On Nov. 2, 2012, McGill University filed a lawsuit against Arthur Porter, the former Director General and CEO of the McGill University Health Centre (MUHC). Porter resigned from his position on Dec. 5, 2011, at which point McGill demanded repayment of a $500,000 loan the university issued to Porter in 2008.

Since the lawsuit was announced, Porter has made national headlines and has been a subject of great controversy. Details have emerged in the past few months connecting the loan to a real estate deal—$500,000 on Porter’s condo in downtown Montreal. While much research has been directed towards Porter’s background, little has been said about the terms and finer details of this loan agreement.

In 2008, McGill signed a hypothec with Porter. The hypothec—the Quebec equivalent of a mortgage—was intended to secure the repayment of McGill’s loan to Porter.  This $500,000 loan was actually the second one that Porter took out against the property, doubling the amount borrowed against it and making McGill a low-priority creditor.

Did McGill protect its financial interests in this transaction? After an examination of McGill’s  housing loan to and subsequent case against Porter, questions remain.

The lawsuit

By the time that McGill filed its motion, Porter had already paid back $214,409.60. Specifically, the university’s November lawsuit sought re-payment in the sum of $317,153.89; $285,590.40 of this amount would fully repay Porter’s loan. The remaining money in the lawsuit was charged for overpaid wages on Porter’s professor’s salary, and any interest accrued on the loan (at one per cent interest annually). On Jan. 25, a judge in the Quebec Superior Court ordered Porter to pay McGill $252,077.16.

McGill bases its suit on a promissory note that Porter signed for the university in 2008. The note, which serves as an IOU, or evidence of debt, stipulates that Porter must repay McGill the sum of $500,000 on demand. The promissory note was signed and witnessed by Lynn Panneton, who was reported by La Presse to have been Porter’s assistant at the MUHC at the time.

McGill’s November 2012 lawsuit cites a one per cent interest rate following the passage demanding repayment. However, the note makes no mention of an interest rate on this loan, nor does it outline what the repayment is for. It merely provides a statement of debt.

One condo, two loans

However, as details about McGill’s suit have emerged, news outlets across Canada have linked the $500,000 loan to Porter to a real estate deal—considered one of the incentives offered to bring the well-regarded executive north of the border.  The loan has been connected to Porter’s condo on boulevard de Maisonneuve, and was not the first loan Porter had taken out against the property.

In 2004, Porter received a $400,000 loan from the Bank of Montreal (BMO) in order to purchase the property from its previous owner. He purchased the Maisonneuve property on Sept. 27, 2004 for $546,368.75.

In 2008, Porter received a second loan, from McGill, for $500,000. This brought the value of the existing claims against the property to a total of $900,000.

Porter sold the house in April 2012 for $450,000—half of the total value that he’d borrowed against the house. Six months later, McGill filed its motion with the Quebec Superior Court.

Unless the value of the property doubled, and then dramatically dropped back down over the course of ten years, it appears that Porter received loans well in excess of the property’s actual value.

Housing Loan Agreement

On Mar. 5, 2008, McGill and Porter signed a Housing Loan Agreement, stipulating the terms of the loan and repayment. The only reference to the Housing Loan Agreement—which is unavailable to the public—that the Tribune could find was in the hypothec that the two parties signed in 2008. The entire hypothec was based on this Housing Loan Agreement, which is referenced as evidence that McGill lent Porter $500,000.

The hypothec was signed by Porter and McGill on Jun. 9, 2008, three months after the $500,000 was issued. Between March and June 2008, the nature of the arrangement between the two parties remains unclear to the Tribune.

The hypothec

As the second lender against the property, McGill was only second in line to reclaim its money from Porter. McGill’s hypothec with Porter acknowledged the Bank of Montreal’s higher-priority claim on the property, meaning that the Bank would have to be paid back before McGill could receive its money. The claim was still registered against the property at the time of the June 2008 document’s signature, and the hypothec shows that McGill was aware of the previous lender and that it accepted second-priority status.

