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 Corporation took possession of two apartment buildings at 4096 and 4096B Aput Crt. in November 2016. The idea was to convert the units into condos and sell them to staff for a reduced price. Despite the fact people applied to buy these condos, no purchase and sale agreements have been executed. (Photo by Livete Ataguyuk)

By Randi Beers

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 occupancya 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.

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(47) Comments:

  1. Posted by Ian on

    Clean house, president ,board of directors ,this is a complete disaster.

    67
    1
    • Posted by Maq-Pat on

      This project predates almost all of NHC’s current leadership, with the important exception of the Chair of the Board: WHO HAS NEVER LIVED IN NUNAVUT.

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    • Posted by TP on

      Correct as usual John K. The incompetence of the GN and all of its departments and corporations comes as no surprise. It is also not a surprise that a communications manager is left to speak for the corporation. Meanwhile the minister and president are cowering under their desks. Working for the GN can be a career killer even if you’re a qualified, honest employee. The best advice I was ever given was to never follow any direction unless the manager/director was willing to put the request in writing. If they insisted that verbal orders be followed, do not do so until you have sent an email to the manager/director with a summary of the request and the actions to be taken, then await an affirmative response before proceeding. Because if things go sideways, it’s the lower level staff and managers who will be blamed. What a gutless, duplicitous organization.

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      • Posted by S on

        Thanks TP, that was a splendid, though gentle assessment of GN and the people who run the show there. Case in point of your gentle nature:

        “Working for the GN can be a career killer even if you’re a qualified, honest employee.” is more fairly stated as “Working for the GN can be a career killer ESPECIALLY if you’re a qualified, honest employee.”

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  2. Posted by Still going on on

    From everything I’ve heard around town, this type of attitude is still going on but this time on a much larger scale with the Nunavut 3000 project. NHC has been given free reign to do anything they want with half baked policy documents because there is so much pressure to show any results.

    There will be more scandals in the days to come on the complete mismanagement of this corporation.

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  3. Posted by Name Withheld on

    1. Terry Audla was then the President who like signed off along with the Comptroller for NHC
    2. HR Consultant hired for Iqaluit NHC only hires who she prefers
    3. Majority of the staff working for NHC are hired from outside of Nunavut

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    • Posted by Dylan on

      Mismanagement of millions of dollars in funds. Largely transient staff. CFO who had no idea what he was doing.

      Forensic audit now.

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      • Posted by Nunaessay on

        What will a forensic audit change in the land of incompetence, which is essentially a huge drain of the Canadian taxpayers hard earned money,hinterland is a wasteland..thank you nlca

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  4. Posted by Canary in the coal mine on

    With all the new gn consultants working from down south making double what a GN worker makes they might as well just close all GN offices outside of iqaluit and fill most Gn positions with consultants.

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  5. Posted by Misunderestimated the task on

    It’s only $15-20 million, but once you’re done those units are out of your hair and you’ve piloted a new way of doing things besides the failed staff housing model.

    Talk about bureacratic inertia. Seems like the Corporation is only capable of doing a handful of things.

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  6. Posted by Wait on

    Wait until you see the audit on the 3000 home project. You ain’t seen nothing yet. Somewhat more than 20 million.

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    • Posted by Auditor General on

      Who says there’s gong to be an audit on Nunavut 3000? All there will be is a bunch of sole-source contracts. This government and the next one will be over before Nunavut 3000 is over. The people will be gone. The money will be gone. The businesses will be gone. The housing crisis will not be gone. It will be worse than ever, with more Nunavummiut moving south every year to find schooling, jobs, and places to live.

    • Posted by NHCC on

      NCC is in charge of that, where Michael McPherson is working.

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      • Posted by John WP Murphy on

        What are suggesting and perhaps to give some legitimacy to your comment , identify yourself.

  7. Posted by Mit on

    “Its only 15-20 million” is Nunavut’s M.O.

    Should go back to NWT days where everyone was more independent, resourceful and less conditioned to receive every handout possible from A to Z

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  8. Posted by pissed off on

    What a sh ….. t show !!!!

    Can we find out who they bought the units from ?
    Based on what “ credible and solid appraisal ?
    Who was the minister that signed on all this ?
    How many Deputy ministers since have covered that up?

    Like someone else has commented , wait the year 2030 when someone starts asking questions about the 3000 units.

    This scandal will look like child play in comparison.

    So discouraging to see all the mess.
    One occupant lived in the units for 32 months without paying anything !!!
    Talk about a miserable joke.

    Sop sad !!

    Thanks

    22
    • Posted by blinkey swartz on

      probably no arrears to pay back either. what a total laugh. probably just sat there and said nothing.

      • Posted by Arnaq on

        Heads should roll. Reputations ruined. not holding my breath.

