The Toronto City Council is deliberating on a significant measure: a proposed five-year ban on Capital Sewer Services Inc., a construction company involved in multiple infrastructure projects for the city. This follows an investigation revealing that the firm overbilled Toronto by more than $1 million during a recent assignment. Capital Sewer has secured approximately $200 million in contracts for sewer projects over the past five years, leading the city to suspect that this overbilling incident may be part of a larger pattern.
The irregularities first came to light through the city’s internal controls and complaints reported via the Auditor General’s Fraud and Waste Hotline. A report is scheduled to be examined by the city’s general government committee next week. The investigation specifically focuses on the Dufferin Sanitary trunk sewer system, where Capital submitted a quote of $1.3 million for subcontractor work. However, when the city requested a price directly from the same subcontractor, they were quoted only $470,000—about a third of Capital’s price.
City Councillor Brad Bradford expressed concern over the situation, emphasizing the implications of such misconduct. “I’m glad that that was uncovered and we’re able to investigate and take corrective action, but if it happened once and it happened to the tune of a million dollars, what else are Torontonians paying for that they’re not receiving?” he remarked, highlighting the need for accountability.
Capital Sewer has acknowledged its wrongdoing. In a statement to CityNews, the company claimed it was a victim in this situation, asserting that a single employee had "abused his position of trust" by circumventing established procedures for personal gain. The employee in question has since been terminated, and the company indicates that it has implemented stricter internal controls and intends to repay the city for the funds owed.
Toronto City Council is set to consider the proposed ban later this month, although Capital Sewer currently holds multiple contracts worth tens of millions of dollars with the city. Bradford pointed out the limited number of vendors who meet the city’s requirements for contracts, stating, “There are so few vendors and contractors that meet the requirements to work with the City of Toronto. We will be engaged with contractors doing work on our roads, and there are existing lawsuits underway, and they’re still awarded contracts, and I don’t think that’s acceptable.” His comments reflect the necessity for significant reforms in the city’s procurement process to ensure integrity and transparency.
Furthermore, both Capital Sewer and the city have reached out to the Toronto Police regarding the overbilling incident and potential alterations of documents. A forensic audit conducted by KPMG is also in progress, aimed at uncovering whether additional overbilling practices have occurred in the firm's dealings with the city.
