B.C. Hydro lacks fraud risk management at $16B Site C megaproject: auditor general

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Fall 2021 photo of Site C dam construction on the Peace River. The $16-billion hydroelectric project is slated for completion in 2025. (B.C. Hydro - image credit)
Fall 2021 photo of Site C dam construction on the Peace River. The $16-billion hydroelectric project is slated for completion in 2025. (B.C. Hydro - image credit)

B.C.'s auditor general says B.C. Hydro is lacking a program to manage fraud risk at the Site C hydroelectric megaproject on the Peace River.

Site C is the largest public infrastructure project in the history of the province, with a current estimated cost of $16 billion, nearly double the original price tag. Experts say the risk of fraud increases with the size and complexity of a project.

"Fraud can be costly, financially and reputationally, so effective fraud risk management is essential," said Michael Pickup, auditor general.

Pickup said although B.C. Hydro had some fraud mitigation controls in place, they were not enough to address evolving fraud threats.

Work on the dam near Fort St. John in northeastern British Columbia began in 2015, with construction scheduled to be completed in 2025. Approximately $8 billion has already been spent on the project.

The report said B.C. Hydro only started planning a fraud risk policy once the audit was underway in 2021. It said the organization did not have a written policy on fraud.

Hydro's board of directors committed to a fraud risk policy on Jan. 12, 2022. Previously, no senior executive at the public utility had the responsibility of fraud risk management. It is now assigned to B.C. Hydro's chief financial officer David Wong.

"We do not tolerate fraud as an organization and earlier this year, we implemented a new fraud risk policy at B.C. Hydro that formalizes our fraud risk management program," said Wong in a statement. "We are confident that our existing measures – along with the recommendations from the Auditor General – provide for a robust fraud risk management program at B.C. Hydro."

The audit makes five recommendations, which B.C. Hydro has accepted:

  • Implement its new fraud risk policy.

  • Provide fraud risk management training.

  • Conduct regular fraud risk assessments.

  • Develop a fraud investigation procedure.

  • Regularly evaluate fraud risk management program effectiveness

The audit did not investigate fraud at Site C.

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