Perhaps in order to address this gap, the hypothec also outlines the university’s recourse in order to protect its loan in event of “defaults and effects.”  It states that McGill may “exact the immediate payment of all the amounts then owing to it”—in other words, the university could demand a repayment of its money should Porter claim bankruptcy and dissolve his debts, or if a prior claim on the property—such as BMO’s—took precedence over McGill’s.

This means that, in the event of any significant obstacles to McGill’s claim, the university would be able to demand repayment, rather than seize the property.

The promissory note

The $500,000 Housing Loan Agreement was signed on Mar. 5, 2008, one day before Porter signed a promissory note to McGill evidencing his debt to the university for the same amount.

Although the two evidences of debt occurred close in time,  the Tribune has found no connection between the loan and the promissory note. In its November lawsuit, McGill refers only to the promissory note to justify its demands for repayment, and it does not refer to the Housing Loan Agreement signed on the previous day.  Nowhere in its suit does the university connect the $500,000 loan to a real estate deal.

It is possible to speculate that McGill’s use of the note in the suit—and not the Housing Loan—may be because it only seeks re-payment of the loan. As the second claimant on the property—which had already been sold in April 2012—McGill was lower on the priority list of creditors to be repaid. The only apparent way for McGill to secure its position would be to stipulate that it would receive repayment, not the property, in any events of default. McGill took this step to safeguard its interests.

Securing its interests?

Was Arthur Porter a secure investment for the university? An interest-free promissory note would suggest that it thought so. Although McGill was likely looking to create incentives for Porter to head the MUHC, a secondary claim on a property that was likely worth well under $900,000 seems puzzling.

In fact, in order to protect its  interests from its second place position on this seemingly overvalued property, McGill included a clause on the hypothec that stipulates it must receive repayment even in the event of default or a pre-existing loan, as in the case of BMO’s loan to Porter.

Four years later, Porter sold the house; BMO is presumed to have been repaid. A judge in the Quebec Superior Court ruled in favour of McGill on Jan. 25, 2013.

Did the university adequately protect its interests? To date, McGill has not been repaid the remainder of the loan.

All information, except for Porter’s housing loan agreement with McGill, is available to the public at the Registre Foncier and the Montreal Palais de Justice. The McGill adminstration did not respond to requests for comment.

—Additional reporting by Carolina Millán Ronchetti. Files from Ilia Blinderman.

Around 9 p.m. on Monday night, a group known as McGillLeaks sent all McGill undergraduate students an email using the Students’ Society of McGill University (SSMU) Vice-President (VP) Internal’s email account. The email contained a message to the McGill community, incorporating McGillLeaks’ stated purpose, and an attached link to various confidential files “pertaining to McGill’s corporate fundraising efforts” obtained by anonymous sources.

Less than an hour later, SSMU VP Internal Michael Szpejda and SSMU President Josh Redel sent another email to all members of SSMU, apologizing for the previous email sent from the account. According to Redel, Szpejda’s account is the only one registered with [email protected], which has the ability to send out listservs to all McGill undergraduates.

“It is our sincere apology that the last email was sent out from the SSMU mass email account hosted by MailChimp,” Szpejda’s email reads. “It was done so without the knowledge or permission of the SSMU VP Internal. We are currently investigating the situation, and have taken steps to prevent further such action.”

Redel told the Tribune that the email was likely sent by someone who had access to the VP Internal’s email password.

“Realistically, for someone to be able to hack that account would require a relatively great skill that I don’t think someone of this project would have casually,” he said.  “So, unless they had connections to larger hacking networks, I don’t think that they hacked it; I just think that they somehow had the password. We are taking measures to make sure they can’t get back in.”

Redel also said that both he and Szpejda were in a SSMU Council Steering Committee meeting in the boardroom of the SSMU office when McGillLeaks sent the email. When asked whether or not he could have left his email logged in and open in his office during the meeting, Szpejda indicated that he did not think that he had. Redel, standing with Szpejda, then said that although Szpejda was not in his office at the time the email was sent, the SSMU executive email accounts automatically log out after a short while.

Both Szpejda and Redel have said that so far, they do not have an explanation as to how this could have happened.

