se fcé e CANADIAN FEDERATION OF STUDENTS FEDERATION CANADIENNE DES ETUDIANTES May 31, 2017 Dear Members: am writing to share with you a report regarding the activities of the CIBC bank account prepared by Grant Thornton. Grant Thomton is a respected global accounting firm ang is. distinct from the Federation's financial auditing firm, MNP LLP. The report summarizes Grant Thornton's Forensic Review of the account which took place following its discovery I know many members are deeply concemed about the existence of the CIBC bank account, | {go am concerned and want you to know that since discovering the account, we have done our best to respond appropriately and take action to ensure this never happens again. When members of the at-large executive fist discovered the account in 2014, it was immediately frozen and the forensic review was initiated shortly after. ‘This report follows the requests of members during the November 2016 National General ‘Meeting. It provides additional detail as to the transaction history of the account, including the total amount of unauthorized deposits and withdrawals. To summarize, from July 2010 to Decamber 2014 a total of $263,052.80 in unauthorized deposits were made, and a total of $262,776.13 in unautherized disbursements were withdrawn from the account. ‘The report confirms that the account was not known by most members of the at-large executive of the organization, nar reported to the Federation's auditar. Instead a small group of individuals operated this account independently and without regard to the financial protocols of the organization. It is important to note that no one involved in the orchestration of this account cantinues to be employed by the Federation. ‘There has been a concerted effort to change our Federation over the past two years. This, new direction is one of an unapologetic commitment to social justice and an unambiguous commitment to free education, It also focuses on building solidarity amongst members, strengthening the operations of the organization and improving services. We have positioned equity campaigns and advocacy in its rightful place at the heart of cur movement. ‘We have facilitated a fully unionized work environment for our staff and hava settled all ‘outstanding lawsuits with member locals. We have held membership referenda on three campuses, allowing students to exercise their democratic will and with that have welcomed ew members but have also seen members vote to leave. ‘The release of this report an our forensic review has already and will no doub! continue to elicit attacks from those who have been interested in dismantling the Federation since the election of national leadership in 2014 that was opposed by those with knowledge of the account. These types of attacks wil kely include various forms of blackmail, intimidation and character assassination through e-mail threads, general meeting motions and social ‘media harassment. We must say loudly and clearly that itis unwelcome, inappropriate and will not be tolerated S20 fue SOMERSET STREET WESTIOUEET | OTTAWA ONTARIO TEEPHONENELEPHONE 1825275". | PERTELECOPEUR biooieae | Pe cescegese CANADIAN FEDERATION OF STUDENTS TCOR camereceno se sens Ir would be too easy to allow the good work of our movement to be overshadowed by this unfortunate incident. instead, we must move forward with our work for social justice and Continue our commitment to strengthen financial transparency on an ongoing basis. | believe the approach we have taken is one that is setting the organization back on the right ‘rack. restoring confidence and ensuring these sorts of situations do not occur again. ‘We will not give one inch to intimidation and we know that members across the country will stand together to fight for and continue to improve our national student movement. Preceding national execulives made the dificult but necessary decision to put accountability dnd transparency ahead of complacency by initiating the forensic review, and we hope that {his teport will satisfy members’ desire for addtional information. Let us now recommit to bringing about fairer, more inclusive campuses and communities that all of us desire. In Solidarity, LAbi, Peyton Veitch National Treasurerre) GrantThornton Forensic Review Canadian Federation of Students Summary Report May 30, 2017sanaudan Feceration of Susfeits Forensic Reviow Gontidentia’ ay 30.2017 