FPSLREB Decisions

File: 166-2-27610 Public Service Staff Before the Public Service Relations Act Staff Relations Board BETWEEN JOHN (JACK) W. SAMPLE Grievor and TREASURY BOARD (Revenue Canada)

Employer

Before: Rosemary Vondette Simpson, Board Member For the Grievor: David Landry, Public Service Alliance of Canada For the Employer: Ronald Snyder, Counsel Heard at Edmonton, Alberta, March 25 to 27, 1997.

Decision Page 1 DECISION Mr. John (Jack) W. Sample, an auditor with Revenue Canada in Edmonton, was discharged on June 7, 1996. The letter of discharge (Exhibit E-8) reads as follows: At my request, you met with me today to provide an explanation of your actions related to the purchase of a 1996 Signature fifth wheel trailer. You had been advised that you could have a representative attend the meeting, but you declined to do so.

On June 5, 1996, we provided to you a statement of facts. The statement, in part, indicated that on March 9, 1996, you concluded a deal with Trail Blazer RV Centre Ltd. for the purchase of a 1996 Signature fifth wheel trailer, Model #33-RLRD-SL, for a total consideration of $35,800.00 with no GST to be paid. The vehicle was to be registered to Dustin Grandinetti, a status Indian within the meaning of the Indian Act, thus avoiding the payment of GST. The order was subsequently amended on March 22, 1996 to include a special redecorating/protection package which increased the total price to $36,092.65. Payments in the amount of $32,800.00 and $1,792.65 were made on March 22, 1996, which, together with a deposit made on December 22, 1995 for $3000.00, constituted full settlement. The trailer was delivered to your residence on March 30, 1996.

At our meeting today, you acknowledged that the statement to you was accurate. You admitted that your actions were “stupid” and had caused embarrassment to the department. Other than suggesting that you had been under significant pressure from family members to arrange for the purchase of the vehicle without paying GST, you offered no defense for your actions. Although you indicated that you attempted to “correct” the situation by subsequently paying the GST, you did this by requesting that the contract be rewritten and backdated in an attempt to avoid detection. At no time did you voluntarily disclose to the department your inappropriate actions, even when you became aware that your conduct had come to our attention. You stated that you hoped you would not get caught.

As an employee of Revenue Canada, your conduct must be exemplary when fulfilling the obligations required by laws administered by the department. It is also of paramount importance that the public have confidence in the integrity of the department and its employees. Your actions have put this integrity at risk. They were also incompatible with the level of trust placed in officers of Revenue Canada.

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Decision Page 2 I have considered that when confronted with the evidence of your inappropriate conduct, you acknowledged your actions and apologized for causing the department embarrassment. Notwithstanding this, the severity of the misconduct must be addressed.

By virtue of the authority delegated to me pursuant to Section 11(2)(f) of the Financial Administration Act, you are hereby terminated from employment with Revenue Canada for misconduct. This termination takes effect at the close of business on June 7, 1996 at 5:00 PM.

You have the right to grieve this decision within 25 days of receipt of this letter. All departmental property in your possession will be collected from you today. With respect to finalizing pay matters related to your termination, please contact Moureen Clunie at 495-3541.

Several witnesses gave evidence for the employer and Mr. Sample testified on his own behalf.

Summary of Facts As a result of a telephone call from a taxpayer, Ms. Connie Grandinetti, Mr. Gerry Seaker, an investigator with the Special Investigations Branch of Revenue Canada, was initially involved. He arranged an initial meeting with Ms. Grandinetti, her son Dustin and his girlfriend, Ms. Tracy Leighton. He also arranged to have present Ms. Kaye Finnebraaten, a senior person in investigations who was experienced in Good and Services (GST) tax matters.

At the meeting which Mr. Seaker arranged, Ms. Grandinetti, her son Dustin and Ms. Leighton were in attendance as well as Ms. Finnebraaten and Mr. Seaker himself. Ms. Grandinetti alleged that Mr. Sample, an auditor with Revenue Canada and her former brother-in-law, had used her son Dustin’s Indian status card to purchase a trailer. This would have the effect of evading the GST on the purchase. Her son was 16 years of age at the time, having received his Indian status card in January of that year (1996). They dealt with a salesman called “Rick”. The meeting lasted one-half to three quarters of an hour during which time Ms. Grandinetti tendered some documents. Mr. Seaker could not recall exactly what the documents were. A report was prepared for Mr. David Poon, the then acting chief of special investigations.