“We’ve sent out an apology email,” Szpejda said. “We’re looking into it, and we’ve also contacted McGill it about it. We’ll be following up with it.”

Based on initial investigations by the SSMU executive team that occurred within the hour after the email was sent out, Redel did confirm that it appeared as though the email had been scheduled to go out in advance.

In the anonymous email, McGillLeaks mentioned how McGill had taken legal action against the organization last March.

“In March 2012, we released to the public about one third of the documents in our possession,” McGillLeaks’ email read. “McGill University took legal action that delayed our release of the other documents. These focus on McGill’s fundraising activities in the oil and gas, mining and financial sectors.”

The remaining two-thirds of the documents to which the email refers were released in a link with their Apr. 8 email.

“We have verified the authenticity of the documents, and their content has not been altered in any way, except to redact certain personal information, especially information that the University has collected on the children of fundraising targets,” the email continues.

McGillLeaks also relaunched their website the same night as they sent the email. The website had been taken down after the legal action by McGill.

Vice-Principal External Relations, Olivier Marcil, told the Tribune that the administration had begun to take action to prevent further dissemination of the documents on Tuesday.

“Confidential documents belonging to the University and containing personal information were stolen and published on the Internet without our consent,” he said. “It’s the second time that McGill has had to deal with this type of incident. The police are investigating and we are doing our best to limit dissemination of the documents in question.”

Chris Bangs, founder of McGilliLeaked—a website distinct from McGillLeaks that publishes documents obtained from McGill through Access to Information (ATI) requests—confirmed that he has no affiliation with McGillLeaks, and that every document released on his website was obtained and distributed legally.

“[The name of the McGilliLeaked website] was chosen intentionally as a play on the controversy when McGillLeaks came out last year,” Bangs said. “It has no connection to it. I stand by everything that was published on [McGilliLeaked]. It was all received through ATI requests or the archives. There’s no real connection beyond the fact that they publish documents related to McGill.”

McGillLeaks could not be reached for comment.

—Additional reporting by Carolina Millán Ronchetti

September, 2012 – PQ Elected

On Sept. 4, 2012, the Parti Québécois (PQ) was elected into a minority government. The elections occurred after months of student protests against the former Liberal government’s proposed tuition increases.

As part of their platform, the PQ promised to cancel the tuition increases. The new premier, Pauline Marois, did so by decree during the provincial government’s first cabinet meeting on Sept. 29, 2012.

On Sept. 28, Deputy Provost (Student Life and Learning) Morton Mendelson published a statement on the McGill Student Accounts website which confirmed that the university would return the increased tuition fees to students.

However, McGill had created its budget for the 2012-2013 school year with the tuition increases in mind. Provost Anthony Masi predicted that McGill would lose $90 million over the following five years due to the freeze.

November, 2012 – Arthur Porter

Arthur Porter, former McGill professor and director general and chief executive officer of the McGill University Health Center (MUHC), was involved in a financial scandal that received national attention.

McGill decided to pursue legal action against Porter in November 2012 after he failed to pay back over half of a $500,000 loan from the university and $30,131.63 in salary overpayment following his resignation in December 2011.

Despite receiving a second salary as a professor in the department of oncology on top of his $350,000 salary as head of the MUHC, Porter is alleged not to have taught in that department.

In the midst of this scandal, Porter’s whereabouts were unknown. He finally surfaced in the Bahamas, as reported by The Montreal Gazette, where he claims he was treating himself for cancer at his own medical facility.

Quebec’s anti-corruption squad was also looking for Porter in order to question him about the MUHC’s procurement of a $1.3 billion contract for his superhospital project.

The CBC also discovered that Porter had come to Montreal from Detroit—where he served as the CEO of the Detroit Medical Center—to work for the MUHC following the wake of similar scandals at his previous institution.

December, 2012 – Budget Cuts

In mid-December 2012, the PQ announced that it would impose extensive budget cuts to the operating budgets of all Quebec universities. McGill was told that it would need to cut $19.1 million from its operating budget by April 2013.

In February, the PQ announced that the cuts would continue into the next fiscal year and that McGill would be expected to cut an additional $19.1 million by April 2014.

