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Joseph Khoury Claims Auditor General ‘Misinformed, Inaccurate, Irresponsible & Inflammatory In Report’

Mar 2, 2024 | Politics

By Andrew Macdonald

Nova Scotia’s Auditor General reports on government spending and government actions, sometimes in scathing terms.

Typically in those cases, the government of the day, while perhaps bruised from AG audits, quickly moves to publicly acknowledge a given AG report, and those governments, past and present always tend to readily accept AG recommendations stemming from investigations.

In the case of theft at the Nova Scotia Liberal Party offices, discovered in December 2020, and covering a multi-year period, current Liberal leader Zach Churchill has quickly thanked the AG for her probe into party finances and the theft of close to $140,000 by a now-fired Liberal office toiler.

More importantly, Churchill has also quickly accepted Auditor General Kim Adair’s two recommendations.

The first recommendation was that the Liberal party ought to call in the RCMP to investigate what the AG says is a criminal matter, the theft of public-funded money from party bank accounts. The second recommendation is to give Nova Scotia’s Chief Electoral Officer the ability to investigate misuse of party financing from taxpayers.

I received a statement from Churchill’s office, following the AG’s release of her report and investigation into misappropriated Liberal funds. The staffer in question was fired in January 2021, and has paid back the nearly $140,000 identified in the Liberal Association’s own audit and legal expenses, paying a total of close to $200,000.

Party leader Churchill issued the following statement after the AG report was publicly released:

I want to thank the Auditor General for her vigour in completing this report. As Leader, I fully support her recommendations. This is a situation I inherited as Leader, but one I am taking very seriously. This is reflected in my immediate decision to follow the Auditor General’s recommendation to contact the RCMP. Within 24 hours of first being briefed by the Auditor General, I advised the RCMP that should they need to investigate further, they have my full support.

Since knowing about the misappropriation of funds by staff, the party office has experienced turnover in staff and has implemented more strict financial supports to ensure this doesn’t happen again. It is my full intention to ensure that donors and taxpayers have confidence in our party.”

But Churchill’s comments on the file appear disconnected from a statement by Joseph Khoury, the party president in office when the theft was discovered. He has issued a scathing attack on the integrity of the Office of Auditor General.

When I broke the story in 2022, Khoury had his lawyer threaten me with a defamation lawsuit, the lawyer told me to ‘cease & desist’ C&D coverage, and to remove my Feb. 11th, 2022 news scoop.

Instead, I took C&D to mean: Continue to Dig, and I filed a total of 64 stories on the Liberal theft in 2022. I ignored the Liberal lawyer’s threat to me – that letter has been framed as part of my artworks at home.

Khoury issued the following statement to media,

“Please find below my statement as former Liberal Association president as well as a statement from Stephen Shupe, independent auditor for the Liberal Association. These statements are in response to the inaccurate allegations asserted by the Auditor General of Nova Scotia in her report.

“I am disappointed and disheartened by the irresponsible and inaccurate allegations put forth by the Auditor General in (Tuesday’s) report. The AG’s report does not accurately portray the intent of the Liberal Association while I was president, nor does it accurately portray what took place.

“After this loss of party funds was discovered on Dec. 28, 2020, our objective was solely to make party members and taxpayers whole by ensuring that the funds and the costs incurred in retrieving those funds were repaid in full. And following our legal counsel’s advice, that’s exactly what happened.

“The day this was discovered, I immediately engaged Cox and Palmer and followed the legal advice they provided. On Feb. 9, 2021, Deloitte was engaged through our legal counsel at Cox and Palmer to conduct a thorough forensic examination of previous years so we could fully understand the depth of this loss. We provided complete access to computer networks and financials and anything else Deloitte required to do this important work.

“Contrary to what the Auditor General asserts in her report, the independent auditor for the association was completely aware that there were very likely previous years impacted by this loss and that the investigation was being conducted by Deloitte. The independent auditor understood the timelines of that investigation and that it could not be preempted, and the information borne from that investigation was required before any accurate and official filing could occur. To do this work properly took time. Simply put, we did not know what the previous years’ investigation would unearth. In this area of her report, the Auditor General is wholly and unequivocally mistaken or has been misinformed.

“Additionally, any insinuation by the Auditor General that this independent investigation conducted by Deloitte was purposely misrepresented as part of a political calculation is baseless and needlessly inflammatory.

“I welcome the opportunity to speak to this at the Public Accounts Committee and clear up the misinformation put forth by the Auditor General’s report. As the former president of the Liberal Association, I stand behind the steps we took and the decisions we made to retrieve these funds and to ensure something like this would not take place again. I would be pleased to have the chance to correct the record and provide insight into the events.”

Joseph Khoury is a STFX professor and a past president of the NS Liberal Party (STFX).

Statement from Stephen V Shupe, Liberal Auditor

“We had clear evidence of the former employee’s misuse of funds for 2020 prior to the release of the Dec. 31, 2020, audited financial statements. When fraud occurs, it is rarely confined to a single year, but we had no proof of prior year misuse, nor did we have a measurable amount. We were aware that the association engaged forensic accountants to look at prior years. The forensic procedures were not completed until after April 30, 2021.”


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