NSLC To Address Recommendations of External Report

N.S. LIQUOR CORP.--NSLC To Address Recommendations of External Report

The Nova Scotia Liquor Corporation (NSLC) has introduced new governance and management practices as a result of comprehensive reviews conducted at the request of the NSLC's Board of Directors and performed by the accounting firm Grant Thornton.

The NSLC released documents today, Dec. 11, outlining how it is addressing the recommendations contained in the reports, together with a backgrounder on the review process.

"The improved governance and business practices that will result from the implementation of these recommendations will ensure greater accountability and openness with regard to the NSLC's operations," stated Peter McCreath, chair of the NSLC. "These reports represent an important step in the evolution of the corporation as we improve the NSLC's financial return to Nova Scotians by changing from a government agency to a business organization."

In response to a complaint launched in early 2003 by a participant in a Request for Proposals (RFP) at the NSLC, the board of directors directed that an internal audit of the particular RFP be conducted. Following the results of that audit, the board took two actions: the first was a referral to Halifax Regional Municipality police of evidence that suggested possible criminal activity with respect to the handling of the RFP. The second was the commissioning of the accounting firm of Grant Thornton to conduct a comprehensive review of certain purchasing, tendering and financial procedures at the NSLC. During this review, the board also asked Grant Thornton to do a review of its governance models. The Governance Review and the Internal Controls Review were presented to the board of directors of the NSLC on Friday, Dec. 5.

The reviews conducted by Grant Thornton cover two principal areas of operation of the NSLC. The reports make 20 recommendations regarding internal controls and business practices of the NSLC as well as 37 recommendations regarding the governance of the corporation.

"The NSLC has already implemented many of the recommendations and has released a plan on when the remainder will be completed," stated Ken Barbet, acting president of the NSLC. "The senior management team of the NSLC will ensure that these recommendations are followed and that the NSLC operates in a professional manner."

Grant Thornton's Internal Controls Review focuses on ways to improve certain NSLC financial, contract, tendering, technology and security practices. A number of the recommendations in this report relate to operational security issues. These recommendations are not being released at this time because of their commercially sensitive nature. They will be released during the next few months, once the NSLC has fully implemented these recommendations.

The governance review makes recommendations clarifying the roles and responsibilities of the board of directors; outlining methods to improve board orientation, training, evaluation and decision making; improving board accountability; ensuring effective policy setting and executive performance; and outlining methods to set organization culture and risk management standards. Grant Thornton also recommended that the board and senior management conduct an Enterprise Risk Assessment Review to identify potential risks the corporation might face in the future while conducting its business. This has been completed and will assist in guiding the business as it moves forward.

In order to provide more clarity in the NSLC's operational plans, the corporation is releasing with these reports an outline of how the NSLC is addressing the recommendations and when it expects these to be implemented. These will form an important element of the NSLC's business planning process in the future.

"The ultimate benefit of these changes will be to Nova Scotians, who will be offered better products and services and increased contributions from the NSLC to the financial resources of the province," stated Mr. McCreath. "The implementation of these recommendations by our new leadership team will assist greatly in moving the NSLC from a distributor of alcohol beverages to a modern retail organization."

The investment made by the NSLC to improve its leadership team with the departure of three executives is about $435,000. The reports by Grant Thornton, which will improve NSLC governance and operations, represent an additional investment of about $255,000. Together these amounts represent less then half a day's revenue of the NSLC.

The Nova Scotia Liquor Corporation provides world-class selection and service of beverage alcohol through the operation of more than 100 retail stores, agencies and licensees throughout the province. By providing superior customer convenience and service, the NSLC returns substantial revenue to the provincial government while ensuring the responsible enjoyment of beverage alcohol in Nova Scotia.