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The top brass of Toronto’s troubled public-housing corporation is once again under scrutiny, after the agency’s board put its chief executive officer on administrative leave amid a probe into a $1.3-million consulting contract.

Toronto Community Housing Corp., the perpetually cash-strapped city-owned landlord for 60,000 of Toronto’s poorest households, announced on Monday that it had put CEO Kathy Milsom and an unnamed employee on administrative leave after it learned the process to award a contract to a management consultant earlier this year was “flawed” and “did not follow existing TCHC regulations.”

It is the latest furor to hit Canada’s largest social-housing agency, which for years has struggled with scandals, leadership upheavals and a lack of funding to repair its stock of dilapidated units.

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TCHC hired a law firm to look into the three-year contract, which was awarded earlier this year to Edmond Mellina of Orchango, a management-consulting agency, to provide what the agency called “change-management consulting services” meant to make it more “tenant-centric.”

The contract, TCHC now says, has been terminated, effective immediately, after a board meeting late on Friday.

The agency also says Ms. Milsom – brought in just last year, after TCHC saw three CEOs come and go in just six years – is not being punished but put on leave to ensure the probe can be carried out fairly. The housing corporation said its vice-president, Sheila Penny, will become acting president and CEO.

“As the review into this matter is ongoing, current CEO Kathy Milsom and the employee who oversaw this RFP [request-for-proposals] process have been placed on administrative leave,” the statement issued on Monday reads. “This is not disciplinary action, but part of a prudent effort to ensure the independence and integrity of the ongoing review.”

Mr. Mellina, contacted by The Globe late Monday afternoon, said he had just received TCHC’s statement and need to seek advice before offering comment or answering questions. Ms. Milsom could not be reached.

TCHC board chairman Kevin Marshman said he could not comment on the details of the investigation. He could not say how long the probe would take. But he said the agency would still forge ahead with reforms aimed at making it more responsive to tenants, as well as plans to spend hundreds of millions of dollars on needed repairs.

“The culture change, and improving efficiency and effectiveness, is something the board is interested in continuing," Mr. Marshman said.

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Mayor John Tory said in a statement that he agrees with the board’s decision: "The good governance of all city agencies is essential and requires that everyone involved with these organizations is held to the highest standards.”

Ana Bailao, one of three city councillors who sit on the TCHC board, said an interim report on the investigation presented to the board “clearly showed the process was flawed.” But the probe, she said, is not concluded, so the board thought it was prudent to put Ms. Milsom on administrative leave while it continues.

“Our goal is that the investigation will clear things up,” Ms. Bailao said. “That’s why this is happening: We want to ensure that the integrity of the process is kept.”

TCHC has been the subject of several scathing reports in recent years, including a 2014 report from the city’s ombudsman that said the agency’s human-resources practices under then-CEO Eugene Jones had created a “climate of fear," with rampant breaking of rules around hiring and firing staff.

A 2016 report from a task force created by Mr. Tory and led by former mayor and Liberal senator Art Eggleton called for sweeping reforms, including the breaking up of TCHC – the second largest public-housing agency in North America, behind only that of New York City – into smaller units.

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