After contesting this move for several weeks, the McGill administration released official plans for the cuts in late March 2013. To date, the administration has implemented salary and hiring freezes, introduced a voluntary retirement package to administrative and support staff aged 60 and above, and reduced the operating budgets of senior administrators’ portfolios. A second phase of plans—which, according to the administration, will likely include layoffs—is expected but has not yet been released.

January, 2013 – Flood

On the afternoon of Jan. 28, a 48-inch water main burst under Doctor Penfield Ave., flooding McGill’s downtown campus. That evening, several buildings were evacuated, and classes and activities were cancelled.

The water main broke just outside the McTavish Reservoir, which was undergoing a second phase of renovations. The City of Montreal started the project in October 2012, and predicts it should be completed in August 2013. The estimated cost of the renovations is $16.4 million. The City concluded that construction crews who were shifting the earth around by the pipe caused the break.

The water damage to certain buildings on campus was vast. The hardest hit was the James Annex, which required extensive repairs, according to Director of Internal Communications of McGill’s Media Relations Office Doug Sweet.

Classes in the Wong building were relocated in the following weeks, and classes in Wilson Hall and Birks Hall were cancelled. The James Administration Building and Service Point were also closed. Most buildings reopened that same week. The Students’ Society of McGill University’s [SSMU] Winter Activities Night was rescheduled, having been originally scheduled for the afternoon of Jan. 28.

February, 2013 – Protest protocol documents

On Feb. 4, McGill released two documents that detailed its procedure for dealing with protests and demonstrations. The Operating Procedures document stipulates the conditions under which the university will intervene in on-campus protests, including guidelines for when protests are considered peaceful, while the Statement of Values and Principles addresses students’ rights to freedom of assembly and freedom of expression. The Operating Procedures went into effect immediately, requiring approval from neither the Senate nor the Board of Governors (BoG).

The Statement of Values and Principles will eventually replace the provisional protocol released in Feb. 2012 in response to the five-day student occupation of the sixth floor of the James Administration Building. Senate passed the Statement of Values and Principles on Mar. 20. It will next go to the BoG on Apr. 26 for final approval.

February, 2013 – Tuition Indexation

On Feb. 25 and 26, the PQ held a two-day Summit on Higher Education, where it announced an annual 3 per cent tuition increase for students—whether they are Quebecois, out-of-province, or international students. The indexation of tuition intends to mirror the increase in the disposable income of Quebecers.

Throughout both days of the event, Montrealers expressed their dissatisfaction with the structure and results of the Summit through protests in the downtown area. 1,500 people demonstrated on Feb. 25, and 10,000 people took to the street on Feb. 26 in a protest organized by L’Association pour une solidarité syndicale étudiante (ASSÉ). On both occasions, the Montreal Police (SPVM) attempted to disperse the demonstrators after declaring the protests illegal.

March, 2013 – New Principal

On Mar. 5, McGill’s Board of Governors (BoG) appointed Suzanne Fortier as McGill’s 17th principal. The Board’s Advisory Committee for Nomination of the Principal, consisting of representatives from the BoG, Senate, support staff, the faculty, and the student body, recommended Fortier’s appointment after a months-long search that began last spring.

Fortier, a two-time McGill graduate, will replace current Principal Heather Munroe-Blum and begin her five-year term in September. Fortier’s experience includes several positions in Queen’s University’s senior administration, as well as her most recent position as President of the Natural Sciences and Engineering Research Council of Canada (NSERC).

March, 2013 – New SSMU exec elected

On Mar. 19, the 2013-2014 SSMU Executive was announced. Katie Larson was elected SSMU President, after defeating Chris Bangs for the position. Tyler Hofmeister was elected Vice-President (VP) Finance and Operations, Joey Shea will take on the position of VP University Affairs, and Brian Farnan will become VP Internal. Samuel Harris and Stefan Fong, the only two candidates who ran uncontested, were elected VP External and VP Clubs and Services, respectively. Nearly 30 per cent of the undergraduate student body voted in the elections—the same voter turnout as last year—even though fewer candidates ran this year.