Introduction for the Canadian Heder and the Canadian Federation of Students $ (OCES.S"} colleerively Che edderaton")- . i he Pederaion which The work undoreaken was reatod 10 4 bank account ("the CIBC account") belonging t0 the F ses a swas suspected te have heen misused, and the activities of which the Federation’s executive at the rime 3 aeadicors were tert made felly aware until mid-December 2014. estemal forensic rev as of concern: The following were identified to us as pocential an I. on funds deposited into the CIBC account were aot properly received or rece tothe benefit ss that wer ration funds disbursed from the CIBC account were noc used for purpy of the Federation: 3. The transactions through the CIBC account were conducted without the knowledge and approval of lcratinn and were outside the aperating proceckures and governance structure the executive of the athe organization od 4. The existence of the CIBC account and the transactions through it, were nut katown co the audiror, thus possibly creating inaccuracies or incompleteness in the audits Far the periods concerned, “The purpose af the forensic review was to determine the nature of the transactions in the CIBC account and tw abtaia information concerning the activites of the individuals involved. irane Thoraton issued # report dated January L4, 2016 which provided detailed information an the scope of ‘work and the results of thar work. This is a summary of that report and dies aut reflect any subsequent, aulitional work Procedures performed and records reviewed Interviews We conducted interviews with 16 i on tke CIBC account. Review of CIBC account #99-16133 records juluals, peuple knows ar believed 1 have been connected to transactions We conducted a review of all available documentation for CIBG account # 9916113 of the CE Jadingg bank statements ane! transaction details for die CIBC account covering the period from its opening in July 2000 unl January 2115, “The documentation also included copies of supporting transaction related material leporie slips, eapies af cheques deposited, debit memo ca bank draft rexuest forms, bank draft copies. We conducted a source and use of funils analysis of the eransactions on the account, Review of CFS and CFS-§ records and documentation, We reviewed a number of records which icte provides by che CFS executive, including th following account opening documencation, selected [secutive Committee minutes, staff and tected member liste, correspondence relating te eeansactions and the parties invalved, Digital evidence review We frensiclly acquired images of tbree Apple iMac computers, atthe offices of the Federation. Using forensic tools and metbodoloyies, we teviewal digital information on each of che maps computers w identify additional rckant informacion, Specifically, we reviewed cml files, documene files, and messge files, Research into original payors for deposits into the CIBC accountCanadian Federa Contanen se teeaton of Students Forensic Reviow May 30,2017 We used a variety of in ‘ riety of information sources inchuling Federation records and public records to gather more information rg : : tie thew f teyardling the organizations that were the payors on che cheques depusited inte the CIBC account; He. the source of funds deposited into the accoum). Research into the recipients of funds disbursed from the CIBC account We used a variety of information sources including Federation records and public records te gather more information regarding the individuals and organizations that were the recipients of funds dishursedt from the account, Our Findings ‘uur review idcatified 32 transactions on the account, consisting of 14 deposits aad 18 disbursements in addition to interest and service charges ete. ‘The original payees on cheques deposiced into the account, and the heneficiaries of payments our of ic were identitied and ate represented in the spreadsheet at Schedule | ‘The records pertaining te the CIBC account chat were provided by the hank did not contain any infisemarion regarding the opening. of the account. The statements begin in July 2009 and indicate that the first deposit was made on July 17,2009, We have reviewed a number of documents relating te the opening that were provided tous by CPS and these have been verified Review of secon opeutig decumetation We reviewed documents that collect ¢ corroborate the information nbtained from