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TNRD forensic audit report released and contains 69 pages worth of information

The report expands on a December presentation that described a “culture of inappropriate spending” at the TNRD under former CAO Sukh Gill

The Thompson-Nicola Regional District has released a redacted version of the forensic audit report by BDO Canada, an audit ordered as a result of a KTW investigation into spending at the TNRD under former CAO Sukh Gill.

The 69-page report — which may be evidence in an ongoing RCMP investigation — does not include names of individuals nor vendors and was released about a month after a summarized presentation of the audit findings was made publicly to the board in December. That presentation outlined a “culture of inappropriate spending” at the regional district under Gill, who departed the TNRD suddenly in February 2020 with a severance package worth $520,000.

The investigation scope generally covered a period from Jan. 1, 2015, to Dec. 31, 2019, but per diem and telecommunications expense analysis covered 2014 to 2019 and emails dated back to 2001. It involved review of management and board expense claims, procurement and vendor review and other matters. Former CAO Gill was not interviewed.

Individual 29 in report is Sukh Gill

The report alludes to “Individual 29,” who is Gill. 

“Individual 29, through [redacted] legal counsel, stipulated several conditions in response to our invitation for an interview,” the report states. “We did not believe it was appropriate to accept such conditions. There are also two other individuals who were not available or who did not respond to our interview requests.”

According to BDO Canada, a whistleblower letter — sent from a senior TNRD staffer to TNRD board chair Ken Gillis on Jan. 29, 2020 — expressed concerns about Gill. Kamloops This Week has obtained that letter, which was not revealed to the board before it approved the severance package to Gill.

“There are numerous allegations outlined in this letter,” BDO Canada wrote.

BDO Canada was asked to investigate claims in the letter regarding expense reimbursement claims without itemized receipts and taxpayer-funded expense claims for food and beverage, including alcohol. 

Other allegations presented to BDO Canada from management included buying backpacks annually for relatives, providing gift cards for coffee shops to family and friends regularly, spending on restaurants, alcohol and gift cards. The report noted a jewelry purchase ($1,100) from Anne Louise in Vancouver with no receipt or justification.

In addition to the culture of inappropriate spending, the report details a culture of “intimidation,” including pressure placed on staff to participate in practices that circumvented internal controls. 

READ THE AUDIT RIGHT HERE

“Examples include directing subordinate staff to use their individual corporate credit cards where senior staff (who would then approve the expenses) were present,” the report states.

“We understand [Gill] stated that Individual 30’s ‘credit card was going to lose its virginity’ paying for a group meal at Nandi’s [Flavours of India] and that was to pay on corporate credit card in order ’to make more complicit.’”

The report states that “conflicts of interest are apparent” in Gill’s dealings with TNRD vendors, including accepting personal benefits from vendors. Gill apparently accepted invitations to a rental home of a TNRD contractor on at least two occasions. 

In addition, Gill’s relative was hired by a vendor around the same time of contract renewal. 

“[Gill] appears to have leveraged [redacted] role and network at TNRD to raise funds for a charity with whom [redacted] was involved (IndoCanLinks),” the report states. 

Other highlights from the report

• frequent and high levels of spending on meals and entertainment; 

• the splitting of expenses or directing subordinates by senior management to pay for and claim reimbursement of expenses, which can be used to avoid scrutiny or bypass policies, expense claimable limits or other internal controls;

• submitting expense claims without adequate support, such as itemized or legible receipts;

• purchase and distribution of gift cards and items of a personal nature without specifying recipients thereof.

The report states employees said Gill built relationships with the board to facilitate a good working relationship and “enlist support” for initiatives and management style.

“Another employee claims that [Gill] was able to influence the board to agree with proposals such as paying out [redacted] vacation and pay raises, and [redacted] would also influence who would be board chair. Anyone who talked to the board or voiced complaints was challenged by [Gill] and fired in some instances,” the report states.

As part of the review, the auditor found a purchase order for Nandi’s Flavours of India that was crossed out from $12,000 to $20,000 with a different coloured pen and manually signed off by Gill. Someone at the TNRD was interviewed about the invoice, but the reasoning behind the increase could not be recalled.

The process did not follow typical procedure. However, the TNRD individual told the auditor “with [Gill] nothing is ever normal, if [redacted] says you have to change it, you would just change it and that’s the end of it.”

