The Supervised Consumption Site in Lethbridge (Lethbridge News Now)

By Justin Goulet/Lethbridge News Now

Province pulling funding from Lethbridge’s SCS

Jul 16, 2020 | 9:01 AM

LETHBRIDGE, AB – One of the busiest Supervised Consumption Sites (SCS) in the world is losing its provincial government funding.

The government of Alberta has halted funding to the Lethbridge SCS. The province released key findings from a Deloitte audit on Thursday. It found $1.6 million of public money unaccounted for.

The release noted that it was found that some of the money ARCHES received to help clients of the SCS was instead used to pay for travel in Portugal, unauthorized overtime pay and to buy thousands of dollars worth of gift cards.

“It is disturbing and extremely disappointing to me that taxpayer funds allocated to this organization in order to serve the most vulnerable in Lethbridge would be used for European conferences, expenses for retreats, entertainment and gift cards. Our government will not stand idly by while millions in taxpayer funds are missing or misappropriated,” said minister of mental health and addictions Jason Luan.

Luan reportedly plans to send the audit findings to police.

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Funding to ARCHES was set to come to an end in September, but Luan has told Alberta Health to immediately cease the provincial grant funding.

In a media release, the ARCHES Board of Directors says they “woke up to this news just like the rest of the community” and are “waiting to comment until we have all of the information.”

The provincial government has also asked Alberta Health to set up a mobile supervised consumption site in Lethbridge until a long-term solution can be found.

An audit was sparked in March following an anonymous tip about financial mismanagement at ARCHES. The charitable organization also received funding from the federal government and City of Lethbridge.

The report said ARCHES received $14.5 million in funding from the province between October 2017 and March 2020 to offer supervised consumption services and an Indigenous cultural program called I’taamohkanoohsin (also known as Everyone Comes Together).

The government audit showed that provincial funding made up about three-quarters of ARCHES’ revenue in 2018-2019.

About $13,000 of interest from a bank account that held provincial funding was used to cover car rental and hotel rooms in Portugal, as well as travel expenses in Vancouver and Calgary.

The province reported that ARCHES’ credit card was used to pay for a $2,205 TV that auditors couldn’t find, and $2,100 worth of gift cards at a Lethbridge oil change business.

The report noted that a senior executive with ARCHES told auditors that some of the charges were put on the corporate credit card in error. The senior executive reimbursed ARCHES for around $2,000 worth of expenses, according to the report.

Additionally, the report found that ARCHES purchased $1,129 worth of gift cards for Boston Pizza, Shell, iTunes, The Keg, Cineplex and other companies that were said to be given out as Christmas gifts for workers and board members.

The province noted that the auditor said the unnamed senior executive was authorized to receive $80,000 a year in salary from the SCS grant.

However, the audit found that the executive was paid nearly $275,000 in 2018-2019, which included $70,000 of overtime pay, not all of which was properly authorized.

It was also noted that vendors were “repeatedly secured in secrecy with a lack of transparency and accountability, and proper personal conflict of interest declarations were not recorded when related individuals or vendors were hired or utilized.

Below is a full summary of the audit’s findings:

• $1,617,094 unaccounted for due to missing documentation for expenditures from 2017 to 2018.
• $13,000 of interest off ARCHES bank accounts was used to fund parties, staff retreats, entertainment and gift cards.
• A senior executive’s compensation totalled $342,943 for calendar year 2019. This includes $70,672 in overtime for fiscal year 2019-20. The grant agreement allows for a salary of $80,000.
• The Everyone Comes Together (ECT) program staff salaries and benefits also exceeded the amount allocated by the grant agreement by $16,000.
• The number of ARCHES employees is greater than allowed by the grant agreement. ARCHES maintained up to 126 employees. However, the exact number could not be verified.
• $4,301 spent on European travel for management to attend a conference in Portugal.
• Thousands of dollars in unverifiable travel expenses, including trips charged to company credit cards but not recorded in the ledger.
• A senior executive’s family member was hired, earning $9,900. The auditors could not locate a resume or personnel file to verify any qualifications.
• $7,557 for management retreats, including meals and mileage where documentation for spending was unclear.
• The grant agreement requires the organization to maintain the funding received from Alberta Health within a separate bank account; however, the audit revealed that it was comingled with other funding sources. As a result of ARCHES comingling their accounts, the auditors could not verify thousands of dollars of expenses.
• Proper personal conflict of interest declarations were not recorded when related individuals or vendors were hired or utilized.
• Vendors were repeatedly secured in secrecy with a lack of transparency and accountability.
• No petty cash reconciliations have been completed.
• $1,129 was used to buy gift cards for board members for The Keg, iTunes, Boston Pizza, Earls, Gap, Shell, Chapters, Cineplex, Amazon, Starbuck’s, Tim Hortons, MasterCard, and Bath and Bodyworks. The expense was recorded as “Gift cards – Board Members.”
• $2,100 was spent on gift cards to The Oil Changer – a business owned by a senior executive’s spouse.
• $2,205 was spent on a television with no receipt documentation to support the purchase.

The auditors were unable to complete the grant expenditure review in respect to all of the allegations received or provide a complete financial value attributed to each allegation due to the state of ARCHES’ records and the related outstanding documents.

The province will consult with law enforcement to determine whether further investigation is needed.