00:00A report prepared by Corporate Secretary Lisa Kisto and dated August 21st marked strictly confidential for board members only has
00:08raised serious questions over the rural development company procurement practices.
00:13It warns that the procurement process may have breached key requirements under the Public Procurement and Disposable of Public Property
00:20Act.
00:21At issue is a clash between management and the board. Management insists the board should not interfere with procurement, arguing
00:28the concerns raised were not serious enough to halt the process.
00:32But the Corporate Secretary disagrees, stressing that directors have statutory duties under the Companies Act and cannot simply act as
00:40rubber stamps.
00:41The report highlights troubling deficiencies, documentation circulated to directors only on the morning of a critical board meeting, inconsistencies in
00:49approval timelines, and a lack of a professional security risk assessment before tendering.
00:54Even more concerning, the procurement repair staff moved forward without confirmed funding.
00:59Instead, it relied on a July 17 memo that spoke of expected mid-year subvention.
01:05The Corporate Secretary rejected that as proof of available funds, warning that procurement guidelines require clear evidence of financing before
01:13contracts are awarded.
01:14She also pointed to a separate legal opinion dated July 20th that identified multiple deficiencies and recommended ending the procurement
01:22altogether.
01:24Yet, according to a report, management gave little substantive consideration to that advice.
01:30Beyond the security contract, the report exposes wider governance gaps.
01:35No board-approved delegation of authority policy.
01:37No approved procurement plan or budget.
01:40Questions over procurement expertise among senior officials.
01:43And a vacant internal auditor post despite board instructions to fill it months earlier.
01:49TV6 News understands that position was only recently filled.
01:53The Corporate Secretary's recommendations are blunt.
01:56Terminate the security procurement.
01:58Correct the flaws and retender only if an independent risk assessment confirms the need.
02:03She also calls for stronger internal controls, clearer spending authority, and a review of other procurements to determine whether these
02:11issues are isolated or systematic.
02:14The report warns that directors have statutory duties to act honestly and in good faith in RDC's best interests and
02:22to exercise appropriate care, diligence, and skill.
02:25It cites litigation involving state companies including Sportity versus Paddington and Ours to underline that boards cannot abdicate responsibility.
02:34At the rural development company, the directors' and officers' insurance policy provides $10 million in aggregate coverage.
02:41But the report cautions that indemnification could depend on the wording of the policy and the insurer's interpretation.
02:48Mark Bessand, TV6 News.
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