the persons interviewed which indicate that the CIBC account was set op as part of the Travel CUTS seceivership and sake, ‘They also make clear thar the inital deposit of $1.6 million was specifically related to Travel CUTS, and was collateral for Lecter of Credit in the same amount. ‘The documents also corroborate the involvement of three key individuals in this pracess, one farmer officer and two former employees. Phe Travel CUTS scary deposit autharized transactions We have heen tk by persons interviewed, that the CIBC account was originally set up for the purpose of providing s security deposit for a CFS-S subsidiary, Travel CUTS, in eelation to its debes with Moneris, ‘The {um of $1.6 million seas placed into the xccount ss security /coliateral for a Letter of Credit taken out by Travel CUTS during the period of its receivership soul subsequent sale, At che conclusion of the receivership proceedings, the sum was returned to CFS-S, appaready with some interest. These stacements are carroboracel bby other eleeteonie and documentary evidence, We have confirmed that the first these (authorized) transactions in the CIBC account correspond with the details which we have been given regarding the Travel CUTS security deposit. (Our analysis indicates thar the account was apened in July 2009, and shae the initial deposit, of the sum of $1.6 rnillion from the Canadian Federation of Suudents-Services, was made on July 17, 2009, ‘There were two subsequent disbursements ftom the account which appear to be related to the initial deposit according evidence pravided in a number of the witness interviews. These are as follows: Debit memo to bank deaft ~ October 12, 200; $1.22: 1 6, QUIN: $374,468.22 (includes $368.22 in incerest) Acthe conclusion of these theee authorized eransactions the account balance was $C. Debit memo to bank draft — Ma We have confirmed the decails af che Teavel CUTS receivership ehrough t Office of the Superimendent of Bankeuptey Susequent, anunhoriged transactions on the CANC anconatCCanselan Federation of Students Forensle Review Confidential ‘ay 20. 2017 suri sit, which ‘The transactions which took place subsequent to the repayment of the Travel eel Oe See was concluded on May 6, 2010, were outside the purpose for which the account hac ‘ion of the Federation review has determined that they were not authorized and were noc brought to the aunerdon of ie Pee management oF the respective Treasurers who were in office ducing the period Be ee active. We have also been told that the existence of the accaunt and the unauthorized trans ‘Been brought to the attention of the auditor. ‘Our review identified the following unauthorized transactions which occurted after May 6, 2010: The unauthorized depest of dived finde 14, rotalling A series of 13 deposits were made into the account herween July 14, 2010 and March 25, 2014, 53263,052.80. These deposits appear ro have been nade at the Bank and Queen Branch of the CIBC in Oxtawa, ‘hich is a ten minute (eight block) walk from the CFS office at 338C Somerset Street, Uneutharigad disbursements from the CIBC account A series of 16 withdrawals were made from the account between July 15, 2010 and December 17, 2014, totaling $262,776.13. The difference besween the unauthorized deposits and the subsequent unauthorized withdrawals $279.67 is made up of account and other fees. The final withdrawal, which took place on December 17, 2014, was in fact undertaken by the bank, which had Cae 4 ft frome the CES office instructing thatthe accoune be closed and the remaining balance sent eo CESin a date, This amour, $27,771.35, epresenting the final balance on that date, was withtawn asa deafe wwe understand thar thesc funds have been returned to the Federation in a separate transaction, ‘The other 1 Vithdcawls cotalling $235,004.78 were macle vo atatal of 5 payees, Details ofthese transactions are at Schade L The closing of te CIBC asconnt Our fining regarding transactions on the CIBC Accounts 1. The bank secords for the CIBC account indicate that it was ‘Opened on July 17, 2009 in the name of CFS. Services, and was closed on December 47,2014, 2 The ist thee transactions on che account, a deposit of $1.6 millon on July 17,2009 and in subsequent withdrawal in two installments on December. 