Ryerson’s student union facing forensic audit of $700K in questionable expenses

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The dollar figure at the heart of a spending scandal at Ryerson University has now soared beyond half a million.

During an emergency meeting at the downtown Toronto campus on Friday night, the board of directors for Ryerson’s student union passed a motion approving a forensic audit that will review nearly $700,000 in questionable spending over a nine-month period.

The board of directors for Ryerson’s student union have approved a forensic audit that will review nearly $700,000 in questionable spending over a nine-month period.
The board of directors for Ryerson’s student union have approved a forensic audit that will review nearly $700,000 in questionable spending over a nine-month period.  (Chris Young / THE CANADIAN PRESS file photo)

In addition to thousands of dollars charged to the student union credit card at a Toronto nightclub and other potentially problematic expenses totalling $273,000, the audit will also review $415,000 paid to stage a music concert at a nightclub on January 19, 2019.

“I was told we would get $350,000 in sponsorship,” Dharshini Jay, the student union’s financial controller, said to the board. “Nothing came through.” She said the “$50,000 to $60,000” promised in ticket sales also never materialized. Student union executives had been expected to submit all receipts related to credit card charges on Friday. Jay, a professional chartered accountant hired to work for the union in June 2016, told the meeting she has not yet seen the receipts, which are expected to detail how the expenses relate to line items in the approved budget.

Ryerson’s student union has an operating budget of $2.7 million. The group is run by a five-member executive elected from the student body that oversees more than 90 campus groups and runs various programs, including free legal aid and tax clinics. The money the union uses comes from mandatory student fees.

Daniel Lis, chair of the meeting, began the session by addressing the hundreds of students who waited outside of the auditorium for more than an hour to hear what the board and executive members had to say. Lis explained that the executive’s elected president, Ram Ganesh, refused to attend the meeting because he feared for his safety.

“I understand that many of you are frustrated … and angry,” Lis said, but “there is absolutely no justification for death threats or threats of violence. None of that will be tolerated today.”

Another student executive resigned before the meeting, leaving three elected representatives to address concerns raised by board members and students. For the most part, they had little to say.

Edmund Sofo, vice-president of student life and events, told the audience he had no idea how many tickets were sold for last month’s Loud Fest concert at Rebel nightclub in the industrial Port Lands.

Sofo said Ganesh “chose to be” the executive’s “main point of contact” with the company, which is within his scope as president.

Ganesh’s lawyer and the student union did not respond on Saturday to the Star’s requests for comment following this board meeting.

A campus newspaper, The Eyeopener, reported that Ganesh had explained the union’s credit cards can be used by any part-time or full-time union staff member.

The board said it recognized that the student union’s events committee and full-time events planner were not involved in organizing the concert. It voted to obtain a breakdown of concert expenses and revenues, as well as an overview of free tickets distributed.

Ryerson spokesperson Johanna VanderMaas told the Star the school takes allegations of financial mismanagement “very seriously.” She noted the union is a separate corporate entity from Ryerson with its own governance structure and board of directors so the university “has no ability to conduct an independent investigation into RSU finances.” She said the school’s president, Mohamed Lachemi, has requested a meeting with the union’s executive members.

On Friday, the student union’s board voted to give itself “clear jurisdiction” to review the executives’ financial documents, including credit card statements and receipts.

Earlier this week, Jay showed the union’s student group director Maklane deWever union expenses dating back to May. DeWever’s role is to represent students’ voices to the board. He said all the credit card bills have been paid. He had told the Star “many of the expenses” were legitimate but others sparked concern.

The statements, obtained by Ryerson student newspaper The Eyeopener, showed thousands of dollars spent by the union on food, alcohol and places like clubs and shisha bars. Photos of the credit card statements were published on the Facebook page of a political student group called the Rhino Party, as well as The Eyeopener. The Star has not verified the authenticity of these photos. The statements have not been provided to the Star.

Raneem Alozzi, a Ryerson student and reporter at The Eyeopener, described Friday’s meeting as “tense.”

Reporters not affiliated with the university were not permitted to attend the meeting. Toronto Star reporters viewed livestream and recorded broadcasts of the meeting posted to Facebook.

“I think students want answers, and they want answers overnight,” Alozzi said. “But it’s going to be a much longer process.”

