Tag Archives: embezzlement

Students shouldn’t manage student finances

In Sunday’s Gazette, universities columnist Peggy Curran has a piece on the current silliness at Concordia University in which hundreds of thousands of dollars are unaccounted for (so much so even the auditors can’t figure it out), a huge blackmail plot is alleged and everyone is suing everyone else.

In it, Curran points the finger at student apathy, saying people who go to university just don’t care enough about what goes on in their student government:

The truth is, your average student is usually too busy with classes, work, movies, gym and love life to pay attention to student government. So the decision-making and, more importantly, that ginormous bankroll, falls to that small clique of keeners for whom politics is passion and bedside reading is Robert’s Rules of Order.

This argument sounded familiar to me, so I went looking in the archives. Allison Lampert said the same thing eight years ago, when students started to turn on their radical left-wing student government:

It’s a university with a history of political activism, and a group of older, working-class students who feel their social causes are as important as what they learn in the classroom.

It’s also a university that attracts mature working students, who prioritize their jobs and part-time classes over voting for student council.

“The same things that make a small number of students really active also make a large number of students less involved,” observed Concordia University student Zev Tiefenbach, 23.

Some observers argue the CSU executive was elected because of voter apathy at Concordia – about 7 per cent of students cast ballots in the last election, compared with 20 per cent at McGill University.

Their explanation: Concordia has a larger number of part-time students – 45 per cent of the student population – who are often less inclined to get involved in school politics.

Apathy is certainly a problem, no matter what the political leanings of the student government. And apathy breeds corruption. But the CSU actually gets a lot of students involved. Its elections have gotten as much as 10% turnout, which is very high for student elections in large universities. The fact that these scandals are being uncovered should be considered a good sign in that regard. I’m sure there are plenty of questionable expenses from smaller student groups, like clubs and faculty-specific student associations. But few people care about those.

It’s not just Concordia, either. Dawson’s student union learned a hard lesson last fall when an executive went crazy with a union-financed credit card.

Should the university step in, and take the financial reins? Even if they wanted to they couldn’t. The CSU is an accredited student union that’s separate from the university, and Concordia can no more step in and take control than an employer can take control of a workers’ union.

The decision must be the CSU’s to make, and while they’ve already promised even tighter financial controls, that’s not the answer. After all, financial controls are what got them into this mess in the first place, after almost $200,000 went missing from its coffers in 1999 and 2000.

And it’s been shown time and time again that turnover every four or five years causes an inescapable loss of institutional memory, and the slow deterioration of any good intentions that may have been placed there by predecessors. Outside staff hired to make up for that loss (like the bookkeeper accused of mismanaging those hundreds of thousands at the CSU) end up gaining more and more power through their growing knowledge, and learn how to manipulate things behind the scenes.

Instead, the CSU and other student associations charged with managing any money simply shouldn’t be doing so. They should setup an independent organization to handle their finances, sign their cheques and do financial reports (with another accounting firm doing the auditing, of course). Political decisions would rest with the elected student government, but balancing the chequebook would be left to professionals instead of 20-year-old students with no experience handling a million-dollar-plus budget.

My worry isn’t so much about the CSU, which has a few eyes on it at all times, but more about the smaller organizations getting student money that aren’t the subject of constant attempts at coups d’├ętat. Their financial mismanagement – or just imprudent choices of where to spend money – might go on for years before anyone notices them.

If student government want to be truly proactive about solving this problem, they first have to admit they have a problem, and that they need help to solve it.

UPDATE: A McGill student association executive resigned over personal use of a $2,000 hotel gift certificate that was deemed inappropriate.

Student union money is easily embezzled

The Concordia Student Union has a budget of about a million dollars a year (actually, it’s probably more than that now, but within an order of magnitude). That’s a lot of money, and it’s managed by amateurs who swoop in without any experience. So it’s unsurprising that eight years ago, the union discovered that one of its executives made off with almost $200,000 over a year and a half by writing cheques to herself and hiding the evidence from the bookkeeper.

When the executive discovered what happened (at first they thought it was more like $30,000), it was reported to the council of representatives in a super-secret meeting. The press release came out a week later. It took four years before she was finally convicted, though the union still hasn’t recovered all the money.

This month, history appears to be repeating itself, and the CSU has apparently discovered another “financial irregularity” about “misappropriation of funds” which was presented to a super-secret meeting. No dollar amount is given, but one would assume we’re not talking about a few extra beers in the expense account. No one is named, of course, but it would have to be someone with access to the money, either an executive or an accountant.

For someone to do this at the CSU takes balls (and “creative accounting” skills) the likes of which I have never seen. The union put rigorous financial controls in place after the first fraud, including new financial policies and the hiring of a financial controller. It will be interesting to see how these safeguards were foiled this time.

Meanwhile, a bit further west down de Maisonneuve Blvd., the Dawson Student Union has a financial scandal of its own. It seems one of its executives racked up $29,000 in expenses on her executive credit card (well, I assume it’s a her – if a guy is spending that much on clothes and jewellry, there’s bigger problems afoot).

Whose bright idea was it to give apparently limitless credit cards to 18-year-old CEGEP students? I mean seriously, did nobody consider the rather obvious possibility that this might happen?

What the CSU and DSU have in common, despite the fact that stealing from them is like taking candy from a baby (a baby with a trailer full of candy), is that both were accredited as official representatives of their students, meaning the schools’ administrations have certain legal obligations involving student fees, and can’t interfere in their affairs.

I’m not suggesting differently here, but this is clearly a systemic problem. CEGEP and university students can’t be trusted with huge bank accounts. Rigorous financial controls need to be put in place, and those controls need to be verified on a regular basis by an independent third party.

Perhaps the government should step in here. The same law that says universities must hand over student fees to accredited student unions should also require certain financial control measures be put in place, and there should be regular inspections by the government to ensure that they are respected. Miss your audit by a day and you get a visit from a government agent. Even if you don’t, you still get a visit. Otherwise things like this will just keep happening.

And all of this is completely separate from the misappropriation of funds by student clubs and smaller associations. It was rampant in my time and I doubt it’s gotten much better.