In a hard-hitting new report released Tuesday, auditor general Michael Ferguson paints a searing portrait of the office of the Canadian Forces ombudsman, which investigates complaints against the military and the defence department.
The investigation focused on the decisions and conduct of former ombudsman Pierre Daigle, who retired last year and was replaced by Gary Walbourne.
Ferguson says there were no adequate financial, contract or human resources controls in place, and in many cases the office did not comply with its own rules or codes of conduct.
The auditor singled out one particular contract where an outside consultant was hired to carry out an investigation on behalf of the ombudsman — a deal which started out at $89,000, but jumped to $370,000 when another case came along.
Once the contract ended, Daigle subsequently approved the hiring of the consultant as a temporary staffer for eight weeks at a cost of $14,000 — a decision that ignored contracting rules and was "inappropriate," Ferguson concluded.
"We found that the office of the ombudsman had a weak system of financial controls, which enabled the previous ombudsman to proceed inappropriately, without a full understanding of the rules, or to override the rules," said his report.
Daigle was also approving his own travel and hospitality expenses, or having subordinates sign them in violation of Treasury Board guidelines, the report found.
That practice continued for three years, despite warnings from National Defence that the deputy minister needed to see Daigle's expenses.
"Officials from the department's financial policy group sent three separate communications to the previous ombudsman, stating that neither a subordinate nor the ombudsman himself could approve the ombudsman’s expenditures, but the previous ombudsman continued to do so," Ferguson wrote.
The auditor's report found that $12,000 in hospitality expenses related to an international conference were kept hidden from the public —expenses Daigle said he didn't realize he was supposed to disclose.
Despite the scathing assessment, Ferguson said he doesn't believe the former ombudsman was pocketing any of the money, or obtaining an undue benefit.
"In the transactions we examined, we found no evidence that the previous ombudsman personally profited from any of these transactions," said the report.
Later at a news conference, Ferguson said auditors "didn't see anything that would have caused us to make any kind of recommendation on further action."
Daigle issued a statement Tuesday in which he struck an unrepentant tone.
"I stand by the financial and contracting decisions I made, which I did to make the office more effective for the constituents we serve," he said.
The consultant in question produced critically important reports which shed light on post traumatic stress disorder and the military's failure to provide health care to reservists, he added.
Walbourne, who was appointed to the post in April 2014, said he has already begun putting improved controls in place and invited National Defence's expenditure management review team to assess the office's finances.
"There were no irregularities noted," Walbourne said in a statement.
NDP defence critic Jack Harris called the report "extremely troubling" and wondered why National Defence chose not to fully investigate when "serious management and ethical breaches" were evident.
Defence Minister Jason Kenney said it was good that the auditor got to bottom of "this completely unacceptable abuse of both public servants and tax dollars," and the government accepts without reservation all of the recommendations.
The report also examined the staffing revolt that took place under Daigle's watch, where at least 17 current and former employees were interviewed. The claimed they were bullied and belittled, or made the target of inappropriate jokes.
Twelve staff members submitted grievances between 2009 and 2012 in cases that were widely publicized at the time.
The turmoil led to a spike in sick time and "significant turnover during these years, which included the departures of five senior managers and 13 out of an average of 22 investigators," the report said.
Here again, Daigle offered no apologies and dismissed the auditor's comments.
"I reject the (auditor) report's characterization of my management style," he said in an email.
"I brought a different approach to the office which was focused on results. This undoubtedly ruffled some feathers at the time. However, we worked through that period of change together and produced solid results for the men and women of the Canadian Forces."
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