Committee won’t call for forensic audit of employment agency that mismanaged funds

Nova Scotia’s public accounts committee will not request a forensic audit of a disgraced Cape Breton employment agency that mishandled public funds.

A motion from NDP member Susan Leblanc to ask Nova Scotia’s auditor general to do a forensic audit of Island Employment did not pass in Wednesday’s committee meeting.

The committee was examining the provincial government’s oversight of Island Employment – a provincially funded, third-party organization that delivered employment services in Cape Breton. 

A forensic audit would include gathering evidence from the agency’s financial records that could be used in court.

The Department of Labour, Skills and Immigration ended its contract with Island Employment in November 2021, after an investigation by the Nova Scotia ombudsman found a “misuse or gross mismanagement of public funds or assets.”

Now-former employees of Island Employment sparked the ombudsman’s investigation by reporting their organization’s behaviour, under the protection of whistleblower legislation. After the department cancelled the contract, Island Employment shut down, leaving all 30 employees without jobs.

NSGEU president calls for forensic audit

The department paid the former employees eight weeks of severance and ensured that the interim employer’s job training requirements were not more than what the former employees already had. 

However, Nova Scotia Government and General Employees Union president Jason MacLean said what happened to the former employees is “unjust.”

“We have 30 people who are walking around in their communities with a cloud over their head, they don’t feel as confident applying for other jobs. They have not been exonerated; they’ve just been painted with a broad brush.” 

MacLean said the former employees are “heroes” and that  a forensic audit would specify the bad actors within Island Employment and, “exonerate our members who … now have no job and now have to apply for jobs that simply, government could have stepped in and provided.”

MacLean also said the outcome for the former employees could shake public trust in the whistleblower legislation.

“I believe damage has been done to … the public’s outlook towards government. Because if anybody’s going to bring something forward, they’re going to first look at ‘how is this going to negatively affect me?’ ”

NDP member Claudia Chender also said this harmed whistleblower legislation, known as the Public Interest Disclosure of Wrongdoing Act.

“We have a situation where the department did not catch this wrongdoing, it was reported by an employee, and subsequently, every employee has lost their job in contravention, I would say, of that act,” Chender said.

Department says forensic audit is unnecessary

Deputy minister Ava Czapalay said the Department of Labour, Skills and Immigration will not do a forensic audit because it is unnecessary. 

“We do not believe that a forensic audit would reveal any additional information than what the ombudsman was able to find.”

Czapalay said the department decided to end the contract based on information from an interim and final report from the ombudsman. The reports are not public. She said the report also contained recommendations for the department, which they completed.

MacLean said this halts public accountability. 

“We’re supposed to be accountable to Nova Scotians. And I don’t believe government is doing so by simply saying ‘we’ve adopted things that you can’t see’,” he said.

“I cannot even speak to any failsafe that’s been put in place. And we’ll never know unless we get that full forensic audit.”

A forensic audit by the province’s auditor general would be public.

Regarding the department’s relationship with Island Employment pre-investigation, Nova Scotia ombudsman William A. Smith said, “I’d say there was oversight. I don’t think it was close.”

Smith said he recommended the department consider a forensic audit and that initially, it was interested. Czapalay said the department did consider a forensic audit.

Island Employment is now under police investigation. On Jan. 18, the department announced that the YMCA Cape Breton and le Conseil de développement économique de la Nouvelle-Écosse will take over Island Employment’s old role.