Cheryl Paynter is currently a Chartered Professional Accountant (CPA) in good standing with the Institute of Chartered Accountants (ICA) of Prince Edward Island. She is also currently the CEO of Tourism PEI, and was the CEO of Innovation PEI from November, 2011 to 2016.
Given what Ms. Paynter apparently did in contravention of the CPA Code of Professional Conduct in January 2013, it’s baffling to me how she’s managed to keep her good standing with CPA-PEI, not to mention her job as CEO of Innovation PEI until 2016, then her job as CEO of Tourism PEI. I’ll explain.
The other day, I posted a short article on my website titled, “Why wasn’t Wes Sheridan charged with ‘Misappropriation of funds’ and ‘fraud’? explaining how former Minister of Finance under Robert Ghiz, Wes Sheridan, had directed the Atlantic Lottery Corporation (ALC) to purchase an e-gaming report that Sheridan already had in his possession, and no one at the ALC wanted or asked for, as part of a fraudulent scheme to come up with $60,000 to give to McInnis Cooper law firm as partial payment for an outstanding e-gaming bill of $360,000. In that article, I provided the following information:
“He [Wes Sheridan] must have thought to himself that given that the e-gaming project had already ended in February, 2012, there was no possible way to justify any further e-gaming loans or grants, so – in his dual role as both Minister of Finance and Chair of the PEI Lotteries Commission – Wes Sheridan came up with an ingenious (but illegal) scheme to either keep the other PEI Lotteries Commission board members and staff at the Atlantic Lottery Corporation (ALC) completely in the dark about what he was really up to – or mislead them by pretending to have to “buy” a report that he already paid for [since the AG took care to point out that senior staff at the ALC told her that they did not “request” the report, and that they had purchased it on the direction of Wes Sheridan]…..as part of a fraudulent scheme he concocted to access funds to pay that troublesome $60,000 outstanding e-gaming bill balance from McInnis Cooper law firm.”
When I wrote, “…there was no possible way to justify any further e-gaming loans or grants,” of course I was correct in saying that – given that the provincial government’s role in the e-gaming project had already formally ended months earlier – but what I didn’t explain is that Cheryl Paynter, as CEO of Innovation PEI – went ahead and processed another grant application that was, in fact, another “e-gaming” grant for $100,000, to acquire the final portion of the outstanding $360,000 e-gaming bill owed to McInnis Cooper law firm. But Paynter was careful to hide that fact by providing false information about what the grant money was actually to be used for. In fact, she came up with fictitious future work in the grant application documents which never happened, nor was ever intended to be undertaken. By so doing, the grant application disguised the true intention of the grant by generating a misleading and deceptive paper trail. But the Auditor General, Jane McAdam, somehow managed to detect this ruse, which she reported in her special e-gaming audit.
Before looking at what the AG wrote about that infamous e-gaming “Grant #3,” first consider this quick recap of the timeline revealing how the Ghiz government was first confronted with an outstanding $390,000 e-gaming bill from McInnis Cooper law firm, then devised a plan to pay it off:
- On September 4, 2012, David Arsenault, (Principal with Arsenault, Cameron, & Best Chartered Accountants) was appointed Deputy Minister of Finance by Robert Ghiz.
- In October, 2012, “The local law firm [McInnis Cooper] e-mailed government requesting payment for the balance of their outstanding e-gaming bills.” [AG Report, Exhibit 3.1, p. 13].
- The Deputy Minister of Finance – David Arsenault – then met with McInnes Cooper and “reached an agreement whereby government would pay all outstanding bills, except for approximately $30,000,” which McInnis Cooper agreed to “write off” leaving an outstanding balance of $360,000.
As the Auditor General noted in section 3.51 of her report, the “plan for payment” Arsenault concocted to cover the remaining $360,000 included the following:
A – Island Investment Development Inc. (IIDI) would release the balance of the loan funds committed to the project ($200,000). This was from the $950,000 loan approved by Neil Stewart, Michael Mayne and Doug Clow, in contravention of the Financial Administration Act, which Wade McLauchlan was forced to “write off” as a complete loss to Island taxpayers shortly after becoming premier; something the AG said should have happened years earlier, but didn’t, presumably to keep the e-gaming fiasco hidden;
B – Wes Sheridan would direct the Atlantic Lottery Corporation to buy from the Mi’kmaq Confederacy an e-gaming report related to internet gaming for $60,000, an amount which MCPEI would then turn over in its entirety to McInnes Cooper.
This still left a deficit of $100,000, so the final part of the “plan for payment” was to put in for another grant from Innovation PEI – but of course, the rules governing grants from the “Enterprise Development Fund,” out of which all three e-gaming grants came, didn’t allow Innovation PEI to issue a project grant to pay outstanding bills which had been incurred from previous project activities, so Cheryl Paynter apparently did some “outside the box” (and rules) creative thinking and came up with a “pretend” project to put on paper so she could access the money.
When you read what the AG said (below) about this clever (but very unethical and clearly illegal) maneuver, keep in mind that as a result of a legal opinion obtained by the Deputy Minister of Justice (Shauna Sullivan-Curley) from an out-of-province lawyer in late 2011, the PEI government had formally ENDED its role in e-gaming project in February, 2012. Nonetheless, Wes Sheridan carried on with his e-gaming obsession as a rogue minister, in cahoots with McInnis Cooper and MCPEI, well after that date, with 25% of that $390,000 McInnes Cooper bill ($97,500) being incurred AFTER the PEI government formally pulled the plug on the e-gaming initiative.
