It won’t surprise you to know that I’ve spent some time in the last few days reading and rereading the Ontario Auditor General’s Special Report (“Report”) on Laurentian University. I appreciate the Report and while I don’t think it gets everything right, I think it is another valuable resource in the field of university governance. I could write a lot but as the value of this blog to readers is in synthesis and curation, I’ll extract what I think are the most important lessons for boards. In this, the first of at least a few pieces on the Special Report, my focus is on two key takeaways:
- Undertake university board service so that your board work and decisions will survive scrutiny.
If you take nothing else away from the Laurentian matter, take away the understanding that as a board member your work and your decisions may be subject to intense scrutiny. Not only is your university the recipient of taxpayer dollars, but a key purpose of a university board is to oversee the university in the public interest. Ontario’s Auditor General (“AG”) was highly critical of Laurentian’s board of governors describing it as “ineffectual” and board governance as “weak”. The criticism extends to individual board members and senior administrators personally and those individuals are named in appendices to the Report. As a former general counsel and university/corporate secretary, my advice to my boards and senior leadership was always grounded in the knowledge of the standards to which the law and good governance holds them and further in the understanding that there may come a time when both are held to account to those standards. I believe that this is the framework within which most good lawyers and governance professionals think. We pay attention to how we support the board and senior leaders to fulfil their fiduciary duties. The future worst-case scenario to keep in mind was some form of litigation against the university and the board. An audit by either the Province of Ontario or the Ontario Auditor General were always further options. The audit by the Ontario Auditor General of Laurentian University is not the first audit and won’t be the last. In addition, the Province has undertaken audits of Ontario universities on a number of occasions. I know that most of you strive to fulfil your board obligations because it’s the right thing to do. However, bringing the lens of future scrutiny to your conduct is a helpful way to ensure your board contribution consistently reflects the high standards of behaviour on which the public and all university stakeholders are counting.
- The board and all hired advisors will conduct themselves consistently with the university’s values and the board’s obligation to act in the public interest
Universities are important institutions. How they do what they do is perhaps as important as what they do. Universities are expected to act with transparency and in accordance with their stated values. This applies to university leadership and those hired to represent the university. It is clear in the Report that the AG is thoroughly irritated with Laurentian’s lack of cooperation with her office’s work. She writes,
the University placed unprecedented restrictions on our access to information and set up a legal pushback that included an extraordinary challenge to the Auditor General Act.
Later in the report she notes that not only did the University protect documents subject to legal privilege (see my previous article explaining privilege here: ) but,
in many instances the University’s external legal counsel and the legal counsel for the CCAA court monitor also declined to provide non-privileged information, saying that to review documents to determine whether they contained privileged information would be too resource intensive.
The AG’s irritation with the University pervades the Report and as I’ll address in a later blog, negatively colours the interpretation of all the University’s conduct. The AG paints a decision-making process informed by legal considerations rather than by university values and assessments of reputational risk. She writes,
As late as the end of November, 2020, Board members were voicing concern that Laurentian’s leadership had not made reasonable efforts to pursue options outside of CCAA, such as negotiations with the faculty union or seeking financial support from the government. They described Laurentian’s insolvency lawyers as “giddy with excitement to try something new”.
The board is responsible for the university. Legal advice is to be taken seriously and carefully considered but it is advice. It is for the board to consider the context, university stakeholders, and other implications that inform any decision, including the public role of institutions, obligations of transparency, and the values of the university. Values are especially important in times of crisis, and it is the board’s job to demonstrate them through values-based decision-making.
Future blogs will focus on the Report’s treatment of conflict of interest, the need to ensure the board gets good information, and the AG’s depiction of the role of a university senate among other topics.