Energy Solutions Centre Inc.

Auditor General finds breakdown in governance, controls and oversight

Whitehorse, 7 February 2005—In a Report provided today to the Speaker of the Yukon Legislative Assembly, the Office of the Auditor General of Canada says that the corporate governance and oversight of Energy Solutions Centre Inc. failed. Management did not operate in the full interest of the Company, nor did the Board of Directors exercise sufficient oversight and control to protect the public interest.

“Managers’ decisions showed a disregard for good management principles and practices,” said Ron Thompson, the Assistant Auditor General responsible for the audit. “Management did not inform the Company’s Board of Directors of many of its actions, and problems continued because the Board did not challenge management.”

Energy Solutions Centre Inc. is a subsidiary of the Yukon Development Corporation, a government corporation of the Government of Yukon.

The audit found serious problems in the overall management of the Company, including:

• Large unauthorized contract awarded to a senior manager;
• Contracts negotiated, issued, signed and paid by the same person;
• Contracts awarded without competition;
• Payments made without proper supporting documents; and
• Lack of board approval of major projects.

The audit noted that it was not clear why the Company was established and why it was involved in certain projects. The audit also identified overlapping roles and responsibilities and unclear accountability among the Company, its parent, its board members, and its president.

“The Company’s costs are higher than necessary because of these deficiencies,” said Mr. Thompson. “I hope our findings will help the Government to avoid similar problems in the future and strengthen the governance and oversight of government corporations.”

The Office of the Auditor General carried out the audit of the 2003 financial statements of the Energy Solutions Centre Inc. The Auditor General issued a qualified opinion on these statements and decided that several matters should be brought to the attention of the Legislative Assembly in this separate report.

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To obtain the Report “Energy Solutions Centre Inc.”, please contact:

Communications
Tel.: (613) 952-0213, ext. 6292
E-mail: communications@oag-bvg.gc.ca