Kathryn May and Tim Naumetz, The Ottawa Citizen
A Mountie sergeant who wanted to widen an investigation into the misuse of money from the RCMP pension and insurance plans says one of the force’s senior officers muzzled the probe.
Staff Sgt. Mike Frizzell told a Commons committee yesterday that Assistant Commissioner David Gork told him the investigation had no mandate to try to find whether anyone profited from contracts that broke federal procurement rules to outsource the administration of the insurance plan.
MPs questioned Staff Sgt. Frizzell about what motives might have been behind secret and complex deals that resulted in the insurance plan’s underwriter, Great West Life, acting as the “conduit” for fees paid to Morneau Sobeco, the company quietly hired to manage the running of the multimillion-dollar insurance plans.
“We were specifically told not to look into it,” Staff Sgt. Frizzell told MPs on the public accounts committee, adding that Assistant Commissioner Gork told investigators that finding motives was not part of their mandate.
Staff Sgt. Frizzell was one of more than a dozen RCMP officers seconded to work on what was supposed to be an independent investigation led by the Ottawa police.
Dominic Crupi, the former director of the RCMP’s National Compensation Policy Centre, which oversaw the pension and insurance plans, and his superior, Jim Ewanovich, were “removed” from their posts after an internal audit, which eventually led to the Ottawa police investigation.
But Staff Sgt. Frizzell stunned MPs yesterday when he disclosed that Assistant Commissioner Gork, who previously testified he had no hand in directing the investigation, told investigators their inquiry was limited. “The original mandate of the investigation was to follow the pension money, where did it go, was it spent in a criminal manner?” Staff Sgt. Frizzell told the committee.
“As we had questions, we found more and more our mandate was constricted,” he said. “At one point, I had an argument with Mr. Gork, who told me our mandate was to investigate Mr. Crupi and Mr. Ewanovich. I explained to him ‘no, we don’t investigate people, we investigate events.’ The event was misuse of the pension funds.”
Staff Sgt. Frizzell and Chief Supt. Fraser Macaulay told the committee that the investigation should be reopened to pick up the trail that the original investigators had to drop. Staff Sgt. Frizzell has long insisted he was removed from the case after he found $600,000 was improperly withdrawn from the insurance plan.
Staff Sgt. Frizzell testified that investigators were not given the opportunity to determine whether anyone personally profited from the pension insurance dealings.
“We never exercised any warrants on bank accounts or anything like that to be able to tell you that,” he said in response to questions from NDP MP David Christopherson.
Staff Sgt. Frizzell told the committee that investigators found that the RCMP has been improperly taking money out of the insurance premiums to pay for the management of the plan since 1995 and the practice continues today.
Staff Sgt. Frizzell and Chief Supt. Macaulay gave MPs a presentation on the intricate and questionable transactions, beginning in 1995, when the RCMP decided to take administration costs out of insurance plans rather than use operating funds. That was also when the Liberals downsized the government and all departments were forced to cut costs.
The two officers were accompanied by acting Deputy Commissioner Kevin Mole, who told the committee the force had cleared the facts in the pair’s presentation, but later said he did not agree with some of their allegations.
Staff Sgt. Frizzell explained that during the probe into the pension funds, investigators found pension funds were funnelled into the insurance plans to help pay for mushrooming costs to outsource the administration of the insurance plans to Morneau Sobeco.
He told MPs the outsourcing plan, led by Mr. Crupi’s branch, went awry. Rather than get Treasury Board approval, the RCMP persuaded the insurance committee to approve taking money out of the insurance plans to cover those costs. First, the RCMP hired Great West Life to take over the plan’s administration, but it bowed out after being paid $250,000.
The compensation centre then struck a deal with Great West Life in which it appeared to be the administrator, but sub-contracted the work to Morneau Sobeco. Mr. Crupi agreed to pay Morneau Sobeco $6.3 million over seven years to administer the plans. That was double the yearly rate that would have been paid to Great West Life.
That’s when the RCMP dipped into the pension fund to cover the extra costs. The justification was that 40 per cent of the policyholders were retirees, so the pension plan should pay.
The contract was awarded to Morneau Sobeco without competition. Staff Sgt. Frizzell said Mr. Crupi argued it would “take too long” to go through a bidding process. The two officers said the contracts with the two companies were not reviewed by government lawyers or contracting authorities.
Staff Sgt. Frizzell said e-mails show neither Great West nor Morneau Sobeco were “comfortable” with the way the deal was structured, but went ahead to accommodate their client. Mr. Christopherson questioned why the compensation branch went to such lengths to set up such a costly deal. “Why, why were they willing to go so far, so persistently, just to make life easier, the savings of going with this process, as opposed to the grief it was causing them?” he said.
“I mean that is at the heart of this,” he said, adding that if Mr. Crupi’s branch had not insisted on using Morneau Sobeco exclusively without tendering the contract “we wouldn’t be here.”
Conservative MP John Williams agreed.
“There is obviously more to this than meets the eye,” he said. “It’s starting to be what I consider a corruption scandal and a coverup. What are the motivations? Usually they are monetary and someone obviously, or presumably, did it for some ulterior motive.”
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