NANAIMO — Municipal staff were punished for raising concerns about misuse of City money, one in a series of "significant deficiencies" outlined in scathing comments contained in a report from the City's auditor.
The report by KPMG based on their review of the City's 2017 financial statements said a "poor tone at the top" provided an opportunity for senior management to override various protocols. Failures in internal control over financial reporting related to whistleblower policies, expense report review, consistency of hiring practices and governance and understanding of responsibilities, the letter said.
KPMG found during 2017, senior employees raised concerns regarding "appropriate usage of City funds."
"The initial concern appeared to be handled effectively; however, when the questionable activities resumed months later, the employees raised the issue again to several members of the Senior Leadership Team of the City. In response, disciplinary letters were placed in the complainants’ employee files," the report said.
It recommended the City review policies on respectful workplace and reporting serious misconduct and also include mechanisms so allegations involving the chief administrative officer are reported directly to the mayor or a member of Council.
"The protection from retaliation for employees who raise concerns, as outlined in the policies, must be adhered to and respected."
The report took aim at the practice of the CAO and chief financial officer reviewing and approving each others expense reports, saying the cross-approval process "provides the opportunity for collusion" and is not an appropriate internal control.
"Additionally, when discussing the review procedures performed when approving expense reports, it appears that the proper due diligence is not always followed in reviewing the items being submitted for approval."
When referencing deficiencies in hiring practice, the report said it appears in some situations steps in the process were bypassed.
The City of Nanaimo's response to that statement in the report said "In some situations, steps in the process have been bypassed at the senior management level, advice from Human Resources was not followed, and that candidates have been hired into positions without having met all the usual screening requirements."
Finally, KPMG found there appears to be a lack of clarity regarding roles and responsibilities of committees, particularly the one tasked with managing the City's finances.
"The responsibilities of Council compared to the CAO are not well understood, along with other fiduciary duties."
The damning comments were published days after it came to light CFO Victor Mema charged more than 60 personal expenses to his City-issued credit card over a 17-month period, directly contravening existing policy. Most of the statements were signed off on by CAO Tracy Samra.
CUPE Local 401 president Blaine Gurrie previously told NanaimoNewsNOW "The reaction from the employer was not what they expected" when staff raised concerns about Mema's spending to Samra. NanaimoNewsNOW learned Samra formally disciplined those employees for what she perceived as them going over her head with complaints.
Further, the City confirmed Samra changed the protocol for how complaints about the CAO were handled without notifying the union. A previous process where complaints about the CAO went to the mayor was replaced to have the issues reviewed by the City's legal counsel instead.
Gurrie said the protocol was changed back to have CAO complaints dealt with by the mayor or a member of Council after the union found out and voiced concerns.
John Van Horne, the City's director of human resources, said KPMG outlined areas where the City was "falling down" and they need to be addressed.
He said it's critical for staff to be able to raise concerns without fear of reprisal.
"We don't want to have an environment where people feel they can't speak up because I don't think we're going to get the best out of people and I don't think they're going to be motivated to come to work. If there's some changes we need to make there, it's incumbent on us to do that."
The KPMG report will be presented and discussed at the May 9 finance and audit committee meeting.
On Twitter: @domabassi
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