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Secret bonus that broke rules paid to Royal B.C. Museum CEO

The Royal B.C. Museum has a few hidden exhibits not on display for public viewing. And one of them is the CEO’s employment contract, which includes a secret bonus that broke government rules.
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Royal B.C. Museum CEO Jack Lohman.

Les Leyne mugshot genericThe Royal B.C. Museum has a few hidden exhibits not on display for public viewing.

And one of them is the CEO’s employment contract, which includes a secret bonus that broke government rules.

It’s a reprise of the Kwantlen caper, where a board secretly paid bonuses to executives that were over the guidelines set by the provincial government and not disclosed publicly.

The Surrey university’s board got special attention in a Finance Ministry audit last month because one of the key members now happens to be the minister of advanced education. Amrik Virk got off with a mild lecture from Finance Minister Mike de Jong about the need to play by the rules.

But the museum’s secret circumvention of the rules just cost it $53,000. That’s the amount that de Jong has docked from the provincial contribution. The penalty indicates how frustrated the government is getting with board appointees making secret end-runs around spending guidelines. The museum scheme was exposed at a news conference devoted to a public-accounts update, which heightens the museum’s embarrassment.

The Finance Ministry outlined the circumstances in a background document. It said that in January 2012, former museum board chairman John Williams signed a “secondary contract” with newly named CEO Jack Lohman. Lohman is an internationally recognized museum expert and his hiring was quite a coup.

But it turns out the museum had to go the extra distance in order to accomplish the hiring.

The standard contract was submitted to the Public Sector Employers’ Council, which watches and regulates executive compensation, and approved. That provided for a $161,800 base salary, plus benefits and pension to a total of $197,331. It was just under the $200,000 cap.

But in the past few weeks, about 2 1/2 years after it was signed, the supplementary contract came to light, partly because the Kwantlen scandal prompted a check around.

As the government put it Tuesday: “In June 2014, the existence and value of this secondary contract was provided to PSEC for the first time.”

It included a $30,000 signing bonus, an $18,000 relocation allowance for which no receipts were required, and up to $5,000 in “tax advisory services” for two years. About $2,500 of that has been used to date. It also featured three round-trip upgrades to business class for travel between Victoria and London annually.

Last week, de Jong ordered the museum allocation be docked $53,000 to make up part of the difference. He also wants an end to the airline upgrades.

Museum board chairwoman Suromitra Sanatani, who came on after the contract was signed, said the museum could not offer enough money under the guidelines and was advised the secondary contract was above board. She said it is unfortunate Lohman is exposed to embarrassment.

It’s no reflection on Lohman. He’s entitled to ask for whatever he thinks he’s worth. And $53,000 isn’t all that much from the annual provincial grant, which was $11.866 million in 2013-14, covering 61 per cent of operating costs.

It’s the underhanded nature of these off-books deals that rankles.

Every year, the museum files a required executive compensation statement with the government. It submitted one in May 2012, months after the deal was signed. It stated that Lohman’s salary was set within the guidelines. And under “bonus or incentive plan compensation,” the board submitted “zero.”

That’s false, misleading and wrong. And it’s been posted publicly for the past two years. It was only corrected Tuesday, in a footnote.

Also Tuesday, the Finance Ministry found the half-million dollar contract to the head of the B.C. Cancer Agency out of line. De Jong ordered it rolled back by 10 per cent. The cases are few and far between, but they raise doubts.

The overall public executive compensation disclosure system in B.C. is considered a leader across Canada. All the top salaries in every public entity in B.C. are held to specific caps and are posted publicly.

The government says the overall effect has been a small gradual adjustment downward in the big six-figure payouts.

But if some outfits are faking the numbers and pulling end-runs around the guidelines, it throws those findings into doubt.