With files from Isabel Teotonio and Premila D’Sa.

Diana Zlomislic is an investigative reporter working the weekend shift covering breaking news. Follow her on Twitter: @dzlo

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Ottawa drops appeal in political activity case, ending charities’ 7-year audit nightmare

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The Liberal government has withdrawn its appeal of a stunning 2018 court ruling that quashed a section of the Income Tax Act limiting the political activities of charities.

The landmark case was launched a tiny Ottawa charity, Canada Without Poverty, which argued that the section violates the Charter of Rights guarantee of freedom of expression.

Justice Edward Morgan of the Ontario Superior Court of Canada agreed in his July 16 ruling, declaring that the section no longer had any « force and effect. »

Canada Without Poverty had been under threat of losing its charitable status after auditors at the Canada Revenue Agency (CRA) determined that 98.5 per cent its activities were political. Charity law, as it was written at the time, had limited political activities to no more than 10 per cent of an organization’s resources, though critics have said the law’s definition of ‘political’ was too fuzzy.

Leilani Farha, head of the tiny Ottawa charity Canada Without Poverty, helped launch the court challenge of the political-activity limits in charity law, saying it restricted freedom of expression. An Ontario court agreed. (Idil Mussa/CBC News)

After losing the case, the Liberal government eventually agreed to rewrite the Income Tax Act to accommodate Justice Morgan’s ruling – but paradoxically announced Aug. 15 it was appealing the case because of an alleged error of law in the judgment.

Anne Ellefsen-Gauthier, spokesperson for National Revenue Minister Diane Lebouthillier, told CBC News the government still believes Morgan made an error in law by applying a test for religious freedom rather than for freedom of expression.

But after consulting with the charity sector last fall and reviewing higher court rulings, the government has decided not to fight the Ontario case because little would be gained by the effort.

« Higher courts have already been pretty clear on the different test that needs to be applied to freedom of expression, » said Ellefsen-Gauthier. « We’re dropping the appeal. »

The law amended

The Liberal government has since amended the Income Tax Act, under Bill C-86, to remove all reference to political activities for charities. The omnibus bill, one of two implementing last year’s budget measures, received royal assent on Dec. 13, 2018.

The department also recently published a guidance document to inform the charity sector on how the new regime — which still includes a strict prohibition on partisan activities — will be applied. Notably, the term « political activities » has been replaced by the phrase « public policy dialogue and development activities. »

But charities still cannot endorse or support political parties or candidates for office, something the sector has always accepted.

Ottawa’s decision Thursday appears finally to end a long nightmare for some charities targeted by a special CRA auditing program launched in 2012 by the former Conservative government to review the political activities of charities. More than $13 million was earmarked for audits of 60 charities over four years.

The Conservative government of Stephen Harper launched a four-year program to audit the political activities of charities beginning in 2012. Some $13 million was budgeted for the program, which targeted 60 charities. (Tom Hanson/Canadian Press)

In its first year, the controversial program targeted environmental charities, most of which were critics of the government’s energy and pipelines policies. It was later expanded to include religious and human rights charities, among others. The targeted charities said the audits drained precious resources and in some cases led to an « advocacy chill » as groups self-censored so as not to aggravate the government.

The Liberals campaigned in the 2015 federal election on ending the « political harassment » of charities but did not halt the audit program immediately, winding it down only in stages and letting some audits continue. The program has since been cancelled.

« The decision to let Justice Morgan’s decision stand is a huge victory for democracy in Canada, » said Leilana Farha, head of Canada Without Poverty.

« The government has done the right thing twice. First they made the legislative changes recommended by the government’s appointed panel and ordered by Judge Morgan, and now they have properly decided to withdraw their appeal … »

« This decision puts Canada in the lead among common law countries and will have a positive effect not only in Canada, but worldwide. »

Follow @DeanBeeby on Twitter

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Audit finds flimsy accounting for travel, booze at Canadian UN mission

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Canada’s diplomatic office at a UN agency in Montreal has been badly managed for years — and even managed to lose track of its alcohol and silverware.

« [T]he current method used to track alcohol consumed during hospitality events was not sufficiently reliable, » says a newly released audit of the Canadian mission to the International Civil Aviation Organization (ICAO).

