Senior administrators at Laurentian University were determined to file for creditor protection from as early as spring 2020, a new <a href="https://www.auditor.on.ca/en/content/specialreports/specialreports/Laurentian-U_Preliminary_Perspective_en.pdf" target="_blank" rel="noopener">report</a> from Auditor General Bonnie Lysyk alleges.
Lysyk tabled the preliminary report on Wednesday because “Laurentian’s consistent lack of co-operation and delays” meant that her office’s full report would most likely come after the legislature is dissolved for the election.
Laurentian declared financial insolvency in February of 2021, but Lysyk alleges that the university did not have to and that senior administration “strategically planned and chose to take steps to file for creditor protection.” The report states that Laurentian contacted the Ministry of Colleges and Universities (MCU) in August of 2020 to raise its financial issues but didn’t request additional funding until December. The MCU had offered funding assistance but Laurentian declined. In an interview with QP Briefing, Lysyk couldn’t disclose the dollar amount that the ministry had offered the university but said the government had offered “sufficient funds to allow due diligence to be performed and to see what needed to be done both financially and operationally for Laurentian to go forward.”
A law firm working with Laurentian raised the prospect of creditor protection in 2019, but that option wasn’t actively pursued until the spring of 2020, Lysyk details in the report. As of March 3, the auditor general found that Laurentian had paid more than $24 million in legal and financial consultant fees.
“Guided by external lawyers, external financial consultants and government-relations specialists,” Lysyk says Laurentian’s senior administration attempted to lobby the government for financial assistance over working with the MCU. Lysyk declined to tell QP Briefing the specific individuals or ministries that were lobbied but indicated that they would have been focused on the MCU and local MPPs.
However, the ministry isn’t completely clear of blame. According to the report, financial issues could have been raised as early as 2010, but the MCU only started monitoring the finances of universities in 2014 and “did not attempt to proactively intervene.” Lysyk recommends that the government legislate limits on deficits and borrowing, especially in relation to capital expenditures, and that annual funding to universities should be dependent on “fully functioning governance structures.”
Lysyk writes that while COVID tuition freezes and the pandemic more broadly impacted the university, its financial deterioration began in 2010 with $87 million in capital investments toward expansionary plans in a “'build it and they will come’ approach.”
In 2016, Laurentian’s primary lender, the Royal Bank of Canada, refused to provide more long-term debt and university administrators appropriated funds meant for employee benefits and academic research. The auditor general also notes that between 2010 and 2020, senior administrators’ salaries and expenses grew by 75 per cent, $4 million at their highest in 2018, with a “lack of transparency and fairness” in the hiring process.
Part of why the report has taken so much time is due to the “unprecedented legal pushback from Laurentian,” that Lysyk has noted in previous reports, adding that the university’s lawyers had also ignored the rarely used “<a href="https://www.qpbriefing.com/2021/12/09/mpps-vote-to-use-rare-speakers-warrant-to-compel-laurentian-university-to-hand-over-documents/" target="_blank" rel="noopener">Speaker’s warrant</a>” issued unanimously by the legislature in December. Laurentian and its lawyers were forced to hand over some privileged documents after trying to fight the auditor general <a href="https://www.stcatharinesstandard.ca/ts/politics/provincial/2022/02/28/laurentian-university-surrenders-financial-documents-to-province.html" target="_blank" rel="noopener">in court</a>. Lysyk also alleges that senior administration put “protocols” in place that prevented staff from co-operating with her office and “created a culture of fear” around speaking with the auditor general.
Lysyk told QP Briefing that “there are still some systemic issues” when it comes to Laurentian’s co-operation with her office but added that “we’re working through it.”
“It's all about the people in Sudbury, the university, the students and the faculty and how they get past this,” Lysyk said. She’s hopeful the full report will be complete “within the next few months.”
Laurentian didn’t answer specific questions asked by QP Briefing and instead sent out a statement to journalists from interim chair of the board of governors Jeff Bangs. Bangs said the board would consider the report’s “important contributions to better understanding — and correcting — the shortcomings of Laurentian in prior years.”
Bangs wrote that additional actions would be announced after “taking time to digest” the report.
Bangs was previously the principal secretary of former Premier Ernie Eves’ office in 2002 and was executive director of the PC party before that. Since 2005, he has been a lobbyist with the firm Pathway Group and was Laurentian’s “government relations adviser” from December 2020 until his appointment to Laurentian’s board a year later. <a href="https://www.thestar.com/politics/provincial/2019/07/22/doug-ford-revamps-campaign-team-after-french-connection-cronyism-scandal.html" target="_blank" rel="noopener">According to</a> the Toronto Star, Bangs was also put on Premier Doug Ford’s re-election campaign team after a scandal involving his former chief of staff Dean French.
According to France Gélinas, one of the NDP MPPs representing the Sudbury area, said “for the first time in a very long time, it was a good day,” hailing Lysyk’s report.
Gélinas emphasized the province’s culpability in not acting sooner on Laurentian’s dire financial straits, and supported Lysyk’s recommendation for financial accountability to be legislated for universities.
“I support the academic independence of our university, absolutely. But the financial has to be accountable when in 2016, the Royal Bank told Laurentian, 'You cannot borrow any more money. You are maxed out.' The government knew this and they did nothing.”
Later on Wednesday afternoon, Gélinas and her fellow Sudbury MPP Jamie West introduced a bill to cement the auditor general’s powers to “request and see any documents she needs to do her work,” West and Gélinas said in a press release.
The Council of Ontario Universities, of which Laurentian is a member, declined to comment.
QP Briefing reached out to Minister of Colleges and Universities Jill Dunlop for comment but did not get a response before publishing.

Laurentian officials actively pursued creditor protection: AG report

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