External audit confirms 'careless' spending by Hampstead's former director general

City of Hampstead town hall.

The Montreal municipality of Hampstead had "major financial management and control deficiencies" that led to "abusive credit card" spending by the town's former director general over a five-year period, an external audit has confirmed.

The results of the investigation by the firm Sirco were published on the town's website on Tuesday, revealing "careless" expenditures involving taxpayer money that included confusing personal purchases with business-related ones, invoices for overseas conferences not being submitted to the city treasurer, and more than $32,000 in purchases for unused gift cards.

The 13-page report centres around the actions of Richard Sun, who retired in January when details of suspicious spending were first revealed in a Commission Municipale du Québec (CMQ) report.

Hampstead Mayor Jeremy Levi said at the time that it was a planned retirement and the timing was coincidental.

Levi, who publicly defended Sun amid the allegations, requested an independent investigation into the matter following the CMQ report. 

The Sirco report concluded that Sun had a rather "broad" interpretation of acting in the "best interests of town" when he made the questionable expenses.

A breakdown of the report showed $512,111 on a Costco credit card between 2018 and 2023, including $177,500 on "employee rewards and recognition, some of which not previously known to council."

"It is important to point out that we cannot affirm that Mr. Sun defrauded the town, nor did he have the criminal intent to do so. On the other hand, we can clearly state that Mr. Sun was negligent in his spending and in his failure to comply with control measures," the report stated.

Sun fully cooperated with the investigation, which heard from 12 witnesses.

The audit found that city employees were reluctant to speak out about his spending due to "fear of reprisals."

"Several invoices for conferences and training courses were not submitted to the treasurer by Mr. Sun. Certain expenses were also not explained. A simple signature from Mr. Sun was sufficient for him to authorize payment of the credit card balance," according to the report. "In addition, he approved his own expenses. For example, two cash advances, totaling $1,031.30, were made by Mr. Sun while he was in Europe, without him actually explaining the expenditure."

Levi did not immediately respond to a request for comment Tuesday evening.

Sirco highlighted that Hampstead has made changes to its internal spending protocols since the CMQ report.

The town also has a new director general, José Ramon Nunez, "who comes from a military background" and whose arrival brings "a much tighter framework of rules and procedures."

The firm made three recommendations for the town: set up an external reporting line for employees, suppliers and citizens to file an anonymous report; seek reimbursement from Sun for some of his personal expenses; and present policies and controls to employees on an annual basis to ensure their understanding.