« The audit team also identified discrepancies in the crystal, chinaware dishes and cutlery inventories after performing a physical count. »

Transport Minister Marc Garneau was warned in March 2017 of problems at Canada’s mission to ICAO in Montreal. (Rafferty Baker/CBC)

The report says that most of the overtime and travel claims it sampled were not pre-approved, there was no proof that goods and services paid for were actually received, five hospitality claims disappeared entirely, silverware was never counted — and at least $6,000 in travel and hospitality spending wasn’t tracked at all.

« [I]t is difficult for the audit to determine why certain travel took place, » says the highly critical document.

The audit focused on operations between April 2014 and March 2017, a three-year period that followed intense lobbying in 2013 by the Conservative government of Stephen Harper to keep the ICAO in Montreal.

The UN agency, which sets global standards for aviation safety and security, came into being in 1947 and has been located in Montreal ever since. According to one estimate, the agency’s 191 member countries are bringing some $120 million in economic benefits to the city each year.

Rival bid

A rival bid by Qatar in 2013 to host the agency in Doha beginning in 2016 was dropped in the face of intense lobbying by then-Foreign Affairs minister John Baird and others. That lobbying ensured the ICAO will stay put until at least 2036.

Canada’s small mission in Montreal, with eight permanent staff and three temporary positions, devotes about half its resources to host-state duties, including securing visas and even parking for ICAO member countries.

The Liberal government was alerted to problems at the Canadian mission sometime before March 2017, when a briefing note to Transport Minister Marc Garneau warned of major « shortcomings » and the need for a full audit. CBC News obtained the note under the Access to Information Act.

The auditors ended up delivering a scathing June 2018 report, citing « haphazard » communications, « confusion » about work responsibilities, « ad hoc » procedures, « insufficient training, » a « lack of documented procedures » and missing paperwork.

The mission’s annual budget – averaging $806,000 during the audit period, and $856,488 in 2017-18 – reserves about 10 per cent for hospitality and travel.

The funding was accounted for; however, the reporting was lacking.– Transport Canada spokesperson responding to an audit of the Canadian mission to ICAO in Montreal

Among other things, the report found the mission’s accounting for those funds was flawed, citing « weaknesses in the Mission’s management controls and oversight in the areas of budget planning and monitoring, expenditure approvals, inventory management and information management. »

A spokesperson for Transport Canada, which is primarily responsible for the operation of the ICAO mission, played down the findings, saying that « the funding was accounted for; however, the reporting was lacking. »

« There was no evidence of any items that went missing, including alcohol, » Sau Sau Liu added in an email.

Performance reviews

The audit does not refer to individuals at the mission. Asked whether any staff members have been reprimanded or terminated, Liu said only that the « lack of management oversight has been addressed through the completion of regular performance reviews required within the public service. »

On April 3, 2017, the Liberal government appointed career diplomat Martial Page as the new head of the ICAO mission to help sort out the mess.

Montreal Mayor Michael Applebaum, left, Foreign Affairs Minister John Baird, centre, and Jean-François Lisée, Quebec’s international relations minister, leave a ‘Team Montreal’ meeting at ICAO’s Montreal headquarters May 3, 2013. (Graham Hughes/Canadian Press)

Transport Canada declined CBC’s request to interview Page, whose three-year appointment ends in 2020. But the department says the mission has since strengthened management control, implemented new strategic and operations plans and created an inventory system.

« Transport Canada and Global Affairs Canada will continue to monitor progress in the implementation of measures identified and will work with the Mission to ensure that taxpayers’ money is being used effectively, » said Liu.

The audit was conducted jointly with Global Affairs Canada, which provides support and advice to the mission.

Follow @DeanBeeby on Twitter

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Ford government’s new ‘audit and accountability’ committee will not probe why Ontario’s chief accountant quit

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The Progressive Conservative government has struck a new “audit and accountability” cabinet committee to increase the scrutiny on spending.

But Treasury Board President Peter Bethlenfalvy said the panel of cabinet ministers will not examine why the province’s chief accountant quit after refusing to sign off on the public accounts due to concerns about the inflated deficit.

