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8 red flags from the Portland Hotel Society audit

WATCH: Housing Minister Rich Coleman says he isn’t satisfied by the reasons departing Portland Hotel leaders have given for their spending. Geoff Hastings reports.

The biggest story in B.C. this week has been the forced removal of the Portland Hotel Society leadership, after investigations showed vast amounts of questionable spending.

The investigations came from BC Housing and Vancouver Coastal Health, who provide PHS with over 50 per cent of their revenue.

We took a close look at both investigations, and found eight facts about PHS spending that make clear why the government forced out management.

1. Maximum amounts taken in sick, holiday and vacation pay.

The four senior leaders of PHS were entitled to eight or 10 weeks of vacation depending on tenure, equivalent to either 14 per cent or 16 per cent of their hourly pay. From 2010 to 2012, the BC Housing review found that they, along with three other leaders, were given their extra vacation pay regardless of whether they took their vacation time – a practice they categorized as “unusual.”

In addition, the four senior leaders were always paid for working statutory holidays, “approximately 10…each year in addition to their salary.” B.C. has 10 statutory holidays. They also found the maximum amount of sick leave was paid out each year to the four, with the exception of one person in one year.

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Combining the increases, the review found “an increase from salary to T4 income of an amount in the range of 30 per cent to 40 per cent for the four individuals.”

In April 2010, they were also given a retroactive pay increase for 2009, giving each of them an after-tax cheque between $4,600 and $6,100.

2. Spending came while the PHS was in financial trouble.

According to the Vancouver Coastal Health audit, there is “limited cash on hand which could make it difficult for PHS to meet short-term debt obligations. PHS would have reported a deficit of $2.07 million in fiscal 2013 if not for a one-time non-cash gain related to the disposal of an investment.”

In addition, many of PHS subsidiaries, which include a coffee shop and thrift store, had a history of losses. PHS has advanced $481,000 to these companies to cover their losses as of October 31, 2013.

3. Money given to PHS leaders to use (and clean) their basement suite

Mark Townsend and Liz Evans, who were the co-executive directors of PHS, had charged the organization to lease the basement in their home. They charged $1400 a month from 2010 to March 2012, at which point it increased to $1600 a month. PHS said the basement was used regularly for training, meetings, and interviews. PHS board chair Jack Bibby defended the amount charged, saying “they could easily get close to that if they rent it out”.

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They also charged PHS $11,000 from 2010 to 2012 to have the basement cleaned by Merry Maids.

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4. Charges and payments without contracts

While the two reviews found many examples of questionable spending that were properly documented by PHS, they found many examples where justifications were vague or non-existent. The BC Housing review found 61 instances from 2010 to 2012 where “the description did not allow us to identity the vendor and/or determine the nature of the charges.”

In 2013, Vancouver Coastal Health found a number of “poorly supported” payments that were done without contracts. These included a company owned by a PHS employee given $8,820 for playing a piano and driving a bus for PHS clients, and a $800 monthly payment “to an individual tasked with helping facilitate purchase of a laundromat”.

5. Paying $3,000 for a computer and printer in Berlin

While in Germany for vacation, Director of Operations Kerstin Stuerzbecher needed to do work. However, she didn’t bring her computer with her.

The solution? Steurzbecher charged PHS $2,164 for a computer and $805 for a printer from Saturn Electro-Handelsges, a store “similar to the Best Buy franchise”.

WATCH: An emotional Jenny Kwan addressed the controversy over family trips paid for by the Portland Hotel Society. Geoff Hastings reports.

What raised the ire of many people were the paid trips around the world for PHS staff – from London, to Hawaii, to Disneyland, where NDP MLA Jenny Kwan travelled with her ex-husband Dan Small.

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The PHS defended many of the trips as gifts for long-time employees, or necessary to attend conferences or promote initiatives. However, there were a number of travel charges racked up directly by PHS leadership that investigators took issue with. They include:

6. $9,031 spent at a New York hotel

In November 2009, Evans and Townsend’s cards had total charges of $9,031 from The Plaza Hotel, a New York hotel overlooking Central Park that bills itself as “Setting the standard for luxury for more than a century.”

8 red flags from the Portland Hotel Society audit - image

According to Business Insider, the Plaza is the 11th most expensive hotel in New York, with an average rate of $632 for the most affordable double room.

According to Townsend, the chargers “were for activities related to other PHS social initiatives”, and that “the trip was influential in helping PHS get funding related to this social initiative.”

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During the New York trip, Evans also spent $178 at the Lotus Salon and $57 at the Blow Styling Salon for “getting her hair done before a presentation.”

7. Over $30,000 spent in Europe in one month

In the summer of 2010, a number of PHS administration appeared to travel to Europe for an international AIDS conference in Austria, where Evans and  Small were presenters. The conference was from July 18 to 23, but in early July PHS employees were in Paris, where they were charged $4,456 in two installments by Paris tour operator “Your Paris Experience”, which puts together concierge services and vacation planning for clients. Townsend’s assistant said this was for “English to French translation services. Logistical arrangements and Executive assistant services. Disabled staff person assistance with transportation, transfers, etc.”

Between the two “Your Paris Experience” charges, there was also a PHS charge in Paris of $2,637 to Elite Limousine. Investigators were told “charges were for a driver and a car service for an employee who was sick during this time to ensure that this person … could travel safely and without emergency assistance of hospitalization.”

Then, two unnamed delegates travelled from Vienna via Paris for the conference. Investigators found charges of $25,891 related to Vienna, including $10,636 at the luxury Hotel Bristol, and $5,340 at a Holiday Inn.

Investigators separated the Vienna Conference, Your Paris Experience, and Elite Limousine charges in their report to BC Housing, but indicated that “they may be related”. The charges from the three incidents total $32,984.

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8. A $6,000 tour of Western Canada.

Finally, Evans was a speaker at the 2009 World Youth Assembly, hosted by Edmonton from July 30 to August 2. Before and after the trip, Evans traveled across B.C. and Alberta by train ($2,071), car ($631), and bus ($521). She stayed at the Jasper Park Lodge ($450), the Banff Fairmont Hotel ($776), the Drumheller Ramada ($449) and Four Points Sheraton ($294). She also went to the famous Drumheller dinosaur museum (the Royal Tyrrell Museum, for $56).

For this three-day conference one province east, the Portland Hotel Society was charged $6,276.

Of course, while in Edmonton for the conference, Evans needed accommodation. Where did she stay?

The Fantasyland Hotel, for $749.

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