“This is an apparent example of [Gill] circumventing TNRD’s PO change process, with which was presumably familiar given prior employment position. This particular incident is of interest considering the apparent close relationship between [Gill] and [Nandi Spolia].”

Several witnesses whose names appeared on receipts said they were not in attendance for meals. 

High remuneration and fine dining

Gill’s remuneration was 47 per cent to 81 per cent higher than other CAOs in 2017. In 2019, his expenses were 207 to 368 per cent higher than other CAOs analyzed. 

Nandi’s Flavours of India saw the most dollars spent of any food and beverage vendor in the time analyzed by the auditor. Almost all (95 per cent) of Gill’s expenses at Nandi’s did not have itemized or legible receipts. Spolia and Gill together organize the IndoCanLinks golf tournament and both have longtime ties to the Rotary Club of Kamloops Aurora Centennial.

Former staff indicated to the auditor that Gill directed others to pay for excessive food and alcohol at events. 

“We understand that staff would be scolded and treated poorly if they refused to comply with the request,” the report states.

Some staff wrote “as directed by [Gill]” on the backs of receipts. 

This was the case with the champagne room reserved at the Bearfoot Bistro in Whistler during the Union of BC Municipalities conference in 2018.

In addition to nearly $7,000 expensed via Gill’s credit card, an additional $1,762.86 was incurred. The total cost of the event was more than initially reported by Kamloops This Week, totalling about $8,600. The names of individuals who attended were not included and no itemized receipt could be found by the auditor. 

Gill charged taxpayers on 278 occasions between 2015 and 2019 for more than was allowable via the regional district’s meal threshold. A total of 1,195 such transactions occurred by 10 individuals and categories, including several individuals who could not be identified, only detailed as individuals 9, 16, 34, 02 and 27 and also including non-staff and the emergency operations centre.

A small paragraph discusses board expense claims and is as follows: “We reviewed 66 Board expense reimbursement claims totalling $33,496 (Schedule 14). We summarized 295 transactions from the 66 Board expense reimbursement claims. 107 of these transactions complied with the relevant bylaws. There were 15 transactions where the claimed amount increased due to increase in rates and eight transactions where the claimed amount was reduced to the threshold allowed by the bylaws, and 26 transactions where the claimed amount was adjusted by the authorizing signatory to zero for reasons unknown. We did not observe any other instances of non-compliance with the relevant bylaws. 139 transactions were categorized as N/A, which is when there was no supporting documentation attached to the claim (Schedule 14.1).”

A practice of charging meal expenses to various “GL codes instead of listing individuals” made it difficult to allocate charges to individuals. UBCM events from 2014 to 2017 did not list names for meals, so they were unable to be split to determine if individuals were in excess.

One example of naming people on Gill’s receipts, who said they were not in attendance, includes an $494.95 expense at the Noble Pig charged on Dec. 15, 2019.

“The receipt indicates that individual 47 plus one” attended, the report states. “However, individual 47 advised us that [redacted] was not present.” 

Questions about trip to Japan

Gill is said to have claimed five nights of accommodations for a sister city trip to Uji, Japan, when it was only four nights. Gill apparently also claimed two dinners during personal time in Japan — one on Oct. 3, 2019, for 11 people worth $847 and another on Oct. 7, 2019, for six people worth $201.

A $357.08 post-Japan dinner was apparently also ordered from Nandi’s on Dec. 10, 2019, with the diners being Gillis, his wife (Merritt Mayor and TNRD director) Linda Brown, Kamloops Mayor Ken Christian and eight non-TNRD people. 

Concerns were also made about personal expenses paid by the TNRD, including Gill’s home Telus services. Between 2014 and 2019, 71 Telus charges were noted for Gill totalling nearly $6,000. Other unnamed individuals were also said to receive Telus services, funded by the TNRD.

Gill went over an allowable $2,000 bonus amount, which was approved by the board, including purchase of a $235.63 Fitbit, a $300 donation and $1649.76 in jackets for management.

A former staffer said coffee shop gift cards were regularly provided to Gill’s family and friends, significant reloads occurred for coffee shops, restaurants and alcohol gift cards and there was a “pattern” of coffee being purchased daily from coffee shops. 

For whom did taxpayers purchase backpacks?

The auditor noted concerns of backpacks purchased for personal and family use. It said supporting documents did not provide adequate reasons for the purchases, but it was explained they were likely purchased for educational purposes at the library.

