Auditor General Highlights Concerns in the Management of Specialty Wines by Newfoundland and Labrador Liquor Corporation

  • Office of the Auditor General

13 February 2020

Auditor General, Julia Mullaley, delivered her report to the House of Assembly today on the results of a performance audit of the Newfoundland and Labrador Liquor Corporation. The audit concluded that the Corporation did not manage the procurement and sale of specialty wines in an effective manner and in compliance with legislation.

The report highlighted concerns around the lack of transparency in the acquisition of specialty wines for the Corporation’s Bordeaux Futures program during the fiscal years 2007 to 2018. Decisions regarding these acquisitions rested solely with the former Chief Executive Officer (CEO), were not documented and did not follow the standard process for other product lines. These wines were purchased throughout the period in quantities that far exceeded customer demand and resulted in significant excess inventory of specialty wine.

Further, instances were identified where the Corporation contravened federal and provincial legislation by knowingly selling and shipping, or arranging the shipping of, specialty wines directly to customers in other provinces. Prices for most of these wines were discounted in an effort to reduce the excess level of specialty wine.

The report identified that the former CEO did not take appropriate action to address a known conflict of interest relationship with a close family member who conducted business with the Corporation. The audit found that the former CEO made decisions to purchase specialty wines which benefited this close family member and which influenced the performance of the CEO’s duties as a public office holder.

In addition, the Corporation misrepresented information in its response to the Office of the Citizens’ Representative related to a 2016-2017 investigation of conflict of interest allegations involving the former CEO and the same close family member. In response to a recommendation of the Citizens’ Representative stemming from this investigation, government committed to complete a government-wide review addressing conflicts of interest within the broader public service, including Crown entities. This review is ongoing.

Learn more
Report to the House of Assembly on the Newfoundland and Labrador Liquor Corporation

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Media contact
Nancy King
Office of the Auditor General

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2020 02 13 2:00 pm