Richmond, B.C., councillor 'dumbfounded' by alleged misuse of city hall gift card program

A city councillor in Richmond, B.C., is calling for a more thorough audit of city finances amid a police investigation into alleged misuse of a gift card program.

In a statement on May 15, the City of Richmond said it purchased approximately $446,000 worth of gift cards from 2022 to 2024 as part of an employee recognition program — but found in a recent review that around $295,000 of them were unaccounted for.

Richmond RCMP said their serious crimes section has opened an investigation into the gift card case, which was first reported by Global News.

The city said "an individual's employment with the City has concluded" following a personnel investigation.

It also said it no longer uses gift cards and would be conducting a forensic audit of the past three years of finances.

Richmond Coun. Kash Heed introduced a motion Tuesday to expand the audit to include the past decade, and have the findings presented to council afterwards. The motion was approved unanimously.

He also co-signed an open letter to B.C. Premier David Eby that says the province needs to either reinstate a specific office to oversee municipal spending or expand the auditor general's mandate to cover it.

Heed spoke with CBC's On The Coast host Gloria Macarenko on Tuesday afternoon.

On The Coast18:08Richmond City Councillor Kash Heed responds after hundreds of thousands of dollars worth of gift cards unaccounted for

Richmond city councillor Kash Heed speaks with host Gloria Macarenko about a motion he wants to introduce expanding a forensic audit to include the past ten years. This comes after investigations into the City of Richmond's gift card purchases revealed inconsistencies, and $295,000 worth of gift cards is 'unreconciled.'

This interview has been edited for length and clarity. 

So what do we know about these gift cards?

What we don't know is the troubling aspect of this — how we could let almost $300,000 worth of unaccounted transactions take place in the City of Richmond.... So that is very troubling. And we just know this from three years of data. 

The gift card program has been in existence for over a decade. As a result of that, I think we have to dig further into this particular problem to identify where this went off the rails, why there is such a discrepancy [in] the accounted-for and the unaccounted amount.

Why does the city hold this much money in gift cards?

I'm dumbfounded. I've never experienced this in [my] career. When I talk to other councillors throughout the Lower Mainland, they don't have a particular program like this.

We have to remember gift cards are actually treated as monetary cash.... So when we have reconciliation, for example, for cash items that are purchased within local government, that is all looked after and it's all caught by the auditors to make sure there's integrity behind it. 

These cards were used as part of an employee recognition program. Do you think this is the most appropriate way to offer recognition?

Absolutely not. It's proven itself that it's not the appropriate way. We cannot control it. We can't even account for it. 

So this is something that has been halted here in Richmond, but the reason why this went off the rails and the reason why we're unable to reconcile it has to be looked at, has to be explored. 

I'm not sure … whether this is a deficiency in our oversight or that there is actual fraudulent activity taking place, and until we do the level of forensic audit that's required to determine what went wrong, we will never know. 

We do annual audits outsourced by a particular company, they were unable to pick up on this. We have internal auditors that work within the City of Richmond, they were unable to pick up on this. We've got to delve into this.

What do you make of the decision to stick with KPMG for the forensic audit since they also audited the city's financial statements? 

I think, based on whether there's a clear conflict or the possibility or the perception of a conflict, they should have outsourced it to another company that has the ability to do these types of forensic audits.

KPMG is the auditor, they've been the financial auditor for the City of Richmond for decades now. And now we're bringing that same company in to do the forensic audit. It is very telling. 

According to media reports, one employee in Richmond has already been fired. What more do you think needs to be done for accountability? 

My fear is, do we have a deeper problem within our financial accounting of the taxpayer dollar in Richmond? And I think if we can truly understand what occurred here, maybe we can start looking into other areas to see and ensure the right standard operating procedures and auditing systems are in place.