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Decision Page 3 As a result, Mr. Terry Willisko, an investigator with the Special Investigations Unit, was assigned to investigate the case. He was provided with some documents and handwritten notes. Allegations had been made about the grievor avoiding tax on the fifth wheel travel trailer previously referred to, as well as on a Jeep Cherokee, another vehicle and some fencing. His investigation concluded that all the allegations were unfounded except in relation to the travel trailer. As part of his investigation, he met with Mr. Keith Graham, the General Manager of the “Trailblazer R.V. Centre” dealership, around the end of May 1996. After his interview, he then wrote out a statement for Mr. Graham to sign and swear. After a few minor changes were made, Mr. Graham signed and Mr. Willisko commissioned the statement (Exhibit E-3).

Mr. Willisko testified that in the course of his investigations, he became aware that the travel trailer in question had been stolen from the grievor’s campground and that Dustin Grandinetti was alleged to be involved.

If the facts alleged against the grievor are true, this would constitute tax evasion contrary to section 327 of the Excise Tax Act.

The witness acknowledged that Exhibit E-3 was prepared by himself after speaking to Mr. Graham, the General Manager of “Trailblazer R.V. Centre”, the dealership which sold the trailer to Mr. Sample. He spoke to him for one to one and a half hours, prepared the document and took the document back to Mr. Graham for his signature.

Mr. Len Gorniuk, Mr. Sample’s supervisor, presented Mr. Sample’s job description (Exhibit E-4) and described his duties in ensuring compliance with the Excise Tax Act. With regard to the GST, Mr. Gorniuk indicated that an auditor would be expected to arrange and negotiate for the payment of the GST if this tax had not been submitted properly.

He also testified that he would not be able to trust Mr. Sample in the future with regard to matters such as his expense accounts, including mileage charges. He would have concerns about overseeing his various activities, including the time spent on audits. However, in cross-examination, the witness agreed that he had not experienced any problems with Mr. Sample in the past with regard to any of these matters.

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Decision Page 4 Ms. Elaine Routledge, Director, Edmonton Tax Services, Revenue Canada, testified. After receiving Mr. Willisko’s report, she called the grievor to a meeting. This meeting, which took place on June 4, was also attended by Ms. Mona Berry, Assistant Director of Human Resources, and a Mr. Gene Yorke of the Department. At this meeting, she questioned the grievor on the affidavit of Mr. Graham (Exhibit E-3). The grievor had agreed that the statements in the affidavit were true. He apologized, admitted he had done wrong, and indicated that he had let himself be swayed by others in allowing his nephew to claim ownership of the trailer to avoid paying the GST. Although Mr. Sample had 12 years of fully satisfactory service and had paid the tax voluntarily before discovery, she considered and was influenced by the fact that he had not voluntarily disclosed the whole matter to his employer before discovery. She also considered that if he had succumbed under pressure as he claimed, the source of the pressure still remained and would still be a part of his environment. This would lessen the degree of trust she could have in him in future. She referred to statements that Mr. Sample made to the effect that he had at first tried to sweep the whole matter under the rug and although he had later tried to correct the situation, he still got caught.

Ms. Mona Berry testified that she had also heard the grievor make these statements as well as his admission that Exhibit E-3 was correct. Ms. Berry did agree in cross-examination that Exhibit E-3 was not reviewed with the grievor in detail with specific questions being put to him.

Mr. Keith Graham, General Manager of the “Trailblazer R.V. Centre” dealership, was called to testify. He was made aware that Mr. Sample wished to write a contract for the purpose of a trailer under the name of his nephew, Dustin Grandinetti, who had a Treaty Card. The GST in the amount of $2,506.00 would not be payable if the trailer were delivered to a reserve. The contract was written to show delivery to the Hobbema Reserve. In fact, it was delivered to the grievor’s residence in Edmonton because the lot was crowded and he “needed to get it off the lot”. On May 6, he became aware that the grievor wanted to rewrite the contract, pay the GST and have the payment dated the same day as the contract. He stated that he told the grievor that this was “turning into a kinky deal and we don’t do kinky deals”. Although he did not write the affidavit himself, he stood by its contents.

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Decision Page 5 Mr. Paul Stephanson, Business Manager of “Trailblazer R.V. Centre”, reviewed the sales documents and explained how the original contract for the purchase of the trailer came about and the changes that were later made. He recalled that Mr. Graham, Mr. Sample and he himself had met and that Mr. Graham had chastised Mr. Sample about the kind of deal this was turning out to be.

