A new report from the Office of the Auditor General makes five recommendations to improve fraud risk management for Site C project after concluding that BC Hydro has not established a fraud risk management program for the major project, although it acknowledges it has some elements in place.
The five recommendations focus on implementing policy and investigation procedures, staff training, regular assessments, and evaluating effectiveness.
Site C is the largest and most expensive infrastructure project in British Columbia’s history, with an estimated cost of $16 billion. The Global Infrastructure Anti-Corruption Centre says fraud risk increases with the size and complexity of large infrastructure projects because it becomes harder to compare costs and detect corrupt practices.
“Fraud can be costly, financially and reputationally, so effective fraud risk management is essential," said Auditor General Michael Pickup. “The good news is that there are many ways to identify and respond to fraud risk and it starts by designing and implementing a comprehensive fraud risk management program.”
The audit report calls on BC Hydro to fully implement the fraud risk policy it introduced for Site C in January 2022, and to provide fraud training to all staff. In addition, it said that BC Hydro did not perform fraud risk assessments for Site C until after the audit began, and the report recommends it conduct regular assessments in the future.
“Robust fraud risk management on Site C could enhance the existing risk management culture and benefit other projects,” Pickup said. “It could also support BC Hydro’s reputation as a careful builder and provider of hydroelectric energy.”
The audit did not investigate or look for instances of fraud at Site C and did not include any aspects of the project unrelated to fraud risk management.
Responding to the report, BC Hydro said that it does not tolerate fraud as an organization and earlier this year implemented a new fraud risk policy that formalizes its fraud risk management program.
“The B.C. Auditor General’s report confirms that BC Hydro has elements of fraud risk management in place including controls to defend against fraud threats,” said David Wong, Executive Vice President, Finance, Technology, Supply Chain and CFO. “We have accepted all five recommendations of the Auditor General and we welcome their ideas to help formalize our fraud risk management program. Many of the recommendations are already being implemented and we will work to adopt all recommendations as quickly as possible.
“Our commitment to fraud risk management to date has included a code of conduct policy, internal ethics officer, anonymous reporting line for employees and related annual training on these items for all BC Hydro employees.
“We are confident that our existing measures – along with the recommendations from the Auditor General – provide for a robust fraud risk management program at BC Hydro.”
Site C, on the Peace River in northeastern B.C., is scheduled for completion in 2025, and BC Hydro says it will supply enough electricity to power 450,000 homes annually.