CEO’s hidden expenses questioned

Head of St. Joseph’s Healthcare says foundations should foot bill for work done to raise funds, thank donors

St. Joseph’s Healthcare CEO Kevin Smith has hidden expenses claimed through the hospital’s fundraising foundation.

It’s the same controversial practice Rob MacIsaac used when he was Mohawk College president.

The expenses totalling between $1,800 and $2,800 a year raise questions about accountability and transparency.

The issue has come to light since The Spectator revealed Feb. 10 that current Mohawk president Ron McKerlie has a secret contract, second salary and shielded expenses with the entity that raises funds for the school.

“The ethical principle at play in this story, and ones like it, is transparency,” said Robert Shepherd, associate professor in the School of Public Policy and Administration at Carleton University in Ottawa. “If those involved were truly comfortable with such practices, they and the organizations they are serving would make such practices transparent.”

The college board says it will revisit McKerlie’s nearly $109,000 salary as president of the Mohawk

College Foundation when it institutes provincially-mandated new caps on executive pay by September.

McKerlie’s combined college and foundation salary was roughly $369,000 in 2016, which is approaching the $401,000 wage cap that the province has already said is too high.

“Everything is on the table and under consideration by the board, including the president’s compensation from the foundation,” said a statement Friday from the college.

McKerlie did not respond to requests for comment last week and MacIsaac was unavailable.

Smith says foundations should foot the bill for work done to raise funds or thank donors.

“If they are purely fundraising expenses … we don’t want to use resources from the hospital,” said Smith.

He says the expenses don’t need to be in public view because the money comes from donors not taxpayers. “They’re not public resources,” he says. But NDP leader and Hamilton Centre MPP Andrea Horwath says donations should go to improving schools and hospitals, not paying CEO’s expenses.

“I would wonder whether people who make donations see that as an appropriate way to spend the funds,” she said. “This speaks to the issue of transparency or lack of transparency.”

Deputy Premier Deb Matthews has voiced concern about McKerlie’s secret contract and second salary.

But she doesn’t take issue with expenses claimed through the foundations.

“If those expenses are charged in the interest of the foundation … I think it’s quite appropriate that that be covered by the foundation,” said Matthews, who is minister of advanced education and skills development. “I don’t have a problem with that.”

When asked where to draw the line considering presidents and CEOs are expected to do work for the foundation as part of their job Matthews said, “We have to leave something for their judgment.”

But Horwath calls it a “back door” that allows executives to get around the Broader Public Sector Accountability Act and freedom of information requests.

Democracy Watch says it has long called for foundations to be more publicly accountable.

“It’s a systemic problem and the provincial government’s fault that they haven’t extended the disclosure law and the public accountability laws to institutions like the foundation that serve a public purpose,” said Duff Conacher co-founder of the government accountability advocacy group.

Highlighting the transparency issues around claiming expenses through the foundation, a number of area organizations have opted to keep all executive expenses in the public eye. McMaster University, Hamilton Health Sciences and Burlington’s Joseph Brant Hospital say none of their executives claim expenses through the foundation.

“It is only through transparent practices and procedures that the public can make an informed judgment about the legitimacy of these practices,” said Shepherd. “Whether those involved believe they were acting rightly is immaterial: the perceptions left by their actual behaviours raise uncomfortable questions.”