A report by the former auditor of Bear Mountain Resort - a massive golf, hotel and commercial and residential project near Victoria headed by Canadian Len Barrie - has accused the Tampa Bay Lightning co-owner and other senior members of the complex's management team of misappropriating funds.
The Victoria accounting firm of Norgaard Neale Camden Ltd. made the report to Bear Mountain's executive committee last January and then resigned as the auditor on April 15 because it felt some financial transactions were illegal and because Bear Mountain's directors did not take action.
Some of those transactions, according to the report, involved at least $2.5-million that Mr. Barrie, a former NHL-player-turned-owner, used to pay for his part of the Tampa Bay Lightning. The report raised questions about more than $25.8-million paid to Mr. Barrie or companies under his control going back at least two years by the partnership that owns Bear Mountain.
"We brought to your attention a number of instances where senior members of [Bear Mountain]management had engaged in a number of activities that, in our view, were improper and, in some cases, illegal," the auditor stated in its resignation letter, which was signed by Allan Neale, a partner in Norgaard Neale Camden.
Mr. Neale confirmed he wrote the letter and his firm resigned as Bear Mountain's auditor. But he refused all further comment, citing confidentiality regulations.
Mr. Barrie denied all of the charges last night. He said all of the money in dispute was repaid to Bear Mountain and that the company has a new auditor, KPMG, which "agrees with how I've done it so I don't think there is any issue."
He also said he has reached an agreement with his main lender, HSBC Bank Canada, to extend Bear Mountain's loans for another two years.
"They never, ever talked to me," Mr. Barrie said of the former auditors. "I never got to give the answers."
Mr. Barrie added that "I've given the answers and we've moved on."
Bear Mountain was started with investment money from Mr. Barrie and a large group of current and former NHL players. The group includes Mike Vernon, Gary Roberts, Joe Nieuwendyk, Ryan Smith, Ray Whitney and other prominent NHLers. Aside from Mr. Barrie, none of them have been accused of any wrong-doing.
However, sources close to the executive committee and the auditor's report tell a different story. One source with knowledge of the committee's deliberations said Mr. Barrie may soon be replaced as CEO of Bear Mountain by an interim leader from a Toronto company that specializes in corporate rescues.
Mr. Barrie at first denied he was being replaced as soon as today but then said "a couple of different possibilities" were being discussed.
The matter also raises questions once again about the NHL's due diligence in investigating new owners.
In a separate development yesterday, Mr. Barrie has told NHL commissioner Gary Bettman he was unable to put together a deal to buy out fellow Tampa Bay Lightning owner Oren Koules, according to an NHL source. The NHL has presented Mr. Barrie and Mr. Koules a chance to buy each other out after the two began disagree on team management issues.
Mr. Barrie and Mr. Koules, who has no involvement in Bear Mountain, were the first two owners investigated last year after the NHL claimed it made its due diligence much tougher in the wake of the scandal that saw William (Boots) Del Biaggio approved as a part-owner of the Nashville Predators and depart in a hail of bankruptcy and criminal charges.
Bill Daly, the deputy commissioner of the NHL, declined to comment on the due diligence conducted on Mr. Barrie.
The auditor's report listed more than 20 transactions going back to 2007 that it found questionable. In several instances, the report said, "we encountered several instances where we believe that Len [Barrie]used his authority as Chief Executive Officer to override or otherwise circumvent the internal control system of the partnership, to misappropriate partnership funds for personal purposes."
Among the transactions, the auditor said it discovered that almost $2.5-million in construction costs on Mr. Barrie's personal residence was charged to the partnership. The report also said $2.5-million was funnelled from Bear Mountain to pay for Mr. Barrie's share of the Lightning through Scansa Construction Ltd., a company owned by Kory Gronnestad, Mr. Barrie's brother-in-law.
Mr. Gronnestad declined to comment. Mr. Barrie said all monies from those transactions were repaid to the Bear Mountain partnership.Report Typo/Error