MCRC loans under scrutiny

MCRS President Alexis Meyerman says personal loan to her was ‘risk-free’

Alexis Meyerman has taken out a private loan from MCRC.
Alexis Meyerman has taken out a private loan from MCRC.
Credit: 
Lukasz Rygielski
Chown Hall is one of the residences under jurisdiction of the MCRC.
Chown Hall is one of the residences under jurisdiction of the MCRC.
Credit: 
Journal File Photo

After a short internal investigation into a $5,000 loan granted by the Main Campus Residents’ Council executive board to its outgoing president, concerns have been raised about whether student money should be used for personal loans to MCRC staff.

The investigation, which was opened and closed within a week, found there was “no evidence … to suggest any foul play was involved in the issuance of the loan” to MCRS President Alexis Meyerman, nor “violation of any existing MCRC policies with regards to the issuance of the loan.” MCRC is funded by a $74.99 student fee from students in residence on main campus and subsidized by the University.

However, concerns about the loans have been anonymously expressed to the Journal on three separate occasions. Due to a policy instituted when Meyerman took office last year, MCRC employees are prohibited from communicating with the media without permission. Asked whether any concerned staff members could speak freely with the Journal about this issue, Meyerman expressed reservations.

“The point of the policy is to ensure that the information given out by Society members is clear, and is fact. So while any Society member can provide opinions on it, we want the council’s word to be fact. None of our staff are there to be interpreters.”

Meyerman was granted the loans because she lacks a Social Insurance Number, preventing her from getting paid legally. As a result, she has forgone salary from the MCRC for the past two years she has worked there, totaling more than $13,000.

“This was a risk-free loan, because by the time I was lent $5,000, the society owed me $13,000, so had I run away to the Cayman Islands with this money … I would lose $13,000,” Meyerman said. “But even if I did, the MCRC would still have a debt owing to me.”

In three separate cheques last fall, Meyerman was lent $1,000, $2,000 and $2,000 in the months of September, October and December, respectively. The agreements, which were approved by the MCRC executive board of which she is a member, stipulated the amounts were granted as an “interest-free salary advance to be repaid immediately upon [Meyerman’s] next payroll deposit or April 30, 2006, whichever date is earlier.”

“We don’t give out loans, other than salary advances,” Meyerman said. “I mean, it was a loan in the sense that it’s money passing on to me that I must repay.”

To date, the loans—which Meyerman said were used to pay for things like school books, travel and the December holiday break—haven’t been repaid. She assured the Journal she expects to repay the loan in the time specified.

“If that hadn’t been the case, we would have reported it immediately to [MCRC] General Assembly,” she said.

George Boland, associate director of the Queen’s Commerce program and faculty advisor to the MCRC finances and audit committee, said he’s thinks there was “no malicious intent,” and the transaction was legal. But he disagreed that personal loans should be granted by MCRC’s executive board.

“It may be harsh to say … but financial help isn’t the business of MCRC generally,” he said. “I would look fairly seriously at coming down on the side of no loans. I don’t think that’s what the MCRC funding is intended to be doing.”

MCRC Finances and Audit Committee Chair Eddie Ho, who headed the investigation, was granted permission by Meyerman to speak with the Journal. In an interview prior to an emergency meeting on Saturday that led to the investigation’s closure, he said disclosure of the $5,000 Meyerman owes the MCRC last week at a a finances and audit committee meeting brought the loan into the limelight. Neither Ho nor Meyerman attended the meeting.

“It doesn’t matter what other circumstances are, but the whole concept of loaning student money to a student, we don’t have policies regarding loans, so it’s very dangerous for loans to be made out like this,” he said, explaining the situation could set a precedent for the future. “There’s no foul play, this is just bad practice … it could spiral out of control.”

Meyerman said that at Saturday’s meeting, Ho relayed to the committee the opinions he expressed to the Journal. She said some members of the MCRC finances and audit committee disagreed with him, because the council doesn’t manage by precedent.

“I think overall, the committee was no longer concerned,” she said, explaining that issues of transparency that were initially questioned were quickly resolved. “Considering the fact that [the loans were] raised three different times [twice in meetings during the fall and at the meeting last week], that proves at least that people were aware and that they had it on their radar. I don’t think there’s anything more the executive could have done.”

AMS General Manager Claude Sherren said while the AMS has given salary advances in the past, it has never granted a personal loan.

“My guess is it would never happen,” he said. “I just can’t conceive how the [AMS Board of Directors] or the executive could get its minds around doing such a thing, because even if it was done perfectly, it wouldn’t look good.”

EngSoc President Connor Langford said EngSoc, which employs SciCons, bartenders and DJs at Clark Hall Pub, doesn’t give salary advances or personal loans.

