Last week, one of the largest and most influential social service agencies in Vancouver’s Downtown Eastside became a centre of turmoil. The government moved in and fired much of the leadership of PHS (Portland Hotel Society) Community Services Society after an audit – in which the agency provided tepid cooperation – found the agency to have squandered vast sums on travel and luxuries for staff.
A routine audit by B.C. Housing late last year raised enough red flags to bring in an independent auditor. In 2013, the society received $18.7 million from the provincial government and $2.27 million from the federal government. Overall, PHS is a $28 million a year operation, which runs hundreds of provincially owned housing units in the city’s poorest area, intended to provide stable housing for individuals who had been left to the rapacious slumlords who once ruled the area.
In addition to the constellation of renovated hotels in the area, the society operates Insite, Vancouver’s (in)famous safe injection site, where people with addictions can find a safe place and sanitary equipment to use, and help in the event of an overdose. Insite is also an entry point for people to access primary care medical treatment and a range of treatment, housing and community supports.
According to the organization, during its 23 years of operating in the Downtown Eastside, deaths by drug overdose have fallen dramatically, as have HIV infection rates, while life expectance has increased by 10 years. These are extraordinary outcomes and one of the saddest results of this scandal is that the important work of this organization has been tarnished by the actions of its leadership.
The four top managers – who oversaw more than 300 staff – and all eight members of the organization’s board of directors left their positions last week. The four managers were earning between $120,000 and $160,000 a year, and received an additional 30 to 40 percent in remuneration for vacation pay and statutory holiday pay. This is not necessarily out of line – what rankles most are the expenses the audit uncovered, and which the senior staff felt no need to justify, including providing receipts to the auditors.
Mark Townsend, who, with his wife Liz Evans, was co-executive director of PHS, reportedly racked up high meal and travel expenditures. The auditors, KPMG, in a more-than-100-page report, noted: “The PHS declined to provide the associated credit card receipts … PHS also reiterated, among other things, their view that provision of these receipts was unnecessary to complete a proper review of these charges. We respectfully disagree.”
KPMG cited dozens of suspicious expenses, including a trip to New York City by Townsend and Evans, who stayed at the Plaza Hotel, accumulating a $9,266 bill. The purpose of trip, according to KPMG, was entirely summed up as: “Activities related to other PHS social initiatives.”
Another PHS senior staffer enjoyed a $5,832 Danube River cruise. Over three years, staff restaurant bills averaged $1,927 per month, to a total of about $69,000. An expense that resonated immediately was a trip to Disneyland for (now-former) PHS manager Dan Small, his (now-estranged) wife Jenny Kwan and their children. Kwan is the member of the B.C. legislature for the riding that encompasses the Downtown Eastside and, despite the potential for conflict of interest or misallocation, Kwan said in a teary news conference on the weekend that she had no idea that the Disneyland, and another, vacation were at least partly funded by PHS.
These incidents are doubly troubling, not just because the misallocations of funds have hurt the people they were intended to help, but because they have the potential to harm these individuals further by reinforcing the perception that money put into the Downtown Eastside is going down a hole without commensurate results. In fact, PHS has done and will continue to provide vital services that improve life for many of our city’s most disadvantaged. Our hope is that this sad situation will result in improved oversight and more scrupulous management not only of this important organization, but of all the agencies serving this area – and, frankly, all nonprofits, especially those receiving government funding.
We should also remind ourselves that these events do not grant us the right to wash our hands of events in that troubled neighborhood. The concept of anei ircha kodmin means it is a primary obligation of our tzedakah to do what we can to ameliorate suffering of the poorest in our local community. May this incident and the probable further investigations serve to rebuild our confidence in how public and private funds are spent in the Downtown Eastside so that these agencies will continue to make the changes needed for the people there.