Lethbridge & District Exhibition short millions of dollars, unclaimed management expenses: report

Unclaimed management expenses, unsupported strategic plan targets and inconsistent project budgets are believed to be leading factors behind the Lethbridge & District Exhibition's (LDE) financial troubles, according to a newly released report.

The third-party review, conducted by Deloitte Canada, was shared during Tuesday's economic and finance standing policy committee meeting.

"We are alarmed and incredibly concerned with Deloitte's findings and what appears to be significant level of mismanagement," said Mayor Blaine Hyggen, following the meeting.

The review revealed significant issues across five key areas: strategy and planning, project execution, governance, use of funds and council communication by LDE throughout this project process.

Through the findings, the report suggests that strategic plan targets used to support the funding of the Agri-food Hub and Trade Centre were not aligned with historical results of LDE, comparable organizations or other reasonable support.

The strategic plan targets contemplated by LDE were not supported by actionable operational plans.

The lengthy review highlights that the strategic plans were not updated as circumstances changed, such as during the COVID-19 pandemic.

When planning the facilities, the report says that "facility maintenance records and logs were not retained for the new centre or existing LDE buildings and pavilions."

Deloitte found that the project budgets and forecasts were inconsistent and lacking in detail.

The city says its costing $32 million more to complete the project on top of the forecasted $77 million.

The report finds that initial estimates for parking lot refurbishments and pavilion demolition costs were "not supported by third-party quotes or appropriate diligence."

Lethbridge city manager Lloyd Brierley says the use of funds are alarming.

"100 per cent of the CEO expenses and 50 per cent of the board expenses tested were not in compliance with LDE policy," said Brierley.

"Expenses filled by both the CEO and board members indicated that money was spent on items such as gifts, luxury hotels, event tickets, alcohol at private functions, car washes and televisions."

Those costs add up to roughly $230,000, according to the review.

While the report found overall construction costs per square foot to be reasonable, it identified instances of avoidable cost overruns such as, more than $331,000 on reclaimed wood furniture and fixtures from trees cleared at the LDE site and more than $296,000 to close-off a space intended for a quick-serve restaurant due to design issues.

In 2023, it was discovered that despite the project being completed, LDE was experiencing significant financial challenges and was on the verge of having to shut down operations.

Last December, the LDE board was dissolved, and the city and Lethbridge County took over operation.

This review was a part of the Memorandum of Understanding (MOU) signed between the City of Lethbridge and LDE earlier this year, which also included the city agreeing to fund the 2024 operations and assume governance of LDE.

"The city council of the day asked many questions of the LDE; however, this Deloitte report tells us that presentations made by past LDE management were missing critical context and was subject to limitations," said Brierley.

The review recommends that the LDE continues to prioritize agricultural events and activities, with the agricultural society continues to manage all agricultural events hosted within LDE facilities.

It goes on to suggest that the LDE transfers ownership of its facilities to the city and the city assumes all the maintenance.

Once financially stable, the report says the city can return LDE governance to shareholders going forward.

"We regret the situation we are faced with, but can guarantee that we will work over the next several months to install guard rails, policies and systems to prevent it from happening again," said Brierley.

Earlier this month, the LDE reported a total deficit of $2.2 million down $4.2 million from the originally estimated annual budget of $6.4 million.

The report has been turned over the to the economic crimes unit of the Lethbridge Police Service to investigate this matter.

LPS says to protect the integrity of the ongoing investigation, no further information will be released.