Investigation finds ‘cavalier’ attitude toward millions in housing corporation funds
Finding follows complaint that Iqaluit staff condo project was managed with ‘reckless and willful disregard’ for public property
Nunavut Housing Corp. is still dealing with issues raised in a 2022 ethics investigation into a program it created to give Government of Nunavut staff the opportunity to buy a condominium for below market value.
The investigation was spurred by a complaint the GN received in 2021 under the Public Service Act alleging “reckless and willful disregard” for the management of 36 condominium units at 4096 and 4096B Aput Crt., known as the Road to Nowhere Project.
Nunatsiaq News used Nunavut’s access to information law to obtain a report of its findings prepared by MNP LLP accountants, the company the GN’s Human Resources Department hired to conduct the investigation.
That report found numerous issues, including that the project’s financial operations were such a mess that investigators could not discern its costs or revenues, and that several hopeful buyers had moved into units without occupancy agreements.
Investigators also found the housing corporation did not comply with the GN’s code of ethics or follow relevant financial policies.
These issues not only put the condo project at risk, but the housing corporation and GN as a whole at risk, the report found.
The specific risks are redacted from the report.
The Road to Nowhere Project is two apartment buildings the housing corporation purchased in 2016, along with two others named the Plateau Project, for $14.3 million. All four buildings are known as the Staff Condo Program.
The goal was to convert the apartments into condos and sell them to GN employees as a way to recruit and retain staff. So far, none of the Road to Nowhere condos have been sold.
In emails to Nunatsiaq News, housing corporation spokesperson Sierra LeBlanc said 90 to 95 per cent of the issues raised in the report “have been addressed,” but few details were provided.
‘It’s only what, $15 to $20 million’
In March 2020, the housing corporation set up Iqaluit Condominium Corp. 17 (referred to in the report as ICC17) in to manage the Road to Nowhere condos.
As of October 2022, housing corporation staff were not keeping track of the condo corporation’s financial activities, according to the report. The condo corporation also did not have its own bank account until July 2022, and that account remained inactive throughout the investigation.
“As a result, we were unable to investigate the financial transactions and activities of ICC17 (as a distinct legal entity) because they do not exist,” the report said.
Investigators also found the financial activities of the Road to Nowhere Project were intermingled with the housing corporation’s general accounting fund and possibly had been altered in the course of the investigation.
“NHC also provided us with several Excel workbooks purportedly representing the financial activities of the [Road to Nowhere] project exported from an accounting database,” the report said.
“We identified concerns with the Excel workbooks … that led us to believe the accounting data had been changed before it was sent to us.”
Therefore, investigators said they were unable to conclude “with any level of certainty” the costs or revenues associated with the Road to Nowhere project.
The report highlights a conversation with Ji Liu, who was chief financial officer for the housing corporation and a director of ICC17.
He told investigators he had no experience related to managing a condo corporation, nor did he know how they are supposed to function.
Liu also said the Road to Nowhere Project was “insignificant” in relation to the rest of the housing corporation’s budget.
“He told us, ‘It’s only what, $15 to $20 million, all while you have hundreds of millions going on,’” the report said.
“We found this statement to be concerning given the cavalier connotation of these remarks with respect to the use and management of public funds.”
Liu no longer works for the housing corporation, according to LeBlanc. Nunatsiaq News was unable to reach him for comment.
Living in limbo
As of March 2020, 12 people were living in Road to Nowhere condos they intended to purchase, but without any written agreement outlining terms and conditions of occupancy, a situation that created a host of problems, the report said.
Housing corporation staff “repeatedly” advised these buyers that purchase and sale agreements were forthcoming, “despite there being multiple situations where this was demonstrably false and known to be impossible,” the report said.
Occupants were also expected to arrange utilities connections for their units. This did not happen, according to the report, and costs were “presumably” covered by the housing corporation.
“One occupant we interviewed told us that they have not paid anything the entire time (approximately 32 months) they occupied the unit,” the report said.
Investigators noted the housing corporation charged Road to Nowhere occupants for condo fees in January and February 2020, even though there was no condo corporation registered for the building until March 2020.
They also “observed an instance where a prospective Road to Nowhere purchaser received an email on Aug. 26, 2020, asking for payment of $7,175.96 for condo fees that were in arrears,” the report said.
“The prospective Road to Nowhere purchaser responded advising NHC that they had never received the keys or taken occupancy of the unit.”
In January 2023, CBC News spoke to several occupants living in these condos who expressed frustrations about their situation.
Multiple issues stalled Road to Nowhere: NHC
Nunatsiaq News requested to interview Nunavut Housing Corp. president Eiryn Devereaux, but was told he was not available.
In her emails, LeBlanc did say ICC17 is now properly invoicing and recording condo fees.
She cited staffing issues, the COVID-19 pandemic, Iqaluit’s regulatory processes and renovations to explain why no units in the Road to Nowhere building have sold yet.
“NHC decided to complete renovations before we proceeded to execute purchase and sale agreements,” she said.
The Road to Nowhere Project lead Michael McPherson — who took on the role as GN’s lead on COVID-19 enforcement and compliance while running the Staff Condo Project — left the housing corporation in April 2022 for a job at NCC Properties. He declined to comment for this story.
Thirteen units in the Road to Nowhere project remain unoccupied. Of the 12 hopeful buyers who were living in the buildings without occupancy agreements, 11 now have lease agreements.
One occupant moved on.