Pubdate: Thu, 13 Mar 2014
Source: National Post (Canada)
Copyright: 2014 Canwest Publishing Inc.
Contact: http://drugsense.org/url/wEtbT4yU
Website: http://www.nationalpost.com/
Details: http://www.mapinc.org/media/286
Author: Brian Hutchinson
Bookmark: http://mapinc.org/topic/Insite

RECEIVER MAY TAKE OVER INSITE OPERATOR

B.C. Probing 'Irregularities' At Vancouver Charity

VANCOUVER* A controversial social services provider that operates 
Canada's only supervised drug injection centre and runs dozens more 
projects in Vancouver's poverty stricken Downtown Eastside appears 
headed for involuntary receivership and a possible court battle with 
the B.C. government, because of concerns over its "spending 
practices" and financial "irregularities."

Steps are being taken to "protect provincial assets" including 
hundreds of social housing units owned by B.C. Crown corporations and 
managed by the PHS Community Services Society, a registered charity 
that grew from a single residential facility in 1993 to a 
$28-million-a-year, taxpayer funded operation with more than 300 
full-time employees.

The province will make an announcement regarding the PHS and its 
future sometime in the next few days, several government sources 
confirmed. One possible outcome is the removal of the society's 
executive staff and board, with its operations placed under the 
direction of new management.

Also known as the Portland Hotel Society, the PHS serves thousands of 
Downtown Eastside (DTES) and area residents suffering from mental 
illness, drug addiction, infectious disease and other problems. Its 
activities have expanded in recent years to crack-pipe vending, food 
sales and catering, even beekeeping. But the society is best known 
for operating Insite, the intravenous drug facility it opened for 
temporary "scientific and research purposes" in 2003. Insite became a 
permanent DTES fixture after the PHS and several drug users won a 
series of legal battles with the federal government, which wanted the 
tax-funded shooting gallery shut down.

The PHS also operates mobile needle exchanges and recently began 
offering alcoholics the opportunity to make their own booze.

Problems surfaced publicly in November, following a routine audit 
conducted by B.C. Housing, the province's Crown corporation 
responsible for subsidized housing. The corporation announced it had 
"discovered some irregularities in the Portland Hotel Society's 
spending practices," and had hired accounting giant Deloitte LLP to 
conduct an independent financial review. A separate review was 
conducted by Vancouver Coastal Health, the public agency that 
oversees delivery of health services in the DTES.

Last week, B.C.'s deputy premier and minister responsible for 
housing, Rich Coleman, told reporters his government had examined the 
two reviews. They raised "significant concerns that we're going to 
work through in the next week or 10 days, and [the government will] 
make some final decisions on how we'll manage it going forward."

Mr. Coleman said that forcing the PHS into receivership was "one of 
the options."

Speaking on condition of anonymity, a well-placed government source 
says the province is looking at two scenarios: removing the society's 
upper management and appointing a receiver to run its affairs, and 
filing a lawsuit against the PHS in an attempt to recover public 
funds. The province will decide on one option or both, the source indicated.

Contrary to earlier media reports, police have not been asked to 
investigate the PHS. There is no suggestion of criminal activities. 
Insite is not a "core" area of concern, according to a government source.

Rumours of questionable spending by PHS insiders on non-essential 
services such as limousine rides and entertainment have circulated 
for years in the DTES.

The society successfully fought off attempts by one local newspaper 
to have its financial accounting made public, claiming that while 
most of its annual funding comes from taxpayers, opening its books to 
the taxpayers would jeopardize its competitive position in the DTES. 
The PHS is the largest non-profit service provider in the 
neighbourhood, and its senior managers are among the industry's highest paid.

According to financial information it filed with the Canada Revenue 
Agency for the fiscal year ending March 31, 2013, the PHS paid six 
staff members between $120,000 and $159,000 each. Total "expenditure 
on all compensation" was $15,289,078, more than half the society's 
total revenues (not including $6-million from a disposition of 
assets) in fiscal 2013.

The PHS reported it spent another $358,724 on travel expenses that 
year, and $398,794 on professional and consulting fees.

The province gave the PHS $18.7-million and the federal government 
contributed $2.27-million in 2013. In an email sent Wednesday to the 
National Post, PHS co-executive director Mark Townsend said he had 
not spoken to Mr. Coleman, and was "not aware of any allegation of 
anyone here benefiting at the expense of our clients." He said he is 
proud of the society's work, adding that "all projects and programs 
are fully audited by our external auditors each year. What we do know 
is that our lack of administrative systems have left us vulnerable to 
being misunderstood. We're doing our best to work through those 
issues with our funders."

Jack Bibby, president of the PSA's board of directors, is away from 
his workplace for "the next several days," said his colleague. He did 
not reply to a message left on his voice mail. Asked if the PHS was 
being forced into receivership, the board's secretary-treasurer, 
Cordell Draayer, said he wanted to comment, but could not.

The case is not without precedent. In 2010, B.C. Housing and the 
Provincial Rental Housing Corporation filed suit against a smaller 
nonprofit housing society operating in the DTES, accusing it of 
negligence, financial mismanagement, conflicts of interest, 
misrepresentations and breaches of fiduciary duty.

The Downtown Eastside Residents Association (DERA) controlled almost 
300 publicly owned apartment units in the neighbourhood until a 
court-appointed receiver manager took charge of the properties. The 
province and DERA negotiated a confidential out-of-court settlement 
that ended the lawsuit, and the 37-yearold society was disbanded.

The PHS is much larger and more firmly entrenched, with assets of 
almost $60-million. According to its public filings to Canada Revenue 
Agency, the society's ambitions now reach overseas, with employees 
spending $90,000 in the last fiscal year on activities abroad. The 
precise nature of those activities are not described in the filings.
- ---
MAP posted-by: Jay Bergstrom