Auditors investigating BC Housing found a pattern of mismanagement that allowed former officials to spend millions in public money without proper scrutiny, Premier David Eby told the British Columbia legislature today.
Eby said the government’s auditors found “missing important financial information, including audited financial statements, significant spending — in some cases millions of dollars — and raised concerns about the candour of the CFO and CEO.”
The investigation into BC Housing found the Crown corporation mismanaged the conflict of interest between former CEO Shayne Ramsay and his spouse Janice Abbott, the CEO of the province’s largest provider of non-profit housing.
“Our work has uncovered significant risks to public funds resulting from the manner in which BC Housing operates and administers its oversight role,” said the report prepared for the Office of the Comptroller General.
“Our observations call into question BC Housing’s financial oversight capabilities and the rigour with which BC Housing disperses public funds.”
Eby said text messages of the CFO, Abbas Barodawalla at the time, and CEO Ramsay had been deleted, which "effectively obstructed and delayed the investigation."
Ramsay and Abbott had both contributed to building and operating housing for vulnerable people in the province and there is no evidence that either personally benefited from the conflict of interest breaches, Eby said.
But Eby said the breaches are very serious and led to the government firing BC Housing’s board in July and putting a freeze on new projects for Atira until an operational review can be completed, including physically inspecting all Atira buildings. It has also suspended renewal of existing operating agreements.
Eby also provided an explanation of how the entire board came to be replaced. He said that when he learned of the serious conflict of interest allegations, he asked that Ramsay be fired or placed on leave until a full investigation could be completed. When the board refused to do that, Eby said, he decided the governing body needed to be replaced.
The report released today confirms many of the allegations The Tyee has already reported about the conflict of interest between Ramsay and Abbott. Several former BC Housing senior staffers told The Tyee they frequently experienced Ramsay recommending funding or projects be given to Atira.
The 50-page report said that although Ramsay declared his conflict of interest, “we have concerns regarding the governance practices that allowed for the CEO of a publicly funded organization to have a direct [conflict of interest] with the organization’s largest funding recipient.”
The investigators from Ernst & Young said they “observed numerous instances whereby the former CEO engaged in the influence of decisions that were made to benefit Atira, clearly demonstrating that the policies put in place to manage the [conflict of interest] were ineffective.”
The lack of oversight from the board and inaction or enablement by BC Housing employees created a culture where it was seen as acceptable to tolerate the failure to comply with conflict of interest policies, the report said.
That culture appears to have resulted in “Atira receiving preferential treatment from BC Housing and being afforded greater access to public funds” than similar non-profit housing providers, it said. Funding from BC Housing to Atira more than quadrupled from $17 million in 2016 to $74.1 million in 2022. That was about $35 million more than went to any other provider.
Instead of following the normal communication channels, it said, Atira would directly approach more senior officials at BC Housing with funding requests and other matters. “In turn, the senior members of BC Housing told other BC Housing employees to ‘make it happen.’”
Eby said he was shown a series of texts messages that were allegedly sent from Ramsay “directing a staff member of BC Housing to work funding to Atira and also directing his name not be used.”
The Tyee has previously reported on a 2018 draft financial review that showed Atira had been unable to manage its budget over a five-year period. While BC Housing’s executive team recommended that new funding for Atira be paused until the issues revealed by the review could be addressed, the board overruled that decision.
The issues with BC Housing’s funding of Atira added up to render the agency’s financial oversight processes ineffective, the report released today said. “It has affected BC Housing’s ability to make appropriate decisions, placed a significant risk to public funds, and calls into question the diligence with which these funds are dispersed to Atira.”
Atira on multiple occasions approached senior members of BC Housing directly for funding and other requests, bypassing standard approval channels, it said. “BC Housing permitting such access casts doubt upon its ability to maintain objectivity while exercising financial oversight and administering public funds.”
In some cases Atira used money from BC Housing in ways it wasn’t supposed to — such as by using restricted funds that were repayable to BC Housing for the purchase of a building — and BC Housing failed to respond to the conduct adequately.
“BC Housing’s failure to exercise its legal rights in response to Atira’s actions can send a message to providers that they can act in contravention of their operating agreements without fear of repercussions from BC Housing,” the report said.
It also noted that both Ramsay and Barodawalla told investigators they periodically deleted text messages, even though BC Housing sometimes made business decisions via text message. “With respect to the former CEO, we note that he deleted his text messages despite explicit instructions from the [Office of the Comptroller General] to ‘take steps to ensure that all records and things of BC Housing are preserved and not destroyed,’” it said.
“This conduct is inconsistent with the expectations of the CEO and CFO of a publicly funded organization.”
The investigators analyzed data from laptops, mobile devices, desktop computers and tablets issued to BC Housing employees.
In a press conference, Eby said an operational review of Atira has now been started to further examine the housing provider’s operations and finances. He said frontline workers and residents who live in buildings operated by Atira should be assured that current housing operations and programs will continue.
BC United housing critic Karin Kirkpatrick said the mismanagement at BC Housing has occurred on the current government’s watch. “It's crucial to recall that this premier has consistently avoided accountability for his time as housing minister,” she said in the legislature.
The Tyee asked Janice Abbott and Shayne Ramsay for comment but had not heard back from them by publication time.