    • Posted by monty sling on

      It’s a bad medicine, poor leadership at Iqaluit and Arviat, President and the V/President. if they knew their jobs, we would not keep hearing about NHC,,,,

      15
      • Posted by Inuk on

        I agree to you monty sling. If they are being talk about them they alwaus use excuses and they there qaulify for that. If we see the government workers and see how many inuit workers in the higher job position and there will be lots of foreign workers who are leaders in the offices. Even in arviat there are social workers and when i check in rankin inlet for the health workers that person said in arviat worker he is not a social worker. Just start say what grad did you finish and see what the MPs will think. They even say each other that person is kindagarten or in number grade 0.

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  9. Posted by hermann kliest on

    Why is the workmen always taking the axe? It’s the president and the v/president that are the problems. Why are the bottom of the ladder taking the axe? Get rid of the two and the Corporation will se new directions! Board, have you no vision that there has been a problem for quite a while? Top two are the problem(s)….Sort it for change, look at your critics on housing crisis….The problem is right in front of you; Two senior autocrats….

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  10. Posted by Homeless in Iqaluit on

    A new subdivision in China in the Works and another somewhere in NL! Yet, this kind of ridiculousness will continue with GN.

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  11. Posted by Larry on

    Every MLA, Mayor, should be screaming for heads only 20 million , 20 public housing units, 5 daycares , 2 parking garages, and divide 20 million between all the hamlets and they could run badly needed local programs, Nunavut 3000 is going to cost this GN and every community their capital plan budgets for 3-5 years, and don’t forget who is going to be on that 50 million prefab disaster in Arviat now on hold because KIA ran out of money to build it already.remember the federal gov is watching and this train wreck is out of control.

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  12. Posted by I live in the Arctic on

    Is this how all GN is? I’m for devolution when it is run by a qualified well paid personnel, who they are or where they come from shouldn’t matter, like everyone I want good qualified people working for the best interests of everyone in the Territory.

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  13. Posted by Maq-Pat on

    I do NOT understand the GN’s longstanding obsession with Condos…. Housing Coops are the same thing but BETTER IN EVERY WAY.

    Unlike a Co-op Unit, a condo can and often does quickly become a rental owned by profit driven investors. House Co-ops focus on providing housing to communities, condo’s focus on making their owners rich.

    Look at the Happy Valley Co-op housing set up in the 80’s and compare it to the wave of condo’s the GN set up in the early 2000’s. Which are still providing value to residents? https://nunatsiaq.com/stories/article/condo_ownership_for_gn_staff/

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    • Posted by Yes, you do on

      Yes, Maq-Paq, you do understand.
      “a condo can and often does quickly become a rental owned by profit driven investors”.

      10
    • Posted by Devil’s Avocado on

      I’m not here to dump on co-ops, but I don’t think the GN is obsessed with condos. I’m not aware of any other GN condo projects besides this one.

      Co-ops or condos, either one is a huge improvement over staff housing or public housing, if they are executed competently.

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  14. Posted by TMP on

    Sounds like they just bought 24 units of staff housing in Iqaluit for $14.3m… based on the going rate for there that’s a win!
    And really what did they expect, who in their right mind would want to get involved in an ownership position of a condo corp. in Nunavut where payment delinquency is so high?

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  15. Posted by oh my on

    Money is never lost, never disappears into thin air. It only changes hands. People are pocketing a whole lot a money.

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  16. Posted by Former Insider on

    What am I allowed to say…

    For starters, someone decided that owning a bunch of apartments in Iqaluit would make him rich. He could lease the apartments to Housing Corporation and have a steady income. But it turned out, the buildings were not well built. They leaked. Maintenance and repairs would turn a money machine into a money sink-hole.
    .
    So he convinced someone in the GN that the NHC should buy the buildings and sell them at a discount to GN employees as condos, to free up some GN staff housing.
    .
    The units each had two bedrooms, a small livingroom, a small kitchen and little storage space. It was a design intended to maximize rental revenue. OK for a year or two, but not a place to raise a family.
    .
    Condo law requires many things. For example, the condo information package is required to include a copy of a building assessment report prepared by an independent condo inspector. That was just one of the obvious requirements that was not done. Issue after issue dragged on for years.
    .
    But someone succeeded in dumping his “white elelphant” on the GN, so the undertaking was not a total loss (to him).
    .
    As for Nunavut 3000, it’s being run entirely by highly paid southern consultants. There is no indication that they are working for the long-term interests of Nunavummiut. There has been no public reporting, except about one house renovated by students in Rankin Inlet.
    .

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  17. Posted by no name on

    The truly disheartening aspect is that those ineffective so-called leaders are still in their positions, shifting all responsibility onto a finance person who wasn’t even the project lead and has already left. While Liu’s response may have its shortcomings, he was merely answering from the perspective of a finance person. What about the actual project lead? Why is there no mention of them in the report? Isn’t this a blatant attempt to shift the focus and scapegoat others?

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  18. Posted by Really? on

    One person’s name is mentioned in the article, and although in a significant position, surely there were other managers and senior managers and perhaps ministers and board members who should be held accountable for this mismanagement. And why was there a review only by accountants instead of a review that also covered the entire governance of the scheme? A plan to blame the one individual? It is very sad because we do need a variety of housing options and initiatives to get people off of employers – provided housing, off of public housing, into sustainable and affordable ownership and rental options. Also looks like the housing corporation cannot handle that any more than they can handle supposed non profit housing in Joamie Court. They know public housing and that is it. This is sad. Don’t people care about public service and respecting public funds for the benefit of society?

