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Story by Mark Hume, with Photography by Nick Didlick
But although the government audit revealed some financial deficiencies, it found no evidence of wrongdoing and noted that the organization has moved to correct its mistakes. The audit - which found the Restoration Corp. had at times both under billed and over billed the government - was made after three disgruntled employees accused the organization of corruption. Several more employees and three directors subsequently quit, suggesting there was real substance to the allegations. Dan Burns, president of the Steelhead Society and Chief Executive Officer of the Restoration Corp., said the audit has cleared his name, and will help the organization restore its reputation. “It very nearly killed us,” Mr. Burns said of the scandal, which raised questions about the honesty of those directing the Restoration Corp. “An entire year has been lost (dealing with the issue). We’re going to have to go back now and rebuild the trust that has been lost.” The Restoration Corp. was devastated, in 1999, when the employees filed with directors allegations of wrongdoing by Mr. Burns and others at the Society.
The employees - and most of the rest of the hired staff - quit when directors of the Steelhead Society rejected the allegations as unfounded, and refused to accept Mr. Burns’s offer to resign. Despite the vote of confidence by Society directors, a cloud of suspicion was left hanging over the Restoration Corp. Mr. Burns said the allegations hit the Steelhead Society “like a bomb” and forced the organization to go into crisis management mode for a year. The fund raising dinner - which the previous year raised $100,000 - was canceled in 2000 as was the Society’s annual general meeting. Gossip and rumours spread unchecked in the fishing community as the directors found themselves trying to deal with a whisper campaign. It was said there were acts of fraud at the Habitat Corp., that directors were pocketing money, taking free trips and abusing the government’s trust.
“It was like being asked to say you don’t beat your wife. No matter what you say, there will be suspicions that linger. “The allegations are so huge people felt there must be something to it. But there wasn’t.” He said the directors chose to wait for the lengthy audit to be completed before speaking out. “We didn’t want it to be our word against somebody else’s,” said Mr. Boyanowsky. “That’s why we had to wait for the Auditor General’s report. “We’re going to come back now and take on the world.” Pete Soverel, a director of both the Steelhead Society and the Restoration Corp., said it’s impossible to measure the impact of the scandal. “The Society is a big loser in this. It’s a big loser in momentum, in dollars. It’s been a year of innuendo,” he said. “But I’m looking forward to the future now. “Hopefully the Steelhead Society will recover, rebound, maybe get a new president. But it can do all that now, having a clean slate.” Mr. Burns said he hopes the Auditor General’s report will reassure the government, which had been waiting for the study’s completion before concluding negotiations over renewal of the Habitat Corp.’s long-term contract. The Habitat Corp. is seeking about $4 million over five years. The audit did not respond specifically to the complaints from the employees, but instead undertook a detailed examination of the Restoration Corp.’s financial records. The audit sought to determine if the Restoration Corp., which rebuilds salmon and steelhead streams, was in compliance with a multi-year funding agreement with Forest Renewal BC, a government agency charged with restoring watersheds damaged by logging.
But the audit also found more than $40,000 in invoices that the Restoration Corp. had failed to claim. The Auditor General questioned the Restoration Corp.’s use of five leased trucks, saying a cost benefit analysis had not been done before the contract was signed, and that poor travel records were kept. The report also found the Restoration Corp. “had not followed the guidelines” in accounting for costs and that not all labour costs could be verified with supporting documents. It also found that “administration costs in the agreement schedule were excessive.” However, the Auditor General concluded: “We believe the estimate used was a fair allocation and that the SSHRC was conscientious in ensuring that costs not chargeable to FRBC were segregated and not included in the calculation.” The audit showed that the Restoration Corp. had billed labour hours using day rates that were higher than the actual hourly rate of pay required in the multi-year agreement. “In this way, the SSHRC - a not-for-profit (organization) - generated a surplus,” states the report. But the Auditor General’s report defended the practice, saying the government should consider changing its rules so the procedure is allowed.
The Auditor General said the government should consider changing its policy, to allow the Restoration Corp. to accumulate surplus funds as an operating reserve for use in covering unexpected expenditures. The Auditor General’s overall conclusion was that although the Steelhead Society Habitat Restoration Corp. did not meet the terms and conditions of its contract, and had deficiencies in its accounting system, “the SSHRC has taken steps to correct these deficiencies and appears to have implemented a control structure that should avoid similar problems in the future.” Reflecting on the scandal that nearly destroyed one of North America’s most important fisheries conservation organizations, Mr. Burns said: “I look at this as an extreme event, like a fire or an explosion. I think the lesson is, don’t give up. We never gave up. If we had, we would have let pass a great legacy.” The Auditor General’s report does not put the issue completely to rest. That won’t happen until the Steelhead Society holds its next annual general meeting, in April, and members get to openly discuss the allegations that were made, and the findings of the government audit. In the meantime, the Steelhead Society is considering legal action against the three employees who “blew the whistle” but who didn’t provide any sound evidence to support their claims. Also see our comment on our letters page. What do you think? Visit our online discussion area and post your views. |
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The Steelhead Society Restoration Corporation - a creation of the Steelhead Society that obtained more than $3 million in government funding - has run its financial affairs in a sloppy manner, according to a report by the Auditor General of British Columbia.
