Innu economic group audit cites lax controls
The Canadian PressFriday, February 07, 2014
ST. JOHN'S, N.L. - Two former executives of the Innu Development Limited Partnership in Labrador racked up "excessive" salaries on top of questionable claims for restaurant tabs, cigarettes, lotto tickets and massages, says an audit obtained by The Canadian Press.
The 900-page spending review by former provincial auditor general John Noseworthy was sent to the RCMP on his recommendation to assess possible criminal activity.
It cites a sweeping lack of board oversight and controls at the partnership, which was formed to advance Innu economic interests in two Labrador communities.
The partnership's board hired Noseworthy in October to specifically assess salary, bonuses, incentives and expenses for former chief executive officer Paul Rich and former chief financial officer Edgar Branton.
His report filed last month says that for the fiscal years 2008 to 2012, Rich received almost $1.5 million in salary, bonuses and incentives. In 2011 he received $339,519 — up 106 per cent from the year before — and his pay then jumped again to $638,847 in 2012, says the report.
It also says Branton over the same five years was paid $717,357 in total compensation including almost $186,000 in 2011 — up 73 per cent from the year before, and $251,060 in 2012.
"The review identified that Paul Rich and Edgar Branton both received remuneration in excess of what was authorized by the board of IDLP," says the report. "The evidence available at IDLP indicates that Paul Rich and Edgar Branton took full advantage of the lack of board oversight by taking excessive salaries, bonuses and incentives.
"As is so often the case," Noseworthy concludes, "it seems as though Paul Rich and Edgar Branton did what they did because they could!"
The report says Rich and Branton were both fired June 29, 2012, just before community protests erupted over leaked internal documents on their pay scales.
Rich did not answer a request through Facebook for comment.
Branton, reached at his home in St. John's, listened to details from the spending report but said he has not seen a copy of it and declined comment.
The review finds "numerous issues identified with the expense claims made by Edgar Branton" including $5,766 in restaurant tabs that were mostly run up on Friday and Saturday evenings.
"There were no details as to who attended or the purpose of the meeting," it says, adding that there were apparent instances of double billing.
"On Sept. 10, 2010, Edgar Branton claimed a charge of $61.53 for Golden Phoenix restaurant at 2:58 p.m. and at basically the same time — 2:57 p.m. — claimed a charge of $43.99 for Red Rock Bar & Grill. It is difficult to determine how Edgar Branton could be in two different places at the same time."
Citing "conflict of interest" the audit also says there were payments of $7,544 made to Rose Branton (Branton's wife) from the Innu Development Limited Partnership and its partnership venture Ueushuk Fisheries during the fiscal years 2009 to 2012.
"Support for the payments was, for the most part, a notation on a piece of paper and approved by Edgar Branton — there was no other authority or approval for the payments."
Paul Rich on several occasions claimed such items as cigarettes ($32.07), lotto tickets ($30) and $184 for massage therapy, says the report. He also filed numerous restaurant claims "without any indication of the purpose of the meeting or who was in attendance" and several times billed for fuel purchases "in excess of his vehicle's fuel capacity."
"There was no adequate supporting documentation for many of the bonuses, overtime, incentives and claims for travel and CEO expenses claimed by Paul Rich," says the report. "The common modus operandi for support for many of the amounts paid to Paul Rich was for Edgar Branton to either make a note to the effect 'as per Paul Rich' or the IDLP staff to indicate 'as per Edgar'."
Examples of such claims made with "inadequate support" total $398,131, says the review.
It advises the partnership to tighten oversight, tracking and enforcement of existing guidelines.
"IDLP should consider the weaknesses identified in controls at IDLP with a view to taking corrective action to strengthen current practices."
Requests to the partnership for comment have not been answered.
The RCMP has received the report and is reviewing it but has declined further comment.
The partnership was created in 1998 by the Mushuau Innu First Nation in Natuashish and the Sheshatshiu Innu First Nation. The for-profit corporation based in Sheshatshiu near Happy Valley-Goose Bay is tasked with "creating and managing equity through ownership and partnerships in strategic industries," says its website.
Those ventures include Innu Kiewit Constructors, a joint effort between the partnership and Kiewit Infrastructure Group, and Innu Mikun Airlines Limited Partnership, between the partnership and Provincial Airlines in Labrador.
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