Researchers at Laurentian University raise concerns about access to federal funds

As Laurentian continues to work its way out of the Companies' Creditors Arrangement Act (CCAA), some researchers question whether funding for their efforts has been lost, and why they have to justify access to their own accounts. Several research agencies have filed claims against the Sudbury university.

Federal research agencies have filed claims of more than $7M against Laurentian

Laurentian says research continues as the Sudbury, Ont., university restructures, while federal research agencies are listed as creditors against the financially beleaguered institution. (Radio-Canada)

As Laurentian continues to work its way out of the Companies' Creditors Arrangement Act (CCAA), some researchers question whether funding for their efforts has been lost, and why they have to justify access to their own accounts.

Several research agencies, including those in the Tri-Agency  — the three Canadian government research funding agencies — have filed claims against Laurentian. 

The Tri-Agency is comprised of the Canadian Institutes of Health Research (CIHR), the Natural Sciences and Engineering Research Council of Canada (NSERC) and the Social Sciences and Humanities Research Council (SSHRC). According to its website, the three are a major source of research funding for post-secondary institutions across Canada, and are overseen by the federal Ministry of Innovation, Science and Industry.

Laurentian has told CBC in a statement that "despite the impacts of COVID-19 and additional restrictions as a result of CCAA, Laurentian faculty and graduate students continue to be engaged in research activities across the university and at field locations around Ontario."

Laurentian says research continues during restructuring

Laurentian declared insolvency Feb. 1 and entered creditor protection under federal CCAA legislation, which has allowed the university to continue to operate while restructuring to deal with its financial problems, and has prompted hundreds of creditors to file claims. 

Court documents show the Tri-Agency alone has filed for more than $7 million.

It's not entirely clear what that claim is based on.

The Tri-Agency, in response to CBC's questions, would only say that funds disbursed after Dec. 1, 2020, have been put in a segregated account at Laurentian and it's working with Laurentian to get the money to researchers. The Tri-Agency added the matter is before the courts and it can't comment further.

The court monitor overseeing Laurentian's restructuring notes that the December date is important. 

Ernst & Young wrote in its first report on factors leading to Laurentian's insolvency, that prior to that December date, Laurentian deposited all funds it received, including those earmarked for specific purposes, such as research awards, into the same bank account and the funds effectively were co-mingled. 

It said Laurentian paid all of its expenses out of this main operating account.

In addition, it said Laurentian used all funds available in the operating account before drawing on its lines of credit, which it said was not an uncommon practice. 

Ernst & Young further explained that most universities have sufficient cash reserves to cover these obligations. However, in Laurentian's case, as a result of its historical deficits and other issues, Laurentian didn't have enough money to cover all of its obligations. 

The monitor said that Laurentian's cash management practices were brought to the attention of the university's President and the matter was discussed with the Board. 

The Board instructed management to amend its practice and immediately create three new bank accounts in December, one of which was for segregated research funds.

Researcher claims no direct funding access

How those funds are being handled now remains unclear.

One researcher still employed at Laurentian spoke to CBC on condition of anonymity. The individual is worried speaking out publicly could further restrict access to research funding and endanger their job, which they feel is already precarious due to Laurentian's financial crisis.

However, they claim they no longer have direct access to the funding they've been awarded.

Instead, researchers must fill out a form justifying their expenses, and send it to the vice-president of research, who decides whether or not to release the funds.

The researcher who spoke to CBC points out the money does not belong to Laurentian, and it is highly embarrassing to have to request funds that are being held back.

Not only that, they say, delays in the research due to money slowing to a trickle have caused damage to their relationship with research partners in other provinces and the U.S.

The researcher wants the institution to be held accountable for holding back funds.

Laurentian University president Robert Haché defends the management of research funds, saying, 'We are doing everything we can to support the continuation of all critical research at the university.' (Parliament of Canada)

Laurentian president Robert Haché defends the management of research funds.

"We are doing everything we can to support the continuation of all critical research at the university, the support of graduate students going forward as we go through and complete the process, and we are going to do everything we can to meet all of those obligations," he said. "But in the context of a very challenging situation, we have to do that  in a very careful way."

Questioned on whether it is Laurentian's responsibility to manage research funding, Haché said that's the way it has to be.

"It's managed in the context of the overall funding that comes to the institution as well as we have to, according to this process. 

Research funds cited by court monitor

In its seventh report filed Aug. 24, the monitor updated Laurentian's cash flow situation, mentioning the research funds.

"Critical research pursuant to research grants received prior to December 2020 for which funds were not segregated are funded to the extent the research is required to support students enrolled in LU [Laurentian University] programs. Non-critical research continues to be deferred."

The president of the Laurentian University Faculty Union (LUFA) also issued a statement to CBC.

"Laurentian is still under the purview of the court through the work of the monitor when it comes to any spending decisions, including expense approvals in all circumstances," said Fabrice Colin. "That applies to all the budgets and funds (including segregated research monies) as it comes down to cash flow management of Laurentian's limited resources.

