Mayor Rob Ford said the city will be moving quickly to replace the Toronto Community Housing Corp. board hours after the auditor general blasted the social housing agency for wasting millions of dollars in untendered contracts and lavish employee expenses.

Ford also hinted CEO Keiko Nakamura may be on the way out, when he ominously announced: “Ms. Nakamura will be meeting very shortly with me to discuss her future. I’m going to reserve comment on (whether she will be removed) until after I talk to her one on one.”

Board chair David Mitchell has been asked to resign.

“This money could go helping people that need it the most, the people I have monthly meetings with to try to get people’s units fixed, get them transferred. Time after time after time, the excuse is we don’t have enough money. Well obviously that excuse does not hold water,” Ford said in an afternoon press conference at city hall Monday.

“I’m asking for all (seven) citizens that sat on the board to resign immediately. We have as you know changed the councillors, three out of four of them, and the seven civilians should do the right thing and tender their resignation.

We will move as quick as we can with the new appointments.”

Ford also said he will be “dealing with” former CEO Derek Ballantyne “as soon as possible.” Ballantyne is now the chief operating officer of Build Toronto.

Millions of dollars has been wasted at the TCHC through untendered contracts, poor accounting and inappropriate employee expenses, the city’s auditor general has found.

Two scathing audits released Monday by city auditor general Jeffrey Griffiths determined that the social housing agency improperly awarded millions in no-bid contracts and spent tens of thousands of dollars on luxuries.

The TCHC spends about $200 million on procurement. Griffiths found between anywhere between $4 million and $10 million of that has been wasted through a lack of competition.

Griffiths found “inadequate” documentation that a bathroom fixture contract with a Chinese supplier, which was worth nearly $5 million, was put up for open bidding. In addition, Griffiths was unable to find any contract relating to the deal.

“The arrangement with both (the supplier and overseas agent) appears to be completely informal,” he determined.

In another case, a $25 million refurbishment contract was awarded based on an unsolicited proposal.

“Other contractors may have been able to provide similar or in fact additional benefits. It is not possible to determine this without a competitive process,” he found.

And in a case of conflict of interest, the agency purchased more than $500,000 worth of solar panels from a Chinese supplier using an overseas agent, who was a long-time friend of a TCHC staff member.

Nakamura said she is “appalled and outraged” at the findings of review by the city's auditor general, which found millions had been wasted in untendered contracts.

“I will not defend these actions,” Nakamura said. “Frankly I feel betrayed.”

Some of the improprieties revealed in the audits precede the leadership of Nakamura, who became interim CEO in May 2009 and permanent CEO in February 2010 following the departure of Ballantyne. Ballantyne was appointed in 2002.

Nakamura, who was chief operating officer under Ballantyne between 2005 and May 2009, attributed the problems cited in the audit to the “poor judgment and unacceptable actions of a few individuals.”

She said the audit had proven that she had no role.

“As the audit reveals, I conducted myself with complete integrity in how I conducted my business,” Nakamura said. “Obviously, others were not held to the same standard.”

Board chair Mitchell said the board continued to support and trust Nakamura.

Mitchell said he had been too trusting of “the former senior leadership of the organization,” declining to name any individuals.

Nakamura said the TCHC’s “executive team” had been replaced, but she would not say which executives were no longer with the agency or when they had departed.

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She said the employees responsible for “the most flagrant” of the abuses, and who had committed abuses more than once, had been terminated. She would not say how many employees she was referring to, who they were, how senior they were, or which abuses she regarded as most flagrant.

“I’m appalled and outraged that something like this could happen at Toronto Community Housing,” Nakamura said. “We have a duty to spend the public’s money wisely and well, and we failed in that duty.”

Nakamura declined to condemn specific expenditures that had been intended to boost employee morale, such as the holiday party. She said the TCHC needed to find “a healthy balance in terms of recognizing staff.”

The procurement audit suggested that the cancellation and re-tendering of certain contracts may be appropriate. Nakamura said it was too early to say if the TCHC would do so.

Mitchell said he felt “betrayed.” He pleaded for the continued existence of the TCHC, saying “it would be a tragedy, and tragic, if these findings, as appalling as they are, are used to undermine the importance of social housing.”

Mitchell said: “I accept responsibility. Should I have asked more questions? No doubt. Do I accept responsibility? Yes I do.”

Griffiths found $200,000 worth of questionable employee expenses, including $1,000 worth of chocolate from Holt Renfrew, a $40,000 staff Christmas dinner, and $1,925 planning meeting at a local spa and another $6,000 off-site meeting in Muskoka.

The audits are likely to intensify calls for an overhaul of the TCHC. Mayor Rob Ford said during the election campaign that the city should subsidize the rent of the poor in private buildings instead of housing them in government buildings.

Griffiths found that there was a “general lack of due diligence” when it came to following up expense reimbursements from third parties - in one case, the former CEO attended a conference in 2009 at a cost of $3,175, but the reimbursement was made 15 months later and only after the auditor inquired - and that there are virtually no controls over cash advances.

A cheque for $8,500 was issued to an employee in connection to a July 2009 event, but date no expense report has been filed. In another case, photocopies of gift cards with $500 were accepted as receipts.

“A greater concern is a culture at the TCHC which allows such expenses to occur,” the auditor noted.

“We have been advised by certain staff that some of the expenses were necessary and contributed to 'team building' and to an improvement in employee morale. While this may be the case, it is inconceivable that staff would view the expenditure of public funds, for example, on a visit to a spa as appropriate no matter the justification.”

Contacted before the release of the audits, Deputy Mayor Doug Holyday said they were unlikely to prompt a dismantling of the agency. But Councillor Doug Ford, the mayor’s brother and closest advisor, told the Globe and Mail that the mayor was preparing for “a complete overhaul in the whole system.”

The TCHC is one of North America’s largest landlords, housing about 164,000 tenants in a $6 billion housing portfolio. The agency is responsible for a massive ongoing revitalization project in the troubled Regent Park neighbourhood, and it plans to undertake a similar project in Lawrence Heights. But it has been recently plagued by scandal.

The most prominent surrounded the treatment of Al Gosling, an 82-year-old who died in 2009 after he was evicted from his TCHC apartment and rendered homeless because he had failed to provide documents to demonstrate that he needed a rent subsidy. Former Ontario Superior Court chief justice Patrick LeSage conducted a review of the case and made 81 recommendations for change.

- with files from Paul Moloney