A concern about $1,100 from Ann Louise Jewelers, which had no receipt, was apparently for an TNRD employee with 24 years of service. Similarly, former Kamloops Coun. Pat Wallace received a $1,000 diamond gold necklace upon her retirement from the TNRD, though she was required to pay some of the cost.

According to the report, a TNRD employee observed a carpet pattern inside Nandi’s Flavours of India’s side room was the same as carpet installed at the top floor of the TNRD. 

“A concern was that the excess carpet from TNRD was shared or gifted to [Nandi’s],” the report states. “However, TNRD does not have sufficient records to facilitate an investigation of this issue. In particular, the purchase records are no longer available and an inventory or reconciliation of the materials purchased and used were not maintained.” 

The auditor emailed followup questions to Spolia. 

“With respect to [Gill], we asked if [redacted] was ever a partner, shareholder or received any sort of profits/commissions from [Spolia] and [redacted] said no. We also asked if the flooring was redone recently and [Spolia] said no upgrades were done and that would have been the landlord’s responsibility.”

Spolia sold Nandi’s Flavours of India around the time Gill departed the regional district, which was in February 2020.

Nandi’s Flavours of India was “flagged” as a vendor of interest due to the frequency and amount spend by Gill. While Spolia maintained no special arrangement were made with Gill, an instance was reported of Gill receiving authorization to sign off on Nandi’s Flavours of India payroll in 2018, when Spolia was away for 2.5 months. 

Furthermore, a number of individuals apparently witnessed Spolia suggesting alcohol could be “categorized as a non-alcohol item (such as appetizers) or know alcohol was served, but never saw a receipt that had alcohol itemized.”

“We asked [Spolia] whether [redacted] has offered or in actuality served alcohol while categorizing/billing the item as a non-alcohol item to the TNRD or [Gill]. As of the date of this report [Jan. 20, 2022], we have not received a response from [Spolia.]

Much of what was found was reported by KTW, but some is new. 

The report may be used as evidence, should the matter proceed to court.

Other notes from the report

• A vendor that was used by the TNRD for various work and projects was also reviewed, including a $1-million-plus civic building renovation project that had “two unusual” expenses: a $6,000 grand-opening meal from Nandi’s Flavours of India and a $636 meal at Romeo’s Kitchen, for which no receipt was available.

• Gill apparently stayed in one vendor’s vacation home for free. 

“The senior leadership and board of TNRD should be cognizant of the ethical risks of requesting and receiving a significant personal befit from a vendor to TNRD,” the report states.

• Another vendor noted an unusual expense labelled as “attick insulation” for $6,195 in 2010.

“What is unusual about this expense is that there is no attic space at the TNRD,” the report states. “We were unable to uncover much further information on this expense as employees did not remember this particular expense that occurred over a decade ago and no supporting documentation appears to be available in respect to this expense. Based on our interviews with employees, we understand that [Gill] had a large renovation done at [redacted] house around this time. The employees suggested that there may be a connection associated with this expense, though we are not in a position to verify these concerns.”

• Gill is alleged to have conducted personal matters during regular work hours, including a high volume of emails relating to the IndoCanLinks and Rotary Club of Kamloops Aurora Centennial. Emails included planning events, soliciting sponsors and donations and setting up meetings. 

“From 2015 through 2019, there were 530 emails exchanged from 8:30 a.m. to 5:30 p.m. that were related to IndoCanLinks (based on our keyword search),” the report states.

• The report noted Gill directed TNRD staff to do non-regional district work, including helping Gill deliver a television to a house using a TNRD truck, directing assistants to conduct personal errands, such as dry cleaning, for IndoCanLinks, the Rotary Club of Kamloops Aurora Centennial and/or Kamloops Ribfest — all during regular working hours. A staff member apparently witnessed Gill make requests to obtain donations and sponsorships for IndoCanLinks by soliciting TNRD vendors. 

“While we were unable to witness this, we identified an email where [Gill] copied Individual 36 in [redacted] correspondence and asked a vendor to sponsor a hole for [redacted] IndoCanLinks golf tournament. Individual 36 separately emailed the vendor indicating, ’It would be awesome if you could help [Gill] out on this one. [Redacted] is the one who okay’s all of the P.O’s I issue, so it would look great on your companies [sic] part.”