More pay, time away for MPI boss while ‘un-managed,’ long-delayed project’s costs exploded

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This article was published 09/05/2023 (865 days ago), so information in it may no longer be current.

WINNIPEG — Manitoba Public Insurance’s CEO received tens of thousands of dollars in bonuses and spent more than three months out of the province on business travel and paid vacation while the Crown corporation was facing criticism for poor management of a project that is more than $200 million over budget.

A Winnipeg Free Press review of MPI financial documents, along with figures provided by the public insurer and interviews with current and former employees, confirmed that in spite of criticism of information-technology Project Nova from the Public Utilities Board and rate-application interveners, Eric Herbelin continued to receive increases in salary and perks during his first two years in the job.

When Herbelin took over in 2021, the CEO salary stood at $348,094. His salary increased to $364,263 in that first year and to $375,563 in 2022, an eight per cent increase from what his predecessor earned.

MPI refused to disclose his salary and bonus pay for the 2022-23 fiscal year. However, corporation sources confirmed his total remuneration went up again last year following an external compensation review that he commissioned.

MPI’s financial performance has been solid over the past few years, largely due to the impact of the pandemic. While Manitobans were dutifully renewing their Autopac policies and paying their licence-renewal fees, there were far fewer vehicles on the road as remote work became a reality because of COVID-19.

Herbelin’s pay hikes have become a source of frustration for rank-and-file MPI employees who were subject to a two-year wage freeze.

Those employees, who are represented by the Manitoba Government and General Employees’ Union, have been without a contract since last September and are current trying to negotiate a new deal.

MPI officials said the freeze was initially applied to all employees, both unionized and non-unionized. However, over the next two years, sources confirmed that executive, director and manager-level employees, including Herbelin — everyone not covered by the collective agreement — received performance and retention bonuses.

Herbelin declined several interview requests to explain the reasoning behind his performance bonuses.

At the same time as his paycheque was going up, Herbelin was also taking advantage of relaxed pandemic restrictions for business-related travel outside of Manitoba.

MPI reported that in 2022-2023, he spent 38 business days — the equivalent of 7 1/2 weeks — travelling for the corporation.

The reasons for, and costs of, those trips were not provided.

MPI confirmed total executive travel expenses for the year ending March 2023 was more than $88,000, four times what was spent on travel in the fiscal year 2018-2019, the last complete year before the pandemic travel restrictions were in place.

The travel days, added to his annual paid vacation — which sources indicated was at least six weeks — mean the CEO of Manitoba’s monopoly auto insurer was away from work and often out the province for 3 1/2 months in the year ending March 2023.

Current and former MPI employees, all of whom asked not to be identified, said the total number of days Herbelin spent on business travel was a constant source of concern.

Even among other members of the executive team, nobody seemed to know where Herbelin was or what he was doing at points when he was travelling for business.

“He was gone a lot from the office and we hardly knew where he was,” said one MPI source. “It was so odd.”

Multiple sources related an incident surrounding an early 2023 trip to Toronto to meet with MPI’s reinsurers, the institutions that offer financial protection to insurance companies.

The sources said the annual trip to Toronto had been, in the past, a two-day affair. However, after the business with the reinsurers was completed this year and other MPI staff in attendance had returned to Winnipeg, Herbelin stayed away on business for another week. The sources confirmed that few people at MPI admitted to knowing where he was or what he was doing.

Herbelin declined several interview requests to explain the purpose of his business travel on behalf of MPI.

The sources indicated that Herbelin’s absences frequently disrupted the flow of work at the head offices, including work on Project Nova, which is now years behind schedule. They said the CEO’s responsibilities were frequently downloaded on to other members of the executive team, and that decision-making often ground to a halt.

“When you look at the way Project Nova has gone over the last 18 months, it was less a case of it being poorly managed or mismanaged, and more a case of it being un-managed,” said one source. “(Herbelin’s) absence had a huge impact on the project.”

In fact, the sources said concerns over the state of Project Nova have reached a point where internally at MPI, there are fears the project will not be able stay within its $290-million budget.

Originally estimated at $85 million, Project Nova was intended to modernize MPI’s information-technology systems while also providing Autopac customers with a broader array of online services. In January, the PUB ordered MPI to provide a detailed update of the scope and costs of Nova after expressing concern that a lack of “management control” over expenses and “significant uncertainty” in total project costs remain.

An MPI spokeswoman said in an emailed statement that MPI remains committed to bringing in all phases of Nova by 2025 within the revised $290-million budget. However, there were few details on what MPI considers to be within scope of those other phases.

In January, the first phase, which sources said is referred to internally as “R1,” was released. The MPI spokeswoman said it involved moving the special-risk extension business for trucking and other commercial customers from a paper-based system to a fully digital one.

A second phase, R2, will be delivered in August, adding further improvements to the process of insuring trucks and commercial customers.

However, the spokeswoman offered no details on the other phases of Project Nova that are considered to be larger and more costly. Sources confirmed the other phases include a full migration of the Driver and Vehicle Licensing system to a new platform, and the introduction of fully online, self-service features for basic Autopac customers.

MPI sources said that concern is rampant within the Crown insurer that the only way to stay within the existing budget is to start dialling back the scope of the project.

“If we continue at the burn rate we’re currently on, there is no way we can get past the R2 release without more money,” one highly placed MPI source said.

The pay hikes and travel expenses are just the latest example of questionable management practices at MPI that have occurred under the watch of the Progressive Conservative government.

Despite a growing number of concerns that emerged through the Public Utilities Board rate hearings in 2022, the minister responsible for MPI, Justice Minister Kelvin Goertzen, only this year started to take action to bring senior managers under more oversight and control.

Goertzen’s measures, to date, include a public rebuke of a planned hiring spree at MPI which, following the minister’s comments in January, was abandoned. Goertzen was also forced to issue a directive to stop MPI from awarding untendered contracts and, most recently, the announcement of an independent, third-party operational review.

“In addition to concerns about Project Nova, (the Manitoba branch of the Consumers Association of Canada) has been worried about inadequate operational cost controls at MPI in areas like staffing and overall staff costs,” said lawyer Byron Williams, who has represented the organization at PUB hearings.

“Although we do not want to comment directly on Mr. Herbelin’s bonuses and travel expenses, we are concerned they are further evidence that MPI is not applying rigorous controls to its operational spending.”

» Winnipeg Free Press