Hubert Lacroix, President and CEO of CBC/Radio-Canada, speaks at the Economic Club of Canada on the new challenges CBC faces regarding the company's finances in Toronto on Thursday, June 7, 2012. Nathan Denette/Canadian Press
CBC president Hubert Lacroix repaid nearly $30,000 in living and meal expenses last fall after an internal audit found he had been wronglyclaiming accommodation costs since his 2008 appointment.
Lacroix had been submitting claims for living expenses since he started his job as CEO and president of CBC on Jan. 1, 2008, despite having negotiated a $1,500 per month living allowance after deciding not to move to Ottawa, where the CBC is headquartered. Lacroix lives in Montreal.
The expense claims were approved despite an appendix to a CBC bylaw for director compensation that says the president is entitled to be paid reasonable travel and living expenses for CBC work "at any place other than the head office of the corporation," the auditors said in a memo about the review of Lacroix's expenses.
The rule, known as section nine of Schedule K, was approved by the board of directors in March, 2006, but auditors found that nobody seemed to be aware of the rule. Lacroix and "the executives and managers currently charged with reviewing the president's expenses" didn't know about Schedule K, the auditors found.
The CBC's internal audit team summarized the investigation and opinion of the Crown corporation's general counsel, Maryse Bertrand, in a memo dated Oct. 15, 2013.
The executives and managers also said they didn't know that Lacroix had negotiated a $1,500 per month living allowance to "stay in a regular hotel" instead of moving to Ottawa, according to the memo.
The executives and managers weren't aware of "the contents of the Order-in-Council" that appointed Lacroix and set out the terms of his employment, the memo says.
CBC presidents are appointed by the federal cabinet.
Integrity, transparency 'extremely important'
The total cost for Lacroix's meals and hotel expenses over the past six years was $29,192.41. Lacroix voluntarily repaid that amount on Sept. 30, 2013.
In an interview on CBC News Network's Power & Politics, Lacroix said when the rule was pointed out to him, it was clear the expenses weren't allowed.
"What's important for everybody to understand is that these expenses, I mean, nobody was hiding them. They had been posted on our website since the first day I came in. Everybody knew what they were," Lacroix told host Rosemary Barton.
"Is it embarrassing to me? Am I upset, am I angry? I mean, I've been preaching transparency since day one. And here I am, in a conversation with you on Power & Politics about my expenses in Ottawa, and that's not acceptable to CBC, not acceptable to Radio-Canada either."
In a memo to CBC employees Friday, Lacroix said transparency was "extremely important" to him, and warned critics may use the information to attack the CBC.
"There has been a lot in the news recently, including on our own news, about the expenses of public officials and there are some who may use my disclosure of this information to attack me or this corporation. It will not change my commitment to doing what I think is necessary to make things right," he wrote in the memo.
The news comes as the CBC faces tighter budgets and less revenue: the federally funded corporation had its $1.1 billion budget cut by $115 million in 2012.
The CBC also lost its NHL broadcast rights last fall, which means that, beginning next season, it will lose the advertising that ran during hockey games and will be forced to find additional hours of programming to replace those games.
CBC stopped reimbursing the president for living expenses in Ottawa as of Sept. 1, 2013.
"The corporation also obtained a legal opinion on Aug. 13, 2013, from independent outside counsel which noted that the practice followed by the corporation (since 2006) is not in accordance with the governing instruments of the corporation," the auditors' memo said.
Gregory Thomas, head of the Canadian Taxpayers' Federation, said it's problematic that nobody knew about the rules adopted by the board.
"I think heads need to roll in the executive suite," Thomas said.
"Any corporation where the board makes a decision and the executives don't hear about it, that system's broken. And the board who represent the shareholders, which is Canadians, they need to demand action.
How come [the] internal audit [section] didn't know? How come people responsible for administering the expenses didn't know?"
Asked whether the situation with his expenses indicated a bigger problem, Lacroix said the decision dates back several years.
"No, I don't think that's a bigger problem in the organization," he said, going on to discuss the rationale for the rule.
"The concept ... [was] that this job was actually located in Ottawa and that's why it made sense to not reimburse expenses in Ottawa, in the same way that I would never claim expenses in Montreal," he said.
A spokeswoman for Canadian Heritage Minister Shelly Glover, whose portfolio includes the CBC, said the Crown corporation is "solely responsible for its day-to-day operations."
"It must be accountable to taxpayers for how it spends their money. This expense claim was contrary to the rules, and Mr. Lacroix has taken steps to correct it," Marisa Monnin said in an email to CBC News.
Lacroix's predecessor, Robert Rabinovitch, was also reimbursed for hotel, meals and incidentals while travelling to Ottawa, the memo said, although it notes that "financial records indicate that prior to October 2006, Mr. Rabinovitch was not reimbursed for hotels or meals while travelling to Ottawa." It doesn't say why that changed a few months after Schedule K was introduced.
Lacroix's Ottawa expenses were regularly posted to the CBC's website, along with his other expenses.
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