Atlantic Lottery Corporation needs to improve how it governs: report

The Atlantic Lottery Corporation has cancelled staff Christmas parties and will release a list of everyone who received tens of thousands of dollars of free event tickets from the corporation.

That's after a joint audit by four provincial auditors general found excessive spending on travel and entertainment.

The audit reveals the ALC spent $111,000 on staff Christmas parties over two years.

$68,000 on AC/DC tickets

It also bought tens of thousand of dollars of tickets to ALC-sponsored events and distributed them to senior bureaucrats and elected officials. The auditors general questioned why that was the case.

"While the corporation does have a list of who the tickets were sent to, it does not know if people actually use the tickets, and could not demonstrate any business purpose to these types of expenses. "

Those tickets include $68,000 for an AC/DC concert in Moncton, and $14,000 for tickets to the Cavendish Beach Music Festival in P.E.I.

"If you look at $14,000, and you say, 'Well how much is that?' I think if you ask somebody who works down the street at Tim Hortons, that's probably half their year's pay is going to buy these tickets," said Nova Scotia Auditor General Michael Pickup.

"I think any spending of public money should be explainable to all."

Thousands reimbursed without receipts

The Nova Scotia minister who oversees the ALC, Michel Samson, says he's received tickets to two events, including a James Taylor concert.  

"In my case I can tell you that the CEO of the ALC was there, and during the evening we had the opportunity to speak about a number of files affecting Nova Scotia during the event," Samson said.

The audit report identified lax accounting around travel expenses, including thousands of dollars of flight and hotel bills reimbursed without receipts.

"To me these examples show that this is an area that needs to be cleaned up by ALC so that these expenses are properly approved and supported by required documentation," said Pickup.

Improving oversight

A major focus of the report is how to improve the governance structure of the ALC, with greater oversight and control by the four provinces that own the corporation.

The Auditors General found the board of the ALC was not always given enough information in time to make effective decisions.

The composition of the ALC board is also "challenging effective operations of ALC," according to the report.

The report gives examples of the consequences of these governance problems:

• Nova Scotia ordering the ALC to override business processes and advance $1.26 million to Techlink, a company that failed after the province abandoned its My-Play VLT system
• A loss of $640,000 on an online poker system that the provinces cancelled after the ALC started the project
• A board failure to assess risks involved in a partnership with UK company Geonomics in the failed launch of the map-based lottery Geosweep. That error cost $8.7 million of public money

Significant pay raises

The report also found that ALC executives gave themselves significant pay raises without consulting the provincial owners.

The salary cap for the chief operating officer and chief financial officer was raised by 56 per cent during the audit period.

"These are significant potential increases which we thought ought to have been run by the four shareholder governments to see if they were in line with what they would expect in these times."

Alcohol policy fuzzy

Auditors found that ALC policy does not state when alcohol is an appropriate expense.

"In our sample, we identified approximately $5,000 in alcohol expenses claimed at staff events and meetings with stakeholders," the report said.

Approximately $1,500 of those expenses were eventually reimbursed by employees and board members.

The Atlantic Lottery Corporation started posting detailed travel expenses and salary information on its website early this summer.