He was acclaimed for making the city 'more transparent,' but he had a secret trail of expenses he couldn’t repay. Ms. Samra was there to help

N

anaimo city officials claim chief financial officer (CFO)made at least 64 personal charges on his city-issued credit card over a period of 17 months,can reveal today.

The unprecedented trail of personal spending is a stunning violation of internal financial controls by the man council and taxpayers entrusted to safeguard the city’s assets.

Serious questions will be raised about the role of city manager Tracy Samra in failing to address Mr. Mema’s extraordinary spending.

There is strong evidence indicating that taxpayer resources were used to help repay and cover up the finance chief’s non-business expenses.

Mr. Mema is currently suspended and faces possible termination at a future council meeting related to what the city has described as an “allegation of significant concern.”

Ms. Samra is also suspended and subject to a RCMP release undertaking that bars her from being in 100 meters of city hall or having contact with nine individuals, including this reporter.

She was due to appear in court on May 1 to face a peace bond application related to alleged threats being uttered during a Jan. 31 incident at city hall, but she has rescheduled the hearing for a third time to May 15.

Records show that after Mr. Mema found himself with debts to the city that he couldn’t repay in full, Ms. Samra took steps to shore up his finances with an unusual “living expenses” benefit that gave him an immediate $5,400 payout.

She also approved the city extending credit to Mr. Mema through a special receivable account that functioned much like an interest-free line of credit.

And despite knowing that her CFO had violated city financial policies, the city manager promoted him as her deputy and boosted his salary by 10 percent.

It is known that city finance staff who raised concerns were repeatedly ignored. One was pressed into early retirement after clashing with Ms. Samra over the finance chief’s spending, News Nanaimo was told.

Hidden from public

City policies in place throughout the period that Mr. Mema incurred the expenses prohibited personal charges on city purchase and credit cards. Policy violations could be grounds for termination even if employees paid back the money.

The personal charges the city has identified on Mr. Mema’s purchase card are thought to total more than $14,000. But that amount does not include non-work related charges the city has yet to identify, sources said.

Mr. Mema’s personal charges were hidden from the public and never recorded on the city’s quarterly management expense reports.

Those reports won Mr. Mema praise from Ms. Samra for making the city “more transparent” and helped the city secure a provincial award for excellence in financial stewardship.

Evidence of the 64 charges that the city says are personal are contained in 21 pages of heavily redacted city purchase card statements. They were obtained by News Nanaimo during a six-month freedom of information battle with the city.

Before handing over Mr. Mema’s statements the city blanked out descriptions of his personal charges, the amounts, card balances, a breakdown of spending categories and handwritten notes on the statements.

By themselves the redacted statements reveal few details of the CFO’s personal spending beyond the unprecedented volume of his personal charges. However, when combined with other city records and information provided by multiple well-placed sources over the past nine months, a disturbing picture emerges.

It is now clear that while Mr. Mema was winning plaudits from finance and audit chair Bill Bestwick in council meetings and being lauded by Ms. Samra in news releases, behind the scenes he was racking up a string of unsanctioned expenses and using the city as a source of personal credit.

Mr. Mema, who is paid an annual salary of almost $170,000, began his personal spending spree in May 2016, eight months after he joined the city. It continued for another 17 months until his card, which carried a limit of $5,000, was finally revoked in October 2017.

Based on other information obtained by News Nanaimo, the finance chief’s non-work expenses over that period included personal flights — including to vacation hotspots like Orlando and Cancun — hotel and meal expenses and a range of other non-work related charges.

Cheque returned non-sufficient funds

According to the records, Mr. Mema’s personal spending was most pronounced over the Dec. 2016-Jan. 2017 holidays prior to the March 11 referendum for the proposed Event Centre, a project championed by Mr. Bestwick and for which Mr. Mema masterminded a financing plan that he said would not increase city taxes.

A total of 24 personal expenses, which sources said totalled about $7,000, were charged to Mr. Mema’s purchase card in that two-month period, his statements show. It’s understood that these were mostly family vacation-related expenses and included five flights, meals and hotel expenses.

Mr. Mema wrote a cheque to the city for his vacation expenses but it was returned for non-sufficient funds (NSF), multiple sources claim.

Numerous current and former staff at the city have said that Mr. Mema’s level of personal spending on a city credit card is unheard of. In the past, any personal expenses billed to city purchase cards have been inadvertent, benign and were quickly repaid in full.

