'Inappropriate culture of spending' occurred under former TNRD CAO, audit finds

Actions of former Thompson-Nicola Regional District CAO Sukh Gill contributed to an “inappropriate culture of spending” within the TNRD, according to BDO Canada, the independent firm tasked with conducting a forensic audit into the regional district’s finances.

Representatives from BDO Canada virtually attended the TNRD board of directors meeting Thursday, presenting a summary of findings and recommendations stemming from the eight-month long investigation.

The TNRD secured the firm to perform the audit through an RFP process after a Kamloops This Week investigation revealed Gill spent taxpayer money on costly dinners, drinks and gifts while he was with the district.

Before BDO’s presentation, Scott Hildebrand, the current CAO, said he believes the board should fully accept the audit’s conclusions and mistakes made over the years, and all recommendations made by the firm should be accepted.

“This investigation will reveal significant gaps in policy, procedures, processes and practices and how they were exploited with no concerted effort to identify them or make the changes necessary to eliminate them,” Hildebrand said.

“Our staff deserve better. …We’re also fully aware of the fact that residents and taxpayers of the TNRD deserve better. Having seen the detailed audit, we know that we have a lot of work ahead of us to regain their trust.”

However, Hildebrand said the full audit report will not be available to the public until lawyers can review the document.

He said the goal is to have the report released in January.

Board chair Ken Gillis said the TNRD wasn’t anticipating the level of detail that would be present in the report, and in order to protect individuals who are not complicit in improprieties whose names appear in the report, a legal review is required.

In the summary presentation to the board, Simon Padgett, director of forensic disputes and investigations for BDO Canada, said the audit found an “inappropriate culture of spending” stemming from Gill’s behaviour.

He said Gill’s remuneration and annual expense reimbursements were “significantly higher” than CAO’s in other B.C. regional districts from 2015 to 2019.

“The former CAO appears to have created, or encouraged, a culture of bypassing financial internal controls in respect to these expense claims,” Padgett said.

“What’s more concerning to me that the CAO’s position is one of tone at the top, that everyone should be following. And he did very little to correct these gaps in these internal controls. We see very little improvement to policies and procedures during his tenure.”

Padgett said in regards to Gill’s expenses, the firm saw “inconsistencies and incomplete information” in terms of invoices submitted and documentation of names listed on receipts.

Detailed or itemized receipts were often missing altogether, Padgett said.

He said charges were often split, where several people would be directed by the former CAO to use their individual credit cards to pay portions of bills.

At one particular dinner at Whistler restaurant Bearfoot Bistro, which racked up just over $8,600 in costs, Padgett said auditors found the total amount of the bill was split into two transactions under the direction of the former CAO.

“Most of the bill was paid at the event, and an element of the bill, I think around 20 per cent of it, was paid the next day by somebody else. Very highly unusual,” Padgett said.

According to BDO, Gill did not record the names of individuals who attended this event, which is something Padgett said is expected, especially in the case of such a large event.

In other cases, Padgett said Gill had recorded that certain employees were present at events, but those employees came forward to BDO and told them they hadn’t in fact attended.

“The way he drew in and involved many employees — for example with meals, involving them in the payment process, listing them on the receipts — this was one of the reasons why this became a culture, because several people, more than one, were drawn into these activities.” Padgett said.

BDO Canada listed between 15 and 20 recommendations for the TNRD, including the use of an audit committee, having an anonymous whistleblowing process for employees, conducting exit interviews and strengthening various policies and bylaws.

“We do feel that there is some shortcomings at the board level. … We would recommend government ethics and fraud awareness training at least on an annual basis to all board members and particularly new members,” Padgett said.

Gillis said he fully reviewed the audit on Saturday, and said it’s “very disturbing” how employees were asked to be complicit in financial improprieties.

“I think it reflects poorly on the party who’s asking people to split expenses on their credit cards,” Gillis said.

He said he is confident in changes made since Gill left the TNRD in 2020.

Gillis said the board itself has to take responsibility for what happened.

“Membership is one thing, membership changes from time to time, but the board is an entity unto itself. And so the board in its present form, I think, has no choice but to accept full responsibility for everything that has gone before and we do so without reservation,” Gillis said.

Gillis said many changes have already been made to TNRD policies and procedures, with more forthcoming.

Police are conducting their own investigation into the TNRD’s finances.

Hildebrand said he has had a recent meeting with the RCMP, who advised they hope to wrap up their findings and investigation in January.