Island Employment Association Grossly Mismanaged More Than $1M of Public Funds - AG
For release June 20 - Island Employment Association’s gross mismanagement of public funds exceeded $1 million, reveals an investigation by Nova Scotia’s Auditor General.
In a new audit, the Auditor General identifies the three major points of failure that persisted for almost a decade at the Cape Breton employment services agency.
“You have certain managers and staff engaging in unethical and unprofessional behaviour, a board exercising poor governance, and a department that did not provide effective monitoring and oversight of Island Employment Association and it all led to an egregious mismanagement of public funds,” says Auditor General Kim Adair.
Some IEA senior managers engaged in inappropriate business practices which resulted in substantial unapproved payments for extra compensation, overtime, employee bonuses, double-dipping, and travel claims which violated employment contracts and policies.
The audit also uncovered numerous financial transactions to fund education and employment programs for family and friends, unreasonable purchases of furniture, equipment and computers, and an alleged kickback arrangement involving the Executive Director.
“It was a perfect storm of mismanagement, which appeared to be deliberate and systematic, and designed to benefit certain players at Island Employment,” says Adair.
The Auditor General also points to the failure of IEA’s Board of Directors to carry out its fiduciary responsibility due to poor governance practices – as well as the failure by the Department of Labour, Skills and Immigration to effectively monitor and oversee IEA – which contributed to the inappropriate management of public funds.
As a result of the audit, the Auditor General recommends the Department conduct an immediate and comprehensive assessment of its Nova Scotia Works program.
“It’s crucial the department has proper oversight of the 16 other service providers that signed multi-year funding agreements that last year totaled more than $22 million,” she says.
The Department terminated the IEA contract effective November 21, 2021, after an investigation by Nova Scotia’s Office of the Ombudsman.
The Auditor General’s investigation of Island Employment Association began last year after a request from the Legislature’s all-party Public Accounts Committee.
The Auditor General – in accordance with the Auditor General Act – has been cooperating with Cape Breton Regional Police’s Major Crime Unit, which has an active investigation underway.
French news release - communiqué