MPI loses another exec but board chair insists Crown corp has handle on spending, restructuring

Manitoba's embattled auto insurance Crown corporation insists it is righting itself amida storm of scrutiny over the ballooning budget of Project Nova, the exodus of executives and a questionable contract with aU.S.-based consulting firm.

But before he waded into any of the controversies, new Manitoba Public Insurance board chair Ward Keith highlightedgood news for Manitoba driversMPI is applying next week to thePublic Utilities Board tohold the line onbasic insurance rates for next year.

The application will also seekenhancements to the Driver Safety Rating scale to offer larger discounts for driverswith the safest records, he said, also noting MPI is in "a strong financial position overall across its lines of business."

"After considerable challenges, today's message is indeed a positive one," Keith said in a Tuesday interview.

The zero per cent rate request, however, is no surprise. MPI has been directed by the provincial governmentto not increase ratespending an organizational review of the corporation.

The province ordered the external organizational review after cost overruns and a steep rise in projected staffing levels. A month later, after an internal review of his conduct, chief executive officerEric Herbelin was dismissed.

Exec quits after relocation ultimatum

More recently, late last week,MPI'schief information technology officerSiddhartha Parti quitafter getting an ultimatum from Keith, who was appointed chair after his predecessor, Michael Sullivan, quit last month.

"When I came onto the board, I determined fairly quickly that there needed to be a little bit of a reset within the organization," Keith said on Tuesday. He joined the board in May.

After learningParti lived in Toronto, Keithasked him to relocateor resign. Parti chose the latter option.

Keith had "significant concerns" about an executive member of the Crown corporation living outside the province. On top of that, Parti's travel costs between Toronto and Winnipeg were charged back to MPI through an arrangement with Herbelin, Keith said.

In an email to CBC News, an MPI spokesperson said Parti was hired in May 2021 andinitially relocated to Manitoba, but moved back toOntario in October 2022.

The corporation spent $19,021 on travel expenses between then and his resignation on June 2.

Parti's departure will not impact Project Nova, Keith said. An interim person will lead ituntil a permanent replacement can be found.

Project Nova overruns

Project Nova which included anoverhaul of MPI's core information technology systemsand theintroduction ofonline options was expected to cost just over $100 million and be done withinthree years when it started in 2020.

It is now pushing$290 million with two years still to go.

More recently, the corporation submitted plans to increasestaffby 420 people, with many linked to Project Nova. Those hiringshave since been put on hold, said Keith.

"Prior to my appointment as board chair, there was considerable concerns raised about Project Nova," he said.

Since then, a number of steps have been taken to ensure the project stays within scope and budget and "we will soon have the oversight that is necessary to stay on top of this project moving forward," he said.

That said, greater oversightis required to ensure Nova stays on track andismanaged diligently, responsibly and with the right levels of transparency, Keith said.

The board is preparing to hire an independent firm to provide that external oversight for the remaining two years of the project. An update will be provided to the Public Utilities Board in October, he said.

As well,MPI is in the final stages of contracting out the external review ordered by government in April. It isto be completed by the end of December.

The costs for the third-party review and the Nova oversight will be covered by apre-approved budget for governance and advisory services under Project Nova.

"So in other words, no new money will be required," Keith said.

Keith is optimistic some of those spending figures will actually decrease.The$290 million cost of Project Nova includes $60 million forcontingencies, of which virtually none has been used.

If that trend continues, he believes Nova will be completed several million dollars below that total.

"From my perspective, at this pointanyway, I can tell you thatthere are absolutely no upward pressures on the budget for this project," Keith said.

Public interest group watching

Byron Williams, director of the Public Interest Law Centre, which helps representconsumers at PUB hearings into MPI rates, called Keith an honourable man and applauded thetightened oversights, but said he still has great concerns.

"Project Nova has been going south in a bad way for a long time" and consumers are likely to never reap any savings or benefits that it initially promised, Williams said.

He said hisclients the Consumers'Association of Canada willattend next week'srate application at the PUB hearing "to make sure Manitoba Public Insurance is being prudent and reasonable with ratepayers' money."

The board has also cut ties withU.S.-based consulting firm McKinsey & Company, which the Winnipeg Free Press reported in January hadreceived $12 million in untendered contractsto examine what's going on with Nova. But then McKinsey & Company came under the criticism for its own lack of progress.

"MPI no longer has any contractual ties to that organization," Keith said Tuesday, explaining the firm completed its work. "It's not like the relationship was severed when there waswork was ongoing."

However, there are invoices still to be paid and MPI is reviewing them to ensure the firm met its obligations, he said.

Keith also said MPIhas identified and pre-qualified about 50 Canadian information technology vendors that can be contracted in the future on short notice "and at a much lower rate than hiring IT consultants," he said.

"This is an example of what will help control costs of Project Nova and the overall IT operations at MPI moving forward, and this will be the case for the next three to fiveyears."

The Progressive Conservative government did not respond to requests for comment.

The Opposition NDPaccused the government of mismanaging MPI and said a public committee examining the Crown corporation would be preferable to a review.

MPI loses another exec but board chair insists Crown corp has handle on spending, restructuring

1 year ago

Duration 2:05

Manitoba's embattled auto insurance Crown corporation insists it is righting itself amidst a storm of scrutiny over the ballooning budget of Project Nova, the exodus of executives and a questionable contract with a U.S.-based consulting firm.