The Strange Case of Island Employment

As 2021 drew to a close, Island Employment, a third-party provider of employment services funded largely by the provincial Department of Labour and Advanced Education (LAE), was making some rather startling headlines.

The organization — which began life in 2000 as the Persons With Disabilities Association of Industrial Cape Breton, became the EmployAbility Association of Cape Breton in 2009, then the Island Employment Association in 2016 — has been headed by executive director Jane Orrell since 2001. (Orrell is the wife of former Northside-Westmount MLA Eddie Orrell. See this 2015 member’s statement by former Sydney River-Mira-Louisbourg MLA Alfie MacLeod in which he congratulates Jane Orrell on winning the Canadian Association for Supported Employment’s Wiltshire Award of Excellence in Supported Employment and makes a point of noting her marriage to Eddie.)

 

Orrell is also the highest-paid employee at Island Employment. Her salary for the year ended March 2021 was $111,164, according to this compliance report from MNP, making her the only agency employee (or contractor) paid over $100,000.

Last year, an investigation by the office of Nova Scotia’s Ombudsman, William K (Bill) Smith, found evidence of a “misuse or gross mismanagement of public funds” by the agency;  the province terminated its contract as of November, throwing some 30 people out of work; and on December 2, the LAE asked the Cape Breton Regional Police Services (CBRPS) to investigate a possible misuse of funds by the agency.

I have nothing new to add to this story in terms of developments since December 2, but I thought it might be helpful to provide some background information about the situation and to consider what this case says not just about this specific agency, but about the government’s general approach to third-party bodies spending public money (a longtime bugbear of mine).

 

Case study

It’s difficult to determine the precise timeline of the Ombudsman’s investigation. Most of what we know about it comes from the office’s 2020-2021 Annual Report, which included the Island Employment investigation as a “case study” and said it began after the office was approached by a “group of individuals associated with” the agency.

Jason MacLean, president of the Nova Scotia Government Employees Union (NSGEU) which represents the Island Employment workers, told media those “individuals” were unionized workers at the agency. In this interview with Port Hawksbury’s 101.5 The Hawk, MacLean said the workers first brought their allegations of misspending of program funds to the Ombudsman “a few years ago.”

A “high level summary” of the Ombudsman’s findings was returned to the government in December 2020 (MacLean told The Hawk it had never been made public) and the final version was submitted in April 2021. (The Ombudsman’s office sometimes publishes investigations on its website, but this one has not been.)

Island_Employment_Ombudsman

 

According to the case study, investigators pored over “hundreds of documents” covering a four-year period, which suggests they focused on the period immediately following a big reorganization of the provincial government’s employment services system in 2016. That reorganization saw the government establish Nova Scotia Works (a “one-stop job search and career advice resource”) and end funding for specialized employment services — like those for women or people with disabilities.

In Cape Breton, as Jane Orrell explained in a 2017 interview with Elevate, a publication of the Cape Breton Partnership, this change in government policy meant that, rather than dealing with eight “agreement holders,” the LAE (through Nova Scotia Works) would deal with three — EmployAbility (renamed Island Employment in November 2016), the Cape Breton YMCA and the North Side Employment and Resource Centre.

 

Ann Terry Project

If you remember nothing else about the restructuring of employment services, you may remember that one of the first victims of the policy change was The Ann Terry Project, a 30-year-old, Sydney-based, employment services agency for women run by the non-profit Ann Terry Society (ATS). Initially, it seemed an agreement brokered by the deputy LAE minister would save the agency, allowing it to share office space with Island Employment, but in 2018, ATS executive director Joan MacDonald told the CBC the province was:

…looking for a one-stop shop and the Island Employment agreed to take us as a partner within their three-year contract, but as soon as we were in, it became apparent that we weren’t really going to be a partner.

We were a necessity for them to get their contract.

Speaking on behalf of Island Employment, board chair Murdoch Moore told the CBC that IE had done “everything in [its] power” to make the Ann Terry Project part of its organization.

Those efforts proved unsuccessful, and ATSmoved out of Island Employment’s George Street digs into “a small office elsewhere” in 2018 and the three members of the society who sat on the Island Employment board quit. MacDonald said the organization hoped to source funding from the Department of Community Services to continue offering services to women.

I contacted Rosalie Gillis, chair of the ATS board, to ask the current status of the organization and she told me in an email:

When we severed our relationship with Island Employment in 2018, the Ann Terry Project closed, and the ATS started working with Community Services to do Pre-employment programs for women. Through these programs we are able to help about 12-15 women each year from our space at New Dawn. This is a far cry from the average of 200 women we were able to serve annually when we ran the Ann Terry Project.

With the hit that women’s employment has taken during the COVID pandemic, the ATS board believes that it is time for the province to again support women-only employment services for women in Nova Scotia. We know from our many years of experience working with women that the women-only model works in helping women develop to their best potential. We shared our views with the province, considering there is a void in employment service in CBRM now, but have received no response to date.

 

Follow the money

I figured it would be useful to see how much money Island Employment has received from the provincial government over the years, so I went through the Public Accounts.

The first reference I found to the agency was in 2010, so I recorded all the entries between then and 2021:

YearLabour & Advanced Ed*Community ServicesHealth and WellnessTotal
201090,74990,749
2011360,510360,510
2012415,922148,610.58564,532.58
2013582,568139586.44722,154.44
2014564531.76136797.51701,329.27
2015706,689.05 100,263.75 152,745.34 959,698.14
2016700,605.95 75,121.25135,456.98 911,184.18
20171,498,064.48 38,024.24 63,759.39 1,599,848.11
20182,209,095.41 N/A150,276.42 2,359,371.83
20192,633,449.25
N/A189,171.302,822,620.55
20201,449,446.23 N/A184,775.651,634,221.88
20212,325,084.07N/A193,418.292,518,502.36
Total15,244,722.34
*In 2010 LAE was the Department of Labour and Workforce Development

 

By my calculations, the amount of money the agency received after the 2016 restructuring of employment services increased significantly.

