VANCOUVER -- Directors of the Insurance Corp. of B.C. should be held accountable for failing to provide adequate oversight while employees participated in a controversial scheme to buy damaged vehicles fixed up at its collision-repair training facility, NDP critic Michael Farnworth says.
"If the government is serious that they are making changes at ICBC, it is not good enough to just say, 'Yeah, some people who did this are not there,' " Mr. Farnworth said yesterday in an interview. "This is a significant blow to the public view of ICBC. The government needs to move and make not only changes in polices and procedures but also changes at the board level."
However, Solicitor-General John van Dongen, who is responsible for the government-run auto insurance agency, vigorously defended the integrity of the board and the reappointment of three members a week ago.
"The board has the government's full confidence; they have my full confidence," he said in a later interview. The directors acted immediately and competently when they became aware of the problems, authorizing the hiring of outside consultants to conduct an independent review, he added.
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An external audit of ICBC's material damage, research and training facility in Burnaby released earlier this week found that 55 damaged vehicles sold to automotive dealers through a wholesale auto auction were subsequently resold to senior managers, employees and others who were either friends or relatives of employees. Five of the vehicles were later resold by the insiders for a profit. The audit by PricewaterhouseCoopers also found that concerns about activities at ICBC reported by whistleblowers on three separate occasions were not properly investigated, beginning in 2006.
Geri Prior, the corporation's chief executive officer, said the situation created the appearance of conflict of interest. Those who condoned the activities were no longer with ICBC, she said. Corporate polices have been changed to clearly state that employees should not purchase salvaged vehicles, Ms. Prior said. She refused to identify how many employees were no longer with the corporation, whether they were fired or whether they had received severance payments.
Mr. Farnworth said directors on the board's human resources and compensation committee should have been asking questions and ensuring they knew what was taking place. The government should not have re-appointed Ken Martin, chairman of the board's human resources and compensation committee or two other directors, Neil de Gelder and Diane Fulton, who were reappointed at the same time, he said.
"Something is really wrong," he said. "The government knows about this investigation, they know that this report is coming down and they go ahead and reappoint three members of the board that have been there while the whole scandal has taken place."
The directors have a responsibility to ensure that appropriate polices are in place. "At the end of day, the board of directors are put there and they are accountable," he said.
But Mr. van Dogen said it took some time for the issues "to get to the top." When the board became aware of the problems, the directors did the proper analysis of what caused the problem, he said. "People involved in the line of authority ... are all gone, out of the organization. Policies have been significantly modified and will be further modified," he said.
Mr. van Dongen also said he took exception to criticism coming from Mr. Farnworth. Some of the systemic problems that the board is dealing with developed over many years starting in 1998, when Mr. Farnworth was the minister responsible for ICBC in the NDP government, Mr. Van Dongen said.
"It appears to me Michael Farnworth is throwing stones at people who acted immediately and competently when they became aware of it. In fact, the problem started under his watch," Mr. van Dongen said.
Mr. Martin, the board's human resources committee chairman, is also president of Pacific Blue Cross. He has been on the ICBC board since October, 2004, and was reappointed last week for a term ending October, 2010. He was not available yesterday for an interview.
Mr. van Dongen defended Mr. Martin as the committee chairman. "Mr. Martin is a very competent individual," he said.
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