The University of Regina drained one of its trust accounts in order to pay off unusual overspending — much of it on legal expenses — by the dean of the Faculty of Engineering, CBC News has learned.
According to a document obtained by CBC News, entitled Discovery Project Update, several research accounts managed by Dean Paitoon Tontiwachwuthikul, were overspent by $1.3 million.
The document reveals the overspending took place over a number of years, and the trust account — which was an endowment, or gift, to the U of R — was drained to pay for the overspending.
"For several years there have been issues with the Faculty of Engineering and Applied Science having numerous overspent research accounts," the report, dated April 2012, said.
The Discovery Project was the code-name assigned to an internal review of the Faculty of Engineering and examined records from May 2006 to December 2011.
It outlined how university officials paid debt owed by Tontiwachwuthikul by draining the industry-funded endowment.
"A funding source of $1.3 million, which is an endowment from Wascana Energy Inc. from 1997, was identified within trust as a payment option for these overspent accounts," the report said.
It noted that by April 19, 2012 almost every dollar in the fund was gone.
"Should accounts become overspent again, then the approximately $95,000 [remaining]…is available to offset them," the report said.
The revelation that a donation account was used to cover overspending surprised Gary Tompkins, who is chairman of the U of R Faculty Association.
"Who's accountable for this?" Tompkins asked, noting it was a highly unusual move for a university. "And how could it go on for that many years? That's the disturbing thing about it."
Overspending not allowed at U of R
According to policies of the university, all faculties must live within their stated budgets.
While faculties have control over their spending, through research accounts, the U of R has strict — and clear — rules which allow overspending in only exceptional cases.
According to the published policies "overspending is not allowed" and "fund managers may be held personally liable for overspending their research funds."
CBC News asked a spokeswoman for the university to describe the nature of the overspending.
"Oh I don't know. I don't know. That was three years ago," Barb Pollock, vice-president of external relations said. "I didn't look into that. It would be research related."
Pollock also said that some expected research funding failed to come in.
In a follow-up email, after Pollock spoke to CBC News, the university provided some detail and acknowledged that more than $500,000 was spent by the faculty of engineering on legal fees "for patent and intellectual property work."
When Pollock spoke about the issue, she said officials considered reducing research funds to the faculty of engineering to recover the overspending. However, she said such a claw-back would have made things extremely difficult for the faculty.
"It would have risked the amount of money in that whole budget," she said. "It would have put at risk the teaching, the students and the whole bit."
Still, because of the overspending, the faculty of engineering was put under what Pollock called "very strict oversight."
For months after, any spending over $5,000 by the faculty required approval by a U of R vice president.
"We have dealt with it to our satisfaction." Pollock added. "When a budget manager overspends and has some difficulties with that, we provide fiscal management support and oversight and that was done in this case."
University defends use of donated money
Pollock said it was OK to cover the overspent accounts using money that had been donated by the private sector, in this case Wascana Energy.
"This gift was allowed to be, by terms of reference, was allowed to be used in this way," Pollock said. "We don't play fast and loose with donors gifts."
In an email, the university said the funds were used for petroleum engineering.
The endowment was granted to the U of R back in 1997 by the Wascana Energy Inc., now owned by Calgary-based Nexen.
CBC News asked the university for a copy of the terms of reference in order to verify they allowed for bailing out of overspent accounts.
But the university refused to provide it.
CBC has, by other means, obtained a copy of that document and it offers a much more specific description of how the money was to be used.
The trust agreement between the two organizations says Wascana Energy will provide a $1 million endowment to establish "a research chair at the U of R with a focus on heavy oil recovery processes."
The university promised to set up the research chair, find other funding and staff to support it and provide lab space and infrastructure support for the chair.
However, the money sat unspent for 15 years, collecting interest, until U of R administration decided to use it to pay off the faculty of engineering's overspent accounts.
The faculty association's Gary Tompkins says "the optics aren't very good." "I think morally, the purpose was to create a research chair," Tompkins said. "To do this [pay off overspending] instead was, I think, inappropriate."
He says such an approach will hurt the university's fundraising efforts.
"If the donor knew that we're not going to do a research chair, [that] we're going to bail out an overspent research account by a dean, I'm sure they'd have second thoughts about making that donation," Tompkins said.
CBC News contacted Nexen, which bought out Wascana Energy Inc., but it declined to comment on the matter.
CBC News also contacted Paitoon Tontiwachwuthikul by email and he also declined to offer comment.