The leaders of a union local for Toronto city workers set up a company that sucked more than $350,000 from union coffers, according to an internal audit obtained by the Star.

The forensic review of the finances of Canadian Union of Public Employees Local 416 was commissioned by the national office of CUPE, which announced last February it had taken control of the local. The move was to “resolve ongoing issues,” CUPE national said at the time.

Exchanged Chartered Accountants probed accounts for 2009 to 2014, when Mark Ferguson was president, Dave Hewitt vice-president and Darin Jackson secretary-treasurer of Local 416, representing about 6,000 so-called outside workers including trash collectors, paramedics, parks staff and Toronto Water employees.

The audit, completed last month and circulated among members, does not allege criminal conduct. It does say the union paid “hundreds of thousands of dollars” in vendor invoices with no approval for payment or proof the local received the goods or services, and paid one man more than $328,000 for call centre and tech support.

The auditor interviewed Ferguson and Jackson, who defended their actions and said they did not benefit personally from the issues highlighted.

“Both Mark Ferguson and Darin Jackson stated they did not make any personal purchases on the local’s Amex credit card,” says the report, and “stated they had and have no financial interest in, nor received any financial compensation from, any of the vendors that were providing the services and were paid by the local and (the company) they set up.”

Ferguson did not respond to messages left by the Star this week. Jackson could not be reached.

Hewitt was not interviewed by the auditor. In a brief interview with the Star, he said he had read the review. “The only comment I have to make is I did nothing wrong — nothing wrong at all,” Hewitt said.

Other findings of the audit include that there were “unaccounted for” iPads and BlackBerrys; that Jackson and Ferguson used Local 416 American Express cards for almost $60,000 in purchases with no record of what was bought, and sometimes loaned the cards to other members; and “poor accounting practices.”

The audit describes how, in 2011, Local 416 began providing telephone town hall and “call blast” services to members and others, including politicians and political parties. In February 2012, after receiving legal advice about limiting the local’s liability, the officials incorporated Civic Public Relations and Research, with themselves as directors. Financial records were never reported to the local’s executive committee or members.

The business generated $63,958 in revenues and incurred $393,239 in related expenses. “When accounting for the cash flows which include the operating losses and capital expenditures, the local had a net cash outflow of $364,476,” said the audit.

Meanwhile, between 2009 and 2013, the local’s cash and investments ballooned from $2.25 million to $7.2 million, thanks to hikes in members’ paycheque deductions for dues and a new strike contingency fund.

The audit was released as the local negotiates with the city for a contract to replace one that ended Dec. 31, 2015, which included considerable concessions. Elections to return 416 to local control are expected in coming months.

The audit makes many recommendations to tighten financial controls.

Kevin Wilson, a CUPE spokesman, said: “CUPE (national) will not be commenting on internal union matters.”

OTHER FINDINGS OF THE AUDIT

—Between 2011 and 2013, the local paid $328,690 to one man, Apollo Chung, and two companies he apparently controlled, for call centre activities and tech support. The audit didn’t indicate that Chung did anything wrong. The Star could not find Chung. The Chinese Canadian National Council, with which Chung was once affiliated, suggested he might live in Vancouver.

—The “call blast” company set up by the local provided services upon verbal agreement. There is no record of payment for services it provided for Ontario NDP Leader Andrea Horwath in 2013, including conducting telephone townhalls and making robocalls. Ferguson and Jackson gave the auditor “Ontario NDP contacts who were involved in the meetings related to the verbal agreement for the services. To date (the auditor) has not been able to reach the contacts to confirm the terms of the agreement.” Neither the party nor the NDP caucus “has any invoices on record,” the party’s provincial secretary, Karla Webber-Gallagher, told the Star.

—The auditor cited scant paperwork on the purchase of iPads, laptops and BlackBerrys, suggesting 20 are “unaccounted for.” Devices were given to “staff and others involved in the local’s activities” but the local did not record who received them.

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KEY PLAYERS

Mark Ferguson: The paramedic was elected CUPE Local 416 president in 2008. He led the City of Toronto’s outside workers through the 2009 civic workers’ strike that brought public furor over garbage dumped in parks. Ferguson later led bargaining with the administration of then-mayor Rob Ford, in which Local 416 made major concessions on a four-year contract rather than face a winter lockout. Ferguson said in April 2012 that he would not seek re-election, citing stress from the bruising talks. But he changed his mind and was narrowly re-elected later that year. Ferguson ceased being president sometime in 2014, without any public announcement.

Dave Hewitt: Elected a shop steward in solid waste collections in 1995, he became Local 416 vice-president in 2008. Leading up to the 2011 contract negotiations Hewitt was a vocal critic of Rob Ford, branding the then-mayor a bully. He later led the public fight against the city’s plans to expand private garbage collection. Hewitt became acting Local 416 president after Ferguson’s departure in 2014, and remained so for some time after CUPE national announced last February it was taking control of the local.

Darin Jackson: Worked at the former city of North York, and then Toronto. He was on the board of CUPE Local 416 when it formed after amalgamation in 1998. Jackson rose to the position of secretary-treasurer, being re-elected most recently in 2012, and retired from the city in July 2015.