Nova Scotia

N.S. government auditing development authority

The Nova Scotia government is auditing the books of the South West Shore Development Authority, after irregularities in their accounting procedures were found by the Ombudsman's office.

Ombudsman uncovers irregularities

The Nova Scotia government is auditing the books of the South West Shore Development Authority, after irregularities in their accounting procedures were found by the Ombudsman's office.

Investigators from Nova Scotia's Ombudsman's office spent a year looking into the authority, after receiving complaints from two Shelburne residents about the expenditure of public money.

"I thought the matters we brought forward were significant," Nova Scotia Ombudsman Dwight Bishop, a retired RCMP superintendent, said Tuesday.

The issues included problems with accounting, administering money and conflict of interest, Bishop said.

The authority is a regional development agency that represents nine towns, including Yarmouth and Shelburne.

Bishop released his final report, which contains 12 recommendations.

The report recommends external auditors examine at least two years of financial transactions and the sale of the former Shelburne Youth Centre.

Bishop said he was sufficiently concerned about the way the authority handled the sale that he referred it to the RCMP. But police determined there were insufficient grounds to proceed.

Auditors should still examine the tendering process involved in the sale of the centre, he said.

The centre was sold to a group of business people, headed by consultant Ralston MacDonnell. An official from the MacDonnell Group of Companies declined comment when contacted by CBC News.

Bishop also wants auditors to look at how the authority handled $600,000 given to it by the provincial government to promote economic activity in Shelburne after the provincial youth centre was closed.

Some of the money was spent on legal fees without proper authorization, according to his report.

"There's issues of legal fees and the handling of the money. I prefer to leave it to the audit to drill down," Bishop said Tuesday.

Conflict of interest

Bishop's report also deals with Frank Anderson, the authority CEO, who also runs the Yarmouth Area Industrial Commission.

Anderson is paid by both organizations but, Bishop said, that even after examining the issue he was unable to determine how much Anderson is paid.

The report reveals nearly $1 million in loans were made from the Yarmouth Industrial Commission to the authority between 2004 and 2007. In at least one case, a loan was made because the authority "had a cash flow issue."

Bishop said he did not know if all of that the money was repaid or exactly what it was used for.

The boards of both agencies are repeatedly criticized in the Ombudsman's report for being asleep at the switch and failing to monitor Anderson's activities.

In Shelburne, four of five municipalities have served notice that they are breaking away from the authority effective April 1.

Anderson declined an interview when reached by CBC News, saying he had not read the report. He said the board welcomes any constructive criticism to improve its efforts.

The authority board is scheduled to meet Wednesday in Yarmouth.

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