What happened

The City of Waterloo financed the RIM Park recreation complex through a private financing arrangement. A financing company presented Council with a rate of 4.73%. The contract that was executed specified 9.2%. No Council member and no independent advisor reviewed the executed document.

Over thirty years the payout would have reached $227.7 million — roughly 4.5 times the construction cost of the facility. The arrangement was later settled at $145.7 million. The Sills Judicial Inquiry reported in 2003 and made 31 recommendations. At the following municipal election, the entire Council lost their seats.

The information failure

Contracts and Governance together. The number the decision-makers acted on and the number in the signed instrument were different numbers, and no step in the process existed to reconcile them. Review of the executed document was not assigned to anyone, so it was not performed.

This is the clearest available demonstration that an information failure does not require a technical system to fail. It requires only that the authoritative version of a fact and the version in front of the decision-maker are allowed to diverge.

What would have been different

A single control — independent review of the executed contract against the version presented for approval, assigned to a named role before signature — addresses this directly. The inquiry's 31 recommendations are largely of that character.

The relevant point for an owner reading this today is not that Waterloo was careless. It is that the control did not exist, and that whether it exists in your own organization is a question with a documentary answer.

← All the evidence