Nova Scotia·CBC Investigates

Nova Scotia ombudsman slams Richmond County officials for 'self-serving' expenses

Nova Scotia's ombudsman is calling for a forensic examination of Richmond County's finances after an investigation found "opportunistic and self-serving" expense filing.

Draft report questions 'seemingly erratic and unorthodox activities' by CAO and council

The Office of the Ombudsman of Nova Scotia has investigated expenses filed by senior leadership of the Municipality of Richmond County. (Angela MacIvor/CBC)

Nova Scotia's ombudsman is calling for a forensic examination of Richmond County's finances after an investigation found "opportunistic and self-serving" expense filing and a "culture of entitlement" with disregard for the public interest.

A consultative report obtained by CBC News illustrates a county warden and chief administrative officer spending tens of thousands of dollars on travel, alcohol, Valentine's Day flowers and even a taxi fare paid to a Houston gentlemen's club.

When county financial staff questioned the expenses — often filed without detailed receipts or justification — they were told to "just pay it," the report says.

The ombudsman also referred allegations of harassment, bullying, aggressive behaviour and substance use by senior staff to the Nova Scotia Labour Department for investigation.

The provincial ombudsman has been investigating the travel and expenses of the Cape Breton county's officials, after freedom of information requests filed by a citizen sparked months of public debate.

The study included a detailed look at expenses for former and current councillors and the CAO between 2012 and 2014, and interviews with 27 people including the CAO. Councillors and staff can submit any "new and substantive information" before the report is made final.

'Erratic and unorthodox'

The focus of the criticism landed on current CAO Warren Olsen and former Warden Steve Sampson, who left his post in 2014. Sampson still sits as a councillor and recently said he had been blackmailed over expensing a call on a hotel bill.

Former Warden Steve Sampson left his post in 2014, but still sits as a councillor. He is not trying for re-election this fall. (CBC)

"An overriding issue for this office is the ongoing existence of seemingly erratic and unorthodox activities that occur unbeknownst to many councillors and taxpayers," the ombudsman said in the report.

"They appear to have thrived in a culture of entitlement, with indifference to propriety, costs, or consequences."

'The way it's always been done'

A forensic audit is needed to tell if that behaviour was legal, the report said, as it "may go beyond the careless spending of public funds."

The county is doing its own forensic audit into expenses but the ombudsman is calling on the province to order a forensic examination of all of the county's financial records over five years.

County spending practices appear to conflict with existing laws and municipal policies, but multiple people interviewed said that is "the way it's always been done," the report said.

The report comes less than two weeks before the municipal election on Oct. 15. Sampson is not running.

Both he and Olsen declined to comment, citing confidentiality imposed by the investigation process.

Victor David, the current warden, also declined an interview.  

Alcohol purchases questioned

Between their county credit cards, Olsen and Sampson bought "cumulatively significant" amounts of alcohol, with little documentation, the report found.

Almost $3,700 was spent at the Nova Scotia Liquor Corporation, the only explanation being "Business Expo at arena" in Port Hawkesbury.

Alcohol bought with county credit cards was kept in the CAO's office which councillors drank after meetings, the ombudsman's office found.

Receipts were sometimes filed with the details obscured, ripped off or not available. One interviewee alleged that was to "mask or hide" the number of alcoholic drinks and number of people at a dinner.

'I stay there a lot!!'

The CAO and warden also billed for laundry, dry cleaning and valet service despite those being banned in county policies. After those expenses were raised at council publically last winter, the CAO emailed a hotel to have a 2013 laundry charge waived.

"If you check the records I stay there a lot!!" Olsen wrote in an email to the hotel. The hotel reimbursed the fee.

The forensic audit says Richmond County CAO Warren Olsen claimed meal expenses twice and claimed reimbursement for money spent at an adult entertainment club. (CBC)

The ombudsman found the county paid for flights for spouses of council members and the CAO to join them on a conference in Niagara Falls in 2014. The report found some of those charges were reimbursed in 2016.

"There also appears to be no rationalization for many unorthodox uses of corporate credit cards by individuals in senior management and leadership positions," the ombudsman said.

'Opportunistic and self-serving'

In some cases, councillors claimed for per diems, even when meals were provided or when they also submitted receipts for reimbursement. The practice is known as double dipping, which is "commonly understood as forbidden," said the report.

"It appears opportunistic and self-serving, indifferent to existing policy and possibly the law," the report said.

"[That was] justified by an athletic form of reasoning that ignores the public interest and tenets of good government."

Staff told the ombudsman when they asked about expenses, they were met with "conflict," the report said.

'Lack of oversight'

In 2014, travel budgets for the CAO and warden were $30,000 and $15,000.  The report estimates they spent more than $40,000 each that year. They approved their own travel, the report said.

All of this should have triggered an audit within the county and at the provincial level, the ombudsman said. That it didn't shows "a lack of oversight and accountability."

The provincial municipal affairs department offered services of an independent auditor last fall, which the county turned down. The CAO was "dismissive" to offers of help, the department told the ombudsman's staff.

Nova Scotia called to act

Complainant Germaine MacDonald, who filed the freedom of information that revealed credit card statements for the first time, reviewed the report, and said she believes Municipal Affairs could have done more.

"A lot of times it's a matter of won't instead of can't," she said by phone from St. Peter's, N.S. "I don't think it would have escalated."

Germaine MacDonald applied for copies of expense claims for Richmond County council members under the Freedom of Information Act. (Joan Weeks/CBC)

Along with a forensic examination of Richmond's finances, ombudsman William Smith is recommending the Department of Municipal Affairs review its role in enforcing municipal compliance with the law.

'We're taking this seriously'

Staff with the Department of Municipal Affairs also declined to answer questions on Sunday, but said in a statement that they are reviewing the report.

"Nova Scotians have every right to expect their elected representatives to be responsible and accountable," spokeswoman Sarah Gillis said in an email.

"We're taking this seriously."

The ombudsman's recommendations will factor into an ongoing review of the Municipal Government Act, she said.

'Something to hide'

The ombudsman also wants to see a study of the feasibility of standardized travel and expense policies across the province, and an auditor general for municipalities, recommendations which MacDonald supports.

"I keep saying if you have nothing to hide, you hide nothing," she said.

"Having looked at this report, it sure looks like there might have been something to hide."

The ombudsman also recommended Richmond County should review its policies, ban unauthorized travel, develop methods to enforce those policies, and train staff and councillors about the rules.

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With files from Don Munro