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    • Posted by S on

      Thanks ‘Really?’. I appreciate your comments. One thought regarding your statement: “They know public housing and that is it”

      NHC has done a horrible job with public housing. It has fostered a climate to promote and tolerate obvious capital waste, deterioration of product, lack of qualified and productive operational and administrative staff, pathetic leadership, and complete indifference to criminal living conditions, housing allocation strategies and rent collection.

      In addition, NHC has been a direct impediment to the quality of life for GN staff through its mismanagement of all aspects of the staff-housing program over the past several decades

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  19. Posted by alex on

    I see that 14 years later, nothing has been learned from this 2010 fiasco with NHC

    https://nunatsiaq.com/stories/article/230910_nunavut_housing_corporation_another_50_million_in_the_hole/

    So whats the real issue with housing in Nunavut? Sounds like the Government is shooting themselves and poorly representing the people of Nunavut. I think people need to seriously start demanding some action here. The basic need of shelter in Nunavut is causing detrimental effect on the social welfare of the people of Nunavut. ENOUGH IS ENOUGH. I cant believe how idle the population is while getting crushed by the highly incompetent Government. SAME OLD STORY. Someone end the blood bath this government has caused to its people for the last 24 years.

    18
    • Posted by Larry on

      Your Right Larry, no lesson learned from 2011, this is bigger and messy, no MLA will stand up and defend the best interests of Nunavut .

  20. Posted by Devil’s Avocado on

    That’s true to a point, under a narrow set of conditions. There are relative opportunity costs. The same physical asset can yield wildly different income streams depending on how it is used. The failure of this project represents considerable missed opportunity that exceeds the value of what actually happened.

    Bureaucratic mismanagement destroys value. Who benefits from a unit sitting empty for years while the GN has to pay for staff housing for a hypothetical GN worker who otherwise might be in that unit? The landlord of the substitute rental unit receives revenue, but the value of that is ultimately less than the value of the GN worker being able to get on the property ladder (not to mention the value to the GN of freeing up a staff housing unit).

    11
  21. Posted by monty sling on

    It’s Keystones Cops at the top for Nunavut Housing Corp. Three regional offices and their District Mangers. Starting right from the top two to their regional managers. NHC Board, are you a group of Pawns or are you going cut heads because if you cannot get rid of incompetence performances of your top tiers; you as a group should disband. You are not worth to collect your highly placed remunerations.

    11
  22. Posted by Devil’s Avocado on

    This is different.

    The 2010 fiasco was a boondoggle from the jump. Totally deluded utopian nonsense from the 2nd Okalik government. The execution failed because there’s no way it could have succeeded. LHO’s as general contractors, centralized materials marshalling and distribution in the south. Smacks of Soviet planned economy.

    There’s no reason this condo project shouldn’t have worked as a concept. NHC management failed to deliver, NHC board and minister failed to hold management to account.

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    • Posted by hermann kliest on

      It’s the Prez and the Vice that are total and full of incompetence and should resign, thee two are chicken heads cut off…..I double if the head office in ARV even knows what is going on at the 3 regions.

  23. Posted by To Maq-Pat on

    Even though it may predate the current administration does not relieve the corporation of its obligations to manage an inherited project and make corrections ass needed.

  24. Posted by Devil’s Avocado on

    The CFO wouldn’t be top of my list for who was responsible for the failure here. Unless the failure involves financial reporting, FAA compliance, etc. I can’t see why the CFO would have a special accountability for this failure. Presumably he was interviewed because he was on the condo board (and I can see why NHC would have put him on the condo board).

    Interesting that this Nunatsiaq story is based on a Public Service Act investigation by the Department of HR. I expect the OAG will have a different take.

    19
    • Posted by Raymond Pilakasi on

      I agree that the CFO has been touted as the fall guy here. The Condominium program was and has always been administered by a program department called “Staff Housing Department” that reports to the COO (Chief Operating Officer). The CFO is a support resource who does not direct what happens in the program including purchasing the units, environmental assessments, building code compliance, Purchase/Sale agreements, setting up of a condo corporation. In fact NHC is understood to have hired an external lawyer to set up the corporation. It is surprising to me that Ji Liu is cited as “responsible” when in fact the VP and COO had the remit to deal with this.

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  25. Posted by Annoyed on

    On top of the ethical piece, and the mismanagement, they really wasted a lot of people’s time. From information sessions to touring the units, to all the paperwork involved, including obtaining mortgage, preapprovals, it was a ton of work for those of us who were interested. Then we were met with radio silence. Mike and his team did not think through this program, and they probably pulled the plug when they realized, I suppose. I hope they at least turn all of these empty units into staff housing to help alleviate some of the housing challenges in the city.

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  26. Posted by John WP Murphy on

    What are suggesting and perhaps to give some legitimacy to your comment , identify yourself.

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