A City of Vancouver building inspector had an “ongoing undocumented and unmitigated” conflict of interest that involved preferential treatment of the employee’s ownership in a private sector business.
That’s according to findings from an investigation by Vancouver’s auditor general’s office.
The investigation by Mike Macdonell and his staff also partially substantiated the allegation that some contractors were given preferential treatment, including “favourable inspections” by the employee.
Another finding was employees telling investigators in interviews that “bribes and hospitality are routinely offered” to inspectors, although Macdonell and his staff did not obtain evidence that any bribes were accepted.
At the same time, Macdonell said in his report — which will go before city council July 3 —that his office will refer information on the issue to the Vancouver Police Department for further consideration.
The investigation stems from a series of allegations the auditor general’s office received from a complainant in May 2024. The allegations centred on an inspector employed in the City’s development, building and licensing department.
The report doesn’t identify the employee or the business, or businesses involved.
A representative from the City's communications team said in an email Friday that the employee no longer works at the City, "but we're unable to provide further details regarding their departure."
'Conflict continuing for many years'
Over many years, the employee retained a significant ownership interest in a business that conducts work subject to inspections made by the employee's department.
The employee's role in the business included being involved in renewing the licence for the business to operate in the city. The employee and other City staff, including those the employee managed, were responsible for inspecting the work of the business.
“Our analysis of City records showed that the employee, in their capacity as a City inspector, personally made decisions about the private sector business they owned on four instances [never making an unfavourable decision],” the report said.
“The employee also submitted requests to the City on the business's behalf. We did not determine the exact number of times this occurred, but our evidence indicates it happened more than once. This included initiating a permit application on the business's behalf when its business licence had lapsed.”
Although City policies require employees to declare and document actual or potential conflicts of interest, these interests were never fully declared by the employee, said the report, noting management was not aware of the extent of the conflict.
“However, even when City management were made aware of instances where the employee was found to have personally made favourable decisions about the entity and had knowledge that some degree of conflict did exist, steps were not taken at the time or subsequently to document that conflict or mitigate it to prevent a reoccurrence,” the report said.
“This contributed to the conflict continuing for many years, until its extent was identified during this whistleblower investigation.”
'Preferential treatment occurred'
Investigators found that the employee conducted a “disproportionate number” of inspections involving a contractor that the complainant to the auditor general’s office had raised concerns about.
The employee never made an unfavourable decision regarding the contractor.
“Across a significant population size, other inspectors had made unfavourable decisions relatively regularly, suggesting the employee's decision-making pattern was unusual,” the report said.
“The employee's explanation was that they had made extra efforts to support the private sector contractor as it needed help. This support included giving the owner their direct contact number.”
The report added: “Although it is difficult to conclude definitively whether this private sector contractor received preferential treatment from the City employee, the [auditor general’s] data analysis and qualitative research and the totality of the complaint all infer serious concerns that preferential treatment occurred.”
More broadly, the report continued, the auditor general’s office found that processes in the employee's work area easily enabled preferential treatment to occur without detection and did not ensure a consistent standard of inspections.
Investigators questioned the employee about a bribe offered by the same contractor who appeared to have received preferential treatment from that employee.
“The employee stated he did not accept this or any bribe and said he used it as an example in team meetings as to what can take place in the field,” the report said.
'Lack of boundaries'
Investigators also followed up on an allegation that the inspector was wearing City-branded attire in a private context that involved the same private sector contractor as the allegation about preferential treatment.
While the basic facts of this allegation were accurate, the context was different and important, the report said.
“It appears that the employee was at a meeting in an official City capacity when the private sector contractor asserted that the employee worked for them rather than the City,” the report said.
“The employee stated they renounced this status and reiterated their presence was in an official capacity in the course of their employment with the City to provide general advice.”
The report added: “While we were unable to verify the exact course of events, we are satisfied that the events reflect a general lack of boundaries for appropriate conduct in the employee's work area that was consistent with the ongoing and undocumented conflict that we found.”
The report emphasized the importance of City management implementing measures to prevent future conflicts of interest, highlighting two points from the investigation:
• They can “create a situation where City employees use their public positions for private enrichment and are biased in their judgment, causing serious harm to the City's reputation while impairing public trust.”
• Conflicts of interest have the potential to compromise the robustness of inspection functions that are designed to protect the public against risks that could impact their health and safety.
Sixteen recommendations
The auditor general’s office has made 16 recommendations to reduce the risk of preferential treatment and increase the likelihood of consistency in decision-making in this aspect of the City's work.
The recommendations include:
• Inspectors should adhere to specific checklists when making decisions to ensure consistency across all decisions and compliance with relevant standards and legislation.
• Inspection documentation and note taking should be improved.
• Restrictions and tighter controls should be implemented over inspectors reassigning inspections to themselves that were not originally assigned to them.
• The department should ensure conflict of interest declarations are submitted and periodically updated, and provide employees with regular training on the subject.
• A sample of inspections should be audited each year to provide quality control and ensure consistency.
• There should be a clearer set of policies and rules about City inspectors engaging in outside work.
The report included recent examples of corruption in other cities, including New York City, where 64 housing authority employees were arrested last year on charges of taking cash bribes to hand out contracts to vendors performing public housing repairs.
'Maintain integrity'
On Friday, the City of Vancouver provided answers in an email to the following questions posed by BIV:
When did the City learn of the inspector's conflict? What did City management do when they learned of the conflict?
When the allegation was reported to City Leadership in 2024, it was promptly referred to the Office of the Auditor General (OAG) for investigation. Earlier this year, the OAG raised concerns related to that investigation. City management reviewed the two pre-2024 misconduct allegations and confirmed through an internal review that both had been addressed at the time.
How were allegations addressed?
These allegations were addressed in 2015 and 2016. The potential conflicts were identified to management at that time but not formally documented. In one case, the nature of the work was assessed by the individual’s manager as not presenting a significant risk, and in the other, additional review measures were implemented to maintain integrity in the process.
The City’s current Code of Conduct Policy stipulates that potential conflicts with outside employment must be declared and approved in writing; the circumstances in 2015 and 2016 in which such matters were addressed absent written declarations is no longer accepted as adequate.
What will the City do to prevent this from happening again?
The City’s Code of Conduct includes explicit prohibitions against employees accepting monetary or other benefits in the course of their employment. Any such conduct would be clearly in violation of the Code of Conduct policy and any complaints or evidence to that effect would be treated with utmost seriousness.
Macdonell said that he cannot discuss the report until he delivers it to council at the July 3 public meeting at city hall. The meeting begins at 9:30 a.m.
X/@Howellings
