Tales from the tragic kingdom

Updated: PHS damned by duelling audits, Kwan's Disney nightmare and questions swirl around Coleman oversight

For the second time in four years, an activist charity responsible for helping some of Canada’s poorest people is targeted by the province for poor governance and mismanagement.

In 2010, it was the Downtown Eastside Residents Association. Now it is the PHS Community Services Society. DERA was effectively shutdown after an out-of-court settlement. To keep PHS operating, it is getting a new board peopled by executives from its two biggest funders, Vancouver Coastal Health and B.C. Housing. Mark Townsend and Liz Evans, PHS’s husband-and-wife co-founders and executive directors, are on their way out at the end of March after Housing Minister Rich Coleman threatened receivership. Read my Vancouver Courier story here.

What went wrong? In December 2011, just 14 months before B.C. Housing hired KPMG to conduct a forensic audit, B.C. Housing applauded PHS after an operational review of its organization, maintenance, tenant records and finance. B.C. Housing found PHS had “done a great job.”

“The buildings were well maintained and well managed given their age and the inherent challenges faced with aging building systems. The support service programs provided to tenants seem well utilized and add value and quality of life for the tenant population.”

Of “Minnie” Kwan and “Richie” Rich

In the most embarrassing moment for the B.C. NDP since it lost an election that it should have won on May 14, 2013, Vancouver-Mt. Pleasant MLA Jenny Kwan admitted she benefitted from a trip to Disneyland paid for by PHS. It was among a number of expenses in the Feb. 26, 2014 Vancouver Coastal Health internal audit of PHS that “were not reasonably incurred to provide programs and services.”

The VCH audit mentioned $2,694.95 in hotel charges for the Disney Resort Grand Anaheim for May 21-23, 2012. Kwan’s then-husband was PHS policy, research and fund development director Robert “Dan” Small, who is also resigning from PHS at the end of March.

On March 20, Kwan issued this statement:

“I was concerned to see the findings of an audit released today on the Portland Hotel Society, particularly the expenses charged by previous directors of the society.

“Together with my family, I did join my husband — who was an employee of PHS — on two trips in 2012.

“I was assured at the time by my former partner that he paid out of his pocket for the family-portion of the travel expenses. I never would have gone had I known that the family portion of the travel would appear to have been be paid for by PHS.

“I trust that my former partner will address the findings and take appropriate action to ensure that the PHS is reimbursed for any expenses related to family travel. And if he doesn’t, then I will.”

Kwan simply has to do more to resolve this situation: Either provide evidence that Small misled her about who was paying the bill or get out her chequebook and reimburse PHS without delay.

UPDATE – March 21: Kwan said she has written a personal cheque for $34,922.57 to PHS and delivered it to the board. She told reporters that she would be taking an unpaid leave of absence (obviously she would be a distraction for the NDP and an easy target for the Liberals in Question Period when the Legislature reconvenes March 24). Here is the text of her statement:

“Words cannot adequately express how shocked and sorry I am about the findings of this audits. It is my understanding that my ex-husband travelled to Europe to further his work for the Portland Hotel Society and while he was there, he conducted research, was a presenter and attended conferences.

“He brought the family along and as I stated yesterday, I was reassured by my ex-spouse that he had paid for all the family portion of the travel associated with the Society. I trusted that he was telling me the truth.”

“Since reviewing the audits, I have asked the individuals involved to advise me how much of the travel cost is attributed to my family and to provide me with documentations to verify this. I spent most of my day yesterday trying to get answers and explanations about the discrepancies between what the audits found versus what I had been told about the payment of these expenses. As of today, they are not able to provide me with this information.

“Given the findings of the audits, it is clear that their accounting system is deficient and I am not at all confident that they will be able to provide me with this information.”I strongly believe that the travel expense incurred by my family should not be paid for or perceived to be paid for by the Society.”I am therefore repaying the full costs identified in the audit that either my ex-husband and/or my family is associated with.”

Kwan said she was reimbursing PHS for: travel to the United Kingdom ($8,323.22), travel to Bristol, England ($3,175.12), flights ($5,950.60), transportation ($4,142.68), Vienna ($10,636) and the Disney hotel upgrade ($2,694.95).

