Brandon group home operator spent thousands of dollars on jewelry for kids in care, hockey tickets for staff
CEO says gifts were management’s way of rewarding and motivating staff and children
A company that was paid by the province to care for youths in group homes spent $7,265 on Winnipeg Jets tickets for staff and $3,738 on jewelry purchases — including a diamond bridal set — for youths in care, according to a financial review of the company's services.
Brightscape Endeavours Inc. had 27 kids in care at homes in the Brandon area when the province said last February it was cancelling funding for the company over concerns about financial issues.
A detailed list of spending items is contained in a financial management review of Brightscape done by auditing firm Deloitte LLP at the request of the Manitoba government.
A copy of the confidential report, dated December 23, 2020, and obtained by CBC News, says some of the examples of spending by the company "do not support the expectation of fiscal prudence" for an organization supported by the Manitoba government.
Brightscape Endeavours, which cared for some of the highest risk youth in the child welfare system, began operating in 2016 and received as much as $7.63 million annually from the province in 2019-2020, a provincial spokesperson said in an email to CBC.
The Deloitte report documented staff bonuses including $7,265.79 for Winnipeg Jets tickets, $500 for a fitness class/spin class gift card, and $934.40 spent on cycling shoes for "two directors who went above and beyond their portfolio scope," the report says.
It also noted the company's advertising and promotion budget, which management described as being used mostly for things like recruiting fees and staff hiring, included payments of $296.57 for Dom Pérignon Champagne as a gift to a lawyer, as well as $974.12 for Winnipeg Jets tickets.
Jewelry, gift cards
Documented expenses also included gifts for the youths in care, ranging from more than $400 spent at Dollarama, to more than $10,000 in gift cards for Christmas presents.
The report noted $3,738.27 was spent on purchases at a jewelry store, one of which included a diamond bridal set that management said was a gift to a youth in care. The report also listed a sports memorabilia gift for a youth in the form of a signed hockey card worth $902.55.
"These types of gifts appear to go beyond the concept of fiscal prudence with government funding," the report says, noting that management should document and implement policies related to gifts.
NDP MLA Bernadette Smith, who lived in a group home growing up, disapproves of the gifts.
"Children were being bribed to do certain things for behaviour management reasons," she said in an interview with CBC. "That's not how we manage behaviour."
"We need to stop incentivizing," she said, and help kids "feel good about what they're doing and changing their behaviour for the right reasons," not because they're going to get a materialistic reward at the end.
Smith, who worked in the child welfare system for 12 years, said the focus should be on building trusting relationships with the kids.
Reward and motivate: CEO
The report recommends Brightscape not incur those types of expenses, and in response, the company's management agreed.
However, management's comments in the report noted the jewelry purchases were for girls who had been sexually exploited before they went to Brightscape and "overcame enormous obstacles to address their addictions, gaps in schooling."
The hockey card was for a youth who had ceased a period of being absent without leave and of assaulting staff, management noted.
"Our objective has always been to motivate and reward children under our care who demonstrate promise for personal achievement, so in that regard we see no harm in what we did, particularly as the spend impacted our own profits," Brightscape CEO Jesse Dourado said in a statement to CBC News when asked about the spending on gifts identified in the Deloitte report.
He said the money spent on gift cards for youths at Christmas time works out to less than $400 per child.
"However, if the optics of our decisions were troublesome to Manitoba, we would have been happy to explore other more acceptable ways of rewarding the children if Manitoba would engage in a dialogue."
Dourado said it is noteworthy that neither the province nor Brightscape's external auditors raised issues about the company's spending policies in prior years.
The province says there's an annual gift allowance of $386 for children in care, to be used at the discretion of the care provider, but that caregivers should consult CFS agencies about larger gifts.
Review of salaries
When it comes to executive salaries — such as $175,000 for the chief executive officer of Brightscape and $160,000 for the chief operating officer — the report recommended a review of executive salaries by an HR consulting firm.
"We believe our executive compensation is in line with the requirements of their positions," management commented in the report. "We work in a highly-charged environment with [children in care] who have had very traumatic experiences, which often include drug and alcohol use and abuse, violent behaviour and members of gangs."
"Our executives are always required to be available 24/7 and are constantly required to double up with our staff" to help deal with violent situations, management commented. "Respectfully, theirs is not a 9-to-5 job and we need to compensate them accordingly in order to retain them."
In his statement to CBC, Dourado said the gifts constituted "normal business expenses" that impacted the profits of the company.
"Brightscape was a 'for-profit' organization and our philosophy was to reinvest in our staff and in our children. This was management's way of rewarding and motivating staff and children, and by all counts we have had excellent results with the children in our care."
The financial review found that apart from gifts, the youths could earn a daily cash allowance of up to $30 for meeting goals, as well as a monthly clothing allowance of $90.
When the province cancelled its funding with Brightscape in February, the youths were moved to other homes in either group care settings or supported independent living, and those who reached the age of majority moved to adult supported living programs, the province said.
Asked whether the province should dictate how a service provider spends money if the standards of care provided to children is adequate, the provincial spokesperson said, "The province has a responsibility to ensure that services using public funds are delivered in a financially accountable, efficient and effective manner."
When it comes to governance structure, the Deloitte report recommended Brightscape switch from a for-profit company to a not-for-profit organization "to better align the business with how it is funded."
