Municipal auditor KPMG said governance failures by the finance and audit committee that Mr. Bestwick chairs created a “poor tone at the top” by failing to give proper oversight and not understanding its role and “fiduciary duties.”
This provided opportunities for chief administrative officer (CAO) Tracy Samra and chief financial officer (CFO) Victor Mema to override expense controls, retaliate against whistleblowers, block staff complaints and bypass hiring processes, the report said without naming the two managers.
It is the first official word on the scandal involving a high level cover-up of personal spending on corporate credit cards by Nanaimo’s top two municipal managers.
As reported by News Nanaimo on Sunday, Mr. Mema incurred at least 64 personal charges on his city-issued purchase card, was unable to repay, and he and Ms. Samra took steps to cover up the details and use taxpayer resources to repay the money.
KPMG’s report reveals that finance staff who tried to blow the whistle on Mr. Mema’s personal spending were punished. It says “disciplinary letters were placed in the complainants’ employee files.”
It also confirms that unilateral changes were made to internal policies to redirect staff complaints about Ms. Samra to individuals she had influence over. This ensured complaints did not reach the mayor or council.
The report, which will be presented to Mr. Bestwick’s committee on May 9, reveals that there were three revisions to the individuals designated to manage complaints between Jan. 2017 and Jan. 2018.
KPMG said whistleblowers must be protected and it recommends that only council should have authority to approve or make changes to internal complaints policies.
The mayor or rotating council members should be designated to receive complaints about the city manager and review complaints made against other senior managers, it says.
Opportunity for collusion
Ms. Samra and Mr. Mema’s practice of approving each other’s expenses “provides for the opportunity of collusion between the two parties,” the report says.
The CAO’s expenses should be reviewed by the mayor or a revolving designate of council.
“We also recommend that those who approve expense reports and city credit card statements are provided with guidance with respect to the duty and care required to approve an expense.
“Timely action must be taken in the event of non-compliance with city policies,” says KPMG.
The report notes that critical steps were bypassed in the hiring process for certain positions.
Mr. Mema is known to have tried to restructure the finance department by hiring two people he knew from a previous job in Alberta, appointing them above long-term managers in the department. Those appointments have now been cancelled.
But the report reserves some of its harshest judgment for council’s failure to provide proper oversight of Ms. Samra, a trained lawyer who was originally hired by Mr. Bestwick and four other councillors: Bill Yoachim, Jim Kipp, Jerry Hong, and Gord Fuller.
Supported and encouraged by Mr. Bestwick’s majority, Ms. Samra was given free reign to run the city as she saw fit and use city resources to attack their opponents, principally mayor Bill McKay and councillor Diane Brennan.
KPMG found that “the responsibilities of council compared to the CAO are not well understood, along with other fiduciary duties.”
“Having a strong tone at the top is important as it helps to foster an environment where fraud is deterred,” says the report.
It recommends that committee chairs and council members receive training on their responsibilities.
“The education session should also cover the confidentiality protocols, freedom of information procedures, and the escalation process when roles and responsibilities are not fulfilled,” says the report.
News Nanaimo has previously reported that Ms. Samra and Mr. Mema pressured staff to withhold their credit card statements from freedom of information requests against legal advice.
Mr. Bestwick did not respond to a request for comment by publication time, but he has previously said of his role:
“I get the agenda the same time as all councillors and mayor. I show up to the meetings and chair them. Speakers list cop. Call the meeting to order. Approve the agenda. Amend. Adopt. Approve the minutes. Then introduce the agenda items for discussion, motion, next. Adjourn.”
Ms. Samra and Mr. Mema are both suspended from their duties and have been given required opportunities to be heard at upcoming closed door meetings. It is understood that meeting dates have been set for May 9 and 11 but Ms. Samra is attempting to delay her hearing.
She is currently barred by an RCMP order from attending city hall and is slated to appear in court for a peace bond application on May 15.