The $8,323.22 trip was, according to the VCH audit, “to look into heroin prescription programs and for other business purposes.” Kwan and Small stayed in a £478-a-night hotel room and charged £35 for flowers; at today’s exchange rate, that’s $883 and $64, respectively. The Bristol trip included two rooms, one at £288 per night and the other £420. There was also a £25 charge for flowers. The $5,950 was spent on Transat holidays. The VCH audit said “no receipt or documentation was provided for this transaction.”

Kwan’s estranged husband, Dan Small, referred my interview request to Townsend.

“It was a staff person who’d worked hard and they had a catastrophic health setback and we wanted to help them out,” Townsend said, referring to Small. “Unlike VCH and B.C. Housing we don’t have the employment systems, the disability, the pension. If we did, it would cost $1.7 million. We helped out on that.”

Townsend said PHS had received Kwan’s cheque.

“As to the amount, I think what Jenny is doing is because she is an honourable and sweet person, she’s just paying everything. But technically she’s paying things that are work-related. That is for her to talk about, not for me.”

The spotlight really needs to be shining brightly on Housing Minister Rich Coleman. Coleman was also Housing Minister when DERA was sued in 2010. Only three months before last year’s provincial election, B.C. Housing ordered KPMG to undertake the forensic audit. The audit gathered dust on a shelf for 246 days before it was finally released on March 20. Why didn’t Coleman act swiftly last summer when it was delivered?

For now, Kwan is wearing the mouse ears of shame, but Coleman — the deputy premier, no less! — has his hands on the public purse.

Bad reputation

Meanwhile, here’s a nugget from the KPMG audit’s page 7 of Appendix C (Visa Charges – Retail Stores) in which the auditors analyzed how PHS spent to protect its reputation and sell the supervised drug-shooting gallery to politicians and the public.

Reputations Management — $6,037 (2 charges) — We identified two charges on the credit card of Mr. Townsend on April 12, 2011 and Feb. 23, 2012 (each in the amount of approximately $3,000) from “RPD*Reputation.com”. Based on our limited online searches, it appears that this relates to “Reputation.com” which seems to be a Silicon Valley-based enterprise. Its website states that “people need to control their online search results because they frequently contain inaccurate, misleading or outdated material which can adversely influence how web searchers view them.” Their tools include “web monitoring,” “privacy protection” and “bad content suppression.” To date, we have not discussed these charges with Mr. Townsend. In Subsequent Correspondence, we were told that the company provides a media monitoring service and an online Internet scanning service and the purpose is to bring to PHS’s attention issues associated with PHS social initiative unrelated to B.C. Housing.

Although apparently unrelated to the aforementioned charges to Mr. Townsend’s credit cards, during our review of the accounts payables of PHS, we identified various payments totalling approximately $19,089 to a company called 0842573 B.C. Ltd. dba Reputations (“Reputations”). We were advised in Subsequent Correspondence that this company assisted PHS is (sic) managing media and providing related support during a social initiative unrelated to B.C. Housing.

Reputations describes itself as “a reputation management and public relations firm, helping clients build, manage and protect their reputations. We are the only agency in Canada that has built its practice and intellectual property around reputation management.

The website for Reputations includes in its portfolio a case study about how “PHS engaged Reputations to build public support for Insite, a harm reduction facility in Vancouver.” Reputations states that it “designed an advocacy-focused media strategy campaign to bolster support among Conservative MPs and influence the Prime Minister and Health Canada to commit to expanding approval for Insite. We developed a support network of high-profile influencers comprised of Vancouver’s past five mayors, police chiefs in large urban centres, prominent members of the facility’s nearby Chinatown community, as well as reputable health professionals. We garnered millions in earned media value and informed government decision-makers on community support, positive media coverage and positive scientific research.

PHS is listed on the Canada Revenue Agency charity Iistings website, but you will have a hard time finding information about PHS elsewhere. In my March 19 story on VanCourier.com, Townsend explained why the PHS.ca website did not contain any information about the charity’s services or finances.

“From our mind, websites are about promotion and customers,” Townsend said. “We don’t need customers. Our housing is full, our shelters are full, our services are stretched as it is.”

I know what you’re thinking: It’s the 21st century and a taxpayer-funded charity doesn’t have a website to educate the public about its activities and, potentially, solicit donations?

Townsend did provide me a hard copy of the PHS financial report for the year ended March 31, 2013. It is below.

PHS 2013 financials

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