 

Complaints

Of four initial complaints lodged against the agency, three were found by the Ombudsman to have merit, namely:

  • Billing different contracts for the same services/expenses, including rental space, travel expenses and employee salaries;
  • Paying employees a fee to provide training workshops to external organizations during their regular working hours in addition to receiving their regular salary; and
  • A lack of transparency, accountability and oversight of the operations of Island Employment including spending practices involving items such as computers and tablets purchased through various contracts.

A fourth complaint, involving the submission of false travel expenses, was found not to have merit, but the agency was nevertheless knocked for “inconsistent and inappropriate practices related to travel claims” by the Ombudsman, along with other “administrative defects” including “conflicts of interest by employees, uncontrolled spending practices and lack of adherence to government procurement standards, indulgent spending activities related to food, promotional goods and gifts.”

 

Recommendations

You get a real sense of the problems with IE when you read the Ombudsman’s proposed solutions, like No. 9:

Review, revise, and implement policies to ensure that all spending practices related to the purchasing of gifts for staff, staff meals, promotional items, and staff “retreats” from monies provided from the government to deliver employment services are consistent with LAE agreements and Nova Scotia Government spending and financial policies and practices.

Or No. 8, which called on the agency to revise its travel expense policies to “ensure or prescribe” the following:

a) Appropriate claiming of meals when travelling, including under which circumstances specific meals can be claimed (including meals claimed when attending conferences or staying in hotels where the breakfast meal is provided).

b) The inclusion of relevant supporting documentation and/or details of the incurred expense.

c) The circumstances under which incidental expenses can be claimed,

d) Practice of pre-paying travel expense claims;

e) Oversight of claims by management staff; and

f) Staff training regarding the travel policy and eligible expenses.

Or No. 3:

Examine the use and appropriateness of unrestricted, client, or other discretionary funds, including whether they are prescribed and specifically authorized in the funding agreements.

But I should probably have started where the Ombudsman, did, with a recommendation the agency:

Provide formal training for agency directors and Board members with signing authority on their roles and responsibilities. this training should include information on procurement processes and policies, appropriate expenditures under the agreements, and acceptable travel claim

This reminded me that back in 2017, in the wake of an expense scandal involving the CEO of the IWK, a York law prof told the CBC’s Michael Gorman the requirements for becoming a board member in Canada are “shockingly minimal: it’s over 18, not bankrupt and not insane.”

But the Ombudsman didn’t just require more of agency board members and directors — his first recommendations were directed squarely at the province.

 

Review and revise

You can read the details of the Ombudsman’s recommendations for the Department of Labour and Advanced Education above (perhaps you already have), but the general drift is clear: the Ombudsman seems to be laying a lot of the blame for Island Employment’s problems at LAE’s feet.

LAE, he says, needs to “review and revise” the rules Nova Scotia Works agreement holders — like Island Employment — are expected to follow and “ensure that spending by these agencies is conducted in accordance with provincial government policies to promote consistent, sustainable, transparent, accountable, and ethical spending of taxpayer dollars.”

Moving truck at Nova Scotia Works, Sydney, NS

Moving truck at the former Island Employment office in Sydney, 21 December 2021. (Spectator photo)

The review should “clarify and re-state” all policies and practices related to travel expenses, hiring, gifts, staff meals, promotional items, staff “retreats” and procurement.

The department should also investigate how widespread the practice of taking outside contracts is among Nova Scotia Works agreement holders and whether it affects the delivery of government programs.

In short, LAE needs to keep better track of how its money — our money — is spent.

But this is a responsibility the department seems reluctant to shoulder. In the 2020-2021 Annual Report, the Ombudsman wrote:

In summary, this Office found that LAE was inclined to move incrementally on changes that might increase their [emphasis mine] accountability for such agencies, and to bring them closer to complete adherence to main-stream public service procurement and spending standards. LAE also appeared inclined to reflect the issues back to the agency as opposed to considering deficiencies in the program.

To be clear: I am not defending Island Employment for the way it seems to have operated. But where was the province in this? Why did it not demand a better accounting of the organization’s spending?

The Ombudsman, who can recommend the province conduct a forensic audit — and did in the case of a Richmond County expense scandal in 2016 — didn’t in this case. Rather, he called on LAE to “assess whether any of the findings and conclusions of this Final Report require a forensic audit or examination.”

The NSGEU called for a forensic audit.

Instead, Labour Minister Jill Balser cut IE’s funding and referred the matter to the police. Did she see something in the Ombudsman’s report that the Ombudsman himself missed? Or is she, as the Ombudsman so politely suggests, “deflecting” all responsibility for the misuse of funds onto Island Employment?

As far as Jason MacLean is concerned, the government is punishing workers for the failures of IE management and LAE alike. In an October press release, he said:

It seems like government has decided to make the hard-working frontline staff pay for poor management practices and government’s own failure to ensure proper use of public funds. Instead of trying to address issues with management and the Board, government is just trying to sweep this messy situation under the rug, end the contract, and hand these jobs to another service provider.

As someone who has wondered endlessly about the finances of opaque organizations that survive largely on public money — like Destination Cape Breton and the late Business Cape Breton and the present-day Cape Breton Partnership — I am very curious as to how the government chooses them and the degree of control it exercises over them, so this situation with IE has really got me thinking about these issues again.

Which is not a bad way to start the New Year.