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NB Liquor lacks transparency, fails to properly document activities: auditor general

FREDERICTON — The Crown corporation that operates New Brunswick's liquor stores lacks accountability and transparency, and it is not properly documenting its activities, the province's auditor general said Thursday.
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A customer shops in the NB Liquor store attached to the old Fredericton Railway Station in Fredericton, N.B., on Friday, June 16, 2017. New Brunswick's auditor general says the province's Crown-owned liquor corporation does not effectively plan for or participate in the development of the liquor industry as required by law. THE CANADIAN PRESS/Stephen MacGillivray

FREDERICTON — The Crown corporation that operates New Brunswick's liquor stores lacks accountability and transparency, and it is not properly documenting its activities, the province's auditor general said Thursday.

NB Liquor has no plan or strategy to develop the province's liquor industry beyond the broad purpose outlined in law, Paul Martin told a legislature committee after releasing his report. The corporation, he added, "had no targets against which to regularly monitor or evaluate performance."

A computer program used by the corporation did not retain historical data; instead, new data would overwrite previous entries, Martin said.

"The lack of historical data is worrisome because without it, (NB Liquor) has no documented rationale to defend its business decisions. This is a serious concern for a corporation that is publicly accountable," he said. 

"We found that NB Liquor habitually approved key decisions verbally, typically through undocumented meetings and conversations. As a result there were no documents to support many key decisions in the process that we reviewed."

The corporation, Martin said, has entered into special arrangements with some producers that have resulted in profit margins lower than the margins it makes on its deal with other producers. As well, NB Liquor doesn't have the required documentation to justify its special deals, which he said leaves the corporation with little to no defence against claims of favouritism and bias.

"We found four instances where local producers were receiving a special deal in terms of payment for their product that exceeded the moneys paid to other producers in the province," Martin later told reporters. "There's absolutely an issue around treating people with equality in this process."

Green Party member Kevin Arseneau said the unequal treatment of producers is worrisome. 

"It's concerning that there was preferential treatment … and then to not know why — that is all vital information, especially coming from a Crown corporation," he said.

Martin issued 19 recommendations, including increased transparency and accountability.

In a statement, NB Liquor said it has been working with the auditor general for much of the past year to provide the necessary information.

"While there are valuable recommendations contained within the report, a lot of that work was already underway," spokesperson Emilie Dow said. "Over the past three years, we have come a long way when it comes to following industry best practices and in the development of our programs and services, offering various retail channels across the network and supporting our growing local alcohol producer sector."

She said six of the 19 recommendations have already been implemented, adding that all will be addressed within the next two fiscal years.

NB Liquor is an important revenue generator for the province, contributing $1.7 billion over a 10-year period ending in March 2021.

This report by The Canadian Press was first published June 23, 2022.

Kevin Bissett, The Canadian Press