Vancouver, the other recipients were Whitehorse, Waterloo, Ont., Toronto-Hamilton, Quebec and Montreal-Gatineau.

The federal government paid about a third of the $97.5-million bill for all eight projects, in a program that could well have been a dress rehearsal for the giant Economic Action Plan, which funded thousands of local projects across the country to stimulate the sagging economy.

Auditors were critical of Transport Canada for some lax rules, including a failure to require competitive bidding on city-issued contracts.

"The conditions do not specify that the recipient must seek best value in awarding contracts through the use of competitive tendering practices or place any restrictions on the use of internal resources in implementing the project," says the February 2010 document.

The report also noted that Transport Canada officials did not consistently monitor whether the projects were compliant with the conditions set by Ottawa.

And auditors found that the paper trail got thin when they traced federal payments to municipalities that then handed over Ottawa's cash to third parties.

In one case -- the report does not identify the city -- Transport Canada paid out $4.2 million "based on documentation that, in our opinion, was insufficient to attest to the legitimacy and eligibility of the expenditures." The audit suggests most of the murky claims were for salaries.

Transport Canada acknowledges it did not properly monitor the agreements and spending, and plans to conduct so-called "restricted scope audits" on the program to determine where it failed.

"This work will be undertaken shortly," spokeswoman Melanie Quesnel said in an email response to questions.

The department also plans to carry out a series of compliance audits on some of the projects to determine how much of the $5 million in unsupported claims was legitimate.

Quesnel said these more detailed probes are expected to be complete by March.

The eight projects covered by the program, which ended on March 31, 2009, and their total costs (includes federal contributions):

-- Sustainable Region Showcase for Greater Vancouver (Greater Vancouver Transportation Authority), $30.9 million;

-- Whitehorse Moves (City of Whitehorse), $2.4 million;

-- IXpress: Central Transit Corridor Express Bus Project (Region of Waterloo), $9.2 million;

-- Smart Commute Initiative (York Region, on behalf of Greater Toronto Area municipalities and City of Hamilton), $7.9 million;

-- MetroLink: Innovation Towards Integrated Bus Rapid Transit (Halifax Regional Municipality), $12.3 million;

-- WinSmart (City of Winnipeg), $6.9 million;

-- Integrated Management of Travel in Old Quebec (City of Quebec), $8.6 million;

-- Gatineau and Montreal Public Transit (Cities of Gatineau, Que., and Montreal), $19.3 million.