Canada's diplomatic office at a UN agency in Montreal has been badly managed for years — and even managed to lose track of its alcohol and silverware.

"[T]he current method used to track alcohol consumed during hospitality events was not sufficiently reliable," says a newly released audit of the Canadian mission to the International Civil Aviation Organization (ICAO).

"The audit team also identified discrepancies in the crystal, chinaware dishes and cutlery inventories after performing a physical count."

Transport Minister Marc Garneau was warned in March 2017 of problems at Canada's mission to ICAO in Montreal. (Rafferty Baker/CBC)

The report says that most of the overtime and travel claims it sampled were not pre-approved, there was no proof that goods and services paid for were actually received, five hospitality claims disappeared entirely, silverware was never counted — and at least $6,000 in travel and hospitality spending wasn't tracked at all.

"[I]t is difficult for the audit to determine why certain travel took place," says the highly critical document.

The audit focused on operations between April 2014 and March 2017, a three-year period that followed intense lobbying in 2013 by the Conservative government of Stephen Harper to keep the ICAO in Montreal.

The UN agency, which sets global standards for aviation safety and security, came into being in 1947 and has been located in Montreal ever since. According to one estimate, the agency's 191 member countries are bringing some $120 million in economic benefits to the city each year.

Rival bid

A rival bid by Qatar in 2013 to host the agency in Doha beginning in 2016 was dropped in the face of intense lobbying by then-Foreign Affairs minister John Baird and others. That lobbying ensured the ICAO will stay put until at least 2036.

Canada's small mission in Montreal, with eight permanent staff and three temporary positions, devotes about half its resources to host-state duties, including securing visas and even parking for ICAO member countries.

The Liberal government was alerted to problems at the Canadian mission sometime before March 2017, when a briefing note to Transport Minister Marc Garneau warned of major "shortcomings" and the need for a full audit. CBC News obtained the note under the Access to Information Act.

The auditors ended up delivering a scathing June 2018 report, citing "haphazard" communications, "confusion" about work responsibilities, "ad hoc" procedures, "insufficient training," a "lack of documented procedures" and missing paperwork.

The mission's annual budget – averaging $806,000 during the audit period, and $856,488 in 2017-18 – reserves about 10 per cent for hospitality and travel.

The funding was accounted for; however, the reporting was lacking. - Transport Canada spokesperson responding to an audit of the Canadian mission to ICAO in Montreal

Among other things, the report found the mission's accounting for those funds was flawed, citing "weaknesses in the Mission's management controls and oversight in the areas of budget planning and monitoring, expenditure approvals, inventory management and information management."

A spokesperson for Transport Canada, which is primarily responsible for the operation of the ICAO mission, played down the findings, saying that "the funding was accounted for; however, the reporting was lacking."

"There was no evidence of any items that went missing, including alcohol," Sau Sau Liu added in an email.

Performance reviews

The audit does not refer to individuals at the mission. Asked whether any staff members have been reprimanded or terminated, Liu said only that the "lack of management oversight has been addressed through the completion of regular performance reviews required within the public service."

On April 3, 2017, the Liberal government appointed career diplomat Martial Page as the new head of the ICAO mission to help sort out the mess.

Then Montreal mayor Michael Applebaum, left, foreign affairs minister John Baird, centre, and Jean-François Lisée, Quebec's international relations minister at the time, leave a 'Team Montreal' meeting at ICAO's Montreal headquarters May 3, 2013. (Graham Hughes/Canadian Press)

Transport Canada declined CBC's request to interview Page, whose three-year appointment ends in 2020. But the department says the mission has since strengthened management control, implemented new strategic and operations plans and created an inventory system.

"Transport Canada and Global Affairs Canada will continue to monitor progress in the implementation of measures identified and will work with the Mission to ensure that taxpayers' money is being used effectively," said Liu.

The audit was conducted jointly with Global Affairs Canada, which provides support and advice to the mission.

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