Cape Breton job agency shutting down in wake of ombudsman's report

An employment services agency in Cape Breton is being shut down after a damning report from Nova Scotia's ombudsman found the organization was misusing funds.

In his June 2021 annual report, William A. Smith said his office found "a misuse or gross mismanagement of public funds or assets" after investigating four years' worth of records at Island Employment based in Sydney.

Workers at Island Employment received notice Oct. 1 that the province is ending its contract in November — six months early. The organization employs about 30 people in offices in Sydney, Chéticamp, Inverness and Port Hawkesbury.

The agency, which teaches resumé and interview skills for people seeking work and connects employers with workers, was created by Nova Scotia Works — a division of the Department of Labour and Advanced Education. Although it is almost entirely funded through the department, the province does not control Island Employment as a public entity.

Multiple complaints received

The move to shut it down comes after multiple complaints were made against the organization. Representatives of the ombudsman's office investigated hundreds of pages of expense claims and spending records dating back four years and did interviews with management and staff.

Murdoch Moore, a member of Island Employment's nine-person board of directors, declined to comment on the findings.

The complaints surrounded the misuse of program funds, such as billing different contracts for the same services or expenses, including rental of space, travel expenses and employee salaries.

Another complaint involved employees being paid a fee to provide training workshops to external organizations during regular working hours, despite already receiving a regular salary. 

There were also claims about lack of transparency, accountability and oversight to the operations, including spending practices.

Report cites travel claims, spending issues

The ombudsman found a slew of issues in the investigation, including conflicts of interest by employees, uncontrolled spending and rule-breaking around travel claims and government procurement standards. The ombudsman made multiple recommendations to the organization, provided a timeline for implementation and planned to monitor the process.

Despite that, the province decided to end its contract with Island Employment, citing a review of the organization as well as the ombudsman's report. 

The Department of Labour, Skills and Immigration declined an interview request , but provided a statement and answers to questions. 

"[The department] has regular monitoring processes for NS Works agreement holders to ensure they are meeting policies, standards and requirements," it said.

"This ongoing monitoring also included a recent investigation by the office of the ombudsman, as published in the [2020-21] ombudsman's annual report; those findings were factored into the decision."

The statement said the province has put out an expression of interest, looking for other organizations to take over the services Island Employment provides. It also states bids made by Island Employment will not be considered.

Nova Scotia Government and General Employees Union president Jason MacLean said the unionized workers are not to blame for the issues. 

"[Workers] were of the belief that there was an issue with management and the board, but they still continue to do their work, so that's in my talks with government," he said. "I'm saying, 'Let's continue on with this work. Let's continue servicing Cape Bretoners.'"

It was union members who went to the ombudsman seeking an investigation in the first place, according to NSGEU spokesperson Holly Fraughton.

In an email, she said the NSGEU has not been informed of any members currently working at Island Employment taking extra pay for the work they would normally do.   

MacLean said the province should dissolve the board and management while keeping the workers, who he believes are performing a valuable service in an area with a high unemployment rate.

Staff at Island Employment will not be taking any more clients as of Oct. 29 and are set to be laid off Nov. 21.