Shocked by audit findings: N.L. Speaker

The Speaker of Newfoundland and Labrador's legislature said he suspected something was amiss when he took on his duties, but is nonetheless shocked by revelations unearthed bythe investigationinto questionable spending.

"Early on, I expressed misgiving about some of the financial management practices," said Harvey Hodder, who became Speaker after the Progressives Conservatives took office in 2003.

But he said he was initially satisfied when a private accounting firm found nothinguntoward in the legislature's spending and didn't flag what turned out to benearly $3 million lavished on trinkets,gold rings and other baubles over the past seven years.

Premier Danny Williams has now introduced tighter controls on the house of assembly including the right of the auditor general's office to review spending at the legislature but Hodder said no one expected what has been unveiled this month.

Last week, Auditor General John Noseworthyreported thatfour MHAs have been overpaid a total of $1 millionfor claims on their constituency allowances.

Then on Tuesday, Noseworthy found more than $2.6 million was paid to three companies for trinkets like lapel pins and fridge magnets over a seven-year period, while an additional $170,000 went to a company owned by the legislature's now-suspended director of financial operations.

Noseworthy's inquiry, which is still underway, has already sparked a police investigation. It has shocked political circles here and cost one cabinet ministerhisseat.

Williams asked Ed Byrne to step down June 21 as natural resources minister and government house leader after Noseworthy's audit found Byrne received nearly $327,000 from his constituency allowance over a two-year period, which was more than 10 times what he was allowed.

Noseworthy continues to investigate spending allegations involving two Liberals and one New Democrat. Liberal MHA Wally Andersen and NDP representative Randy Collins have confirmed they have been contacted by Noseworthy's office.

Hodder pointed out that audits of the house of assembly done by the accounting firm Deloitte found not even a whiff of suspicion in reports filed in 2002 and 2003.

"In their report, there are no statements indicating that there is anything wrong with the way this house operates financially," Hodder said.

A Deloitte official told CBC News that the company cannot comment on the audits because of "client privilege." The official would only say Deloitte is now discussing its work with its client.

In hindsight, Hodder said politicians made a wrong move in 2000, when the auditor general of the day Elizabeth Marshall was stopped in her tracks from investigating MHA spending.

"I think it was a very unfortunate decision, that we may have been able to avoid many of the issues that occupy the public mind," Hodder said.

In the years of the Deloitte audits, Noseworthy said hundreds of thousands of dollars was misspent. He said he is investigating howthose findings were missed in the original audits.

Hodder has his own theory about that. It centres, like Noseworthy's entire investigation,on Bill Murray, the legislature's former director of financial operations.

"That could only happen where one person is responsible for controlling the information," Hodder said.

"It seems to me now that the one person the financial officer in this case was controlling access to information. Certainly an auditing firm should have noticed that and yet there is nothing in their letter which would give guidance to the clerk of the house, or guidance to the Speaker, in terms of making reforms."

Murray, who took medical leave earlier this month, has been suspended from his position.