Poor decision making and communication at Westerner Park, but no fraud: Audit

Deloitte’s audit covered the period from April 1, 2017 through May 31, 2020. They interviewed 11 individuals who were involved in Westerner Park’s activities during that time, reviewed over 367,000 emails, minutes and agendas from over 900 Westerner board and committee meetings, and accounting data for over $55 million in expenditures.

Deloitte’s findings identified several factors, described as a “perfect storm,” that together contributed to the Westerner’s declining financial performance, the first being board governance. When the board amended its approach to governance and oversight to have more oversight and have less operational and managerial involvement it resulted in a severing of communication between senior management at Westerner Park and the board, leaving the CEO to be the main point of contact.

Communication between Westerner Park and Red Deer city council was also noted as a factor. While two city councillors sit on the Westerner Park Board of Directors, they were (and are) unable to report back to council regarding decisions made during in-camera board meetings, leading to confusion over what information was and was not being shared between the two sides.

Deloitte also noted the fact that the Exhibition Hall and CFR projects were happening at the same time put added pressure on the employees that were working on them.

Another factor was a lack of qualified staff in Westerner Park’s finance department after several experienced employees were replaced by others that were less experience, resulting in an apparent deterioration of accounting controls and processes.

A lack of any significant marketing prior to the opening of Exhibition Hall also had a negative effect on financial performance, the audit found.

Also noted was ambiguity over the use of the Westerner’s Major Maintenance Fund, designated for major maintenance of facilities or special construction projects, for Centrium washroom and concession stand upgrades in 2018.

The audit revealed that revenue projections presented to the Westerner’s board for the Canadian Finals Rodeo and Exhibition Hall were far greater than what the park actually saw.

In 2017, the 10-year contract for hosting the CFR pitched by then-CEO Ben Antifaiff included having as many as 8,427 seats to sell for each performance, and a ticket sales estimate for 2018 of 88% (average of 7,415 fans per night).

However, during the first CFR in Red Deer in 2018 only 6,690 seats were available to be sold nightly and the actual attendance rate was 92% (6,614 fans nightly). This meant ticket sales were 11-17% lower than projected, resulting in a revenue drop of between $401,000 to $625,000.

“We did not identify communication to the board regarding updates to projected numbers of seats available for sale prior to the actual CFR event,” the audit says.

The revenue forecast for Exhibition Hall took a hit when the Westerner was unable to agree on a multi-year contract with the Red Deer City Soccer Association. Antifaiff had told the board that a contract would result in $165,000 to $355,000 being generated over a 14-week period.

“This was one of the items that convinced the board that the construction of the hall should be completed,” the Deloitte audit reads.

Antifaiff was let go as Westerner Park CEO in September of 2018.

Despite this, the audit found that there was no intentional misrepresentation or fraudulent activity at Westerner Park over the last three years.

“Overall, we did not identify instances of inaccurate information provided by Management to the Board for the approvals of both the CFR bid and the construction of the Hall,” the audit concluded.

Councillor Vesna Higham was surprised by that finding and said the auditor’s specific criteria and the “abysmal state” of the Westerner’s financial records likely made it difficult for them to determine otherwise.

“While the report doesn’t identify substantiated misrepresentation, the evidence is clear in my mind, Madam Mayor, that there absolutely was, without a doubt, operational mismanagement, and dare I say gross mismanagement – unprecedented mismanagement in the storied history of this organization’s lifetime,” Higham suggested.

“I won’t say comfort, but relief,” Councillor Michael Dawe said about the fact that no fraud was discovered. “Taxpayers have shoveled a considerable amount of money towards keeping Westerner Park going at a time of great austerity ($3 million)… at least we can say there wasn’t stealing.”

Councillor Ken Johnston called Tuesday a “day of sorrow, but also hope” that Westerner Park can find can get back on track.

A sustainability report is to be presented to city council in about five weeks that will help them decide what to do with the organization moving forward.

by Troy Gillard

Poor decision making and communication at Westerner Park, but no fraud: Audit

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