“The money we have isn’t our money, it’s student money—it all comes from student fees,” he said. “In terms of giving money for a personal loan, we’re not a bank, we’re not incorporated, we’re a not-for-profit organization, so ... we don’t have the power or reasoning behind us to give loans.”

Now completing her third year at Queen’s, Meyerman said she lost her Canadian citizenship card at the end of her first year, preventing her from obtaining a SIN number. She isn’t planning on returning to the University next year.

“You need not only your own documents, but a lot of other documents [to prove citizenship], and that’s where it gets touchy,” she said.

A complex family situation, stringent rules for attaining proof of citizenship and other priorities—including her bid for presidency last year—have drawn out the process of getting a Social Insurance Number that would enable her to collect the salary she earned.

“There are a lot of things that are on your radar as a priority.”

Meyerman is the only MCRC staff member who has signing authority up to $2,000. Per policy, she co-signed the cheques she received with a second person, MCRC VP (Finances and Operations) James McIntosh. McIntosh is responsible for the society budget.

McIntosh said Meyerman’s case is the first time the MCRC has given what he characterized as a “loan/advance hybrid,” adding it’s an unusual transaction for the Society. There were key lending requirements he ensured were met before co-signing the cheques, he said.

“That the person demonstrates a willingness to repay, which obviously Alexis demonstrates: her character is well-known, she is in a high position in the Society, she has vested interest in the Society … [and] ability to repay—the fact that she’s been earning money from the MCRC for years.

“So those two things together, the risk was minimal to nothing.”

Sherren said he believes assessing the suitability of loan recipients is best left to professionals, noting that the AMS’s lack of an assessment mechanism is another reason it doesn’t provide loans.

“We’re too close to each other,” he said of the parties who would be involved in any such transaction. “I mean, how can the executive do an assessment of its own staff or of any student? I don’t think the community expects that. There is no mandate to do that and therefore it’s not done.”

Sherren added students have come to the AMS in the past facing financial difficulties.

“We’ve had students saying ‘I’m broke, I can’t pay my tuition, can you help me?’ ” he said. “We say ‘the funds of the AMS are not earmarked for that, we’re upset that you’re in trouble,’ and then we take them by the hand to ... all the other mechanisms that are available here at the University and we help them out in that way.”

Boland said that although Meyerman’s loan fell within existing policy, this policy could leave room for “foul play or fraud.”

The policy states: “Requests for salary advances are normally not granted except in cases of demonstrable financial hardship. … Salary advances for executive officers must be approved by the executive board.”

Boland stressed that this existing policy, which contains little to no guidance, could also put students required to agree to a loan in a tough situation.

“In a case like this, where somebody is potentially saying ‘I don’t have money to stay in school or that kind of thing,’ there could be a lot of pressure brought to an individual because it’s students … signing the cheques,” he said.

Improved policy would protect the students asked to make the loan, he said.

“The risk of any loan is that it doesn’t get paid back, so [unsound policy puts] them in a position where ‘Yes, I’ve given up $5,000 of [student] money and now it’s gone.’”

Meyerman said she feels such a safeguard already exists.

“Any mistake that the executive board should make … they’re not liable for it unless they endorsed it, so then, we are personally liable for it and could be prosecuted for it,” she said. “That’s where accountability lies.”

Len Brooks, a professor of business ethics and accounting at the University of Toronto’s Joseph L. Rotman School of Management, said the situation was “bizarre.”

“It seems to me that even if it all turns out to be quite satisfactory, there are a number of issues where the procedures are not sound,” he said. “I don’t think anybody contemplated a pattern of loans when this was embarked upon, but I think it’s incumbent on the individual to have worked diligently to get this citizenship [problem] squared away. If value has been received, if the person has been working, this arrangement really has been payment for work.”

At last week’s finances meeting where the loan was initially called into question, concerns about tax evasion arose, Ho said. However, he said doing the math in this particular case shows taxes to be a non-issue.

But Brooks said a potential for future abuse is worrisome.

“This is not a practice the [MCRC executive board] would want to happen again and again, because they would be found by the tax authorities to be sanctioning an arrangement in lieu of paying properly,” he said.

Brooks added that another concern is conflict of interest, because Meyerman heads the executive board that granted the loans.

“The president should have not voted on this matter,” he said. “[She] should have said I will answer questions, but I will not vote on this.”

Instead of only two signatures, it would also have been good practice to add a third, Brooks said.

“If the money is only going to one of the two [signatories], that means there is really only one signature—there are not independent minds working on this action.”

The only recommendation made by the MCRC finances and audit committee’s official statement, which closed the investigation, was to change the accounting procedure that records existing and future loans “to ensure that reporting of any loans owed to the council is more transparent and clearly reflected.”

MCRC is audited externally every year.

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