The Fraser Health Authority has awarded a multi-million dollar contract to a private nursing home company whose president was convicted of income tax evasion, Public Eye has exclusively learned. The contract, which funds 70 care beds at a new residence being built in South Surrey by the numbered company, has drawn harsh criticism from healthcare unions. But the authority is defending the contract on the grounds it has a "long-term contractual relationship" with Arnold Bennewith, who had "excellent references from three major financial institutions" and "no licensing issues."
Mr. Bennewith's conviction dates back to 1995 when he pled guilty to two counts of making false or deceptive statements in a return, receiving a fine of $14,798.59. According to a Revenue Canada news release, Mr. Bennewith, who is also president of Willingdon Park Hospital Ltd., and his now former vice-president, Walter Chiakowksy, "committed the offenses over a two-year period starting in 1990 during construction of a new wing" at the Burnaby facility.
"The two directors built (private residences) using the same contractors and sub-contractors renovating the hospital. False invoices for construction of the new houses were entered into the hospital's books as work associated to the hospital, which then claimed depreciation on these amounts. Mr. Chiakowsky and Mr. Bennewith failed to report these funds as taxable benefits in their personal tax returns."
News of the past conviction alarmed B.C. Government and Service Employees' Union president George Heyman. "It is shocking that the Fraser Health Authority wouldn't carry out a basic search that would have turned up Mr. Bennewith's legal problems," he said.
And Hospital Employees' Union communications director Mike Old added, "Given this individual's past history with the courts, you have to wonder how the Fraser Health Authority determined he was the best candidate to operate a new seniors' care facility."
But the authority, which refused to disclose the value of Mr. Bennewith's contract, noted in a prepared statement that it does "check financial, bank and other references." Fraser Health has two existing arrangements with Mr. Bennewith's companies - one funding 95 beds at Willingdon Park and the other funding 60 beds at Highland Lodge in Langley. Those contracts cost the authority $4.4 million and $2.2 million respectively in the most recent fiscal year.
Mr. Bennewith, his companies and his son-in-law/business development manager Jody Shields have donated at least $11,905 to the Liberals since 2001. Mr. Bennewith did not return repeated calls placed yesterday seeking comment on his past convinction. The following is a complete copy of the Revenue Canada news release, the authority's statement and details on the aforementioned donations.
Information for the media
On October 25, 1995...
Two directors of Willingdon Park Hospital Ltd. were convicted of income tax evasion in Vancouver Provincial Court after an income tax audit revealed they had deliberately charged costs of constructing their private residences to the limited company. Fifty-six year old Walter Chiakowsky of Abbotsford plead guilty to three counts and fifty-six year old Arnold Bennewith of White Rock plead guilty to two counts of making false or deceptive statements in a return, an offense as described in paragraph 239(1)(a) of the Income Tax Act.
The Honourable B.C. Arnold convicted both men. Mr. Chiakowsky received a fine of $25,325.08 and Mr. Bennewith a fine of $14,798.59.
Mr. Chiakowsky and Mr. Bennewith committed the offenses over a two year period started in 1990 during construction of a new wing at the hospital, located on Grange Street in Burnaby. The two directors built houses using the same contractors and sub-contractors renovating the hospital. False invoices for construction of the new houses were entered into the hospital's booksas work associated to the hospital, which then claimed depreciation on these amounts. Mr. Chiakowsky and Mr. Bennewith failed to report these funds as taxable benefits in their personal tax returns.
For more information contact:
Rod Jamieson at 666-3250
David G. Morgan at 666-4043
116 West Pender Street,
1166, rue West Pender
From: Johal-Virk, Simrita
Sent: 02 February 2006 15:12
As discussed, here is a statement from Fraser Health.
* We have had a long-term contractual relationship with this provider and no care issues have been brought to our attention. Under these contracts, all providers are required to submit annual audited financial statements, and quarterly financial reports. They also participate in quarterly submissions of indicators that relate to quality and care. If issues arise, we have a formalized process for complaints management and follow-up. There have been no licensing issues with this provider.
* The issue you are raising goes back to 1995 and therefore long predates Fraser Health. In this case, the RFP was posted in April 2005, with a response deadline of 24 May 2005. After objective evaluation of the proposals, and prudent diligence and checks of references, we awarded the contract in July 2005.
* Our tendering process is rigorous and transparent, and contains a number of checks and balances. Requests for Proposals and similar invitations to do business with Fraser Health are publicly posted on BCBid, and every bidder is held to the same standards of accountability and must provide financial references. In this case we had excellent references from three major financial institutions.
* As part of our RFP process, among many other requirements, we ask the bidder for a "letter of introduction" that names owners, officers, partners and principals. The RFP form then specifies: "Letter must include a statement consenting to any reference and credit checks and a criminal record search of the owner(s)."
* We conduct such checks with new providers. With known providers with a solid record of service, although we don't necessarily conduct a criminal record check, we do check financial, bank and other references, particularly when we are assessing their ability to make a major investment decision.
Media Relations Advisor, Fraser Health
Contributions to the provincial Liberals
2001 Hurst Management Ltd. ($1,000), Willingdon Park Hospital Ltd. ($1,000)
2003 Hurst Management Ltd. ($1,495), Willingdon Park Hospital Ltd. ($700)
2004 Willingdon Park Hospital ($1,600)
2005 Arnold Bennewith ($1,150), Jody Shields ($2,310), Willingdon Park Hospital Ltd. ($3,000)