CSU taking legal action against former accountant

The CSU is taking legal action against its former controller, seeking redress for thousands of dollars in mismanaged funds.
The union said they don’t even know how much money is missing, or exactly where it’s missing from, because Marie Lyonnais, the former controller, didn’t submit any financial reports for 18 months.
In addition to missing funds there’s also over a year of unpaid taxes and payroll deductions, along with interest and penalties.
According to Keyana Kashfi the problems began in November 2005, when she said Lyonnais stopped filing financial reports and paying the CSU’s taxes.
As well “from December 2005 until May 2007, accounting and payroll records were misplaced, accounting transactions were not properly captured, there were errors in payroll amounts paid, the bank reconciliations were not performed,” she said. As well payroll deductions were not sent to the government, including CSST, E.I. and Q.P.P.
Kashfi said the lack of financial reports should have set off alarm bells, for then president Mohamed Shuriye and VP finance Nadia Hissin, instead she said they “continued spending without questions.”
“They were spending on the basis of cash in the bank,” said Kashfi.
“However cash in the bank always includes amounts that must not be spent, but must be kept in reserve for short term commitments.”
In 2006 penalties and interest began accruing on the CSU’s unpaid taxes.
According to Kashfi, by this time Lyonnais was working from home, and the notices from Revenue Canada and Revenue Quebec began piling up.
“In her absence no executive took responsibility for opening her mail,” said Kashfi. “Normally these letters are addressed to the corporation, which would be the Concordia Student Union . . . now these are not personal letters, it’s very clear they come from the government.”
With the tax assessments unpaid in the spring of 2007, both the provincial and federal governments seized the CSU’s main bank accounts.
According to Kashfi, the frozen bank accounts were discovered when Angelica Novoa took over as president.
At this point Lyonnais quit, and the CSU began negotiations with the government about paying the outstanding taxes.
In October 2007 a forensic auditor was hired to look over the books. According to Kashfi, the auditor found that “critical payroll files were missing” and that others were incomplete.
“Cash deposit books for 2005, 2006 and the beginning of 2007 are missing,” said Kashfi, and there is “no documentation to support financial transactions.”
She also said there was a significant difference in the amount of cash deposited after the 2007 orientation, compared to 2005 and 2006.
“But the significant lack of records and documentation makes it impossible to ascertain exactly how much,” she said.
According to Kashfi, “Lyonnais used the CSU bank account to pay her own personal credit card.”
While Kashfi said there was a possibility the charge was legitimate, the lack of records may make proving it impossible.
In fact the CSU may never be able to figure out exactly what happened with their books. Auditors that looked at 2005 – 2006 and 2006 – 2007, were unable to give them an opinion, due to the lack of documents.
“We’re still trying to figure out the exact cost,” said Kashfi.
Patrice Blais, who hired Lyonnais when he was CSU president in 2002, said Lyonnais had been working for the CSU’s auditors and had come with a recommendation from her previous employers.
“During the time I was there and I was supervising, things were okay,” he said.
Blais, who has attempted to have the current CSU executive recalled, questions why the CSU didn’t make the situation public earlier.
But CSU executives say they had no other choice.
“Up until November, our legal council and all the accountants working on it were still trying to figure out what exactly happened,” said VP communications Elie Chivi, “but once we had enough information, we brought that to our council.”
Kashfi and Chivi said that because of the ongoing investigation, and the pending legal case, they had to be careful about what they said.
“Any one comment can hurt the case,” said Chivi.
In addition to the missing funds, unpaid taxes and penalties, Kashfi said the situation is going to end up costing the CSU even more, in audits and legal fees for the pending lawsuit.
Ironically Lyonnais was hired in response to a fraud, the 2000 theft of almost $200,000 by then CSU VP finance, Sheryll Navidad.
But before the lawsuit can proceed they’ll have to find her. Kashfi said that a bailiff, sent to serve Lyonnais with notice of the lawsuit has been unable to find her.
And Kashfi said more lawsuits could be in the works.
She said her executive has taken steps to insure that the situation, which she said “shouldn’t have happened,” won’t happen again.
The CSU has replaced the position of controller with two accountants and outsourced their payroll to a national company. They’ve also sought sponsorships for events in an effort to make them more cost effective. As well Kashfi said she now receives financial reports every week.
Fauve Castagna, who was VP finance under Novoa, said she was interested in speaking about the situation, but has been asked not to by the current CSU, due to the ongoing investigation and pending lawsuit.