HALIFAX — A member of the Nova Scotia legislature from Cape Breton says employees who came forward with complaints of financial mismanagement at a local employment agency should have been protected.
Earlier this week, Nova Scotia's auditor general released a report alleging senior leadership of Island Employment Association took part in “gross mismanagement” of public funds totalling more than $1 million, including about $340,000 in transactions that involved alleged conflicts of interest.
Kendra Coombes, NDP MLA for Cape Breton Centre-Whitney Pier, says the whistleblowers were among 30 workers at the Island Employment Association who lost their jobs after the province pulled the agency’s funding in 2021, shortly after the province’s Ombudsman released a report with similar findings of gross mismanagement.
“It took six months for some to find permanent jobs,” Coombes said in the legislature on Friday. “Four are still without work.”Â
The workers, she said, remained under “a dark cloud” due to their past connections to the organization.
“In Cape Breton, it’s hard to find a job where everyone knows where you’ve worked,” she said.
Coombes said the province should have stepped in at the agency and ensured the employees were not let go, but Ava Czapalay, deputy minister in the Department of Labour, said the province went above and beyond its obligation to the employees, offering them a two-month working notice before Island Employment shut down, followed by eight weeks of severance pay.
Gary Andrea, a spokesperson for the Nova Scotia government, said the Public Interest Disclosure Act covers employees in government departments, offices or public sector bodies, as well as employees of a government agency, board or commission, as well as current and former school boards.
"The Act also provides a framework for citizens to report or disclose wrongdoing by current government employees and public sector bodies," he said in an email.
The act protects whistleblowers against reprisals, but, he added, "in this case, Island Employment ceased operations after losing its funding. This did not specifically target any individual employee; it impacted all employees."
Sandra Mullen, president of the Nova Scotia Government and General Employees Union, said the government’s process sends “a mixed message” to whistleblowers.
The province could have removed the agency’s executive director and board, and provided more rigorous oversight of the agency, she said.
“Why must working people pay the price for the government's lack of accountability and oversight?” she asked. “They stood up when they suspected something was wrong. They were right.”
Czapalay said pulling the agency’s provincial funding was the department’s only recourse against the third-party contractor.
“We can’t assume ownership of an organization just because we have a contract,” she said. “We had no opportunity to remove the board or leadership. Our piece of control was the contract.”
The auditor general’s report said the Department of Labour didn’t provide sufficient oversight of the organization and “did not take appropriate action to protect the public interest,” and did not properly investigate the whistleblower complaints into the organization.
The auditor general’s report included $162,000 in unapproved salary payments and bonuses, $150,000 in unused and unapproved vacation time, $74,000 in over-budget furniture purchases and $20,000 in unauthorized travel expenses.
Kim Adair, the auditor general, described it as a “perfect storm” of deliberate, systemic actions that benefited select managers and staff. The report does not name the management and staff who are alleged to have benefited from the mismanagement.
Cape Breton Regional Police confirmed Friday their investigation into Island Employment is ongoing.
This report by The Canadian Press was first published June 23, 2023.
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This story was produced with the financial assistance of the Meta and Canadian Press News Fellowship.
Marlo Glass, The Canadian Press
