City of Toronto Olympic Task Force

(Possible Audit of the 1996 Olympic Games Bid)

(City Council on April 13, 14 and 15, 1999, adopted the following recommendations:

"It is recommended that:

(a)Recommendations Nos. (2) and (3) of the Olympic Task Force embodied in the communication dated April 12, 1999, from the City Clerk, be adopted, subject to amending Recommendation No. (3) by inserting the words 'Audit Committee and' prior to the words 'Olympic Task Force', so that such recommendations shall now read as follows:

'(2)the Olympic Task Force report further to the Policy and Finance Committee once the IOC announces its reforms to the bid rules for the 2008 Olympic Games; and

(3)the City Auditor be requested to review the current Bid Company's rules, regulations, and administrative and financial practices, and submit a report thereon to the Audit Committee and the Olympic Task Force.'; and

(b)the following motion be referred to the City Solicitor and the Mayor for report thereon to the Olympic Task Force:

Moved by Councillor Walker:

'That the City Auditor be requested to work with and assist the Provincial Auditor in investigating the use of the GST-exempt Crown Agency, Waterfront Regeneration Trust, for a private sector undertaking (Toronto 2008 Olympic Bid).' ")

(Note:Recommendation No. (1) of the Olympic Task Force embodied in the communication dated April 12, 1999, from the City Clerk, was ruled out of order and, accordingly, Council took no action with respect thereto.)

The Strategic Policies and Priorities Committee reports having concurred with the Recommendation embodied in the following communication (April 6, 1999) from Councillor Anne Johnston, North Toronto:

Recommendation:

It is recommended that the City of Toronto Olympic Task Force be permitted to report directly to the April13and14,1999, meeting of City Council, in order to present my report on the question of conducting an audit of the 1996 Olympic Games bid. The report has been prepared in conjunction with the City Solicitor and the City Auditor and addresses an outstanding motion on the April 13 and14, 1999 Council Order Paper.

Background:

Late in 1998, City Council created the Olympic Task Force and directed that it report through the Strategic Policies and Priorities Committee.

The Olympic Task Force held its first meeting on February 24, 1999.

The Olympic Task Force will meet on April 12, 1999, 9:00 a.m., in Committee Room No. 1, City Hall. It has been impossible to hold a second meeting of the Task Force earlier due to lack of meeting space and the unavailability of the members due to the budget cycle, March break, the Official Plan reviews, the Mayor's Summit on Homelessness, Passover and Easter holidays.

The April 12 date makes it impossible for the Task Force to report (as directed by Council) to the Strategic Policies and Priorities Committee prior to the April 13 and 14 City Council meeting.

I believe that it is in keeping with Council rules to submit my report as a communication to Council for its April 13 and 14, 1999 meeting.

I am, therefore, requesting your Committee's approval to submit my report directly to City Council on April 13 and 14, 1999, subsequent to the Olympic Task Force April 12, 1999 meeting, when my report will be on the agenda.

(City Council on April 13, 14 and 15, 1999, had before it, during consideration of the foregoing Clause, the following communication (April 12, 1999) from the City Clerk:

Recommendation:

The Olympic Task Force recommends the adoption of the report (April 8, 1999) from Councillor Anne Johnston, Chair of the Olympic Task Force, subject to adding the following Recommendation No. 3:

(3)the City Auditor be requested to review the current Bid Company's rules, regulations, and administrative and financial practices; and submit a report thereon to the Olympic Task Force.

Background:

The Olympic Task Force on April 12, 1999, had before it a report (April 8, 1999) from Councillor Anne Johnston, Chair, Olympic Task Force, respecting TOOC 1996 Inc. and International Olympic Committee Rules; and recommending that:

(1)City Council not expend scarce resources on attempting to review or audit the financial records of TOOC 1996 Inc.; and

(2)the Olympic Task Force report further to the Policy and Finance Committee once the IOC announces its reforms to the bid rules for the 2008 Olympic Games.

The Olympic Task Force also had before it the following communications:

(1)(March 10, 1999) from the City Auditor, addressed to the City Solicitor, requesting clarification of the following:

(i)the authority of the City Auditor to conduct an audit on the financial records of TOOC-96 Inc., a private corporation;

(ii)the potential location of any accounting records relating to TOOC-96 Inc.;

(iii)the obligation of former TOOC-96 Inc. Executive and staff to cooperate with the audit process;

(iv)the obligation of Ernst & Young as attest auditors of TOOC-96 Inc. To provide information to the City relating to their financial audits of TOOC from the incorporation of TOOC to its dissolution; and

(v)the obligation of the Province to provide to the City any information/ records relating to TOOC-96 Inc. and

(2)(March 12, 1999) from the Director of Municipal Law, Legal Services, responding to the aforementioned request by the City Auditor.

Mr. David Crombie, Chair of the 2008 Toronto Olympic Bid Corporation (TO-Bid), appeared before the Olympic Task Force with respect to the 2008 Toronto Olympic Bid.)

(Report dated April 8, 1999,

addressed to the Olympic Task Force,

from Councillor Anne Johnston,

Chair, Olympic Task Force.)

(Purpose:

To update Council concerning changes to the IOC rules for Bid Cities and to recommend against the City spending further resources on reviewing alleged improprieties in the handling of the unsuccessful 1996 Olympic bid by TOOC 1996 Inc.

Funding Sources, Financial Implications and Impact Statement:

There are no funding implications.

Recommendations:

(1)That City Council not expend scarce resources on attempting to review or audit the financial records of TOOC 1996 Inc.

(2)That the Olympic Task Force report further to the Policy and Finance Committee once the IOC announces its reforms to the bid rules for the 2008 Olympic games.