The issue of Mr. Mema’s returned cheque was brought to the attention of the city’s human resources department and his boss, Ms. Samra.

Samra gives Mema $7,200

On Feb. 27 last year, the finance chief and Ms. Samra met and afterwards agreed on a highly unusual arrangement. In a letter hand-delivered to Mr. Mema, Ms. Samra proposed to give her finance chief, who was living in North Vancouver and renting in Nanaimo, a retroactive living expenses allowance for two years worth up to $7,200.

Under the arrangement, which was described as “living expenses in lieu of relocation expenses,” Mr. Mema got $5,400 immediately and a further $300 monthly until August 2017.

Usually the city only pays moving expenses if employees actually move to the city. Mr. Mema has never moved to Nanaimo and no longer rents an apartment in the city.

In essence, Ms. Samra’s proposal, which Mr. Mema accepted the same day, meant taxpayers gave their CFO money to pay them back for spending their money on his family vacation.

But the creative maneuvering did not end there.

Magic of receivable account 327720

Sources have confirmed that Ms. Samra also approved the creation of a special receivable account for Mr. Mema — known by the internal accounting code of 327720 — that functioned much like a bank line of credit.

That meant that instead of Mr. Mema being in violation of the city’s card policies and unable to repay what he owed, his purchase card debt was “reimbursed” by his new receivable account, which Mr. Mema agreed to pay off with $500 payroll deductions over time.

However, as he charged new personal expenses to his card in subsequent months, these also were “reimbursed” to the city by his receivable account. On the surface it appeared that the CFO was repaying the city in full for his personal charges, but in reality taxpayers were paying the expenses for him and he was paying off the debt in installments.

Instead of being disciplined and having his purchase card privileges revoked, which government finance professionals said would be normal in the circumstances, Mr. Mema was rewarded for not moving to Nanaimo, allowed to keep his card and given free personal credit by the city.

It’s unclear why Ms. Samra went to such lengths to support her CFO. One likely factor is that Mr. Mema was seen as a lynchpin in the team promoting Mr. Bestwick’s plan to build a $100 million hockey arena on the city’s waterfront, which was about to go to a referendum in two weeks.

Mema promoted with 10% pay hike

Coincidentally, another defining event occurred on the same day that Ms. Samra and Mr. Mema agreed to his unusual living expenses deal.

At a chaotic in-camera council meeting that night, at about 8:20 pm, Ms. Samra was filming councillor Wendy Pratt on her phone when the enraged councillor rushed across the room to leave, swatting the phone out of the city manager’s hand.

Ms. Samra filed an assault complaint against Ms. Pratt with the RCMP, and then took medical leave. She returned briefly after the Event Centre was defeated in the March 11 referendum, but announced that she would be taking an extended absence.

She formally appointed Mr. Mema as her deputy and had council approve the change by resolution on March 27.

On April 3 last year, Ms. Samra gave her CFO a 10 percent interim pay rise, worth about $9,800, “in recognition of your willingness to take on additional responsibilities.”

Sechelt comes calling

In parallel to Mr. Mema’s troubles in Nanaimo, another drama had been quietly playing out with his former employer, the District of Sechelt, which was hounding him for repayment of personal expenses he had incurred on one of their credit cards.

According to evidence submitted to a BC Human Rights Tribunal hearing, shortly after Mr. Mema left Sechelt for Nanaimo in September 2015, officials there discovered credit card charges “related to Mr. Mema’s personal expenses.”

District officials wrote to Mr. Mema on Dec. 23, 2015, giving him a list of the charges and demanded that he repay. On Jan. 20, 2016, Mr. Mema wrote back admitting that “at least some of the charges were for his personal expenses and requested more information.”

The next day he filed a human rights complaint against the District alleging workplace discrimination against him based on his race, colour and place of origin. He claimed that the District had failed to pay him severance in a 2015 restructuring despite doing so for other district managers.

However, it’s clear from the dates of the events in Sechelt and information News Nanaimo has obtained from the City of Nanaimo that Mr. Mema had already been offered a job in Nanaimo while he was trying to get severance from Sechelt.

On Aug. 22, 2017, the tribunal dismissed Mr. Mema’s complaint “in its entirety.” The decision was not reported in Nanaimo’s local media.

On Sept. 17, the District filed a statement of claim against Mr. Mema in North Vancouver small claims court seeking almost $10,000 from him.

