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Ex-CSU VP on Financial Mismanagement

by Archives January 27, 2009

Fauve Castagna didn’t know there was a problem with the CSU’s finances until she got a call from their bank, telling her the government had frozen their bank account for unpaid taxes.
“It was a nice way to come into office,” said Castagna, who was the CSU VP finance in 2007 – 2008.
When the mid-summer call came she became the first person to discover that thousands of dollars in CSU funds had been mismanaged, that payroll deductions had not been sent to the government and that taxes hadn’t been paid in two years.
Castagna said she immediately contacted the CSU legal council and began negotiations with the government for the repayment of the back-taxes. While the bank account was unfrozen the next day, negotiations are still ongoing.
Castagna said her first step was to start finding out what happened.
“I opened up every single piece of paper in the office, cleaned out everything, and did find a paper trail of various government documents that hadn’t been looked at, that were kind of hidden in the office,” she said. “My objective was to find out what the problem was and how to fix it, I didn’t need to point fingers at that point, it was useless.”
The union’s accountant, Marie Lyonnais, who had been responsible for the payroll, had already disappeared.
While Castagna said the hiring process for Lyonnais’s replacement had begun before she stopped showing up for work, her replacement wasn’t hired until the end of August.
Castagna said she tried to reach Lyonnais through phone, e-mail and even relatives she knew, but to no avail. “There’s only so far you can go in order to contact a person,” she said.
“It was the duty of Marie Lyonnais to submit the taxes to the government,” said Castagna. “Over the years those taxes were not remitted to the government.”
Lyonnais is currently facing a $300,000 lawsuit filed against her by the current CSU executive.
But Castagna said when she took over, the unpaid taxes were only part of the problem, because of a lack of financial oversight previous executives had overspent, leaving her to deal with the deficit.
“Part of that deficit is the taxes that were never paid,” she said. “The money that wasn’t paid out in terms of taxes, interest, and penalties . . . the other part of the pie, in terms of the deficit is money that was overspent.”
“A huge thing for us is that a lot of things were not entered in our accounting system,” she said. “We had to go back and recreate bank documents for two years.”
“So the investigation was really recreating the past two years, understanding what went on.”
Under her watch a forensic audit of the unions finances began, but the results weren’t returned until this past summer, after she had left office.
Castagna defended her decision not to go public with the information.
“I had advised the financial committee to make them aware of what was going on, we came to a consensus in saying that this whole situation, we’ve contained it, we’ve kept it from getting worse; we’ve taken all actions possible to try and resolve this, but because there is a lot of information that was unknown – we didn’t want to cause widespread pandemonium. We didn’t want to put something out there where we had no answers to questions that were being asked,” she said. “I had nothing tangible, I had no reports, other than the work I had done on my own. I had nothing official that could say this is what happened.”
Castagna said that in addition to finding out what happened she also wanted to prevent similar problems in the future, outsourcing payroll to prevent similar problems and shutting down the CSU’s Internet banking.

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