"Indeed, the fact these third-party funds could have been previously co-mingled with Laurentian's general operating monies in such a way and wrongfully spent for other than their intended purpose is mind-blowing," Colin's statement reads. "We hope that the governance review process that was part of the agreement between the parties (Term Sheet) will shed some light on these practices, and bring some answers and solutions for the future."

David Leadbeater, an adjunct professor in economics at Laurentian, has no salary or teaching obligations, but is still allowed to conduct research. (supplied by David Leadbeater)

David Leadbeater is not afraid to speak out and suggest a different route.

The associate economics professor was among dozens who lost their jobs in April's employee and program cuts, as the university sought to reduce costs and its operating budget. Now, he's an adjunct, which means he has no salary or teaching obligations, but is still allowed to conduct research.

Leadbeater said that in all, he's entitled to about $100,000 in funding, part of it from a prestigious SSHRC grant. His research is in progress, but isn't complete.

Leadbeater is studying the amalgamation of the town of Schumacher in Timmins and its economic resiliency, which he says could provide lessons for other northern economies.

He is incensed that the research funds are flowing so slowly under the CCAA process, and fearful the Tri-Agency will not be compensated fully for its more than $7-million claim.

Leadbeater thinks there is a better way that would make sure researchers get the federal money.

He wants the Tri-Agency to withdraw its claim and flow the money to researchers as promised.

"I'm saying the federal government should withdraw from its claims and make whole those monies to the researchers, and they can have them administered through either its own portal with the particular agency, such as the Social Sciences Humanities Research Council, or through a neighbouring university," he said. "But they should not be at the table. They should have a system of trust established with the granting of funds and proper oversight. And clearly, the federal government has not used proper oversight for institutions like Laurentian to protect the research funds that are public money."

SSHRC responds

Leadbeater has written to the federal government suggesting this; the Ministry of Innovation, Science and Industry told CBC News it couldn't comment since the matter was before the courts.

Also in reply, a spokesperson for the SSHRC said in a statement.

"The granting agencies, in keeping with practice since Laurentian University's creditor protection period began in December 2020, have been working collaboratively with the university administration to continue to issue awarded funds. These funds are helping to ensure research continuity, while awaiting the results of the restructuring process at Laurentian, and are held in a separate account that is restricted to use by grantees for the costs associated with funded research projects."

Leadbeater said what worries him more than losing his own funding is losing money his community partners entrusted to him.

Schumacher funds in question

Leadbeater was working with documentary filmmaker Lloyd Salomone, co-founder of the Schumacher Arts Culture and Heritage Association (SACHA), on the study of the town's economic resiliency.

Salomone said they raised $5,000 in the community for Leadbeater to do some archival research for them, and it was deposited in Leadbeater's research account.

Also, Salomone said, the Schumacher Foundation contributed $20,000 to match an SSHRC grant that Leadbeater was awarded.

Salomone said the foundation has been in touch with Laurentian to find out where their money went.

He says Laurentian told him that Leadbeater has access to some of the money in his account, but Salomone wonders why the balance is being held back..

"If he doesn't have access to all the money in his accounts and that he can only withdraw a few thousand dollars at a time, the chances are that money is probably used for other purposes."

Salomone said delays in getting enough funding are putting the research in jeopardy.

He said interview subjects are aging, and time is of the essence to get Leadbeater into the community to have their oral history documented.

Regardless, Salomone feels Leadbeater's research accounts should have been protected from insolvency, but as the situation stands now, he is not sure if the community or the foundation will get their money back.

Leadbeater said he has even pressured the federal Liberal representative for Sudbury to intervene.

Paul Lefebvre, the Liberal MP for Sudbury when Laurentian declared insolvency last February, says he was advocating for researchers to get money owed to them. (Kate Rutherford/CBC)

Sudbury MP Paul Lefebvre said he had heard about the research money issue and was advocating for researchers to get the funding owed to them, but that's all he could do.

"I think at the end of the day, there are protocols to follow, and there's agreements and contracts between the researchers and Laurentian, and Laurentian and the Tri-councils [Tri-Agency]." 

There is some talk about whether the Tri-Agency should be involved in the claims, said Lefebvre.

"Should they be creditors, should they not be creditors, right, so that is the conversation that is going on at the federal level."

Regardless, Leadbeater remains convinced the federal government should have been more aware of how public money was being handled and protected it from situations such as Laurentian's insolvency.

The provincial auditor general, Bonnie Lysyk, is in the process of conducting a value-for-money audit of Laurentian's accounts in which she will assess whether there were any irregularities or mismanagement of funds. 

Laurentian University has received an extension of its stay of proceedings against creditors, until Jan. 31, 2022, when it expects to have a plan to address claims from creditors, including research agencies, and to exit CCAA protection.


Kate Rutherford


Kate Rutherford is a CBC newsreader and reporter in Sudbury. News tips can be sent to