B.C.’s municipal financial disclosure system a patchwork of policies

Municipalities across B.C. are mostly free to set their own requirements for financial disclosures for staff and elected officials, leaving a patchwork of policies.

By law, elected municipal officials in B.C. must file annual financial disclosures, which are available for public inspection.

Only a select number of municipal employees, typically senior managers, must do so as well – but only if required to by the municipality. Employee disclosures are not public but are provided to council members for inspection.

Glacier Media canvassed 14 cities among the largest in B.C. last March and found only two had no disclosure requirements for senior staff: the City of Richmond and City of North Vancouver. On April 1 the latter amended its bylaws to include disclosure requirements.

There is no clear prescription for municipalities, which worries B.C. government watchdog Dermod Travis.

“The idea that you can have disclosure rules that vary from one municipality to another in Metro Vancouver, and you then contrast that with what you might see in Toronto and Montreal, it is absurd. You’re going to have to have a uniform disclosure practice that applies to all cities in British Columbia,” said Travis, director of IntegrityBC, a Victoria-based organization.

Richmond and City of North Vancouver happen to be municipalities where a top official is known to have been involved in outside business, which is legal. Richmond’s CAO, George Duncan, was a director of VROX, a sport simulator company that provided games to the Richmond Olympic Oval, a city subsidiary that owned a 50 per cent share in VROX until 2017. And former City of North Vancouver CAO Kenneth Tollstam was a director of several public companies on Canada’s junior exchanges since 2014. Tollstam, who retired in 2018 after a 37-year career, voluntarily filed financial disclosures, according to the city’s response to a freedom of information request, although details of the disclosure were not provided, due to privacy laws.

Municipal employee disclosures are to be sent to council members each year. In Tollstam’s case former mayor Darryl Mussatto stated he never viewed any staff disclosures during his tenure. He said last February he was shocked to learn Tollstam promoted companies and is now subject to a BC Securities Commission investigation for alleged misconduct. Former councillor Rod Clark also said he never saw staff disclosures. North Vancouver now requires its manager, clerk and finance director to file.

The Financial Disclosure Act refers only to a “municipal employee” for disclosure purposes who must be “designated by the council.” To delegate duties, cities are required under the Community Charter to have a bylaw designating some employees as statutory officers – typically the city manager and at least two others, usually the clerk and finance manager.

Some cities are more explicit than others in their disclosure requirements.

Most cities, such as the City of Surrey, have interpreted their statutory officers bylaw to require financial disclosures from those officers. The City of Prince George has only adopted a resolution to designate employees for disclosure purposes whereas the cities of Vancouver, Kelowna, Kamloops and, now, North Vancouver have bylaws that explicitly reference the Financial Disclosure Act.

In September 2018, Vancouver expanded its designated employee financial disclosure bylaw to now include 19 senior managers with “additional roles that entail decisionmaking authority or material influence over matters pertaining to real estate, land use or business licensing.”

Vancouver’s bylaw hadn’t been updated since 1994. Notably, the police chief and head librarian, who are employed by the Vancouver Police Board and the Vancouver Public Library Board respectively, are not included in the bylaw; nor are acting employees.

Disclosures are to include assets, such as shareholdings, creditors and interests in businesses, organizations and property in the region. They are intended to mitigate or prevent conflicts of interest.

Municipalities are also free to set different standards for public accessibility, retention and destruction of financial disclosures.

Only City of New Westminster, Surrey and Vancouver post their disclosures from elected officials online.

For other municipalities, disclosures must be accessed at city halls.

For instance, in Richmond people seeking this kind of information must walk into a suite of offices on the second floor where the clerk provides a binder of the most recent disclosures. To view further back at most cities, a date with archives staff is typically required. Cities also have different policies for requesting copies. Richmond, for example, won’t provide copies whereas Prince George does.

The Freedom of Information and Privacy Act does not address specifically how cities should disclose these forms, according to Jane Zatylny, spokeswoman for the Office of the Information and Privacy Commissioner. The Community Charter stipulates records available for public inspection may be copied for any applicable fee.

Retention of elected official disclosures varies from seven years to permanent.

“The retention/destruction standards/parameters for these documents is determined by the individual municipality. This is why there are different standards for different municipalities,” Zatylny said .

Kamloops retains its records for just seven years. Kamloops records manager Scott Redgrove said the Local Government Act no longer contains a retention rule for documents. He said it used to be seven years under the act until the wording was stripped in 2014 by the provincial government, and so Kamloops maintains the old standard. Surrey and City of Abbotsford destroy records after eight years. Vancouver keeps records 10 years past the council member’s last term. Richmond has no records retention bylaw but has elected official disclosures dating back to 1998. Prince George keeps records back to 1974. The cities of Delta, Burnaby and New Westminster maintain their elected official disclosures permanently.

When it comes to all election nominees, who must complete disclosures prior to an election, the law requires cities to retain all nominee disclosures for at least five years.

It used to be seven years until changes to the Local Elections Campaign Finance Act in 2014. This means the public may cross reference disclosures for returning candidates dating back only one four-year term instead of two six-year terms, with coinciding changes to electoral terms in 2014.

Surrey, Vancouver, Kamloops and Abbotsford are among cities that have destroyed 2008 election records.

The issue of disclosures for elected officials came up in June at a Richmond council meeting when Coun. Kelly Greene suggested the province adopt rules to include direct family members’ assets on disclosures. Mayor Malcolm Brodie called the idea “draconian.”

Greene said she was unaware that Richmond had no disclosure requirements for its senior staff.

Travis points out that Canadian mayors are, as of 2017, classified as politically exposed persons (PEPs) under new Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) rules. This means their family members are subject to scrutiny from financial institutions. Family member requirements should extend to financial disclosures, he suggested.

Brodie said FINTRAC’s extension to family members, particularly members beyond a spouse, such as a sibling, could prevent people from running for office, and lead to privacy violations. He said annual financial disclosures including family members is “more than excessive” given they ask for assets and property holdings.

“At least with FINTRAC there is an element of a cash deposit,” Brodie said. “I think what my brother owns is none of my business,” added Brodie.

Brodie said he would “have to think about” the fact Richmond has no disclosures for its senior staff.

Brodie said existing rules have proven effective. Conflict of interest disclosures are required under the Community Charter and were twice used last term at Richmond city council when two councillors, and business partners, Derek Dang and Ken Johnston, recused themselves from their two townhouse development applications.

Travis said B.C. needs to catch up with most parts of Canada and the western world – “particularly in light of what were seeing in the Lower Mainland with respect to money laundering.”

Disclosures, he said, should include family members’ assets.

“I certainly don’t think that it is only disclosed to council is adequate,” he said.

“There is going to have to be a happy medium struck between the rights of taxpayers and the rights of the individual to privacy on this matter.”

Travis said all elected official disclosures should be posted online.

Travis has followed closely the B.C. Legislature scandal, in which provincial clerk Craig James resigned May 16 after an independent report found he had misused the treasury for personal purposes. Senior employees at the Legislature are not subject to financial disclosures, according to house documents manager Jennifer Horvath.

Travis said it is also important to have senior provincial government employees – who are typically in charge of procurement – file disclosures to cabinet (executive council). The provincial government’s communications staff has been unable to confirm who, if anyone, must file such disclosures. MLA annual disclosures are offline and are available only upon request at the Legislature.

The City of Victoria did not respond to Glacier Media.