Business-class travel, smartwatch data among excessive expenses flagged in AG report on OilCo
CBC
Newfoundland and Labrador's auditor general raised red flags Wednesday in her first audit of the Oil and Gas Corp., the Crown corporation spun out of the now-defunct Nalcor Energy.
Denise Hanrahan says her staff found leaders of the corporation, known as OilCo, refused to follow government direction on job classifications. They also found a lack of oversight for public funds and gaps in compliance with policies on conflict of interest — something she called a "very key part of the public service."
"It surprised me to see a Crown corporation actively work against direction given by Treasury Board," Hanrahan told reporters at a news conference in St. John's on Wednesday.
The 33-page report is the first of its kind about the fledgling Crown corporation, which had operated as part of Nalcor Energy until Nalcor was dissolved in 2021. The Liberal government shut down Nalcor over its handling of the Muskrat Falls hydroelectric project, putting non-petroleum assets under Newfoundland and Labrador Hydro.
OilCo leads oil and gas activities in offshore Newfoundland and Labrador on behalf of the provincial government, but the report found the corporation doesn't operate in line with all government policies.
For example, OilCo does not classify positions on government pay scales, and most salaries exceed remuneration for similar jobs in government.
For Nalcor employees who transitioned to OilCo, classification could affect income.
"Classification would likely result in salaries being frozen indefinitely, or in termination and restaffing for transitioned positions," said Jim Keating, the corporation's chief executive officer, in the report.
Keating's income is approximately $312,740 per year. A similar position in government would be $182,789.
OilCo spent $23,805 on a consultant for position classification before the corporation's management abandoned the process. The corporation then spent $79,821 on alternative classification instead.
Hanrahan's first recommendation for OilCo is to classify its position on government scales, as directed by the province.
The corporation refused. Instead, they are proceeding with a market-based compensation system comparable to N.L. Hydro.
Position classifications weren't the only shortfall Hanrahan identified in her report.
"The other takeaway for me is the use of public money and the lack of oversight with respect to expenses," she said.
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