B.C. Universities Fight For Secrecy - A Warning For Ontario?

Should a publicly funded university be able to squirrel away financial records, funding agreements or various other bits of information in a corporate entity under its direct control? Should such a corporation be a shield against Freedom of Information legislation? That is exactly the matter before B.C.'s Privacy Commissioner. The provinces three largest universities have argued the public should not have access to the financial dealings of Simon Fraser University's spinoff companies. CAUT and the B.C. Freedom of Information and Privacy Association have argued for release of the information. The issue is particularly poignant just months before Freedom of Information legislation is to be extended to cover Ontario's universities and as Trent University actively contemplates creating a corporation to manage its endowment lands.

A Georgia Straight article highlights the details of the issue currently before the B.C. Privacy Commissioner (in B.C. universities are subject to FOI legislation). In light of the growing corporatization of our public universities the article is necessary reading for anyone with an interest in transparent and accountable university governance.

If universities can create corporate entities to shield records from disclosure under Freedom of Information legislation then such legislation is rendered useless. According to the lawyer for the B.C. Freedom of Information and Privacy Association:

Simply put, if Public Bodies can avoid the effect of the FOIPPA by using wholly owned or controlled subsidiary corporations as repositories of records, the effectiveness and purpose of the legislation will be severely impaired and the public accountability it provides will be lost.

SFU created The University/Industry Liaison Office (UILO). The UILO publishes a list of its spinoff companies as well as documentation describing "Creating a Start-Up or Spin-Off Company / Relationship to SFU." The UILO's mission statement is published on their website:

The mission of the University/Industry Liaison Office at Simon Fraser University is to facilitate the creation of new university-industry research and development partnerships and to commercialize the results of University-based research with a view to providing an economic return to the University, the Province of British Columbia, and Canada.

But in the absence of public accountability through access to UILO's records, how can anyone be assured that there are returns to the university, the province and the country? The obvious answer is that the public cannot know without access to records.

UBC and UVic support SFU in blocking release of records sought through a 2004 freedom of information request filed by university professor David Noble.

The Privacy Commissioner has yet to hand down his ruling.

According to the Georgia Straight article a previous FOI request by Noble revealed SFU's involvement with another commercial enterprise resulted in SFU losing close to $300,000 in direct debt it was unable to recover. Certainly an embarrassment for SFU, which still employs some of the administrators involved in that loss.

The matter of shielding university-created corporations from FOI legislation has a direct bearing upon Ontario universities, and our beloved Trent University in particular.

Trent administrators are actively contemplating the creation of a separate corporation to manage its endowment lands. The Trent University Development Corporation would have as its CEO the president of the University, currently Bonnie Patterson. The justification put forward by the university's consultants is that the Trent University Development Corporation would, among other things, create "the impression of an entity that has the authority to make decisions and get 'deals done' with private sector thinking and practices", and that it removes "the 'multiple interest party' approach to decision-making that so often stagnates opportunities."[1]

Besides the obvious governance issues and the potential conflicts of interest Patterson might find herself facing concurrently occupying the presidency and corporation's CEO position, we cannot help wondering if Trent is attempting to go where SFU has previously tread, and now finds itself mired.

Would the Trent University Development Corporation be exempt from Ontario's Freedom of Information legislation?

And what are the implications when the B.C. universities describe themselves as "service providers" to private sector organizations? What does this say about the corporatization of the university? Might this parallel, or even offer some explanation for, Trent's DNA cluster project?

In a manner similar to SFU's UILO Trent has billed the DNA cluster as "a multi-party collaboration between Trent University, the Greater Peterborough Area Economic Development Corporation, Sir Sandford Fleming College, the Ontario Ministry of Natural Resources, and private sector representatives".

Trent's press release of August 2005 made a bold claim about the project's contribution to the local economy;

When construction of the DNA Building is finalized in 2005-06, the DNA cluster project will contribute approximately $39M to the local economy, bringing Trent's economic contribution to Peterborough and surrounding areas to $300M.

No representative of the DNA cluster project has been able to explain exactly what benefits will result or how. The project has yet to produced business plan or attract a single private sector "partner". According to the CFI grant the initial two buildings were to have been completed by December 2005 but in fact are not yet complete. Even Denis Ferkany, president of the DNA cluster, admitted their message explaining how the cluster will benefit Peterborough wasn't "crystal clear."

Still, Trent has managed to attract more than $10.5 million in taxpayer dollars for the DNA cluster.

Recently we have heard rumours the Trent's board has been made aware that the DNA cluster project is close to $1,000,000 over budget.

How is the public to be assured that the significant investment of public dollars in the DNA cluster will indeed bring any of the promised benefits to Trent, Peterborough, Ontario or Canada? How can the public be assured the project doesn't saddle Trent and the community with a very expensive white elephant?

It is unlikely that the administrators of the Trent and the DNA cluster will release anything other than the information they wish the public to have. Therefore, the only viable means for the public to receive accurate information would be through access to the detailed records.

It remains to be seen if Trent's records pertaining to the DNA Cluster Project will be released under a future FOI request or if Trent will argue against release in whole or part.

The ruling of B.C. Information and Privacy Commissioner David Loukidelis with respect to the SFU spinoff companies will have a direct bearing the matters at Trent and other Ontario universities. We await the decision with interest.


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Universities fight for corporate secrecy
The Georgia Straight (straight.com) - March 30, 2006
By Charlie Smith

The province’s three largest universities have argued that the public shouldn’t have access to the financial dealings of SFU’s spinoff companies. According to documents filed with the Office of the Information and Privacy Commissioner, UBC and the University of Victoria have justified this position, in part, with the claim that universities act as “service providers” to private-sector organizations.

