Financial Mismanagement City of North Van?

$692,000 ??? We believe the buck stops at the desk of the CEO.

Our (Voices) policy has been not to publish allegations without proof. Here is the proof for rumours going back to last summer, before the November civic election.  Is this secrecy, cover-up or incompetence?


By: Kerry Morris – April 24, 2015
It was July 31st 2014, and we were right in the midst of the election. I caught wind there was a massive problem with the City of North Vancouver’s water meter billing to Vancouver Coastal Health (‘VCH’) for Lions Gate Hospital. The rumour was that the City had lost approximately $450,000 through a water meter failure. I requested the documents in relation to this matter by way of a Freedom Of Information (‘FOI’) request on the City Clerk ( In what was a breach of law, the City used up it’s legal time for document production, then on October 30th 2014 (  informed me that “…We [the City] require payment in full, for retrieving and photocopying the records responsive to your request, before we proceed further in processing the file…”. This communication also asked for prepayment of a fee of $235 before they would even begin the search.
The City’s target had always been to stall out the production of these records until after the election. The internal decision for the delay had been conveyed as a requirement to locate and copy the documents, but the October 30th letter made it clear no hunting or copying had or would occur until delivery of the FOI payment, and the time clock for delivery of the documents would only then begin. This successfully resulted in delaying the release of the documents until after the election. This delay was important for several reasons. First, it could, by way of payment, allow coverup of the billing loss thereby avoiding further embarrassment for the Mayor and the CEO for having allowed the loss. Second, it would hide a failure to disclose these financial errors within the City’s audited annual statements. Third, it would keep the investigation regarding systemic management failures within the City to remain confidential.
Today, VCH, responding in part to an FOI served on them on March 11, 2015, delivered the first phase of the release (, some 60 pages of documents. At page three of the release the document discloses that the City allegedly under-billed VCH an estimated $692,000 in relation to water and sewerage services provided to VCH by the City. It turns out that beginning in the fall of 2009, and continuing on through to the end of the first quarter of 2012, the City billed VCH only 1/10th of the actual value for water consumption and sewerage charges properly applicable during this period.
The City initially asked VCH to pay the full $692K value of the under-billing. They subsequently reduced their demand to only $375K. It is not yet clear if this amount was eventually paid by VCH. We will have to wait for the final figures which won’t arrive until the Phase-2 document release is delivered. VCH, are still awaiting the City’s approval to release the additional documents. The City’s delay in responding has stalled VCH causing them to request a 30 day time extension. In the circumstances VCH are being fair and reasonable. The final phase of the document release is not expected till June 8th 2015.
My initial News Release on this topic dated November 28th 2014 (, alleged the City’s loss was the result of a meter failure. It was not. The meter failure appears to have caused an over-billing situation which began in the Fall of 2004 and lasted through till the Fall of 2009. At this point the City replaced the hospital meter and for the next three years failed to read the new meter correctly. This should have been easily discovered, as it resulted in a significant change in the annual utility cost for Lions Gate Hospital.
To their credit, VCH staff made repeated attempts to educate the City in regard to these billing errors, but the City rejected these overtures, so eventually VCH took the savings and reduced it budget to reflect the downward change in billed utility costs.
As a result of the honesty shown by VCH staff, the City had little if any ability to do a retroactive billing to reflect the lost income. Moreover, the investigation process also disclosed an over-billing condition and VCH had a legal right of offset, but on a claim which would be harder to prove.
When this whole matter was eventually revealed, the City was compelled to request an internal audit for systemic failure. This confidential audit was conducted by KPMG. The purpose of the audit was to determine how such a huge mistake could go undetected for such a long period of time, despite being questioned repeatedly by VCH. The KPMG audit was requested as a part of the FOI served on the City, but Ms. Graham fanned ignorance and declined to confirm she would allow that document in the release if pursued.
Isabel Gordon, who was required to fall on the sword for this one, was compelled to explain why the drop in annual utility income had not been detected, and like any good leader, claimed the buck stopped at her desk and accepted responsibility. But if the truth be known, her trusted second in command should also have discovered the mistake, and in my opinion was equally responsible. What is sad is that he was propelled into Isabel’s role as a result of her departure, benefiting from his own failure. But the question I have is: Why didn’t any of this make it into our audited financial statements? This error is now known to range between $357K and $692K. Where I come from that’s a lot of money. That is the equivalent of the City giving away a publicly owned house. If we’re going to set about losing money, why don’t we give it to someone that really needs it?
Full document with supporting evidence here:

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