The hits keep coming for Laurentian University

The auditor general wants documents related to the university’s insolvency. The school won’t produce them. Here’s what that means — and what comes next
By Nick Dunne - Published on Dec 16, 2021
Laurentian University entered creditor protection in February 2021. (Vanderbilt8/ Wikipedia)

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SUDBURY — Last week, the provincial legislature voted unanimously to serve Laurentian University with a speaker’s warrant compelling the institution to hand over documents related to its insolvency. It’s the latest development in an ongoing legal battle between the school and Ontario’s auditor general over the disclosure of sensitive documents for her office’s value-for-money audit. “Our first objective was to answer the community's question: What happened at Laurentian?” Auditor General Bonnie Lysyk tells TVO.org.

So far, Laurentian has refused to hand over much of the requested information, stalling the audit — and prompting the rare issuance of a speaker’s warrant. It has “the same kind of standing” as a court warrant, explains David Tabachnick, a political-science professor at Nipissing University. 

The dispute’s roots can be traced back to February 2021, when Laurentian entered creditor protection after RBC and Desjardins cut their lines of credit to the school. The court appointed Ernst & Young as a monitor to help restructure the university, triggering a mass layoff of more than 100 faculty and staff and the cutting of 69 programs. The auditor general’s office aims to learn more about how the publicly funded institution came to this pass.

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TVO.org explains what the value-for-money audit and speaker’s warrant mean for Laurentian — and what comes next. 

What is a value-for-money audit?

value-for-money audit looks at the overall finances of public-sector organizations that have received government grants and determines whether “taxpayers have received value for the tax dollars spent by the entities we audit,” according to the auditor general’s website. 

Citing the 2020 summary annual report, Tabachnik says the auditor general undertook an average of 12 value-for-money audits per year over the past decade. 

The audit of Laurentian is important, Lysyk says, because the institution received nearly half its funding from the province: “We're talking about a public service, which is education. We do think it's incumbent on them to provide us with the information to answer the questions that exist about what happened at Laurentian.” She adds that such an audit can also help inform future decisions: “How can the lessons learned from the situation at Laurentian be used to then communicate better practices for all universities in Ontario so that the same trip-ups don't happen again?” 

Why is there a dispute over the audit?

On April 28, Ontario’s Standing Committee on Public Accounts instructed the auditor general’s office to conduct a value-for-money audit on Laurentian to examine its finances from 2010 onwards. The dispute over the audit centres around whether the auditor general can compel the university to hand over “sensitive documents,” which the latter’s lawyers claim would breach client-solicitor privilege. In the auditor general’s court submission, her office says the school is “creating a culture of fear” by discouraging staff from talking to the auditor general. The university, its own factum states, “objects in the strongest possible terms” to that claim. (Laurentian University declined to respond to specific questions from TVO.org.)

Agenda segment, April 19, 2021: Assessing Laurentian University's deep cuts

Lysyk says this is the first time in her career that any auditee has refused to hand over information. “In the history of this office, we typically get access to all privileged information,” she says. “What we found is that privileged information is mixed with non-privileged information, so the difficulty came when we wanted access to emails — we couldn't even get access to the non-privileged.” 

According to court documents, Laurentian refused to produce — among other things — all in camera briefing packages for the board of governors and its committees from 2010 to present; all emails from staff, such as the school’s president, former presidents, and its former general counsel; and emails to a Sudbury law firm. Lawyers for Laurentian say that the requirement to hand over such documents constitutes a violation of the Canadian Charter of Rights and Freedoms. 

Paul Daly, a law professor at the University of Ottawa, says the argument has some merit: “It’s certainly a plausible argument and direction, even if I think Laurentian is not going to win.” There is precedent against it. “The auditor general is an officer of Parliament, and there are at least some decisions in Canadian courts which say that officers of Parliament can also benefit from parliamentary privileges,” he says. “This is slap-bang within the ordinary functions of Parliament to get information about the activities of public bodies to inquire into matters of public administration.”

