First Class Flights, Cell Phone Plans, Legal Fees: OilCo Audit Reveals Excessive Spending

Auditor General Denise Hanrahan has released her report into operations at the Oil and Gas Corporation, which has found shortcomings in the areas of compensation, operating expenses, and conflict of interest.

One of the main concerns is around what Hanrahan calls OilCo’s “continued pattern of refusal on classification issues.”

She says government has directed them to classify their positions on government payscales, but that isn’t happening. All 16 of the permanent employees transitioned over from Nalcor are paid higher salaries than what they would have been if they were classified.

Hanrahan also found that OilCo hasn’t been following government directives to fill positions: 41 per cent of positions on its organizational chart were either vacant or filled by contractors—a more expensive practice, and “unproductive recruitment efforts were often characterized by a low level of diligence.”

The AG highlights numerous examples of excessive spending.

For example, OilCo paid a law firm a 295 per cent premium per hour for legal services as compared to the top of the scale for a government employee. By comparison, she says government could hire 81 lawyers on their pay scale during the same timeframe.

The organization also paid $6,200 more than necessary for cell phone plans, $720 in data plans for the smartwatches of two employees transitioned from Nalcor over three years, and in one instance two employees upgraded their flights to France from economy to business at a cost of over $10,200.

On conflict of interest, the report states that OilCo’s policies were updated last September. Only directors and senior management are required to sign an annual statement of compliance—others, including contractors, must only do so upon request. As well, there is no formal conflict of interest training being offered.

AG Makes Several Recommendations

Hanrahan’s report made five recommendations with all but one accepted by OilCo.

The corporation rejected arecommendation that its positions should be classified on government payscales.

It argues that it is moving toward a market-based compensation system similar to NL Hydro, and any positions similar to core government will be identified as placed on government scales.

That process was started earlier this year, however, it has been suspended due to an ongoing divestment process.

All other recommendations, which relate to following government directives and providing conflict of interest training, have been accepted.