CFS under fire for handling of “hidden” bank account

The Canadian Federation of Students (CFS) is facing scrutiny from the UTSU for its handling of a “hidden” bank account that was discovered in 2014.

Delegates at the CFS’s National General Meeting (NGM) on November 17–22 voted to approve the audit of a CFS controlled bank account without having had access to the audit report that discussed that account. The bank account was hidden from auditors for years before being discovered in 2014 and remains shrouded in mystery.

The University of Toronto Students’ Union (UTSU) Vice-President Internal, Mathias Memmel, described the CFS’ handling of the hidden bank account at the National General Meeting as “incredibly disturbing,” in his executive report because, he writes, the federation “refused to disclose where it came from or where it went despite the completion of a forensic audit and report.”

When asked by The Varsity why the CFS did not provide members with access to the forensic audit report before having to vote on its acceptance, CFS National Chairperson Bilan Arte stated, “No reports have been withheld.” Arte said that the CFS National Executive was in the process of writing its own report “on the findings of the forensic review in time for the June general meeting.”

According to Arte, the National Executive’s report would contain “additional information about the review,” and would be released to members instead of the full report that was done by Grant Thornton LLP because of “potential human resources matters.”

Memmel said that “According to the National Treasurer, the CFS was advised by its lawyers not to release the forensic audit to its members, although he later admitted that he hasn’t actually seen the legal opinion in question.”

Memmel also stated that the CFS National Executive announced the existence of the bank account in 2014 but its details have “never been explained.”

“The National Treasurer and a number of CFS staff refused to elaborate on [the bank account], despite persistent questioning by the Budget Committee,” Memmel said.

Arte denied withholding information from members, stating that “member local students’ unions have been kept up to date on actions taken by the executive.” Arte also stated that the bank account in question was “immediately frozen” upon its discovery.

When asked how the bank account could stay hidden from auditors for years, Arte said, “It remained undetected because the account was kept hidden from both the Federation’s auditors and of the members national executive. Moreover, the account was located at a different financial institution than the one where the Federation does its banking.”

When asked where the funds in the hidden bank account came from, Arte responded with a quotation from the 2014 audited financial statements on the account, which states, “The primary activity in the account was the receipt of various revenues of the Federation and the payment of professional fees.”

In his November report on the NGM, Memmel wrote, “When asked if the account was used to support candidates in local elections, they declined to answer — three times.” Arte’s comments to The Varsity denied CFS involvement “with local students’ union elections” or provision of “money to candidates in local elections.”

In his email to The Varsity, Memmel noted that “The CFS has always aggressively denied any involvement in local elections,” but that if the hidden bank account had been used to support local candidates, CFS would be “guilty not only of lying but also violating the autonomy of students’ unions like the UTSU.”

Memmel went on to compare the concealment of the CFS bank account from auditors to audits of the UTSU. He stated that UTSU members expect the UTSU audit to be “an accurate statement of the UTSU’s financial position,” and that “if we hide money from our members, we’re lying… the audit does need to include all bank accounts to be accurate.”

Arte stated that the audit conducted after the discovery of the hidden bank account received “an unqualified opinion” from the MNP LLP auditor, “which is the highest level of assurance an auditor can provide that an organization’s financial position is fairly presented.”

While the CFS abruptly added voting on the hidden bank account to the NGM agenda, it refused to debate fourteen motions drafted by UTSU and other Canadian student unions, deferring their debate to the NGM in June 2017. According to Memmel, these motions were aimed at increasing “fairness and transparency” by reforming CFS and the “culture of secrecy that permeates the entire organization.”

Arte explained the deferral of these motions, saying that “member local students’ unions decided to postpone voting on some motions” because “we lost a few hours due to a fire alarm.”

“The CFS is extremely secretive,” Memmel said, “as this bank account debacle demonstrates.” He highlighted that National Executive meeting notes and other CFS documents were not made available online until after members put out a letter calling for their release, but that even these documents “only record votes, not what was said.” Memmel castigated the National Executive for operating in what he describes as “complete secrecy.”

Arte said that “member local students’ unions determine which motions get adopted, what does not, and what gets postponed,” Memmel asserted that many delegates at CFS meetings are not students, since “CFS bylaws permit staff to serve as delegates.”

“Some locals were represented exclusively by staff,” who according to Memmel were “disproportionately powerful” at the NGM, “using their ‘seniority’ to control the room.”

While Arte described CFS’ structure as “the result of 30 years of discussion and debate… democratically organized and driven by the will of its members,” Memmel asserted that students’ unions seeking reform “engaged in the prescribed process, and most of our motions weren’t even debated.” Memmel emphasized that instead of cooperating with “dissident members” seeking reform, CFS is “just preventing them from leaving.” 

“I don’t have any reason to think that the CFS is capable of reform,” Memmel said. When asked if CFS’ conduct regarding the hidden bank account might serve as fuel for You Decide UofT, an ongoing student-led campaign to hold a referendum on UTSU’s continued membership in CFS, Memmel replied, “I hope so.”