Mr. John (Jack) Sample, the grievor, testified on his own behalf. Mr. Sample has been an employee of Revenue Canada since 1983. His classification is PM-02, Source Deductions Auditor. His supervisor is Mr. Len Gorniuk. His main duties as an auditor were to deal with non-remittance and late remittance of source deductions. He has never been involved with the collection of GST.

The grievor stated that he and his wife negotiated for the purchase of a trailer from “Trailblazer R.V. Centre”. After the trailer was ordered, and around the latter part of February and early March, his wife’s nephew, Dustin Grandinetti, approached his wife and offered to do them a favour by putting the trailer in his name. Since he had a Treaty Card, this would avoid paying the GST.

Mr. Sample testified that initially he said “No way”. His conscience would not allow him to avoid paying the GST in this way. This caused a great deal of dissension in his family and his wife brought a lot of pressure to bear on him to go ahead and purchase the trailer in this way. On her own, his wife contacted “Rick”, one of the salesmen at “Trailblazer R.V. Centre”, and informed him about what they were proposing to do. On March 9, Mr. and Mrs. Sample and their nephew, Dustin Grandinetti, completed the paperwork on the purchase of the trailer. Dustin Grandinetti signed the bill of sale. Mr. Sample paid for the trailer on March 22 and the trailer was delivered to his residence in Edmonton on March 30 by “Trailblazer R.V. Centre”.

Mr. Sample testified that after wrestling with his conscience for a period of time, he went back to the dealership on May 6 and paid all the GST that was payable. He himself did not ask to have the deal backdated. He simply wanted to pay the GST and assumed the dealership wanted to keep all the paperwork in line. Mr. Sample denied that Mr. Graham had ever chastised him. In fact, he had met only with Mr. Stephanson and only returned a short greeting from Mr. Graham. Mr. Sample

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Decision Page 6 stated that he wanted to clear up the matter of the GST because he could not live with himself any longer with the matter remaining outstanding. There were complications relating to the fact that the original paperwork had been in Dustin Grandinetti’s name; the vehicle had been registered in his name.

In May, the trailer was stolen. On May 16, Mr. Sample and his wife received a threatening telephone call from Connie Grandinetti. Ms. Grandinetti was threatening to go to the Department of National Revenue, Mr. Sample’s employer, about the non-payment of the GST.

On June 5, Mr. Sample became aware that the Department was investigating his purchase of the trailer. He was visited at his home on June 5 by departmental representatives who presented him with Mr. Graham’s statement and a letter requesting a meeting with departmental officials. He agreed to attend the meeting which took place on June 7. He took no union representative with him because, although he knew he was in serious trouble, he did not realize that discharge could result. He did not take a copy of the statement with him to the meeting nor was one given to him at the meeting. He was simply asked as to the truth of what the statement contained. Mr. Sample explained that when he referred to the statement as being true, he agreed, and still agrees, that the basics of the statement are true, however, he does disagree with some of the facts presented by Mr. Graham. Far from reprimanding him, the dealership was very complicit and very helpful in devising ways to avoid paying the GST. Putting in the contract that the place of delivery was to be the Hobbema Reserve was entirely the suggestion of one of the salespeople; it had nothing to do with Dustin Grandinetti’s place of residence. He did not live at that Reserve. According to Mr. Sample, it did not matter which reserve was put down on the contract because everyone knew that the trailer would be delivered to his residence, which in fact was exactly what happened. Backdating of the documents was not at Mr. Sample’s request but at the request of the dealership. Mr. Sample assumed that the dealership certainly wanted to keep all its documentation in line. Management of the dealership would not want an audit of this and other trailer sales and so would have very good reasons for tailoring their statements to what a Revenue Canada investigator would seem to want. As far as Mr. Sample was concerned, backdating made no difference. He was grateful to be given an opportunity to redo the contract and pay the GST. The date to him was immaterial. Public Service Staff Relations Board

Decision Page 7 Mr. Sample just wanted to come clean. He stated: “I was prepared to take my lumps, to take any punishment that might be meted out. I didn’t realize I was going to be fired that day”. The meeting ended with the Director asking him if he had understood the statement (Exhibit E-3). He replied that he did. At that time, he did not point out any areas of disagreement with the contents of the statement. He was very upset; he was just going through the “two worst days of [my] life”. He stated that there was no defense for what he had done and he just wanted to admit to it without excuses and explanations. Mr. Sample stated that he had not considered coming forward and informing the Department of what had transpired because, after paying the GST he felt that there really was nothing further to say or to do.

