New board put in charge of province’s scandal-plagued crop insurer

Many well-known faces in the ag community are on the new board of the Agricultural Financial Services Corporation

Ten months after dismissing the board of directors of the Agricultural Financial Services Corporation, Agriculture Minister Oneil Carlier has finally named its replacements.

And the board’s first action will be to find a new chief executive officer to replace one who was suspended with pay last June after the provincial auditor found a host of problems including “unreasonable expenses for travel, meals and entertainment, acceptance of gifts, and competitive bid processes compromised.”

“I lost confidence in the last board after an investigation of staff expenses left me seriously concerned there was a culture of entitlement at AFSC,” Carlier said in announcing eight new directors.

The new chair is Jennifer Wood, an Edmonton-based professional agrologist, agribusiness executive, and cattle rancher. Other board members are management consultant Jerry Bouma, former ALMA head Gordon Cove, farmer and ag coach Peter Galloway, former provincial assistant deputy ag minister Jo-Ann Hall, cattleman Harvey Hagman, accountant Anna Harder, and financial executive Kiren Singh. The eight directors were selected from a pool of 42 applicants from a public call placed last fall.

Wood said despite its past woes, she is confident that the Crown corporation is back on track.

“We still need to work with the interim board to ensure that AFSC moves forward in a proper, open, and transparent manner,” she said.

An investigation by the provincial auditor — sparked by an anonymous tip — centred on credit card expenses over a five-year period. It found nearly $900,000 in questionable expenses incurred for travel, accommodations, mileage, meals, hospitality, conference fees, and other costs. 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.

Most of the expenses identified by the auditor last June were targeted to a single broker, who was never named, but is no longer working with AFSC.

“It is important to know that these staff expenses were approved by the former board, which is why I lost confidence in that board and dismissed it,” said Carlier.

An interim board immediately removed three top executives and called in the RCMP, which is still conducting an investigation.

Former CEO Brad Klak, chief operating officer Merle Jacobson, and vice-president of innovation and product development, Wayne McDonald, were all suspended with pay. Jacobson and McDonald have since retired, while Klak’s contract wasn’t renewed. (Chief financial officer Darryl Kay has been the interim CEO.)

Although all three executives received severance, all were highly paid. Klak was paid $732,104 in salary and other payments in 2015, while McDonald made $330,082 and Jacobson $341,550. Under Alberta’s new compensation guidelines created in the wake of the scandal, the new CEO will get between $224,040 and $301,760.

The new board will be receiving about half of what the previous board received in financial compensation.

Carlier and Wood said that business at AFSC has continued as usual, and there have been no disruptions to its service or activities.

About the author

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Alexis Kienlen

Alexis Kienlen lives in Edmonton and has been writing for Alberta Farmer since 2008. Originally from Saskatoon, Alexis is also the author of two collections of poetry, a biography, and a novel called "Mad Cow."

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