• George Black

$2.1M secret bail-out for troubled non-profit

WHITEHORSE - Documents reveal lavish spending, mismanagement, intimidation at Yukonstruct

Yukonstruct corruption Northlight Innovation Whitehorse Yukon

Workers erect a billboard advertising the services of Yukon MP Larry Bagnell above Northlight Innovation as part of Yukon Innovation Week 2020 (Photo: Jeff Bursley)


The Whitehorse non-profit Yukonstruct received a secret $2.1M federal government bail-out despite gross mismanagement, dysfunction and misuse of public funds at the organization.


That is just one of many revelations found in hundreds of documents shared with the Whitewash News by members of Yukonstruct who say that they are fed-up and frustrated with the "politics and shenanigans" that have consumed their society.


The Yukonstruct documents are dated between 2016 to 2020 and include internal emails, reports, memos and financial documents involving Yukonstruct's executive director Lana Selbee, operations director Victoria Hampson and board members Barrett Horne, Bob Sharp, Chris O'Brien, Glenn Piwowar, John-Glynn Morris, Kathie Szpajcher, Maxim Naylor, Selene Vakharia, Stephanie Hawkins and Antonio Zedda.


News of the secret bail-out comes just weeks after Yukon Premier Sandy Silver inadvertently let it slip in the legislative assembly that the RCMP had launched a criminal investigation into the finances of another Whitehorse non-profit, the now defunct Many Rivers counselling service.



Trappings of free money


In September 2018, Yukonstruct took charge of managing the newly-renovated and publicly-funded NorthLight Innovation building in Downtown Whitehorse. The 20,400 square foot facility promised to be a vibrant community hub that would provide affordable co-working spaces, design and construction tools, and free business support services.


By the time Northlight Innovation had opened its doors, Yukonstruct had received over $7M in public funds. The assurance Yukonstruct gave in return is that it would balance government funding with its own independent revenue streams. Yukonstruct's own documents, however, suggest an over-reliance on taxpayer dollars and a careless attitude towards spending them.


According to the documents, starting in early 2019, Yukonstruct's newly-appointed executive director Lana Selbee set about spending thousands of dollars to purchase meals and drinks for herself, her staff and users of the co-working space.


On one occasion, Selbee approved the installation of a bouncy castle in one of Northlight's event spaces during work hours. Selbee, Yukonstruct staff, and at least one Yukon Government employee, business development advisor Jason Rayner, came together for a bouncy castle celebration that same afternoon.


The records show that it isn't just the management and staff that have been enjoying the trappings of free-flowing taxpayer dollars. In a document dated May 1, 2019, then board president Glenn Piwowar suggested to his fellow board members that public funds should be used to pay for private catering at their regular board meetings. In response, all of the board members voted in favour of the idea.


At the same time that board members were approving frivolous spending, they were also aware that the society's finances could be in trouble. One financial report delivered to the board in May 2019 reads: "Income to decrease and expenses to increase. Not a problem now but trajectory causes concern." Another report from August 2019 talks about the need for Yukonstruct to move away from public funds and generate its own independent revenue.


Taxpayer to the rescue


Amongst the early warning signs of financial trouble at Yukonstruct was an internal report delivered to the board that projected the society was not going to continue receiving the same level of government funding to support its day to day operations.


As a matter of policy and to avoid wasting public funds, the Government of Canada does not typically fund the ongoing operations and maintenance costs for non-profits. Except that it did for Yukonstruct, quietly and under the radar, despite clear signs that the society was dysfunctional.


Yukonstruct's $2.1M bailout appears to have been in the works since late 2019, months before the COVID-19 pandemic gripped the world. When the bail-out was approved, it was discretely posted to the Government of Canada's Proactive Disclosure website and categorized as "operational funding for general operations" which represents precisely the type of spending that the taxpayer is not supposed to cover on an ongoing basis.


In a move that was highly unusual for Yukonstruct, it did not publicly announce the funding as it normally does through a press release or its social media channels. Also unusual was the silence from Yukon MP Larry Bagnell, someone who is well known for widely publicizing all federal government funding for Yukonstruct.


Old Boys Club


According to the documents, in 2017 and 2018 Yukonstruct received $3.1M in public funds to renovate the old Super Valu grocery store on Whitehorse's Second Avenue, the building now known as Northlight Innovation.


The building belongs to local real estate company Northern Vision Development (NVD). In addition to the $3.1M renovation, Yukonstruct agreed to pay NVD an additional $326,400 a year in rent for a term of seven years, from 2018 to 2024.


The lop-sided deal means that by the year 2024, Yukonstruct will have given NVD over $5.3M in public funds for a building that NVD will still own. Once Yukonstruct's lease is up, it will have the option to purchase the building outright from NVD, provided it can get its hands on enough public money to do so.


To make it an even worse investment for the taxpayer, a clause in the agreement ensures that Yukonstruct is obligated to pay NVD the full market-value price for Northlight Innovation at the time of sale, despite the enormous investment of taxpayer dollars into the building by way of renovations and ongoing improvements.


Yukonstruct's poor business acumen was apparently not an issue for the Yukon Government because the deal was approved by Yukon's Minister of Economic Development Ranj Pillai, a Yukon Liberal Party member with strong ties to NVD.


Pillai was the VP of Business Development at NVD from 2013 to 2015 before being elected to the Yukon Legislative Assembly in 2016. According to its 2019 Annual Report, NVD's book of assets in 2019 grew 21.4% to $88.2M, partly as a result of Pillai signing off on the renovation of Northlight Innovation.