This should have meant that no more tax dollars would go to any further e-gaming work undertaken by any other parties (e.g., McInnis Cooper and MCPEI)…but of course we now know that’s not the way things unfolded.
Read carefully what the AG wrote about e-gaming “Grant #3,” providing the final $100,000 amount used to pay McInnes Cooper:
The AG’s statement that the creation of an “approval sheet and grant agreement” indicating events “yet to occur” was “misleading” would definitely be a contender for the “understatement of the year” award! These shenanigans clearly constituted a calculated case of blatant falsification of documents and fraud.
E-gaming grant #3 was never intended for any future work of any kind. It was a key part of the “payment plan” devised for the outstanding $360,000 bill from McInnis Cooper – which Gary Scales et. al. confidently submitted to the PEI government on Wes Sheridan’s “promise to pay” all e-gaming invoices – which was apparently hatched by the Deputy Minister of finance (David Arsenault) when he met with McInnes Cooper after their October email to government requesting payment of that $390,000 amount. Although it appears it was part of what was negotiated by Deputy Minister David Arsenault, it was eventually obtained by then Innovation PEI CEO and Chartered Professional Accountant Cheryl Paynter and her staff.
Was Robert Ghiz – who had just appointed David Arsenault Deputy Minister of Finance in early September, 2012 – and Allen Roach (then Minister responsible for Innovation PEI and Cheryl Paynter’s commanding officer) aware of this fraudulent grant? How could they not be? But I’d like proof of that before I make that claim, so I’ll be submitting a couple of FOIPP Requests in coming days to see what other documents I might be able to obtain on this sordid affair…. and perhaps I’ll submit a FOIPP request specifically asking for any communications between Roach, Ghiz, Arsenault and Paynter on this matter, oh, and Neil Stewart as well, who most likely was also involved.
Given the fact that the AG made this information “public” in her report October, 2016, why has Wade MacLauchlan never seen fit to discipline Ms. Paynter (or anyone else) as a result of this very serious and fraudulent affair? Even if Paynter was officially “authorized,” or perhaps even “ordered,” to process the e-gaming grant #3 application using false pretenses – likely with Allen Roach’s and perhaps even Ghiz’s full awareness and blessing – that still doesn’t provide a valid excuse for a Professional Chartered Accountant to knowingly falsify financial documents and defraud a government grant fund.
As a member of the Professional Chartered Accountants of PEI, Ms. Paynter is held to the same high ethical standard of conduct as is every other member – regardless of whether she happens to be employed by a corrupt Liberal government – which makes the falsification of documents for the purposes of obtaining money under false pretences absolutely forbidden under any circumstances! The Institute of Chartered Accountants of PEI states in it’s CPA Code of Professional Conduct:
205 FALSE OR MISLEADING DOCUMENTS AND ORAL REPRESENTATIONS
A member or student shall not:
(a) sign or associate himself or herself with any letter, report, statement, representation or financial statement which he or she knows, or should know, is false or misleading, whether or not the signing or association is subject to a disclaimer of responsibility
And section 50 under Part V of the PEI “Chartered Professional Accountants and Public Accounting Act,” titled “Complaints and Discipline,” reads as follows:
50. Professional misconduct
(1) The conduct of a respondent may be found to constitute professional misconduct if:
(a) the respondent contravenes this Act, the regulations or the bylaws in a manner that, in the opinion of the investigation committee or the discipline committee, relates to the respondent’s suitability to be a registrant or licensee;
(b) the respondent refuses or fails to cooperate fully in respect of a practice inspection or the investigation or hearing of a complaint;
(c) the respondent contravenes an order made under this Act;
(d) the conduct is harmful to the best interests of a client or the public or to the integrity of the profession; or
(e) the conduct constitutes professional misconduct in accordance with the bylaws.
And the Act stipulates two ways in which a complaint can be initiated under section 54:
So my question to the Registrar is this: “Why haven’t you initiated a complaint against Cheryl Paynter as a result of your (implicit) duty to do so based on the statutory authority invested in s. 54 (2)?”
I’m personally swamped with other projects at the moment, so perhaps someone reading this will be inspired to initiate a complaint concerning this matter based on the statutory authority invested in s. 54 (1) [ “And so, my fellow Islanders: ask not what your mighty Island can do for you—ask what you can do for your mighty Island”]. You can obtain a complaint form here….then email it to firstname.lastname@example.org.
You’ll first want to review the CPA Code of Professional Conduct, bylaws, regulations, and the Chartered Professional Accountants and Public Accounting Act because you’ll need to indicate what provisions within one or more of those documents were breached (shouldn’t be too hard to find a few to pick from).
Once you email the complaint form, the matter will then be investigated and the “CPA Investigation Committee” may refer the matter to the “Discipline Committee” for a full hearing…..or they may not, and the endeavour will end up being a colossal waste of your time, which is probably the more likely outcome. When self-regulated professions police themselves, they seem to have a hard time imposing penalties.
But if you have a true hankering for justice, and don’t get down or discouraged too easily when you bang your head against brick walls and get nowhere trying to bring about justice, then you just might be the person called to launch a complaint against Ms. Paynter! You can read all about the complaint process here…who knows, the outcome might just surprise us all…..as Bob Dylan famously sang: “….the times they are a’changing”!