VICTORIA – The B.C. NDP leadership contest is officially underway, with the entry of Vancouver Island veteran John Horgan in a reluctant reprise of his 2011 run against Port Coquitlam MLA Mike Farnworth.

Unfortunately for them, weekend campaign events were overshadowed by revelations of flagrant abuse of taxpayers’ money by the executive and board of the Portland Hotel Society. A pair of audits finally released last week on this network of Downtown Eastside social agencies revealed systematic looting of the $28 million a year in taxpayers’ money that has kept this supposed charity running.

Alas for the NDP, local MLA Jenny Kwan not only failed to keep an eye on it, her recently separated husband was one of the executives who took part for years, and she benefited to the tune of $35,000 in luxury travel. That’s what we know about, since much of the evidence wasn’t produced for the auditors.

When this Lifestyles of the Rich and Famous scheme finally came to light, Kwan hastily paid back the $35,000 and announced she’s taking an unpaid leave of absence. Her tearful claim that she believed nothing was wrong is simply not credible. She not only must have known of her husband Dan Small’s jet-set ways, she participated in at least two trips, one to Vienna and Bristol, England to do “research” and attend a poverty conference from high-end hotels.

If it wants to retain any shred of credibility as it spouts misleading poverty statistics and simplistic solutions, the party must get rid of Kwan, who has two years left to max out her MLA pension.

MLA pensions were a factor in the 2010 ouster of Carol James, who infuriated the old guard by trying to defuse a public backlash against a generous pay and benefits package worked out in private between the NDP and the B.C. Liberals. Kwan would later take a leading role in the caucus revolt that forced James out as leader.

Long-time political watchers will see the PHS abuse as a bigger, uglier version of the Nanaimo Commonwealth Holdings Society scandal. There the siphoning off of bingo funds from charities cost Mike Harcourt his job as premier. In that case, NDP MLAs sat on the board, took their monthly cut and kept quiet.

There’s more. Horgan became enraged last year at the reporter who took a tip from the B.C. Liberals to reveal the NDP was skimming constituency office budgets to pay for its own “ethnic outreach” operation in Vancouver. Horgan had rubber-stamped the plan with a since-dismissed legislature accountant, and thought he had kept it secret after the Auditor-General blew the whistle. His willingness to assess its ethics remains in question to this day.

Then there is Craig Keating, who took over as party president from Moe Sihota last year. Did he inherit the $72,000 salary negotiated by Sihota with the B.C. Federation of Labour and two of its largest unions? If so, do Horgan and Farnworth think this is appropriate?

Will the party’s joined-at-the-hip relationship with government unions even be discussed in the carefully staged leadership contest that’s about to begin?

Then there’s the policy shipwreck left behind by Adrian Dix. His plan to use environmental assessment as a weapon to torpedo industrial projects remains popular with the party’s urban base.

Farnworth and Horgan have paid lip service to the notion that projects like the Trans Mountain pipeline expansion should be properly assessed. Meanwhile the federal NDP fights to keep stacking public hearings with pre-selected protesters.

The party may wish to consider what would give its next B.C. leader any hope of governing.

Tom Fletcher is legislature reporter and columnist for Black Press newspapers.