The Government of Alberta today announced that the Board of Directors of the Agriculture Financial Services Corporation (AFSC) has been dismissed following an examination into senior executive expenses and procurements.
“The report’s findings point to a culture of entitlement in the last administration that Albertans firmly rejected in the election, a culture of entitlement that will not be tolerated by this government,” said Minister of Agriculture and Forestry, Oneil Carlier, on Monday.
According to an internal audit, which was spurred by an anonymous tip, some expenses for AFSC executives related to travel, meals and hospitality were not necessary for AFSC’s business. Executives also accepted gifts, such as sporting event tickets, meals and golf from vendors, and for more than half of the vendors examined, AFSC’s requirements for procurement were not met.
The examination looked into senior executive expenses, as well as contracting and procurement, focusing on the last four years.
- The senior executive expense investigation involved a focus on the expense claims and corporate credit card expenses of four individuals: the president and managing director; chief operating officer; vice president, innovation and product development; and the executive assistant to the president and managing director.
- The review of contracts and procurement looked at contract(s) with the reinsurance broker and a consultant, as well as the leased AFSC office in High River.
The report listed non-adherence to the AFSC’s Code of Conduct in several areas, involving spirit and intent; acceptance of gifts and solicitation of gifts; taking opportunities as a result of one’s position; and the use of alcohol during business hours.
Three senior executives’ expenses were in non-compliance with policies around the prudent use of taxpayer dollars; expenses for travel, meals and hospitality; and claiming legitimate authorized expenses.
Contracting and procurement saw non-compliance in areas including centralized procurement; acceptance and solicitation; fair, open, competitive and transparent processes; and obtaining minimum number of quotes.
Meals, alcohol, paid entertainment, golf and gifts were all received from the broker who provides reinsurance services to AFSC by the three senior executives.
“For example,” reads the report, “in 2014, the President and Managing Director received meals/drinks, tickets, or golf games more than 50 separate days. In addition the Broker paid a portion of costs related to specific AFSC events or functions, including the 2014 Calgary Stampede and Board Tour…”
The report recommended the consideration of disciplinary action, and new measures to strengthen governance and oversight. The auditor also recommended a human resource investigation be conducted to consider appropriate disciplinary action against the implicated senior executives.
The AFSC website still lists Brad Klak as president and managing director; Merle Jacobson as chief operating officer and Wayne McDonald as vice-president, innovation and product development. The Board of Directors is still listed as Klak, Dean Gallimore, Patrick Bieleny, Ian Reynolds, Harold Schmaltz and former Minister of Agriculture and Food and Rural Development George Groeneveld.
An interim Board of senior Government of Alberta employees (including interim CEO Ed Knash) has been set up and will implement the recommendations while new board recruitment begins.