Two Red Deer city councillors sharply questioned an auditor’s conclusion that “no inaccurate information” was provided to Westerner Park’s governance board by the facility’s former CEO.
“That statement stood out for me and surprised me,” said Coun. Vesna Higham at Tuesday’s special council meeting to discuss the forensic audit of the money-losing Westerner Park Exhibition Association.
The external Deloitte audit was ordered by the city in May, several months after the municipality had to take over financial oversight of the cash-strapped exhibition grounds.
Coun. Tanya Handley noted that certain sections of Deloitte’s forensic audit on Westerner Park’s last three years of operation seem to contradict the statement about no inaccuracies being reported.
Handley asked Deloitte partner Gina Campbell to explain the discrepancy reported in a section of the report about a hoped-for contract between Westerner Park and the Red Deer City Soccer Association, which was ultimately never formalized.
Details of forensic audit on Westerner Park’s operations
The report states after the departure of the Westerner Park’s former CEO in September 2018, “it was determined that the rental amounts in the draft contract were not consistent with the rental income presented to the board on Nov. 23, 2017” — the date upon which the board approved the construction of a new exhibition hall, based in large part on those presented financial numbers.
“How could there be no instances of inaccurate information when the rental information was not consistent?” questioned Handley.
Campbell, the Deloitte partner who conducted the forensic audit, responded that no evidence was found that the former CEO knew at the time that the information, or projections he was presenting, were false.
“The inconsistencies presented to the board and the draft contract does not constitute inaccurate information. We did not find the figures were intentionally inflated or overstated,” said Campbell.
The Deloitte audit instead concluded that financial processes, as well as communications, at Westerner Park were seriously lacking.
By building a new exhibition hall during a recession with over-optimistic rental projections, and by overestimating how many seats could be squeezed into the Centrium for the Canadian Finals Rodeo, operators created a cash-flow crunch that became “the perfect storm” when COVID-19 hit and led to dozens of event cancellations.
Higham said the auditors concept of “inaccurate” depended on uncovering a paper trail and other hard evidence that never turned up. But “the abysmal state of (Westerner Park’s) financial records, the governance structure, the corporate culture, left much to be desired.”
Higham added that while misrepresentation was not identified by Deloitte, “the evidence absolutely showed operational mismanagement — dare I say gross operational mismanagement — with gaping holes and a lack of financial controls and record keeping.”
Like other city councillors, Handley and Higham stated their hopes that uncovering these problems will lead to big changes in how Westerner Park is run.
Handley said this includes better defining the role of city council representatives on the Westerner board. Auditors found city councillors felt bound by privacy rules of in-camera meetings and were unable to pass on their concerns about operations to city council.
After Tuesday’s presentation, many city councillors acknowledged the major role Westerner Park has played for 125 years in Red Deer and central Alberta. They expressed their support for current CEO Mike Olesen and stated their desire that lessons learned today will lead to a more positive tomorrow.
Coun. Michael Dawe also noted the difficulty he feels in allocating taxpayer money — so far $3 million was spent by the city to keep Westerner Park afloat — during this austere time when this money could have been spent on many other worthy causes.
Mayor Tara Veer was troubled by much of what the auditors found, but was at least glad to see no findings of fraud and misappropriation.
She said she looks forward to reviewing the results of the next sustainability audit on Westerner Park in four to five weeks. It will provide recommendations on how to get Westerner Park back on its feet again.