BURST
A City of Vancouver building inspector exploited his position for several years to benefit a private-sector company he co-owned, in what the city’s auditor general described as an “ongoing, undocumented and unmitigated conflict of interest.”
Even when city management was made aware that the employee was inspecting his own company’s work and knew that a conflict existed, “steps were not taken” to document the conflict or mitigate it, which “contributed to the conflict continuing for many years,” says a report from the auditor’s office.
The city inspector personally made at least four decisions about his own company’s work, all of which were favourable. The report says the case revealed serious weaknesses in the city’s internal systems to prevent corruption, and lists 16 recommendations to address these shortcomings, including periodic auditing of inspections to ensure consistency and compliance.
Vancouver’s “current systems make it possible to easily carry out various inappropriate practices without detection,” says the report by the city’s auditor general, Mike Macdonell. The report did not identify the building inspector or companies involved.
“Applying different inspection standards to different private-sector contractors can give those favoured an unfair advantage over their competitors and create a race to the bottom for standards,” the report says. “These risks could also impair the city’s reputation.”
The city seemed to dispute the report’s finding that senior management failed to address the employee’s conflict and allowed it to continue for years. In response to Postmedia News’s questions, the city sent an emailed statement Thursday saying that after city leadership referred the 2024 complaint to the auditor’s office, it also “reviewed the two pre-2024 misconduct allegations and confirmed through an internal review that both had been addressed at the time.”
“In each instance, steps were taken to assess the circumstances and ensure appropriate oversight,” the city statement said.
The city didn’t respond by deadline to a followup question seeking clarity about when exactly it became aware of the situation and how the allegations were addressed.
A spokesperson said the individual in question is no longer employed by the city, but didn’t say whether he was fired, quit or retired.
Macdonell declined to discuss the report before he presents it to city council next week.
Macdonell’s office learned of the situation in May 2024, when a whistleblower filed a report with five allegations of serious wrongdoing. The investigation substantiated the allegations of the long-term conflict of interest involving the city inspector and his private company.
It also “partially substantiated” another allegation that the same inspector gave preferential treatment to a different private-sector contractor. The whistleblower had accused the inspector of accepting bribes from that company in exchange for preferential treatment.
The investigation revealed that the inspector had conducted a “disproportionate” number of inspections involving the contractor identified by the whistleblower and “appeared” to have given them preferential treatment based on an “unusual” decision-making pattern, though the auditor general was unable to obtain evidence that a bribe had been accepted.
Macdonell has referred the bribery allegation to Vancouver police.
During the auditor general’s interviews, several city employees said that “bribes and hospitality are routinely offered to inspectors,” but no direct evidence was found of bribes being accepted. The report recommends the city create a mandatory system where employees must report any attempted bribes or benefits offered, including a policy for appropriate action and when to report such situations to police.
The report cites the 2015 case when more than a dozen New York building inspectors were charged with exploiting their positions to cash in on hundreds of thousands of dollars in bribes, a situation that Manhattan’s then-district attorney, Cyrus R. Vance Jr., said showed “harbingers of other potential casualties of the current housing boom — tenant safety and government integrity.”
Such examples “highlight the real risks of corrupt practices arising in these systems,” the Vancouver auditor general’s report says.
Macdonell, a chartered professional accountant and certified fraud examiner, was appointed in 2021 as Vancouver’s first auditor general, after the position was created by Vancouver’s previous city council as a measure to promote transparency and accountability. The city already had a department of internal audit that reports to senior city staff.
But the municipal auditor general was a new role, reports directly to city council and doesn’t take direction from them or from city management.
The office’s creation stemmed from a 2019 motion introduced by then-Coun. Colleen Hardwick, who said Macdonell’s hiring in 2021 would mean that “for the first time, the city will have independent assurance of the stewardship of public funds.”