The Nova Scotia government says it is already implementing recommendations from the province's auditor general, who confirmed on Tuesday that a now-defunct Cape Breton employment agency mismanaged
funds totalling more than $1 million.
Auditor General Kim Adair said Cape Breton Regional Police are still investigating the former Island Employment Association two years after allegations of mismanagement were first made public by the provincial
ombudsman.
Adair said managers and staff improperly bought equipment, paid out bonuses and expenses to themselves, were involved in numerous conflicts of interest and the executive director was allegedly involved in a
kickback scheme.
"It was a perfect storm of mismanagement, which appeared to be deliberate and systematic and designed to benefit certain players at Island Employment," she said in a brief video posted to the auditor general's
website.
In addition to problems with employees, the agency's board of directors provided poor governance and the province provided poor oversight, the auditor general said.
"Our investigation uncovered three major points of failure that persisted in the agency for almost a decade and led to the gross mismanagement of public funds that totalled more than $1 million."
The auditor general said her office is co-operating with police on their investigation into the agency, which employed 32 people in offices in Sydney, Chéticamp, Inverness and Port Hawkesbury, and offered clients
help with resumés and finding jobs.
The province shut it down in November 2021 and replaced it the following year with the YMCA and le Conseil de développement économique de la Nouvelle-Écosse in some of the Acadian regions of Cape Breton.
Adair is calling on the Department of Labour, Skills and Immigration to conduct a thorough review of the Nova Scotia Works program, which funded Island Employment and 16 other agencies like it.
She said there was evidence of a kickback scheme that involved staff donating cash to a fund intended for clients who couldn't afford workshop fees, but stopped short of calling any of the activities criminal, saying
that determination is best left to the police.
"We have very carefully chosen the right descriptors and I would say this, in my time, is probably the most serious report ... and in summary, that's why, because of the accumulation of all of the findings, we label it
as gross mismanagement of public funds."
The auditor general also found the department did not properly investigate three previous complaints before the ombusdman got involved.
Labour Minister Jill Balser said the department has accepted all of the auditor general's recommendations and begun to implement them.