How has Laurentian responded to the speaker’s warrant?

In a process running parallel to the auditor general’s value-for-cash audit, the Queen’s Park public-accounts committee sent three requests to Laurentian — on October 15, October 22, and November 3 — seeking documents related to the university’s insolvency. According to the committee’s request for a speaker’s warrant, filed December 8, “some documents [Laurentian] had deemed did not contain privileged information” were released. In the request, chair Taras Natyshak says that the committee needs the documents in order to “do its work effectively” and that Laurentian had “refused to provide all of the documents outlined in the Committee’s letters.” In response, on December 9, the house voted unanimously to pursue the warrant. (The last time a speaker’s warrant was issued by the Ontario legislature was in 2012, over the Ornge air-ambulance scandal.) 

Correspondence between the committee and Laurentian obtained by TVO.org shows that, of the 133 sets of documents requested by the committee, the university claimed privilege over all but 26. Information requested but not produced includes all documentation and correspondence between Laurentian and Ernst & Young (both before and after the creditor-protection filing), documents related to how the university chose to cut courses (along with the analyses made to support those decisions), and all union grievances and employee complaints from 2010 to the present. “They seem to want to withhold quite a bit of the requested documentation, claiming it is privileged,” Tabachnick says. 

What’s next?

A court hearing was held on December 6; it’s not yet clear when Justice Geoffrey Morawetz will issue his decision on whether the Auditor General Act allows the auditor general to compel the production of sensitive documents. 

Regardless, the speaker’s warrant still applies. Laurentian had been ordered to hand over all documents requested by the public-accounts committee by February 2.  A December 9 statement from the university states that it is “deeply disappointed that a motion, passed Wednesday by the Standing Committee on Public Accounts issued a Speaker’s warrant to compel production of certain documents and information today” and that “this is a clear attempt to pre-empt and interfere with an existing court process.”

Steve Chaplin, former senior parliamentary counsel to the House of Commons, says there are grounds for Laurentian to challenge the legislature. “The courts can look at the scope and the extent of [parliamentary] privilege, but not as exercise.  If the privilege exists, and it's within the scope of the privilege, then the courts can't look at it,” Chaplin says. “If this goes beyond the scope of what you can do, then there's a problem.”

Agenda segment, December 10, 2021: Reviewing northern Ontario's year

Daly says the outlook likely isn’t favourable for the university: “My view is that the whatever Parliament or legislative assembly does is protected by parliamentary privilege.” (This is, in effect, special power granted when the legislature “has been obstructed in the execution of its functions or where Members have been obstructed in the performance of their duties.”) 

Although Daly doubts that the court will side with Laurentian, he says the legislature “should give careful consideration to Laurentian’s argument,” as “it would presumably be in the public interest for the confidential [CCAA) negotiation not to be disrupted.”

If Laurentian fails to comply, there is a legislative process to enforce the warrant that could theoretically lead to imprisonment, Chaplin says, although he adds that that hasn’t happened since 1916, following a warrant from the House of Commons. The vast majority of cases, he says, are settled before they get to that point. “It may be that the people say, ‘Whatever's going on is not worth all the fight. Why don't we sit down and try and figure out what's really necessary for people to move this file forward?’ I would say 99 per cent of the cases, that's what happened in my experience.” 

Lysyk says audits such as the current one would normally take around eight months to complete but that the document-procurement issues have caused major delays. She says that a report “will be available at some point.” (Lysyk says that when the report is ready, it will be tabled to the legislature, then referred to the committee.)  

Tabachnick is concerned by how the conflict has escalated and says the situation raises a number of questions: “You're wondering, What is being kept from the public? Why are these documents not being produced? Is it something more than just solicitor-client privileges?” 

Correction: An earlier version of this article misstated the year Laurentian University entered creditor protection. It did so in 2021. TVO.org regrets the error.

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