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MacPolitics: How Liberal Thief Got Caught – Auditor General Kim Adair Explains Theft Case In Her Liberal Probe

Mar 3, 2024 | Politics

By Andrew Macdonald

  • Theft of Liberal Party Funds – Highlights of Auditor General Findings

Auditor General Kim Adair has the power to investigate political parties – even if that party is in Opposition.

This is so because political parties in Nova Scotia receive public funds – taxpayers’ dollars.

The AG states in her investigation and probe of the Liberal party following the discovery in 2020 of stolen party funds that the Grits over the past ten years have received $6.4M in public funding.

The Auditor General Act authorizes the Auditor General to audit or investigate organizations that receive funding from the Province. The (Liberal) Association is considered a “funding recipient” because of the funding the party receives from Elections Nova Scotia, as determined under the Elections Act. Therefore, our Office has unrestricted access to the records of the Association relating to the government funding it receives.”

Public funding to the Association over the last 10 years totalled $6.4 million, consisting of $2.9 million for party operations and $3.5 million for candidate expense reimbursements, the AG adds.

It seems the Liberal thief was caught because of the McNeil government travel restrictions during the first year of the pandemic. The now-fired employee submitted false expense claims to steal the party funds.

“In 2020, all Nova Scotians were subject to non-essential travel restrictions that began with the onset of the COVID-19 pandemic. According to the (Liberal) Association’s auditor, the discovery of the false travel claims submitted by an Association employee during the first year of the pandemic led to their resignation, triggered an investigation, with the former employee ultimately reimbursing the Association for $194,557 for unauthorized disbursements and recovery of legal and forensi related costs,” writes AG Adair.

“The (Liberal) Association engaged a professional accounting firm to perform forensic work to assist with the unauthorized disbursements made by the former employee. Forensic procedures uncovered additional questionable transactions incurred on (Liberal) Association credit cards.”

Auditor General Kim Adair said Tuesday that, in the Liberal Association of Nova Scotia’s financial report for the year the party discovered itself to have been the victim of six figures worth of theft by an employee, there was no mention of the misuse of funds, other than a single debit and credit entry. (The Notebook/Avery Mullen).

So the stolen money also involved credit card misuse and false travel expenses.

“When the misuse was discovered, (Dec. 2020) the employee resigned shortly thereafter,” the AG says.

“In a conversation with our (AG) Office, (Liberal) Association officials blamed weak internal controls as the root cause of the misuse of funds. According to the Association’s auditor, the audit committee regularly questioned internal controls. The auditor told our Office the financial controls in place were not working as intended,” states the Auditor General.

“The (Liberal) auditor indicated party officials and board members trusted the former staff member too much. And in fact, officials from the Association noted a new “No trust” philosophy was instituted after the employee left the organization.”

“However, it is unclear how this significant, multi-year misuse of funds was not detected earlier by the former Executive Director, Association Executive, Board or their auditor,” the AG notes.

The former president of the board is Joesph Khoury and the former executive director was Michael Mercer. Mercer departed the job in 2022, after media reports about the stolen money were reported, including The Notebook’s breaking Feb. 11th 2022 story on the Liberal cover-up. Khoury did not offer for re-election in 2022.

“We were informed the former employee took a position at another publicly funded organization following their resignation from the Association. According to the Association, when the new employer contacted the Association for a work reference, they only confirmed the employment dates of the former employee and did not comment on suitability,” adds the AG.

The Nova Scotia Liberals may have attempted to paper over the theft of public funds by an employee until after the 2021 provincial election, Auditor General Kim Adair said at a press conference this week. (The Notebook/Avery Mullen).

The AG described footdragging with the Liberal party delaying the handover of documents to her AG office.

“The (Liberal) Association should have promptly provided all requested information after the Auditor General’s initial request.”

The Liberals elected a new leader, Zach Churchill in July 2022. His Liberal board stymied the AG during his first months in power.

“From July 2022 to October 2022, our Office made multiple requests for the settlement agreement and what we understood to be a forensic investigation report. On multiple occasions, we were informed by the President (then Dr. Paul Doucette) of the delay in providing the documents related to securing release clearances from the former employee and the professional accounting firm that conducted the limited forensic procedures. However, eventually we later determined this was not a valid reason to withhold the information. Therefore, the Association should have provided the information in a timely manner after our initial request,” writes the AG.

The AG’s report is entitled Report on Misuse of Public Funds at the Liberal Association of Nova Scotia.

“We question why the Association made an easy-to fulfill information request a costly endeavor for our Office. Considerable time and resources were spent dealing with this lack of compliance to our access provisions granted under the Auditor General Act and delayed our ability to report on this matter to the House of Assembly,” the AG adds.

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