The grievor stated that he has had no previous discipline and in fact has never filed a grievance before. He has not been able to find steady work and in fact, through June 7 and the date of the hearing, he has only been able to find three or four very short-term jobs. He is denied unemployment insurance.

The grievor and his wife have both been devastated by his job loss. He has applied for many other jobs without any promising results. To date, he has sent or faxed out approximately 45 copies of his résumé. Both he and his wife have learned a very hard lesson from this experience and there would be no possibility of any recurrence of any similar conduct in the future.

Argument for the Employer Counsel for the employer pointed out the seriousness of Mr. Sample’s misconduct. The grievor was in fact in breach of section 327.(1)(c) of the Excise Tax Act and also section 327.(1)(e) of that Act by willfully evading paying the GST on the purchase of the trailer. This constituted gross off-duty misconduct.

Counsel for the employer referred me to the following cases: Public Service Employment Act Appeal of R.R. Leclair (File: 91-PEN-0268R); Air Canada and International Association of Machinists, Lodge 148 (1973), 5 L.A.C. (2d) 7; Flewwelling (Board file 166-2-14236) and Skibicki (Board file 166-2-20723).

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Decision Page 8 Since Mr. Sample is in breach of the very acts that he is supposed to be enforcing, he has irretrievably broken the bond of trust between himself and the employer. Counsel pointed out that the grievor had initially agreed with the contents of Mr. Graham’s affidavit and urged me not to accept Mr. Sample’s explanation of how this came about. He called Mr. Sample’s credibility into question in his denial of the accuracy of Mr. Graham’s account of the events as set out in the affidavit. He also called into question the sincerity of Mr. Sample’s remorse.

Argument of the Grievor The grievor’s representative argued that Mr. Sample had 13 years of discipline-free service. Although he had initially not paid the GST on the trailer purchase, the matter weighed on his mind over a period of time and he then went back and paid the GST on May 6. He argued that the dealership was aware of what was going on and was actively complicit in it.

On the very first occasion that the grievor had an opportunity to admit to the Department his wrongdoing, he did so. He apologized and he showed remorse. There was no point in Mr. Sample coming forward and approaching the Department after he had paid the GST because at that point he thought that he had resolved the issue.

The following cases were presented to me for my consideration by the grievor’s representative: Khanna (Board file 166-2-17117); Lodba (Board file 166-2-21819); da Cunha (Board file 166-2-24725); and Gourlie (Board file 166-2-18705).

Reasons for Decision In attempting to evade the payment of the GST on his trailer purchase, Mr. Sample engaged in a very serious act of misconduct. As an auditor with Revenue Canada, he was employed in a position that carried a high degree of responsibility and trust. I accept that at the time in question Mr. Sample was under extreme family pressure to allow the trailer purchase to go through in his nephew’s name. This is no excuse and Mr. Sample is well aware that the ultimate responsibility for such decisions is his.

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Decision Page 9 Since that time, he and his family have suffered great emotional and financial hardships. He and his wife have also had an opportunity to do a great deal of soul-searching in this matter. I have taken into consideration the fact that Mr. Sample voluntarily went back to the dealership and paid the GST prior to detection by the Department. I have also considered his long service and disciplinary-free record.

In his very first meeting with the Department on June 7, he made a full admission. The fact that he did not bother to dispute any of the details of Mr. Graham’s statement is indicative of his desire to just admit to the whole matter and get it over with. He was in an upset, emotional state. He was not represented and he was not questioned on the details of the statement.

Because of his freedom from discipline in the past and his remorse, it is very unlikely that Mr. Sample will find himself in similar circumstances in the future.

Mr. Sample’s supervisor and the Director, Ms. Routledge, raised concerns about the future trust they could have in Mr. Sample. I have considered this point carefully and I am satisfied that considering all of the circumstances and balancing the employer’s interests and that of Mr. Sample, that Mr. Sample realizes the seriousness of his misdemeanour and is resolved to ensure that there be no further misconduct. Therefore, I do not believe that the bond of trust is irretrievably broken.

For these reasons, I find that discharge is too severe a penalty. I would substitute a penalty of eight months suspension and order Mr. Sample’s reinstatement.

Rosemary Vondette Simpson, Board Member

OTTAWA, June 4, 1997.

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