The scandal-plagued B.C. legislature still has lax controls over spending by senior staff that have allowed hundreds of thousands of dollars worth of questionable purchases without proper policies or oversight by politicians, according to a new audit.
Auditor General Carol Bellringer looked at $2.2 million in spending — including all expenses by the clerk of the legislature from April 1, 2016, to Dec. 31, 2018 — at the legislature.
She said she found no “unusual or potentially fraudulent transactions” that needed to be referred to police — a potentially significant development given ongoing investigations by the RCMP and others into misspending allegations at the legislature. But she also said it’s difficult to know for sure because in some cases there was no documentation to back up expenses, for or against.
“I’m being a little bit cautious in coming out and saying there was no fraud because we can’t be absolute in making that statement,” she told the media. “But there was nothing we identified that said, ‘Gee this better be brought to be sure.’ ”
The report was not a forensic audit, but Bellringer said she hired two outside contractors, from Alberta and Manitoba, who are trained as forensic auditors to help conduct the investigation.
Bellringer issued nine recommendations that called for better policies, oversight by MLAs and safeguards into expenses such as clothing, travel and gifts.
“In this audit, we found a number of weaknesses and gaps in the expense policy framework, and where policies were in place, they weren’t always followed,” Bellringer wrote in her audit released Thursday.
“We found that travel expenses were frequently made without clear documentation to support the purpose of travel, some expenses were made without appropriate approval, and purchases of items such as clothing and gifts were made in the absence of policy to guide those transactions.”
Among the expenses flagged by Bellringer were $56,641 in travel by former clerk of the legislature Craig James that was approved by James himself without any oversight.
She also flagged $17,222 in clothing by James and suspended Sergeant at Arms Gary Lenz for such items as a $2,686 court robe and vest, and $571 for four shirts and a pair of suspenders.
A further $20,093 in artwork expensed by James, $18,783 in miscellaneous gift purchases and a $4,000 monthly legal retainer for the legislature was also highlighted by Bellringer and spent without proper justification, oversight and rationale.
“I’d like to note some of the practices we reviewed in this area would not have been allowed in ministries,” said Bellringer.
James retired in May after a report by former Supreme Court of Canada chief justice Beverley McLachlin concluded he had committed workplace misconduct with some of his expenses, pension and retirement benefits. Lenz was cleared by McLachlin, but faces another probe under B.C.’s Police Act launched by Speaker Darryl Plecas.
Two special prosecutors have also been assigned to oversee an RCMP investigation into James and Lenz, based on allegations raised by Plecas last year. Neither man have been charged with any crime.
Premier John Horgan said Thursday that MLAs from all parties will handle reforms at the legislature, which have been long overdue since concerns were first raised by the auditor general in 2012.
“We had a problem and we are taking steps to fix it,” he said, while adding his minority government “does not have any superpowers” over the legislature without the participation of an all-party committee of MLAs.
Bellringer recommended a “comprehensive policy framework in place to govern financial practices” at the legislature, including a travel policy that requires prior approval and documented business purposes, third-party expense authorization, clear guidance on work-related clothing expenses, a process for gift purchases and better management of legislature credit cards.
She also concluded that the legislature’s executive financial officer (EFO) needs direct access to the Speaker and the all-party MLA Legislative Assembly Management Committee (LAMC) that oversees the legislature so that questionable expenses can be reported outside of the building’s senior management.
“The EFO needs to be able to safely report any instances of non-compliance and there should be a clear expectation from LAMC that any significant breaches of policy will be reported to them,” she wrote. “The EFO should have the protections necessary and full access to report concerns directly to the Speaker, the Finance and Audit Committee (FAC) or LAMC (in closed meetings, if necessary). It is critical that FAC and LAMC meet regularly, which has not always been the case. Such a process would assist the EFO in carrying out the policy compliance function and in ensuring the legislative assembly is seen as a best-practice organization.”
Bellringer said “there’s quite a few people who dropped the ball” on expense policies over the last several years.
In a response to the report, acting clerk of the legislature Kate Ryan-Lloyd said she accepts the recommendations and is already in the process of implementing changes under the oversight of MLAs.
Bellringer said her office will conduct future audits into the legislature. MLAs have also ordered an outside workplace review into human resources practices.
“What jumps out to me right away is the incredible work of the acting clerk to be on top of the things in a relatively short period of time,” said Opposition Liberal House Leader Mary Polak. “She’s been at the centre of the storm and in spite of that has managed to present a response, a credible one, around almost all of the recommendations.”
Speaker Plecas refused to answers questions from reporters at the legislature Thursday but did issue a statement that said full implementation of the audit recommendations will be done within months.
“The report illustrates that there was a failure of leadership and trust by senior non-elected leadership of the legislative assembly,” read the statement.
“Appropriate and effective polices were not established and policies that were in place were overridden or not applied.
“While I was hoping that a forensic audit would be completed, and that the audit would reach back to 2011 rather than only 2016, I accept and respect that the Auditor General proceeds according to her own mandate and authority. While not a forensic audit, this report is an important contribution and step forward on the path to reform.”
Plecas also said that “new policies on employee travel, uniforms and gifts and honoraria have been explicitly extended to my office.”
Bellringer was unable to explain why the travel budget for Plecas’s office has tripled in the past fiscal year, from $19,188 in 2017-18 to $60,947.
Plecas, who brought the original allegations of misspent public funds in late 2017, has called for more transparency and accountability on how taxpayer money is spent.
His chief of staff, Alan Mullen, recently completed a $13,000 road trip to other provinces and U.S. states to examine security procedures at their capital buildings, though the lack of detail on the expense has led to criticism by the Opposition Liberals that it was a taxpayer-paid “summer adventure.”
Polak said it’s important that all legislature officials — including the Speaker — have someone sign off on their expenses as a check in the future.
“I think everybody needs to have someone in an oversight position when it comes to signing off on their expenses,” she said. “That can get tricky where you get to a situation where who oversees the Speaker? Well, technically, nobody does.”
But she said MLAs have a role to play in that as well: “I think we can get there. To me that’s another level of oversight that should be there.”