The province has dismissed the board of the Agriculture Financial Services Corp. and suspended three senior executives following an internal probe into “expense and procurement practices.”
“As a result of an anonymous tip, our government has uncovered very serious problems with senior government expenses and current practices at AFSC,” Agriculture Minister Oneil Carlier said at a press conference on June 13.
He said the province’s chief internal auditor found a host of problems including “unreasonable expenses for travel, meals and entertainment, acceptance of gifts, and competitive bid processes compromised.”
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The report looked at expense claims and corporate credit card bills over a five-year period for the three executives — president Brad Klak, chief operating officer Merle Jacobson, and vice-president of innovation and product development Wayne McDonald — who have been suspended with pay. Klak, who was also a board member, earns $670,000 annually in pay and benefits.
The auditor’s report “is a difficult and unsettling read,” said Carlier.
Expenses incurred for travel, accommodations, mileage, meals, hospitality, conference fees, and other costs during the time period totalled just under $900,000. Among the expenses the auditor said were “not clearly reasonable or necessary” were limousine travel and luxury box tickets at Edmonton Oilers games. More than $340,000 was spent on out-of-province and international travel to meet with reinsurance companies even though the farm financing and crop insurance agency contracts with brokers to deal and negotiate with reinsurers.
The report has been “handed over to law enforcement for review to determine if additional actions are required,” the province said.
The board, and former chairman George Groeneveld, were responsible for “authorizing and therefore challenging” the expenses of one of the corporation’s executives, the report said. Carlier said he dismissed the board because he had lost confidence in it.
However, Groeneveld told Postmedia News that he has “no regrets” and that the corporation was well governed. The former provincial agriculture minister said “the writing was probably on the wall” for his term as board chair because he was a prominent Conservative.
But the auditor’s report paints a picture of lavish spending by the three senior executives.
Between December 2013 and January 2015, the trio spent more than $150,000 on air travel and some of these trips included significant portions of time spent on activities such as golf and entertainment. Carlier said in 2014, the auditor found 30 instances when meal per diems were charged for meals that had been provided by a broker. The report said the three executives received “gifts, such as event tickets, meals and golf from vendors” even though accepting gifts “of any kind” from vendors is expressly prohibited.
And the auditor also said for “more than half of the vendors examined, AFSC’s requirements for fair, open, competitive or transparent procurement processes were not met.”
“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,” Carlier said.
The tip was received in November and an investigation launched in January 2016. ATB Financial’s vice-president for business and agriculture, Ed Knash, was named as interim CEO.
