A former chief information officer of the Council of Ontario Universities (COU) is accused of stealing over $600,000 from the organization.
Janet Donio, who is alleged to have committed the fraud, committed suicide while she was being investigated.
The COU is an umbrella organization for Ontario’s 19 public universities, which operates coordinated projects among the universities and lobbies provincial government.
Donio worked for the COU for six years ending in February of 2007. She used fake academic credentials when applying for the job, claiming to hold a bachelors degree from Lakehead University and a doctoral degree from Massachusetts Institute of Technology. The COU failed to verify her credentials.
During her time at COU, Donio is alleged to have arranged the payment of funds for invoices for services which did not exist. The allegation is that Donio funneled between $600,000 to $700,000 from the organization.
How the funds were spent or where they went is unknown at the present time. According to The Globe and Mail, Donio owned a west Toronto home worth $540,000 which was remortgaged in January for $523,000.
Leonard Brooks, a professor specializing in accounting at the University of Toronto’s Rotman School of Management, said, “Fraud can occur in any organization … with robust controls.” Brooks pointed to the recent fraud at French banking giant Société Générale as a high profile example of controls being beat.
Jérôme Kerviel, the trader response for the unauthorized trades which ultimately cost the bank 4.9 billion euros, had previously worked in the audit department and understood how to bypass controls to prevent fraud.
Corporate fraud is more common than most people believe. “One doesn’t always hear about fraud,” said Brooks. “Cases are often settled out of court. Things are kept internal.”
Donio’s fraud was not discovered until some point after her departure from the COU in February of 2007 to take a position with the United Way of Greater Toronto as vice-president for information services and operational changes.
COU launched an audit after noticing irregularities. Donio and her then-employer United Way were informed of the investigation on May 5, 2008. Donio was placed on paid leave by the United Way. The next day she was found dead in her home.
The United Way said in a statement that a special audit conducted by Deloitte & Touche uncovered no evidence — or even suspicion — of irregularities during Donio’s 15 months with that organization. The United Way also stated they will be confirming academic credentials with issuing institutions in all future hirings. Lyn Whitham, vice-president of marketing and communications, stated credential checks are normally completed during an executive search and in this case, the check was made with the COU.
Paul Genest, COU’s Executive Director, said they have been advised to not release the auditor’s preliminary findings and would not comment on specifics of the alleged fraud. He did state the fraud did not involve the Ontario Universities’ Applications Centre and in no way affected students.
He said the finalized audit will be made available to members of the COU and to government.
According to Genest, who took over the position in July 2007, the COU has implemented a large number of reforms that will prevent future fraud against the organization. “We’re making major changes,” said Genest. “We’ve hired two high-calibre accounting firms to guide us. We’re implementing their recommendations.”
Some of the changes include more robust accounting procedures that divide accounting processes among numerous employees, logging and control of cheques separate from signing authorities, and the hiring of a certified general accountant.
Brooks said hiring a CGA is an important asset for any organization. “They are professionals, trained in matters of good ethical practices and monitoring.”
The COU hopes to recoup some of the stolen funds from its insurance provider.