Audits reveal P3 problems

Partnerships BC, the organization established by the Gordon Campbell government to promote public-private partnerships, has taken steps to address more than two dozen problems with its financial controls.

The Crown corporation's goal is to "promote, enable, and help implement" public-private-partnerships. Its P3 projects include the $1.9-billion Canada Line rapid- transit project, the $1.4-billion Abbotsford hospital and cancer centre, the $790-million Sea-to-Sky Highway Improvement Project, and the $15-million Britannia Mine water-treatment plant.

Problems were uncovered in a 2003 audit conducted by the Ministry of Finance's internal audit and advisory services division. A follow-up audit, obtained by the Georgia Straight under a freedom-of-information request, listed the original audit's 25 recommendations in an appendix, along with the corporation's response. It was conducted by the same division.

Among the recommendations was one to "approve vendor invoices prior to payment". In other words, the Campbell regime's flagship organ?ization that's supposed to make government more efficient through contracting-out was doling out taxpayers' funds to companies without first approving the invoices.

Another recommendation was to match the quantities on vendors' invoices with those on shipping documents. It seems bizarre that any organization, government-funded or not, would cough up for goods it might not have received.

Problems were ranked in terms of risk, ranging from "insignificant" to "catastrophic". The follow-up audit somberly explained the latter category as: "Project or program irrevocably finished. Objective will not be met."

In the recommendations supplied to the Straight, the risks of each problem were withheld on the grounds that their release could be "harmful to the financial or economic interests" of Partnerships BC.

The second audit, completed last September 30, was requested by Partnership BC's chief executive officer, Larry Blain.

For most of the 25 recommendations, Partnerships BC has either implemented fixes or plans to do so. There are a couple of exceptions, though, that the latest audit suggests be dealt with. One concerns the way invoices are approved. "Good practice indicates a review of the clerical accuracy of the invoices by a second person," says the audit report.

Other areas of potential risk, according to the report, include project management and procurement and contract management. The Finance Ministry auditors praise the organization for several actions taken to reduce these risks, including the publication on its Web site ( of a guide.

In the Liberals' February 14 throne speech, Premier Campbell once again emphasized the value of public-private partnerships for hospitals, citing the Abbotsford facility as an example.

According to Partnerships BC's financial statements for the year ending March 31, 2005, president and CEO Larry Blain was paid $499,132.73 in remuneration in 2004-05, plus another $40,524.02 in expenses. Three other executives earned more than $200,000, plus expenses, that year.