In its claim, the District said that after Mr. Mema resigned it discovered “a significant number” of unapproved charges for flights, hotel stays, car insurance, cash advances, cell phone charges and banking fees totalling $36,212.45.

It said Mr. Mema repaid $4,381.19 for two flights and one travel-related charge, and later admitted that a further $7,738.64 of items were personal expenses he hadn’t repaid. The District claimed that in addition to the charges Mr. Mema had admitted to, there is $1,835.83 in charges that “bear no possible relation to District business,” including purchases made in Alberta from Home Depot, Canadian Tire, and Edmonton Jaguar.

Samra tries to cover up

Eleven days later, news of Sechelt’s lawsuit against the city’s CFO broke in Nanaimo’s local news outlets. Ms. Samra, who had just returned to work after her months-long absence, was caught off guard but publicly pledged support for her finance chief.

However, it is known that behind the scenes Ms. Samra was anxious over the news and the likelihood of councillors learning about what had also transpired earlier in the year in Nanaimo.

When she reviewed Mr. Mema’s purchase card expenses, Ms. Samra saw that he had recently purchased two tickets to Cancun for himself and his wife. He also had paid a Mercedes Benz car service bill.

In fact, his statements showed that since the drama in February when Mr. Mema’s cheque had bounced, he had incurred 21 new personal charges to his card.

In October, Ms. Samra revoked Mr. Mema’s card privileges. But rather than start disciplinary proceedings against him, she set about gathering evidence to excuse his actions.

She engaged city auditors KPMG to review expense reports of former senior managers going back 10 years to show that her and Mr. Mema’s personal charges were not unusual. KPMG’s report has not been made public but multiple sources say it found nothing that compares to the personal spending of Mr. Mema or Ms. Samra.

That same month, News Nanaimo filed a freedom of information request for her and Mr. Mema’s purchase card statements going back to November 2015. However, as previously reported Ms. Samra and Mr. Mema obstructed city staff and pressured them to withhold the statements against the advice of a former head of BC’s Office of the Information and Privacy Commissioner (OIPC).

After News Nanaimo reported on Dec. 3 that the city was denying access to the two top manager’s statements, Ms. Samra issued a news release claiming that “allegations that city staff have overspent or charged taxpayers for non-eligible expenses are unfounded. The city has appropriate internal controls in place to review and approve claims.”

Finance staff’s warnings

Throughout the many months of Mr. Mema’s purchase card troubles, there was growing disquiet and concern among staff in the city’s finance department. It’s understood that complaints were made to Ms. Samra, to human resource staff, to KPMG and to officials at BC’s professional accounting watchdog.

All were to no avail, in part because at the time Mr. Mema was not registered as a Chartered Professional Accountant in BC, which meant he wasn’t subject to regulatory oversight in this province. He finally registered earlier this month.

Sources have told News Nanaimo that former deputy director of financial services Deborah Duncan, the city’s second most senior finance official, repeatedly challenged Ms. Samra to deal with Mr. Mema.

Described as a highly ethical and principled finance professional, they say she was forced into early retirement after she refused to continue making compromises for Mr. Mema’s troubling transactions. She left the city last October.

Ms. Duncan’s treatment left other managers fearful for their jobs and feeling they had nowhere to turn, sources said. They couldn’t go to council, which is dominated by a five-man majority led by Mr. Bestwick, who unreservedly backed Ms. Samra and were unlikely to countenance criticism of her and Mr. Mema.

Two managers in the department went on leave as a result of the anxiety and stress caused by the upheaval over Mr. Mema’s flouting of the rules. Union members in the department were also impacted.

Council majority in focus

Finally, on March 1, with Ms. Samra suspended and barred from city hall by an RCMP release undertaking, a union member in the department, accompanied by a manager, took a complaint directly to a closed meeting of council.

Mr. Mema was immediately suspended. Lawyers were brought in to investigate what council would only describe as an “allegation of significant concern.”

A week ago, the lawyers delivered their report to council, which decided to give Ms. Samra and Mr. Mema an opportunity to state their cases before deciding whether to terminate them.

The five council members who have all along acted as if the two managers could do no wrong — Mr. Bestwick, Jim Kipp, Gord Fuller, Bill Yoachim and Jerry Hong — face an important decision.

There is currently no balance owing in Mr. Mema’s receivable account 327720. It might be meaningless, however, because it was set up to pay for charges Mr. Mema self-disclosed as personal.