10, 2009 and May 6, 2010, correlate with the details we have ‘these dee transactions were authorized and reflect che original purpose for which the Account was set up. 3+ Subsequently, a further 13 deposits and 16 disbursements were made on the CIBC account Priot to it being Pesce These wansactions were not authorized or known of by the key exceusie members of the Federation (the Chair, and the Treasurer) atthe time they occurred. 4 The 13 unauthorized deposits into che CIBC account all consis of fonds intended for diffetent parts of the organization. ‘The funds included payments intended for services and advertising, refunds, return of ‘ecliness from law firms and payment relating to the national health plan as well ne mveay Payments for eee [SGnn Toman LF A Conan Seer of rr Then aap A At earn,Canadian Fedration ofS nrtion of Students Forensic Review Confidential crensle Revi May 30, 2097 Interastional Suudeat (D Cards. The July 14, 2010 and March 25, 2014, uhorized deposits totalled $263,052.80 and took place between None of the former executives we have interviewed were aware of these additional funels being leper inva the CIBC account. They have s1 this purpose and " accounts at th ed id chat they did not know that the CIBC account was being used far of the belief that all funds belonging to the Federation were deposited inte its otia Bank. Two former utficers said that they had heen told of the account, but knew fone of the specifics of either the account itself, or the details of the unauthorized transactions, Both claim to have been told about the nature of the activities on the account at a strategie level only ‘The unauthorized disbursements made fram the CIBC account went to five recipients: two of whom, are former employees of the Fedemtion, a further individual, one law firm and a consulting company. These transactions, together with the closing transaction, bank fees, interest, etc, totalled $263,055.80. Only peo former employees hav 6. sddmitted being aware of unauthorized disbursements made from the CIBC account. None of the other witnesses we have interviewed knesw of or approved the transactions. “These witnesses have also stated that they were nor aware of and did aot authorize any transactions thac svete not properly recorded in the accounts of the Federation. Many of them expressed surprise that “off the bouk™ payments had been made an behalf of the Federation. Our review id not validate what the recipients of the funds dispersed from the CIBC account did with the money. Altheugh in some cases we were provided with a verbal explanation, we were not provided with any supporting dacumentation or evidence and were not able to develop such investigation, 9. The sp cadsheet at ‘chedule | details all of the transactions that have hecn identified tur the CUBC account. Restriction and Limitations “This Summary Report was prepared in regards to che forensic review for the Federation, The Summary Report is not te be used for any ather purpose and we specifically disclaim any responsibility for losses o¢ damages incurred throuyh use of this Report for a purpose other than as described in this paragraph. tt showkd not be reproduced in whole or in part withoue our express weitten permission, other than as required by you in relation, to the above nuted intent. We reserve the fight, but will be under no obligation, to review and/ar revise the contents of this Report in iglt of information which becomes known to us after the date of this Report, ‘Yours truly, Grant Thornton LLP ko Ptr Greed Jenhitce Fiddian Greet CPA, CAIFA, (1 Parner Sandy Boucher BS¢, CF Senior lavestigator FL, CEE, CAMSInorder to protect the privacy af person involved, we have redacted the name> 2) Schedule 1 Canadian Federation of Students Forensic Review All Transactions In CIC Account Withdrawal ! Date Transaction epost ' te wom Source / Rec Type _o8 ‘Authorized Transactions 00 ‘07/17/2009 Canaian Federation of Student Services Deposit 1,600,0004 09/18/2008. Interest Credit Memo 30822 os 00.00 2/10/2008 Canadian Federation of Student Services Bank Draft “974,268.22 95/06/2010 Canadian Federation of Student Services Bank Draft bibles fatal Authorized Transactions 900,360.22 _1,800.968.22 ‘Unauthorized Transactions 07/14/2010 Deposit / Corection Dep/Cor 29,805.20 07/14/2010 Deposit / Corection Dep/ Corr 29,805.20 07/44/2010 Walsh Wilkins Creighton LLP Deposit 29,747.86 07/14/2010 Purctator Courter Lid. Deposit aacr ‘07/18/2010 Former CFS-Quebec employes Bank Draft 25,000.00 10/18/2010 Howrey