City leadership is describing the results from a third-party review of the Lethbridge and District Exhibition as alarming.
A report from Deloitte Canada highlighted issues regarding the strategy and planning, project execution, governance, use of funds and council communication by LDE throughout this project process.
City Manager Lloyd Brierley says the report shows the mismanagement of more than $70 million in public funding from the city, Lethbridge County, the Province of Alberta and the Federal Government. Brierley says between 2019 and 2020 the organization was requested to present to council multiple times to share updates and answer questions about the requested funding.
“In my opinion, the city council of the day asked many questions of LDE, however this Deloitte report tells us, presentations made by past LDE management were missing critical context and subject to limitations,” Brierley says. “The issues continued throughout the entirety of the project, preventing council from receiving accurate updates. For example, LDE did not communicate a $27 million increase in the total expected project cost until financial difficulties required emergency funding despite the significant impact this would have on the city and its taxpayers.”
Brierley says the project was missing a project charter, which is used as the “north star” for the project, including things such as the project’s scope, budget, deliverables and timeline. The city manager explains the lack of this document could have been a factor to the lack of clarity in project objectives and scope.
Additionally, the review identified the improper use of funds by LDE leadership. Deloitte reviewed historical CEO expenses from 2020 to 2023, inspecting a total of 47 from the CEO and board members to ensure they complied with the organization’s policies. According to the report, 100 per cent of the CEO expenses tested and 50 per cent of the board expenses tested were not in compliance.
“Expenses filed by both the CEO and board members indicated money was spent on items such as gifts, luxury hotels, event tickets, alcohol at private functions, car washes, televisions and other various forms of entertainment. Without itemized receipts, it is hard to detail if these items were incurred for a valid business purpose.”
Mayor Blaine Hyggen says the report shows a lack of information given to council by the organization throughout the planning and construction process, which prevented “fully informed decision-making and sound oversight of the project” and also identified instances where the information given was inconsistent or contradictory.
“This is extremely, I’ll say extremely concerning given this was primarily a taxpayer-funded project,” Hyggen says. “I want to make one thing clear, the situation we have been placed in as a city is inexcusable and frustrating, I share this feeling with our community not only as a mayor but as a long-time resident of Lethbridge.”
Along with highlighting the issues that led to the current situation where the city had to step in, the Deloitte report also laid out recommendations to support future decisions for the Agri-Food Hub and Trade Centre, along with ensuring any future projects the city invests in have substantial oversight.
“We will be establishing safeguards through new policies and procedures that enhance existing due diligence. This will ensure accountability from all organizations receiving City funds, particularly in strategic planning and financial reporting,” Hyggen says.
According to the city manager he and his team will be meeting to review the report before they make their presentation to council on Wednesday, but moving forward council will have some tough discussions.
“The decision before council tomorrow is again back to keeping the facility going or closing the facility, what that looks like and what the costs are of keeping the facility going are,” Brierley says. “Depending on those decisions we need to look at so what do we do from here, what else do we need to look at in terms of LDE related worker decisions and what other areas do we need to drill into more.”
Brieley says there is a lot of analysis that needs to be done for those subsequent decisions which will take a substantial bit of work.
He adds the report has been sent to the Lethbridge Police Service Economic Crimes unit for investigation. According to a statement from LPS they are investigating but to protect the integrity of the ongoing investigation, no further information is being released.
