Council swats down motion to hire forensic auditor to confirm London Hydro’s debt

London Hydro headquarters. (Daryl Newcombe/CTV News London)

On Tuesday, the Board of Directors of London Hydro presented the 2023 Annual Report on Finance to council’s Strategic Priorities and Policy Committee (SPPC).

Coun. Susan Stevenson used the opportunity to ask a series of questions about concerns raised in a letter by businessperson and Chartered Professional Accountant (CPA) Cedric Gomes.

Gomes’ letter to city council expressed concern about the debt declared in the annual financial statement, “In the 2022 financials, the Company (London Hydro) disclosed a [debt] of $168 million. That same debt, at the same point in time, is now (2023 report) valued at approximately $200 million— indicating the company’s debt was previously undervalued by $32 million.”

“There is a lot of grey in accounting. What is not grey, what is black and white, is did the reporting change?” Stevenson asked London Hydro CEO Vinay Sharma.

Sharma explained that a debt swap agreement with a bank ensures a fixed amount of principal and interest will be repaid by the end of the agreement’s term.

The annual financial reports, however, show how changing interest rates impact the amount of money that would need to be repaid if the debt was paid back at a specific point in time.

Sharma explained to the committee, “These are unrealized statements. The loan is $200 million [in] 2022, the loan is $200 million [in] 2023.”

Stevenson put forward a motion to refer the matter to a forensic auditor for an independent determination.

That sent the committee behind closed doors to receive confidential legal advice.

When the public session resumed, the mayor expressed his confidence in the documents provided by London Hydro.

Mayor Josh Morgan noted that the financial statement had been reviewed by independent auditors for the city, “I do not need another opinion on this. The work of KPMG is thorough and has addressed any of the concerns that I personally had.”

The vast majority of Stevenson’s council colleagues were satisfied with the financials.

The motion to have a forensic auditor review the amount of debt declared by London Hydro lost 2-13 (Stevenson and Trosow in favour).