Key governance issues persist five years after audit on Atlantic Lottery Corporation

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Several key governance reforms to the Atlantic Lottery Corporation recommended more than five years ago still haven’t been implemented, the region’s auditors general said in a report released Tuesday.

The four Atlantic provincial governments have not implemented four of nine recommendations intended to improve the corporation’s governance and business agility, the officials said in a followup to their 2016 report.

One of the non-implemented recommendations is a call to update the corporation’s shareholder agreement and bylaws, reforms the auditors general say haven’t been carried out in 10 years. The shareholders of the corporation are the gaming commissions of the region’s four provinces.

“The board needs direction from its shareholders and that’s why the (shareholder agreement) is an important document,” Nova Scotia auditor general Kim Adair said in an interview Tuesday. “It is the overriding agreement that sets the framework and objectives of the organization.”

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The report also noted the region’s governments have not completed a review of the corporation’s underfunded pension plan, which has swallowed up $87 million in potential profit in order to cover a shortfall between 2012 and the end of 2021. The auditors, however, say a pension committee has been authorized to administer the plan and implement amendments.

“We continue to encourage the shareholder governments to complete implementation of plan amendments to address the pension shortfall and to ensure the financial sustainability of the pension plan,” the report said.

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Governance, oversight issues putting Atlantic Lottery at risk: auditors

The auditors said a long-standing disagreement over whether elected officials and government employees should be excluded from the board has not been resolved. The issue was also noted in a 2019 followup report. The region’s provincial governments, the report said, maintain that it is in their best interests to continue having civil servants as voting members of the board.

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The report noted that the four governments have agreed to appoint eight independent voting shareholder representatives and keep the remaining four spots on the board for senior public servants. They have also agreed, the auditors said, to creating staggered three-year terms for members of the board.

However, the report said there is no term limit for the chairman of the corporation’s board, who has been in his role since 2007 after having served as vice-chairman since 2000. The auditors said the chairman’s tenure has been much longer than best practices recommend, adding that the corporation should implement term limits for that position.

Adair said she and the other three auditors general think their recommendations are necessary to ensure the proper operation of the corporation, which has been around since 1976.

“It has functioned very well, but they are in a very dynamic and competitive industry,” she said.

This report by The Canadian Press was first published April 26, 2022.

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