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Blogspot | 14Oct2012 | blackrod

The CMHR annual report fuels the need for a forensic audit

We couldn't figure it out at first

Why did they stall so long before submitting the latest annual report of the Canadian Museum for Human Rights when everything in it was known ten months ago? What were they hiding?

We had to dig deep --- 30 pages into the 58 page report before we spotted it --- there in a summary of the funding collected for the project:

"Cash contributions from the Province of Manitoba ($38.8 million) and the City of Winnipeg ($16 million) have been received, as well as the private sector installments from The Friends of CMHR ($87.8 million)."

Problem was, by March 31, 2012, the fiscal year end, the Friends of CMHR were crowing they had raised $130 million.

It turns out that the CMHR was sitting on $42 million in IOU's at the same time it was about to shut down construction because it had no money.

The museum fundraisers had collected only two-thirds of the private donations they claimed to have raised. When the CMHR was telling people it had a 60 million dollar shortfall, it was actually $102 million shy of what was needed to finish the project.

The Canadian Museum for Human Rights was misleading the public --- again.

That comes as no surprise to readers of The Black Rod where for years we have been chronicling the steady stream of lies and deception flowing from the pet project of the Asper family. Here are just a few of those stories:




And the more we looked, the more variations of the truth we found in the 2011 annual report.

"The Museum’s physical structure and associated building systems have been designed to achieve a Leadership in Energy and Environmental Design (LEED) Silver designation." CMHR Annual Report 2011-2012
"There were two big items that cost... the building to go up in cost. One, was the board at the time, a few years ago, made a decision that the building had to be a Gold LEED standard building...That came with a price tag---if memory serves---about $37 million price tag." Heritage Minister James Moore, speaking at the Winnipeg Free Press News Cafe, Sept. 13, 2012.

"Hiring was limited to ‘critical positions’. For example, while we projected hiring 35 employees in 2011-2012, only 13 new positions were hired." CMHR Annual report 2011-2012
"Instead of the projected 35 new hires, as of today (December 6, 2011) the Museum has hired just 17 positions. Cost savings related to staffing are approximately $2.5 million." CMHR CEO Stu Murray speech, Dec. 2011

"Angela Cassie, director of communications for the CMHR, said the museum sought and received permission to direct the savings into its capital budget. That means the amount owing on a $45-million advance provided by the federal government over the summer is down to $35 million." Winnipeg Free Press, Oct. 12, 2012

"Amid all this, the museum was reaching out to Ottawa and the provincial government for a bailout. That finally came in the form of the $45-million advance payment from Ottawa and a $35-million loan guarantee by the provincial government..." Winnipeg Free Press, Oct. 12, 2012
"$35 million...." James Moore, News Cafe, Sept. 13, 2012

The museum says it got a $45 million advance from the federal government and the federal government says it was $35 million. What's ten million?

Is all this confusion a result of incompetence? Or is it deliberate?

Winnipeg citizens are asking that very question about another scandal --- the firehall boondoggle which involves some of the very same people in the CMHR fiasco, namely Mayor Sam Katz who has been channelling millions into this pet project of his friend Gail Asper.

Two audits have now been ordered to try and make sense out of the firehall debacle and to sort out the roles of Katz, his friend Phil Sheegl and his other friend Sandy Shindleman.

The CMHR fiasco is 25 times bigger than the firehall deal and just as murky and shady.

Lying to the Senate, auctioning off space to ethnic groups, a secret loan for millions of dollars, allegations of a breach of provincial law on sweetheart financial deals, non-payment of taxes in deliberate breach of federal regulation, a litany of lies to justify never-ending money shortages. And because of government collusion at all levels everyone turns a blind eye.

The CMHR will argue that its annual reports contain financial data that's reviewed by internal and external auditors. And the reports do contain an Independent Auditors Report signed by the assistant auditor general of Canada. It's a boilerplate insert and declares "the transactions of the Canadian Museum for Human Rights that have come to my attention" have been in accordance with the relevant laws, rules and regulations.

But a closer reading of the Independent Auditors Report leads to an astonishing conclusion. It's not an endorsement of the CMHR financial information. It's a disclaimer.

The independent auditor declares that before designing his audit procedures he assessed whether the CMHR had relevant internal controls (such as an audit committee, etc) that produced the financial statements "but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control."

In plain English that means he refuses to vouch that the financial statements are reliable and in compliance with the law. He will only go so far as to say the financial data was provided to him and by what looks like a legitimate process.

Wow. Now we see how Enron could run a criminal enterprise and Crocus could be a Ponzi scheme and still get their auditors to approve the books.

That's just not good enough for an enterprise that's swallowing hundreds of millions of taxpayer dollars under the guise of provable lies and false statements, a constantly moving bottom line and no end in sight.

The situation screams for a forensic audit of the project from the day they lied to the Senate about who would be responsible for cost overruns to the future opening date which is already two years later than promised.

This would include the mythical projections of tourists to be attracted by the museum and the secret business plan that's never been submitted to any of the funders.

All we know today, courtesy of a single television newscast, is that the CMHR intends to charge admission that's "more than a movie ticket and less than a theatre seat."

And we need this forensic audit fast, because, if our Spidey Sense is right, the biggest scam is around the corner.

Angela Cassie told the Free Press the CMHR got a $45 million advance of which $10 million has been repaid through some legerdemain by which the $10 million of annual funding that wasn't spent last year was redirected to redeem the part of the advance.

James Moore told the News Cafe audience that the $35 million advance he was making would be repaid with annual installments from the $21.7 million in annual funding the federal government will give the CMHR.

The problem is that neither statement makes sense. The 2011-2012 annual report states that the savings in the annual funding was being "reprofiled." We didn't know what that meant either. We looked it up and reprofiled means rescheduled. They're going to spend this year (2012) the money they didn't spend last year (2011). That means the amount of annual operating funds left to pay back the, ahem, "advance", is zero.

As for coming years? Well, that will be zero too. The CMHR has already said it needs more annual funding, not less.

From the 2010-2011 annual report:
"The Museum will be seeking the government's approval to augment the operating funds already committed by an amount sufficient to cover the required property tax (PILT) payments and to address ongoing pressures of inflation in operating, maintenance and capital repairs."

How much more? Start with an estimated $5 milliion to $9 million in property taxes, add the cost of utilities which they forgot to include, and work up.

In short, there's no hope the "advance" is being paid back.

But, what about that $42 million in IOU's? Couldn't they collect those pledges over the years and use it to pay the government back?

They could, but we're betting they won't. They have a better use for that money. And if they stiff the government, what are the feds going to do? Shut them down?

No, that $42 million would be better served to make up the $35 million to $50 million endowment fund that's always been an integral part of the museum project. The endowment fund is intended to finance bringing tens of thousands, if not hundreds of thousands of children to the CMHR.

Here's how the Friends of the CMHR stated it on their website:
A Unique Student Travel Program
Inspired by the impact of The Asper Foundation Human Rights and Holocaust Studies Program, one of the cornerstones of the Canadian Museum for Human Rights is a funded national student travel program that will bring up to tens of thousands of students to the Museum each year, and interact with thousands more via the Internet and traveling exhibits. No other national museum offers such a program.

It had to be shuffled off to Phase Two of the project when costs of construction went into the stratosphere. But here's all that money just sitting there in a registered charity, waiting to be put to use and no reason not to.

Isn't there?