AFSC officials suspended for code of conduct violations

A “culture of entitlement” appears to be at the heart of last week’s dismissal of the six-member board of Alberta’s Agriculture Financial Services Corp., according to Agriculture Minister Oneil Carlier.

An anonymous tip provided in November led the current provincial government to investigate the activities of several key executives, leading to the suspension of president and managing director Brad Klak, who was also a board member; chief operating officer Merle Jacobson and vice-president of innovation and product development Wayne McDonald.

An internal auditor’s investigation indicated the three senior executives “received meals, alcohol, paid entertainment including theatre and concert tickets and sporting event admissions, rounds of golf and gifts on a frequent basis over four years” from a broker not identified in the document.

That violates AFSC procurement policies, which prohibit acceptance of gifts, and also contravenes the corporation’s code of conduct, the report said.

“I am troubled by these findings,” Carlier said June 13.

“They point to a culture of entitlement in the last administration that Albertans firmly rejected in the election, a culture of entitlement that will not be tolerated by this government.”

As a result, the government dismissed the AFSC board, which included Klak, Dean Gallimore, Patrick Bieleny, Ian Reynolds, George Groeneveld and Harold Schmaltz.

A five-member interim board of government officials is now headed by deputy agriculture minister Bev Yee.

The temporary board will recruit a new board, determine the fate of the three executives and implement recommendations made by the internal auditor.

Yee said the interim board would consider “the full range of options” to deal with the three executives, which might include repayment of money or outright dismissal. At present, they have been relieved of duties with pay.

Full pay for Klak, according to government data, is $670,000 per year, which is about three times what is paid to Premier Rachel Notley.

Ed Knash, the vice-president for business and agriculture with ATB Financial, has been appointed interim chief executive officer of AFSC.

“I’ve lost the confidence in that board doing what they were supposed to do, and that was to have oversight for the executive, to approve … the expenses,” Carlier said.

“That was part of the board’s responsibility, and in my opinion, it failed in that responsibility.”

The investigative report noted approximately 30 cases in 2014-15 when the three men charged a per diem expense for meals already provided by the broker.

The list of claimed expenses deemed “not clearly reasonable or necessary in performing work duties” included:

  • $1,880.25 for limousine trips in 2011, most of it for taking Klak from Edmonton to Lacombe and back for a Christmas party that involved four hours of waiting time
  • $1,506 for limousine service in 2012, most of it related to attendance at hockey games, a dinner and a concert
  • $5,108 for a 2011 dinner in Tokyo that hosted an unidentified Alberta government representative in Japan
  • $880 for Red Deer Rebels hockey tickets in 2011
  • $19,144 paid to a consultant for a 25 percent share of Edmonton Oilers luxury box tickets

Carlier said the auditor’s report has been given to law enforcement to see if legal action is necessary.

As for the services provided by AFSC, which include insurance, loans and farm income disaster assistance, Carlier said annual audits would have ensured proper administration of the programs provided to farmers.

“This crown corporation does very important work and as such its senior executive team and board of directors are expected to meet the highest standards of conduct,” Carlier said during the news conference.

“After all, they are public servants accountable to the citizens of Alberta, entrusted with taxpayer dollars.”

He said the abuses noted in the auditor’s report made for “a difficult and unsettling read.”

The department received the report at the end of April and had been prepared to release it when the fires occurred at Fort McMurray, putting the plan on hold.

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