‘I was not prepared to delay taking action’: MPI board chair

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This article was published 24/05/2023 (1212 days ago), so information in it may no longer be current.

WINNIPEG — Manitoba Public Insurance’s board of directors voted unanimously to oust former chief executive officer Eric Herbelin from the Crown corporation after reviewing the findings of an internal investigation into his conduct.

On Tuesday, MPI board chair Ward Keith said he makes no apologies for calling an emergency meeting of the auto insurer’s governance committee over the long weekend.

The board voted to dismiss Herbelin with cause Sunday and his departure was announced that afternoon. MPI chief operating officer Marnie Kacher was appointed interim CEO.

“As chair of the board, I was not prepared to delay taking action until after the long weekend,” Keith said in an interview. “The board took what I believe to be the necessary and appropriate action and in as timely a manner as possible, considering the necessary due process.”

The investigation concerned Herbelin’s “work-related conduct,” Keith said. He declined to discuss the scope of the review or its findings, citing privacy concerns.

“After considering several factors, the board determined the relationship should be terminated and Mr. Herbelin was dismissed with cause,” he said.

The investigation was ordered by former MPI board chair Michael Sullivan prior to his resignation earlier this month, Keith explained.

A lawyer external to MPI was hired to conduct the review and the results were submitted last week and Keith said he was notified a few days later. Once informed of the results, Keith called the emergency board meeting, which requires 72 hours notice.

Herbelin took the top job at MPI in early 2021 with a resumé boasting 30 years of experience in the insurance business. The Swiss national held a series of management and executive roles prior to working at MPI, including as president of Elips Life Insurance, a Chicago-based subsidiary of a Swiss company.

He joined the publicly owned auto insurer during the COVID-19 pandemic and as MPI was already pursuing the largest technology modernization effort in its history, known as Project Nova.

Under Herbelin’s tenure, the project’s price tag ballooned from $100 million to $290 million, with Herbelin and the corporation blaming delays and cost overruns on incomplete advice from consultants hired to prepare the initial business case.

The hired help left out a number of expenses and overestimated MPI’s ability to deliver the changes necessary to move basic customer services online under the initial timeline, Herbelin told a legislative committee in December 2022.

One month later, the corporation was rapped by the Public Utilities Board, which ordered a closer look at MPI’s spending on Project Nova, citing concerns it had lost control of the $290-million budget.

In its decision to approve a 1.54 per cent rate increase for the average driver in 2023-24, the PUB said significant uncertainty remains with Project Nova and it remains concerned expenses will continue to rise.

Meanwhile, it came to light MPI awarded more than $12 million in untendered contracts to consulting firm McKinsey and Co. to help with the rollout of Project Nova. The revelation sparked a ministerial directive issued in February requiring the corporation to competitively source goods and services.

A second ministerial directive was issued in April ordering an external organization review of MPI to confirm whether MPI’s financial projections are sound, its hiring plans are good value for ratepayers and that the executive structure is appropriate, among other items. A report is expected by the end of the year.

And earlier this month, the Winnipeg Free Press reported Herbelin received a three per cent pay bump last year and spent 38 business days travelling despite Project Nova cost overruns and the PUB’s concerns.

Sullivan resigned as board chair shortly after.

On Tuesday, Keith declined to discuss board decisions made prior to his appointment and would not comment on raises or travel expenses provided to the former chief executive officer.

“Moving forward, having appointed Ms. Kacher as the interim president and CEO, I am really confident in her experience and her knowledge, and I also know that she’s well-respected not just within the company, but by stakeholders and business partners,” he said.

The leadership team is focused on successfully implementing Project Nova on schedule, preparing its next general rate application and providing good customer service while a search for a new, permanent CEO is underway, he said.

The Free Press was unable to reach Herbelin for comment Tuesday.

Justice Minister Kelvin Goertzen, who is responsible for MPI, said he supports the board’s decision to dismiss Herbelin, though he has not reviewed the findings of the internal investigation.

“It deals with (human resource) matters and it’s not something I should be privy to see,” Goertzen said.

The Steinbach MLA said he is confident in the current MPI board and its chair.

NDP critic Matt Wiebe alleged Herbelin’s dismissal was a “political move” and the government should have acted sooner to address concerns at MPI.

“The issues that were identified with Project Nova should have been a major red flag for this government and it should have prompted them to act immediately to get control of the situation,” Wiebe said. “Instead of doing that, the government sat on its hands, refused to acknowledge the issues and, now, in a desperate attempt in an election year to distract or move past this issue… the minister wanted to make this change.”

» Winnipeg Free Press