CEO’s hid­den expenses ques­tioned

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

The Hamilton Spectator - - FRONT PAGE - JOANNA FRKETICH

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.”

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