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Executive director's corner / Laurentian crisis: A wakeup call to change legislation

Executive director's corner / Laurentian crisis: A wakeup call to change legislation

By David Robinson

The crisis rocking Laurentian University for nearly two years has been a tire fire. It just seems to keep on burning.

Even as the university exited insolvency protection in November, more revelations of mismanagement and misrepresentation have emerged.

First, the Auditor General of Ontario, Bonnie Lysyk, detailed how — for over a decade — ill-conceived capital expansions, administrative bloat, and weak governance oversight led to the financial crisis.

Contrary to the administration’s narrative, Lysyk’s wide-sweeping review found that academic salaries didn’t contribute to the financial woes. In fact, salaries were lower than those of comparable universities. Moreover, the university’s academic programs, rather than draining resources, “positively contributed to the University, helping to pay the growing costs of debt, senior administration and special advisors.”

Particularly galling is that Lysyk uncovered a 75 per cent increase in costs associated with Laurentian’s senior administration, including $1.4 million for “discretionary expenses” and $2.4 million for “special advisors.”

Then, at the end of November, the court unsealed correspondence between Laurentian’s president, Robert Haché, and the Ministry of Colleges and Universities. It revealed that the province offered $12 million in financial assistance if the university agreed to the appointment of a special advisor, opened its books, and did not seek insolvency protection from the courts.

The university turned down the offer.

Why would Haché refuse a financial lifeline? It’s clear from this correspondence that Haché had already made the decision to pursue insolvency, even if it was unnecessary and risked serious reputational harm.

What seemed to convince him was that the Laurentian University Faculty Association was planning to seek a legal order to access the university’s financial records. In Haché’s own words, if the association was successful, it would thrust the university’s financial position “including the historical practice of not setting aside restricted funds, into the public domain.” In other words, his concern was that it would come to light that the university had been looting funds earmarked for research and employee benefits to pay for its capital projects and rising administrative costs.

Insolvency protection shielded senior administrators and the board from liability for this questionable accounting. Once the court granted protection under the Companies’ Creditors Arrangement Act (CCAA), any legal proceedings against the university were put on hold.

The sorry affair demands a public inquiry so that those responsible are held to account. But it also exposed a loophole in insolvency legislation that needs to be closed.

During the last election campaign, the Liberal Party promised it would exclude publicly funded universities and colleges from the CCAA. They’ve yet to act on that promise.

These latest revelations should be a wake-up call to all political parties to change legislation so that a crisis like Laurentian never happens again. It’s time to put out the fire.

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