Calls for accountability in wake of AG's report on Laurentian University's financial mismanagement

A report released Thursday from Ontario's auditor general says a series of poor financial decisions, and a lack of transparency, led to Laurentian University's insolvency.  (Erik White/CBC  - image credit)
A report released Thursday from Ontario's auditor general says a series of poor financial decisions, and a lack of transparency, led to Laurentian University's insolvency. (Erik White/CBC - image credit)

Unions that represent staff and faculty members at Laurentian University want to see accountability in the wake of the Ontario's auditor general new report detailing the Sudbury, Ont., institution's insolvency.

"The recommendations are important, but there's got to be a second part of that, and that's holding people accountable," said Tom Fenske, president of the Laurentian University Staff Union.

In her report, Ontario Auditor General Bonnie Lysyk concluded Laurentian's financial collapse was due in large part to a poorly planned and costly capital expansion in 2010.

She said a lack of oversight from the university's senior leadership and its board of governors led to a series of poor financial decisions that culminated with the decision to apply for creditor protection under the Companies' Creditors Arrangement Act (CCAA).

"There is a strong argument that CCAA, an important tool used in the private sector, is an inappropriate and perhaps damaging remedy for public entities," Lysyk said during a news conference after the report was published on Thursday.

"Use of the federal law allowed Laurentian to bypass provisions in its collective labour agreements, clear a backlog of longstanding union grievances and operate under even less transparency."

Fenske said the staff union plans to sue some of the university's former officers and directors who were in charge when Laurentian became insolvent. It continued to operate while dealing with its financial problems, cutting dozens of staff and programs in the process.

"We're also looking into complaints of professional negligence for any professionals who were here and failed the university," he said.

Erik White/CBC
Erik White/CBC

Fabrice Colin, president of the Laurentian University Faculty Association, said that's a step they could also look into, once they've had time to go through the auditor general's report.

But Colin added the university has a new board of governors, and senior leaders such as the former president and vice-chancellor, Robert Haché, have left the institution.

At her news conference, Lysyk thanked Jeff Bangs, Laurentian's new board chair, for his "excellent co-operation" while her staff collected information for the report.

Early in their investigation, Lysyk said Laurentian was not transparent and obstructed her office's efforts to collect information about its finances.

"We encountered the most vociferous pushback from an organization that I've seen in my professional career," Lysyk said.

Following through on recommendations

In a news release, Bangs said the board of governors plans to accept and implement each of Lysyk's recommendations, which would make the board more transparent.

"We are committed to beginning the university's next chapter on a solid financial footing and ushering in a new era of accountability," Bangs said. "The students, staff and faculty of Laurentian deserve nothing less."

In two years, Lysyk's office will follow up with Laurentian to see if the university has implemented her recommendations. She will then publish a followup report.

She said her followup team will connect with Laurentian again, in five to seven years, to see what progress they've made at implementing the recommendations.

Sudbury MPP Jamie West and Nickel Belt MPP France Gélinas have introduced a bill to strengthen the auditor general's role, to prevent future audits from being sidelined by court challenges.

West said they also want to ensure the CCAA, which was created for private companies, can't be used for public institutions again.

"I also think it's important to reach out to our colleagues from the federal side of the government to ensure that CCAA law is written so that it cannot be affected for publicly funded or publicly assisted universities," he said.

"One of the things that stand out shockingly to a lot of people was how much money was spent on legal fees."

Lysyk's report said the CCAA path led to more than $30 million in fees for private-sector financial advisers and lawyers as of September 2022.