The Canadian Association of University Teachers and the B.C. Information and Privacy Association have argued in favour of the release of these records. The Georgia Straight has obtained copies of all of their submissions to Information and Privacy Commissioner David Loukidelis, whose ruling is pending.

The dispute centres around a freedom-of-information request to SFU, which was filed by David Noble, a professor at York University. Noble, a critic of the corporate influence on universities, sought information in February 2004 from SFU’s University/Industry Liaison Office on companies spun off from SFU research.

According to Noble’s submission to Loukidelis, SFU confirmed in October 2004 that it had located records in the UILO, which is on SFU’s Burnaby campus. A year later, however, SFU took a different position, arguing that the records “are not in the custody or control of the university”.

SFU’s claimed that the records were in the sole control and custody of “Simon Fraser University Ventures”, an SFU–owned company that holds shares in spinoff companies. Noble then asked Loukidelis to conduct an inquiry and issue a legally binding order on SFU to release the records.

SFU president Michael Stevenson’s submission to Loukidelis asserts that SFUV is not a “public body” under the province’s freedom-of-information law. As the shareholder of SFUV, Stevenson wrote, the university is entitled to receive financial statements and any auditor’s report. “SFU does not have general statutory right to access all records in the possession of SFUV,” he claimed.

UBC and UVic filed a joint submission supporting SFU’s position. “There is no democracy interest invoked where the public body is acting, outside of its statutory mandate to provide services to the public, as a service provider to a private company,” UBC and UVic’s lawyer, Lorene Novakowski, wrote in the submission. “Access to the records will not further the transparency principle of government as the public body is not engaged in activities that are directly related to the mandate of the public body.”

The Canadian Association of University Teachers has intervened on Noble’s side, claiming that SFU should not be allowed to use its wholly owned company to deny public access to documents involving licensing deals. “SFU considers ‘that research is an essential component of the mission of Simon Fraser University and constitutes a major instructional activity as well’,” CAUT executive director James Turk wrote in his submission.

The B.C. Freedom of Information and Privacy Association has also intervened on Noble’s side, purporting that the universities’ position poses a “threat” to the purpose of the Freedom of Information and Protection of Privacy Act: “to make public bodies more accountable to the public”.

“Simply put, if Public Bodies can avoid the effect of the FOIPPA by using wholly owned or controlled subsidiary corporations as repositories of records, the effectiveness and purpose of the legislation will be severely impaired and the public accountability it provides will be lost,” wrote Daniel Burnett, lawyer for the B.C. Freedom of Information and Privacy Association.

High-tech entrepreneur Bart Copeland has taken an active role in the inquiry. He is chair and former CEO of Credo Interactive Inc., a Vancouver-based software company that has intervened on the side of the universities. Copeland, president of Solstice Management Group, claimed in his submission that the release of records involving third parties “will pose significant harm to the future health and development of the technology industry here in British Columbia”. Copeland noted that Solstice owns more than 25 percent of the shares in Credo Interactive, whereas SFUV only held 6.8 percent of the shares.

“To achieve world class stature requires collaboration with numerous parties including the academy, government, and businesses; inside and outside of the Province,” Copeland wrote. “We are of the strong opinion that this Inquiry does not help, but actually hinders, the future prospects of developing a vibrant technology industry in the province.”

Former SFU vice-president of research Tom Calvert—now an SFU professor emeritus of computing science, engineering science, and kinesiology—was listed as a director and secretary of Credo Interactive Inc. in documents filed with the corporate registry. SFU’s former vice-president of research, Bruce Clayman, swore an affidavit stating that he was a director and officer of SFUV, and that he created documents “solely in my capacity as a director of SFUV and in no other capacity”.

Noble told the Straight that the outcome of the hearing could have an impact in Ontario, because its universities are coming under freedom-of-information legislation in June. “One of the things we’re suggesting is without these companies being subject to FOIPPA, there is no way of knowing about corruption,” he said.

Noble said that through an access request, he was able to obtain documents concerning a licensing agreement that SFU signed with a different company linked to Calvert and Copeland. Calvert was secretary and director and Copeland was chief financial officer of Virtual Learning Environments Inc., which signed a deal with SFU on May 1, 1997. VLEI’s president was Linda Harasim, who taught communications and who generated enormous media publicity for developing on-line learning programs.

Calvert was coleader of the TeleLearning Network, which was funded by the federal government and several corporations. In 1997, the Straight reported that Noble had described the network as “an academic front for a commercial enterprise”.

Correspondence between SFU and VLEI, which no longer exists, reveal that the university tried without success over four years to recover a “direct debt”. In the end, Noble recalled, SFU absorbed a loss of approximately of $95,000 in royalties and another $189,000 for overhead.

“There is $300,000, which is a nice bit of change that the taxpayer ends up eating after funding everything,” Noble said. Calvert was unavailable for comment by the Straight’s editorial deadline.

Noble added that SFU won’t release records on a separate company called Telelearning Solutions Inc., which he described as a “spinoff” of the telelearning centre. Noble said that Telelearning Solutions was created by Joanne Curry, who managed the telelearning centre and who is now the administrator of SFU’s Surrey campus.

“I wasn’t able to get any documents on that because they alleged it wasn’t a spinoff of SFU,” Noble said.

SFU officials declined the Straight’s request for comment by deadline. Credo Interactive Inc. officials did not respond to telephone and e-mail messages by deadline.


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Notes:
  1. Trent's Hahahaha! I'm still alive! board did not explicitly reject or approve Part 4 of the Endowment Lands Master Plan which contains the recommendation for the creation of the Trent University Development Corporation. In the absence of the board's explicit rejection of the formation of such a corporation it must considered that the idea is active and still very much alive.
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Filed under: Freedom of Information  and Governance  by Editor.