The release of a B.C. auditor general’s report on the province’s controversial carbon trading system was delayed Tuesday over allegations the report was improperly leaked.

The Speaker of the B.C. legislature, Bill Barisoff, announced he would withhold the report until he has concluded discussions with the auditor general, noting a “breach of parliament may have occurred.”

Even before its release, the report was broadsided by a barrage of criticism and a threat of legal action from carbon industry players who said they were disturbed by the discussions they had with the auditor general’s office as it was preparing the report.

B.C.’s carbon trading system has long been controversial because public money from hospitals and universities — more than $50 million so far — is being transferred to the private sector to reduce greenhouse gas emissions, through carbon offsets.

Doyle’s report was to examine whether the carbon offsets the province purchased to declare its public sector neutral were “credible.”

B.C.-based Offsetters, a carbon credit developer and broker, sent a letter to B.C. Attorney General Shirley Bond outlining concerns that the audit would be unfair and ill-informed.

Three groups representing industries that trade in the global carbon market and Verified Carbon Standard — an organization that sets standards for carbon trading — made similar claims in letters to the auditor general.

However, critics of B.C.’s carbon trading system say the parties complaining about the report have a financial stake in the province’s carbon trading system.

Independent MLA Bob Simpson, who has been a vocal critic of the system, said the industry group is simply trying to discredit the auditor general’s report, which is why it’s important to release it quickly.

“It (the delay) could lead to the report being squashed and all the public knows is the vested interests who are making money from this thing weren’t happy with what the auditor general had to say, but will never know what (the auditor) had to say,” said Simpson.

In response to the Speaker’s decision to withhold the report, auditor general John Doyle issued a prepared statement.

“It is with disappointment that I must speak on this matter, rather than the content of the report. However, in light of discussions surrounding ‘premature disclosure,’ I feel I must take the unusual step of clarifying the process by which my independent audits are reported,” said Doyle.

He noted it has been a well-established practice for many years to share draft reports with the relevant ministries before they are transmitted to the Speaker of the legislature.

In addition, he said his office has a long-standing practice of providing briefings to ministers and deputy ministers, as well as the chair and deputy chair of the select standing committee on public accounts and other potentially interested MLAs, ahead of the final report’s public release.

Under the law, the auditor general must send a copy of any of his reports to the minister of finance, and to the minister responsible for the area being audited. This must happen at least seven days before the report is released to the public to give the government opportunity to respond.

Simpson acknowledged he received an embargoed copy of the report ahead of its expected release. He said he was told by the auditor general’s office this is common practice, as advanced briefings and copies are sometimes provided to interested parties, including individual MLAs.

Simpson said even if there is an issue over procedure, he sees no reason the report cannot be released now. “I think (the report) should be released today, at the most within 24 hours.”

The Vancouver Sun has also learned that on March 6, a copy of the report marked “Advance Embargoed copy for Environment Critic Rob Fleming” was sent by the auditor general’s office to the deputy minister of finance.

Fleming was not available for comment Tuesday.

An NDP caucus spokesman said Fleming did receive a report from the auditor general’s office earlier this month. The spokesman said the auditor general’s office then recalled the report from Fleming within days of it being sent, adding Fleming returned the copy as requested.

Among letters released to media by carbon industry players was one from Offsetters CEO James Tansey dated Feb. 18 that warns Bond of potential legal action because of an “unqualified and erroneous” report. Tansey called on Bond to “amend” the auditor general’s report before its release.

The letter notes that Offsetters has more than $500 million in carbon credits to broker in the next 30 years, most of them from the Great Bear Rainforest project.

“We would have no choice but to seek compensation from the government of British Columbia for revenues lost due to the misguided actions of the (office of the auditor general),” said the letter.

In her response Feb. 26, Bond said she had alerted the auditor general to Tansey’s concerns but noted the attorney general had no authority to amend Doyle’s report.

In an interview Tuesday, Tansey said the two projects examined by the auditor general were an Encana natural gas drilling project in northeast B.C. and the Darkwoods forestry project in the Kootenays.

He said neither himself nor the other carbon players in the group that released letters to media had seen Doyle’s report.

However, through discussions during the audit, they were concerned the auditor general’s office was not qualified to assess the validity of the carbon projects, he said. “It’s (the auditor general’s office) no more qualified than a member of the public who knows a bit about forestry,” said Tansey, referring to the Darkwoods project.

He noted the report could have ramifications in the annual $176-billion global carbon market if it calls into question the industry’s validation and verification procedures.

The company Tansey heads helped develop the Darkwoods project and also bought carbon credits from the project later sold to a German company.

Forest Carbon Group managing director Alexander Zang told Doyle in a letter last fall that as a supporter of Darkwoods, “we are quite dismayed to learn of the misinterpretation and apparent lack of understanding” of your audit team.