Laurentian restructuring costs expected to reach almost $20M, auditor general reports
In her first formal update, Ontario Auditor General Bonnie Lysyk said costs associated with restructuring Laurentian University are expected to total $19.84 million by the time it is complete.
The university spent $9.86 million on restructuring costs between January and August, Lysyk said in her annual report (https://www.auditor.on.ca/ ) to the Standing Committee on Public Accounts released Wednesday.
The committee, made up of MPPs from all parties, formally asked the auditor on April 28 to review Laurentian's operations. Officials from Laurentian were scheduled to appear before the committee at a closed-door session Wednesday afternoon.
The AG also outlined the conflict that has emerged with LU regarding which documents her office can access as she completes her value-for-money audit looking into why the university declared insolvency under the Companies' Creditors Arrangement Act (CCAA) in February.
She said the university's responses are "unprecedented" in her experience as auditor.
"Unfortunately, our office has been denied access by Laurentian to information we consider absolutely necessary for the conduct of our audit work," Lysyk wrote.
A dispute about whether the AG is entitled to privileged documents emerged over the summer, with Laurentian refusing to surrender documents or email communications covered by solicitor-client privilege.
"In many instances, it has also declined to provide non-privileged information on the basis that to review documents to determine if information is privileged would be too resource intensive," Lysyk wrote.
"Consequently, we have been restricted from obtaining unfettered access and timely access to information. Such a pervasive restriction of our audit work is unprecedented."
She said the university put in control procedures that "discourage staff from speaking freely or provide our office with unfettered access to information without fear of reprimand. These protocols have created a culture of fear surrounding interactions with our office."
The university also insisted on reviewing all information it gave to the auditor, rather than just handing over the information, Lysyk said.
"All of these self-imposed processes require Laurentian staff and external legal counsel to spend significant time and resources responding to our audit requests," she said.
"Unfettered access to information is fundamental to the work of our office."
Lysyk told the committee in October that Laurentian wasn't cooperating, and the committee made a formal demand for "the production of papers or things that the committee considers necessary for its work."
After three letters were sent to LU, Lysyk said some information began to arrive Nov. 17.
"However, Laurentian’s external legal counsel indicated that Laurentian would not provide privileged information, information subject to court-ordered confidentiality, and information that implicates third parties and the CCAA process," Lysyk said.
As a result, the committee sent a fourth letter asking LU president Robert Haché and the chair of the board of governors to appear before them Dec. 1.
Lysyk said she also has the support of the Ministry of Colleges and Universities, which has "strongly encouraged Laurentian to cooperate with the Office of the Auditor General of Ontario by providing the information requested for the special audit."
A court hearing will be held Monday to hear arguments from both sides on whether Laurentian has to surrender all documents the AG is requesting.
In response, officials at Laurentian issued the following statement:
"Laurentian has been cooperating with the Auditor General’s audit. The university has authorized and encouraged all staff to participate in interviews with the Auditor General. We have also granted her office direct access to our entire financial database, enrollment system, as well as all requested, non-privileged documents."
"Following the Auditor General’s application and agreement by Laurentian, a court hearing is scheduled for Monday, Dec. 6, on the issue of whether the Auditor General is entitled to receive privileged information between lawyers and their clients – a deeply valued right in our legal system. The Chief Justice of the Superior Court of Justice will determine the matter following Monday’s hearing."
Read Lysyk's full update here.