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VANOC's $11-million shortfall raises questions about finances Add to ...

A late, unexpected revelation that VANOC was unable to cover its lucrative employee bonus plan in full has reignited controversy over the $28-million fund and revived questions about the Olympic organizing committee's finances.

"It does make you wonder again about their fiscal planning," provincial NDP Olympic critic Kathy Corrigan said on Thursday after it was learned that VANOC fell about $11-million short of its intention to pay large retention bonuses to most of its employees who stayed on until the end of the Games.

Only $17-million was paid out because VANOC cancelled the second half of the bonus program to balance its final budget, which was made public last month.

Ms. Corrigan said the news shows that VANOC was still in bad financial shape even with the injection of tens of millions of dollars from the provincial and federal governments and the International Olympic Committee.

"They got all that extra money, and they still came up short," she said. "We've said all along that VANOC should have been more forthcoming about their finances.

"They don't comply with [freedom of information requests] The Auditor-General has not been able to take a look. It's hard to get information about what's going on. It's been like that from the beginning."

VANOC's decision to write off remaining bonuses was not disclosed publicly, despite high interest in the plan, which the NDP's previous Olympic critic, Harry Bains, had been fond of denouncing as "a slush fund."

The cancellation surfaced this week with the leak of an internal memo to VANOC employees from CEO John Furlong confirming that outstanding bonuses would not be paid.

Mr. Furlong told employees that the money was unavailable because VANOC had been unable to meet its original 2009 budget targets.

As it was, the final $1.884-billion operating budget was balanced only with late government and IOC contributions.

"I would have liked nothing more than to be able to pay this amount to our team, but it is not possible," said Mr. Furlong, in his Jan. 6 memo.

VANOC sources said officials knew by the fall of 2009 that the Olympic organizing committee would be unable to meet its bonus plan in full, as it struggled to make ends meet in the face of the withering, world-wide recession.

Sources said that payment of full bonuses for staying till the Games were completed was always contingent on VANOC being able to meet its budget targets.

As that appeared less and less likely, word was quietly circulated among high-level staff that the prospect of the full bonuses was increasingly doubtful.

Yet publicly, deputy CEO Dave Cobb continued to defend the multimillion-dollar employee retention fund. In a letter to the Vancouver Sun in October, 2009, Mr. Cobb said that not having such a bonus program would put delivery of the 2010 Olympics at risk.

The $17-million in bonuses that employees did receive went to all staff with more than nine months of full-time service at VANOC. The average payout to the 1,000 or so employees was $17,000. That amounts to about $10,000 less than they had expected to receive.

Ms. Corrigan said she expects some will be miffed by the shortfall. "It appears they didn't make good on their entire commitment, and that could leave a bad taste in some people's mouths."

Sam Corea, former press services manager for VANOC, said he started hearing about the cancelled bonuses through e-mail chains in late December.

"It's not really a big surprise," Mr. Corea said. "It was only going to be paid out if the company performed, if all the financial objectives were met. That was my understanding. Obviously, the company broke even, but it did not have a huge surplus."

He said he was not perturbed by not receiving the added bonus. "I was paid for work in my hometown on a fantastic project, so I'm not disappointed. I've moved on."

Another employee, who did not want to be identified, said that she, too, was not overly upset by cancellation of her remaining bonus.

"I got the first part, and I think I was always realistic about it. VANOC was always clear to us about the numbers, so I'm not surprised."

VANOC sources said the contingency that their bonuses depended on the organizing committee's financial health was spelled out in the employment contract of each employee as he was hired.



With a report from Niamh Scallan

Follow on Twitter: @rodmickleburgh

 

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