Political pawn


As a non-profit, Yukonstruct is not supposed to promote or feel beholden to any political party. Under Selbee and the board of directors, however, Northlight Innovation has become the hottest venue in the Yukon for territorial and federal Liberal Party politicians who have held dozens of events and speeches in the space over the past two years.


Selbee is closely connected to the Yukon Liberal Party and an outspoken supporter of Pillai. From 2016 to 2018, she worked as a Communications Advisor in the Yukon Government's Cabinet Office, a quasi-political branch of government that provides direct support to Pillai and other Liberal Party cabinet members. In 2015, she served in a voluntary position as the Communications Chair for the election campaign of Liberal Mountainview MLA Jeanie Dendys.


Despite the mismanagement, dysfunction and splurging, Yukon Premier Sandy Silver along with Pillai and other territorial and federal Liberal Party politicians have promoted the perception that Northlight Innovation is a shining example of success for their economic development policies in the North. It remains in the interest of the Liberal Party that Northlight Innovation keeps the lights on at all costs and at least appears to be boosting jobs creation.


Yukonstruct corruption Northlight Innovation Whitehorse Yukon

Yukon Minister of Economic Development Ranj Pillai has been pumping public funds into Yukonstruct despite mismanagement and splurging at the non-profit. (Photo: Jeff Bursley)


Maximum investment, minimal return


According to the Yukon Government's budget estimates, the Department of Economic Development gave Yukonstruct $350,000 in 2019 and the society's own financial records show an additional top-up of $50,00. In the same budget, $940,000 was given to one of Yukonstruct's tenants, the Innovation & Entrepreneurship branch of Yukon University.


The department's entire budget in 2019 was $8.1M which means that Northlight Innovation received 16.5% of the Yukon's annual budget for economic development, and likely received the same or more in 2020.


This investment was made despite the fact that Yukonstruct and Northlight Innovation provide real benefits to just a small group of Yukoners whose names and businesses appear over and over again in Yukonstruct events and social media posts. Most of these beneficiaries are not job-creating companies at all, but rather Whitehorse-based and self-employed individuals, many of whom rely partly or fully on government funding to survive. The vast majority of Yukoners, and especially those in the communities, receive little or no benefit.


Although in public it claims to have 200 members, in private Yukonstruct refers to most of those people as "building users" as opposed to "voting members." Since 2014, despite moving to a much larger space, Yukonstruct has seen a drop of 38% in voting membership numbers. Today it has just 40 voting members, a disproportionately small number given the amount of funding it receives. Out of those 40, the staff and board make up 21 votes, a scenario that all but guarantees that management gets to call the shots.


Over the past two years, some of Yukonstruct's voting members and tenants have taken to writing emails and letters to the board or posting to social media to openly voice their criticism of the society. The criticism is mainly directed towards Yukonstruct's lack of action on supporting diversity, inclusion, working parents and a safe space for visible minorities. The non-profit currently has a 2 out of 5 star rating on Facebook and its members seem in no rush to defend it.


Internal documents also relay tension between Yukonstruct and the Innovation & Entrepreneurship branch because they are both essentially funded to do the same thing, in the same building. Selbee in a number of her reports to the board writes of the "challenges" presented by Innovation & Entrepreneurship and in one document claims it is "limiting [Yukonstruct's] growth path."


Yukonstruct corruption Northlight Innovation Whitehorse Yukon

Community-driven events were common at Yukonstruct prior to its transition to a politically-focused organization. (Photo: Yukonstruct)


Human rights investigation


One of the more ominous revelations in the Yukonstruct documents is the news that the Yukon Human Rights Commission has decided to investigate the non-profit for alleged incidents of discrimination. If found guilty, Yukonstruct will no longer be able to receive public funds and the organization could be forced to wind down.


According to the documents, users of Northlight Innovation were regularly voicing their concerns to Selbee and operations director Victoria Hampson over the conduct of Selene Vakharia, currently the vice-president of the Yukonstruct board. Vakharia was allegedly intimidating parents and making them feel unwelcome in the building.


In one of the documents, Hampson describes how she and Selbee were fully aware of the allegations against Vakharia and assured members they would deal with it. Hampson claimed that despite the assurances, she and Selbee met privately and agreed that nothing would be done to address the allegations.


In an email dated February 6, 2019, Piwowar discusses reports of intimidation with Selbee and suggests that it would be "a shame" if a ban on babies in the building led to a "no dog rule." In another email, board member Chris O'Brien suggests that he is "not encouraged" by people who believe that the intimidation of parents in Northlight Innovation is Yukonstruct's problem to fix.


Since the Yukon Human Rights Commission started looking into Yukonstruct, a number of staff and board members have quit their positions, including Piwowar and O'Brien. It is not clear from the records if Yukonstruct's funders were aware of the allegations of discrimination before more funding was given to the society. Typically, government does not allocate public funds to an organization accused of human rights abuses or other illegal activities.


Buzzwords before benefits


Despite the dysfunction and $2.1M bail-out, Yukon MP Larry Bagnell continues to lobby the federal government to direct ever more public funds to Yukonstruct.


On November 2, the Whitehorse Star reported that Bagnell participated in a phone call between Prime Minister Justin Trudeau, Yukonstruct, and other taxpayer-funded bodies. During the call, Bagnell told Trudeau that more public funding was crucial to allow Yukonstruct to support "ingenuity."


It appears that 2020 may well be the last hurrah for funding buzzwords such as "innovation" and "entrepreneurship." In 2021, "ingenuity" could be the new black for the Yukon's funding fantasyland.

 

Editors' Note: Despite how it may read, this story is not satirical. The facts in this article are based on Yukonstruct's own documents and statements.

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