Report on New Westminster school business company released

When the B.C. Office of the Auditor General’s report on the governing of the New Westminster school district’s business company (SD40BC) was delivered last fall, trustee Lisa Graham thought Santa Claus had just come down her chimney.
“It felt like Christmas Day to me when I read that report,” said Graham.
“It’s a relief that we are now in compliance with standard business protocol. That was our objective and our objective has been achieved.”
Although the report was completed several months ago, it wasn’t made public by the board of education until Wednesday.
The report determined there were some conflicts of interest and potential for liability risks that needed to be corrected.
It made several recommendations to address the problems and the board of education has complied.
“I thought it was very useful. It was a good exercise for us and the business company, and gave some good suggestions. We were already on track, but it was good to have someone come in and give us some good positive recommendations,” said board chair James Janzen. “In many ways we were going in places no one had done before. We did things that we thought were the right things to do, but ... there really wasn’t anybody to look toward for guidance and we thought we were following regulations.”
The report starts off by saying, “we observed that the governance relationship between the Board of Education and SD40BC Board was not functioning well.”
It said board trustees had different views on the business company, which was created to generate revenue for the district with international operations. Some trustees said they should have more access to information about it.
Others believed oversight should be limited to protect the board from potential liabilities with the company’s operation.
“Things were not done according to standard business protocols and I took issue with that. I was certainly not popular with the board,” said Graham.
“I wanted the company to be a standalone operation with appropriate shareholder governance. It took this report to really bring things to a head. It was flawed from the beginning.”
The report also noted the composition of the company’s board may not have had enough independent directors to comply with the School Act.
When the examination was done, the six-member board included: CEO Brent Atkinson, who was also a board of education trustee; Brian Sommerfeldt, who is district secretary-treasurer; and a third board member was married to a district employee.
It also noted while the School Act requires either the secretary-treasurer or a trustee to be on the business company board, Atkinson and Sommerfeldt were both on it. Sommerfeldt and some district staff also performed management functions for the business company.
With the findings, the board of education promised to make sure the composition of the business company board is appropriate. Atkinson remains as CEO, but is no longer a trustee.
The report said while Atkinson held both positions he voted on business company related matters at board of education meetings, including voting against tabling a motion to defer advancing funds to the company until conflict of interest legal advice had been obtained.
The report said the significant risk from liability the school board could have incurred from the business company’s operations was not formally monitored by either the district or the business company.
It noted the possibility of a perceived relationship between the company and the board emerged from some actions. It pointed to overseas travel by superintendent John Woudzia and trustees to business company events in China.
In response to the report saying the board needs to receive more information than just an annual report or through verbal communication, trustees will now get a company business plan, a risk assessment plan and a management plan from the board of directors. The school board will also be developing an agreement with the company’s board of directors to clearly outline the responsibilities of both boards.