Council Reference/Background/History:

City Council, at its meeting held on November 25, 26 and 27, 1998 adopted the report from the Commissioner Economic Development, Culture and Tourism, dated November 4, 1998 updating Council on Toronto's bid to host the 2008 Olympic games and responding to various Council motions made in March and July, 1998, as well as Community Council motions from special meetings held in September and October. (Clause 1 of Strategic Policies and Priorities Committee Report 24). In so doing, Council adopted the terms of reference for the Olympic Task Force and requested the Striking Committee to select the members of the Task Force. At its meeting of February 2, 3 and 4, 1999, City Council adopted Clause 1, Report 1 of the Striking Committee and I was subsequently appointed Chair of the Council task force. Among its terms of reference, the Olympic Task Force is to establish a procedure to provide further oversight and an independent assessment of the social and fiscal aspects of the 2008 Olympic bid and to review the final bid proposal as well as its underlying assumptions concerning both operating and capital revenues and expenditures.

At its meeting held on March 2, 3 and 4, 1999, Council had before it a motion requesting that a forensic audit be conducted of the former City's 1996 Olympic bid by the City Auditor, which motion was deferred to the next regular meeting of Council to be held on April 13, 1999. That motion states that the current IOC corruption probe has revealed that the former City of Toronto's 1996 failed Olympic bid contained some improprieties and that those improprieties have cast a shadow of doubt amongst many proponents of the 2008 Olympic games. To the extent that allegations surrounding the 1996 Olympic bid continue to cloud support for the City's 2008 Olympic bid, the Olympic Task Force should comment on any such activity.

Comments and/or Discussion and/or Justification:

I have met with the City Auditor and the City Solicitor to review the information available to the City respecting allegations made in the press relating to the conduct of the unsuccessful bid for the 1996 Olympic games. TOOC 1996 Inc. ("TOOC"), was incorporated as a corporation without share capital under the laws of the Province of Ontario on September 8, 1996. It was formed to act as an agent for the City of Toronto for the purpose of organizing and preparing the City's application for the 1996 Olympic games. However, TOOC was not an agency, board, or commission of the former City. Legally, TOOC remained arms length from the City. The City Solicitor advises that the City Auditor does not have a statutory right to audit the books and records of a private corporation.

The roles and responsibilities of TOOC are set out into an agreement entered into between the City and TOOC, dated September 30, 1987. Unlike the agreement entered into between the current City of Toronto, the Canadian Olympic Association and Olympics 2008 - Toronto, respecting the City's bid for the 2008 Olympic games, the agreement the former City entered into with TOOC contained very few guidelines as to how TOOC was to operate. The 1987 agreement between the former City and TOOC did contain a right for the City Auditor to audit the books and records of TOOC, however, this right no longer exists. The Ministry of Consumer and Commercial Relations issued an Order of Dissolution under the Corporations Act, effective July 11, 1991. Prior to its dissolution, as would be expected, the Board of Directors of TOOC approved the winding up of the Corporation and the former City was aware that the Directors of TOOC intended to terminate its corporate existence. Also, notice was published in the Ontario Gazette and in the newspaper in accordance with the requirements of the Corporations Act. Consequently, the City Solicitor advises that as TOOC no longer exists, the City no longer has a contractual right to audit the books and records of TOOC.

There is no legal requirement for the books and records of TOOC to remain in existence at this date. Efforts have been made by myself and by the City Auditor to speak to various TOOC officials, to determine what records still exist and whether the City can gain access to them. These efforts have not been successful; to date we have not even been able to determine whether or not the financial records of TOOC still exist.

While the financial records of TOOC are not available, a search through the records of officials of the former City of Toronto who were involved with the bid have uncovered some draft financial statements of TOOC. A review of these financial statements does not reveal any impropriety, however, it must be noted that these statements are prepared at a very high level with little detail. Details of alleged improprieties, such as those revealed in the press, would never appear in financial statements prepared at this level. Finally, I note that following the award of the 1996 Olymic Games to Atlanta, Paul Henderson and Norm Seagram submitted a report to the IOC detailing their concerns with the bid process and with the expectations placed on bid committees and bid cities. This report has also been detailed in the media and its conclusions and recommendations have been praised by United States olympic officials in their recent investigation of the award of the Olympic Games to Salt Lake City.

In the circumstances, I would recommend to Council that efforts be made to look at the future to ensure that the City's bid for the 2008 Olympic Games is impeccably clean, rather than squandering the City's resources on the past. Given that the City has no legal right to access the records of TOOC, assuming they still exist, and given the Henderson report that was submitted to the IOC detailing concerns with the bid procedure and recommending change, I cannot see any benefit to the City pursuing an audit of TOOC. As a result of the worldwide coverage that allegations of IOC corruption, the IOC is reforming its rules, as they apply to cities bidding on the Olympic games. As has been reported in the press, the bid rules for the 2006 Olympic games now ban IOC members from visiting the cities and also forbid visits to IOC members by delegations representing bid Cities. The IOC has also changed the process; there will be a panel of fifteen members that will review all of the bids and make a short list of two Cities, from which the entire IOC Board will select the ultimate victor. To date, nothing has been specified respecting the bid rules for the 2008 Olympic games and reform of the bid rules for 2008 is not expected until the Fall of this year. The Olympic Task Force will be able to make recommendations to Council in respect of the bid process once the rules are set by the IOC.

Conclusions:

City Council should not expend its scarce resources on attempting to review or audit the financial records of TOOC, if such records even exist and if the City is given access to them. Instead, the Task Force should monitor the reform of bid rules by the IOC and report further to Council on this once the IOC has established its bid rules for the 2008 Olympic Games.)