Client Escrow Account Deposit 4,872.76 10/21/2010 Exchange $USD. Service Fees 28.75 1411072010 Cartiied General Accountants Of Brtish Cohmbia Deposit 4,000.00 11/10/2010 Federation Of Post-Secondary Educators Of B.C. Deposit 3,000.00 11/10/2010 B.C. Goverment And Service Employees Union, Deposit 787.50 11/10/2010 District Realty Real Estate Trust Deposit 366.45, 102610 Evetest Restoration (Ottawa) Lid Deposit 225.00 14/12/2010 Former CFS-Quobec employee Bank Draft 17,500.00 022972011 Onlario Small Business Transition Support Deposit 1,000.00, (02/23/2011 Momeau Sobeco Deposit 1,488.24 02/23/2011 Rights & Democracy Deposit 96457 (02/25/2011 Former employe Bank Draft 3,000.00 03/10/2011 Momeau Sobeco Deposit 188,874.32 (06/08/2011 Former employee Bank Draft 415,500.00 407272011 Brant Consulting Bank Draft 29,945.00 (01/19/2012 Clayton Ruby Professional Corp Trust Account Bonk Draft 125,000.00 2/0/2012 Former CFS-Quebec employee Bank Draft 25,000.00 (03/15/2012 Brock University Students’ Union Deposit 1,828.00 03/15/2012 International Student Identiy Card applicant Deposit 21.50 (03/18/2012 International Student Identity Card applicant Doposit 2150 03/45/2012 Intemational Studont Identity Card applicant Depasit 2150 03/5/2012 Intemational Student fdentity Card applicant Deposit 21.50 03/15/2012 Intemational Student tdentty Card applicant Deposit 2150 03/15/2012 Intemational Student Identity Card applicant Deposit 21.80 (03/15/2012 Unknown / Missing Deposit 43.00 04/24/2012 Brant Consulting ‘Bank Draft 9,800.00 (04/302012 Clayton Ruby Professional Corp Trust Account Bank Oratt 16.000,00 (09/28/2012 Bank Draft - No Name Deposit 20.00 (09/26/2012 Bank Draft - No Name Ooposit 20.00 40/16/2012 Claytan Ruby Professional Corp Trust Account Bank Draft 40,000.00 Contsenita Page 1082SHMINEEO PrOIECt the privacy of person involved, we have redactes the names of individuals from this schedule Privacy of perso Ganadian Federation of Students Forensit Review ‘Schedule 4 All Transactions in CIBC Account : Marr) Transaction Deposit? ‘Withdrawal Source / Recipient Credit 10/16/2012 Former CFS-Cuebec employes Bank Draft moe C¥15i2013 Intemational Student Klensity Card applicent Dopost ao 01/15/2013 Intemational Student Identity Card applicant Deposit iene 01/16/2013 Intemational Student Identity Gard applicant Deposit on 01/15/2013 Intemational Student Identity Card applicant Deposit an 01/15/2013 Intemational Student Idantity Card applicant Deposit za09 0115/2013 Bank Draft- No Name Deposit o1rs2013 Federation Des Etudiants Et Etudiates DuCenve ——nyaoga 799.00 Universitaire De Moncton nde 5,350.78 02/04/2013 Clayton Ruby Professional Corp Trust Account Bank Drak 1,000.00 02/04/2013 Former employee ; om Dra ae 04/26/2013 Intemational Student Identity Card applicant enn6 04/25/2013 Intemational Student Identity Card applicant Deposit za00 04/25/2013 International Student Identity Card applicant oerest ae 04/26/2013 Intemational Student Identity Card applicant Depost 2180 04/26/2013 International Student Identity Card applicant ets a150 04/25/2013 Intemational Student Identity Card applicant ped (04/25/2013 International Student Identity Card applicant Deposit 2150 04/28/2013 _Internaliona! Student Identity Card applicant rosie wae 04/25/2013 Gowlings Lip . . 41.36.20 06/18/2013 Tarace 8 Distt Community Sendcas Socity Deposit 8820 06/18/2013 International Student Identity Card, apphican| Deposit 5506 06/18/2013 Intemational Student Identity Card @pplicant Deposit o00 (06/18/2013 International Student Identity Card applicant om nee 06/18/2013 Intemational Student identity Card applicant it 2000 06/18/2013 Intemational Student! Identity Card ee Deposit 2000 06/18/2013 International Student Identity Card applicar onset oe 06/48/2013 International Student Identity Card applicant Enea aaa 06/18/2013 International Student identity Card applicant Come a 12/12/2013 Loyalist Cotege Eon =a 12/12/2013 DomainPeople Inc. fovea aan 12/12/2013 Former employes Bark Ort s4ooe0 12/12/2013 Former employee Deposit 47,033.00 03/25/2014 Gowlings LLP a 33.00 03/25/2014 Canada Post Fea ae 03/25/2014 Bank oan x ale becoa eed 14 Bank Draft = No Nama annas ‘asia Carns coven er toi Seve esi Mero a0 01/14/2015 Credit Memo acl soe various Service Fees (57 transactions) ee cust Gace) 07/14/2010 Deposit / Correction 263,055.80 263,055.80 [otal All Transactions 1,065,42402 1,863,424.02] fotal A Trat