Politics

Audit report slams federal fish agency for mismanagement

The federal government's freshwater-fish marketing firm lacks basic spending controls, as employees were hired, salaries raised, equipment purchased and business plans created without basic controls to safeguard public money, says a report from the auditor general.

Officials hired people and bought equipment without normal controls and oversight, says scathing report

Fisheries Minister Dominic LeBlanc says he is consulting widely on the future of the troubled Freshwater Fish Marketing Corp. (CBC)

Canada's auditor general is raising a big stink about a federal fish agency.

Officials with the Freshwater Fish Marketing Corp. spent public money on equipment that wasn't needed, hired staff without job competitions and failed to do the most basic of business planning.

The problems were so bad that the auditor general's office forwarded a copy of the scathing assessment directly to Fisheries Minister Dominic LeBlanc for immediate attention.

"Overall, we found many weaknesses and significant deficiencies in the oversight and management of the corporation, and in the way its operations were carried out," says the report, posted Monday.

"In several ways, the board and management failed to meet their responsibilities for oversight and management of the corporation, leaving it exposed to considerable risks in a complex and changing business environment."

The Freshwater Fish Marketing Corp., a federal agency, has been faulted for bad management in three audits since 2005. (Freshwater Fish Marketing Corp)

This is the third audit in 12 years to raise red flags about the Winnipeg-based agency, which buys, stores, processes and markets freshwater fish from Western Canada, most of it for export.

The other audits in 2005 and 2010 pointed to many of the same problems, which continued to fester through to this latest "special examination," carried out last year.

Previous to Monday's audit report, the finger had been pointed largely at former president Donald Salkeld, who was appointed in December 2014, but agreed to go on administrative leave in March 2016 — just 14 months into the job.

'Terminated for cause'

Salkeld, whose salary ranged from $147,900 to $174,000 a year, was subsequently "terminated for cause" by the Liberal cabinet on Dec. 21 last year. He had been appointed by the Conservatives to fix problems at the agency.

Salkeld told CBC News at the time that he was only trying to make the agency more efficient and that "unfortunately, when you make change to the status quo, you create enemies."

But the auditor general spreads the blame around in the latest report, focusing in part on the failure of the board of directors to carry out basic responsibilities.

"We found that the board's efforts to meet some of its key responsibilities for oversight of the corporation were inadequate," says the report, to be tabled in Parliament on Tuesday. "We found significant deficiencies in key aspects of governance."

The agency, created in 1969, markets freshwater fish from Canada's western provinces, though Saskatchewan pulled out in 2012 and Manitoba gave its notice of withdrawal last year. That leaves Alberta and the Northwest Territories as the only remaining participants.

All options are on the table.- Donald Salkeld, terminated president of the Freshwater Fish Marketing Corp., when asked whether he plans legal action. 

About 1,600 fishermen sell some 15 million kilograms of freshwater fish to the corporation each year, which then exports about 80 per cent of the product. Revenues were $73.2 million in the fiscal year ended April 30, 2016, with about $1.5 million in net income after paying harvesters.

But the audit report on Monday noted that the corporation would have lost money if the Canadian currency had stayed within its historic value range vis-a-vis the American dollar. The recent drops in the value of the loonie allowed the company to eke out a positive net return.

Wasteful purchases

The auditor general report found that Salkeld had spent $794,000 on fish-plant equipment without a proper business case. In the end, three pieces of that equipment were never installed.

"As a case in point, the corporation purchased a mincer to process fish, but discovered that the end product was unsatisfactory to its customers," says the 31-page report.

The firm's interim president, Stan Lazar, declined to comment in detail on the report, other than to say: "We accepted the auditor general's recommendations and we're working to address all of them."

Lazar said the corporation agrees with all the findings. Management will deliver a review of corporate governance practices by June 30.

Reached Monday, Salkeld said he had not yet read the report, but said of his termination: "I don't think I was treated properly, and I think some false information was provided to the minister's office."

Pickerel are cleaned in a fish plant. The audit of the Freshwater Fish Marketing Corp. says the firm bought equipment it did not need. (Erik White/CBC)

He said he has not launched legal action over his dismissal, but that "all options are on the table." A government spokesperson has said cabinet followed "due process" in making its decision to terminate.

LeBlanc said Fisheries and Oceans has been working with the corporation to improve governance, and that stakeholders — including Indigenous fish harvesters — will be consulted about the future of the organization.

"The concerns of fishers are important to our government and will be considered in decisions [regarding] the future of the FFMC," the minister said in an email.

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About the Author

Dean Beeby

Senior reporter, Parliamentary Bureau

Dean Beeby is a CBC journalist, author and specialist in freedom-of-information laws. Follow him on Twitter: @DeanBeeby

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