N.S. auditor calls RCMP over ‘concealment’ by provincial Liberals of misuse of funds

Zach Churchill responds to a question in Halifax on Monday, March 8, 2021. Nova Scotia's auditor general has filed a complaint to the RCMP against the provincial Liberal association over its "apparent concealment" of the misuse of public funds by a former party worker. The CANADIAN PRESS/Andrew Vaughan

Nova Scotia’s auditor general is asking the Mounties to investigate the provincial Liberal party over its “apparent concealment” of the misuse of public funds by a former employee.

Kim Adair’s report released Tuesday says her office is aware of “concerning information” that reveals the party tried to hide and delay the matter “until after the 2021 election,” which the incumbent Liberals lost to the Progressive Conservatives.

During a news conference, Adair declined to reveal further details or the source of the information, but she said the allegation came earlier this year as her report was being completed.

Adair’s report notes the Liberal party has argued it didn’t release details about the missing money sooner because auditors were still assessing how much was missing and they were focused on recovering the funds from the employee.

However, the report says, “the (Liberal) association’s delay in providing information to our office was not in compliance with the Auditor General Act,” which gives her office unrestricted access to records of any organization that receives public funding.

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The report says a former employee’s misuse of travel claims and a party credit card led to the employee’s resignation and the reimbursement of more than $194,000 by the employee. The reimbursements were to cover the cost of the missing funds and of the forensic audit that followed.

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The chronology of the missing funds goes back years, to when former Liberal premier Stephen McNeil was in office, though the date of the first misappropriations wasn’t provided in Adair’s report.

The document says the Liberal party had an audit of 2020 party finances prepared by April 2021, but the audit didn’t reveal the unauthorized disbursements to the employee.

“It was not until the spring of 2022 that the public was made aware of the misuse of funds,” when the party released financial statements that included a note indicating that misappropriation had occurred, says the report.

Adair told reporters that while at times private corporations do recover misappropriated funds without reporting to police or oversight authorities, there should be a higher standard applied when public money is involved.

All registered parties receive annual operating funds from Elections Nova Scotia. In the past 10 years, the Nova Scotia Liberal Party has received $6.4 million in public funds: $2.9 million for party operations and $3.5 million in candidate expense reimbursements.

The report says the Liberal association told the auditor general’s office it would have been in breach of a confidentiality agreement with the former employee if it had gone to police. It also says when the party was approached by the RCMP, members of the executive told investigators the matter had “been resolved.”

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Meanwhile, the former employee went on to take a position at another publicly funded organization after resigning from their job at the Liberal party, said the auditor general’s report.

Zach Churchill, who was elected party leader in July 2022, said he “fully supports” the auditor general’s finding. He said after he received the auditor general’s report this month he went to police “and urged them to look into this matter further.”

“I want to get to the bottom of this,” he said.

Asked why more information wasn’t provided by the party to the auditor general after he became leader in 2022, Churchill said he had advised the party to co-operate with Adair’s office

Churchill said that both former premiers McNeil and Iain Rankin had written letters to the party’s board “urging them to reach out to authorities if they deemed that to be the appropriate action.”

The former president of the Liberal party, Joseph Khoury, didn’t respond to messages seeking comment on why the party didn’t report the matter to police, or whether there was an effort to conceal the misappropriation before the 2021 election.

In addition to the recommendation to send the matter to police, the auditor general’s report recommends the Elections Act be amended to give the CEO of the elections agency the authority to deal with any similar issues in the future.

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The auditor general’s report is the latest political blow to the Opposition Liberals. Last week, Brendan Maguire left the party, crossing the legislature floor to become Premier Tim Houston’s new minister of community services.

This report by The Canadian Press was first published Feb. 27, 2024.

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