No fraud found at Medicine Hat College, auditor general says

Alberta's auditor general has found no evidence of criminal activity at Medicine Hat College despite a recent audit that revealed the school's operations in China left the college 'highly susceptible' to fraud

College may still call in police to investigate

The auditor general has found no evidence of fraud in a program operated in China 2:22

Alberta’s auditor general has found no evidence of criminal activity at Medicine Hat College, despite a recent audit that revealed the school’s operations in China left the college "highly susceptible" to fraud.

In a report released last week, Auditor General Merwan Saher detailed a serious lack of financial and academic oversight at the college’s International Education Division.  The report specifically referenced a joint program the school offers with E&A College in China.

Medicine Hat College staff did not know what non-credit courses E&A College was offering, or who was teaching them.  None of the students were registered in Medicine Hat College’s system.

The audit also uncovered serious financial irregularities concerning Medicine Hat College’s payments to a private Chinese company, Qinhuangdho Rands Electronic Co. Ltd.  The college had hired Rands in 2008 to provide non-credit programs to its students in China. 

The finances of the college’s contract with Rands raised several red flags.  A 2010-2011 invoice for the company was created at Medicine Hat College, not in China.  And at one point, $212,000 was nearly deposited in the personal bank account of Rands’ president.

But assistant auditor general Ed Ryan said his office found no evidence of fraud.

"We found no evidence of criminal activity," he said. "We had good people looking hard at the situation, at quite a depth, and we found no evidence of criminality."

Ryan said the auditor general did not recommend a criminal investigation, as it is outside the purview of his office, and the decision to call in the authorities "would be up to [Medicine Hat College] and their legal counsel."

Police investigation still a possibility

Medicine Hat College registrar Craig Wood said the school may still ask police to step in.

"We have engaged legal counsel, to provide us with some advice to see if we’ve been within the bounds of law," he said.  "And we will take appropriate action if necessary."

In the meantime, he said the college has formed an "action team" comprised of board members, senior administration, faculty, and students to go through the auditor general’s report in detail, and figure out how best to introduce proper oversight of the division.  The college has already stopped admitting students at its Chinese campuses.

Wood said Medicine Hat College is also in the process of reviewing its offshore students’ academic records.  The audit found that in several instances, Chinese students received passing grades, even though they had failed their midterm or final exams;  a violation of Medicine Hat College policy.

"We’re going through [these records], case by case, to find out in what instances the grades were calculated in a way that a student passed a course where they shouldn’t have passed a course," Wood said.

"If a student passed a course fraudulently, we can go back and retroactively revoke a credential."

He said of the 877 students who attended the college’s joint programs in China, 179 came to Canada to finish their studies in Medicine Hat. 

While Wood said he remains confident that all 877 Chinese students actually exist, and were not simply manufactured as part of a fraud, "We’re not 100 per cent positive.

"Certainly, there is some doubt."

Advanced Education to visit campus

Wood said the school has been in contact with the Ministry of Advanced Education, and that ministry officials will visit Medicine Hat College next week.

Advanced Education Minister Thomas Lukaszuk has not ruled out dismissing the college’s board, or calling for a police investigation.

"I can tell you if there is a necessity, I will act accordingly," he said last week.

Ryan said he believes the college’s lax controls over the International Education Division could stem from the school’s desire to attract international students, at any cost.

"I think it was under the umbrella of a Government of Alberta goal to enhance international presence of students within Alberta," he said.

"It was an intriguing thing that added complexion to the Medicine Hat College itself. It was very well-supported, from kind of a culture and person perspective. And it was providing money."