Treasury Board President Peter Bethlenfalvy said a panel of cabinet ministers will not examine why the province’s chief accountant quit in September. “No, this committee won’t be looking at that,” he said Dec. 11, 2018.
Treasury Board President Peter Bethlenfalvy said a panel of cabinet ministers will not examine why the province’s chief accountant quit in September. “No, this committee won’t be looking at that,” he said Dec. 11, 2018.  (Rene Johnston / Toronto Star)

Bethlenfalvy, a Bay Street veteran, said Tuesday the committee “is designed to meet our fiduciary responsibilities.”

Asked if the new panel would try to determine why provincial controller Cindy Veinot resigned Sept. 27 after declining to approve what the government claimed was then a $15-billion deficit, he said: “No, this committee won’t be looking at that.”

“It’ll be taking the auditor general’s report and acting upon it and making sure ministries follow up so that we have great accountability,” the minister said.

As first disclosed by the Star, Veinot, a civil servant, left because she “did not agree with accounting decisions made by the current government.”

“I believe that the consolidated financial statements of the province of Ontario as issued … materially overstate the deficit of the province for the year,” she said in an unsolicited submission to the legislative “transparency” committee examining the province’s books.

Because Tory MPPs on that select committee have blocked Veinot from testifying as a witness, New Democrat Sandy Shaw said she has little hope for any new cabinet accountability initiative.

“It has been an abysmal failure,” said Shaw (Hamilton West-Ancaster-Dundas), who sits on the committee.

“They talk a good a game … but their actions belie how transparent they’re really willing to be.”

Interim Liberal leader John Fraser said the new cabinet panel should begin its work by interviewing Veinot.

“It’s an audit committee and the public accounts they submitted don’t actually have the top accountant in the government’s signature on it. That’s the first thing they should investigate. They should talk to her,” said Fraser.

“She had very serious concerns about the government’s misrepresentation of the deficit.”

Veinot, who has also recommended an audit committee be formed, broke with the government over whether $11 billion in public money in co-sponsored Ontario Public Service Employees’ Union Pension Plan and the Ontario Teachers’ Pension Plan should be counted as an asset on the books.

She contends they are.

Auditor general Bonnie Lysyk — along with her predecessors — used to count them as such. But Lysyk changed her mind in 2015 and no longer does.

The new government sides with the auditor general, who praised the administration for its audit committee.

That decision has ballooned the deficit by $5 billion. It now sits at $14.5 billion, though the financial accountability officer said Monday it is at least $1.2 billion lower.

Lysyk, for her part, welcomed Bethlenfalvy’s new initiative.

“I am encouraged to hear that one of the responsibilities of the audit and accountability committee will be to monitor the timely implementation of the recommendations made by my office, resulting from our value-for-money and other audit work,” she said.

Robert Benzie is the Star’s Queen’s Park bureau chief and a reporter covering Ontario politics. Follow him on Twitter: @robertbenzie

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Workers’ compensation board denies over 90 per cent of chronic mental stress claims, audit shows

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The provincial workers’ compensation board has denied 94 per cent of chronic mental stress cases since new legislation extended benefits coverage to employees experiencing long-term trauma or harassment on the job, according to an internal Workplace Safety and Insurance Board audit obtained by the Star.

Previously, workers could only seek compensation for mental health injuries caused by a traumatic incident, not those triggered by ongoing trauma in their workplace — which labour advocates and legal experts described in a 2016 ombudsman complaint as unconstitutional and discriminatory. Subsequent legal changes mean workers can now file claims for work-related chronic stress issues.

But between January and May, just 10 of the 159 claims for work-related chronic mental stress were approved, the audit conducted by the WSIB shows.

Maryth Yachnin, a lawyer with the Toronto-based legal clinic Industrial Accident Victims of Ontario, said advocates already had concerns about existing barriers to winning chronic mental stress claims — but said she was “stunned” by the denial rate.

“I cannot imagine a world where they should be denying upwards of 90 per cent of the cases,” she said.

In a statement to the Star, WSIB spokesperson Christine Arnott said the board wanted “anyone dealing with work-related chronic mental stress (CMS) to get the help and support they need.”

She said workers were entitled to compensation if they met the board’s criteria, which includes evidence of a “substantial work-related stressor” and abusive workplace behaviour that rises to the level of workplace harassment. (Workers are not entitled to chronic stress compensation for problems stemming from discipline, demotions, transfers or termination.)

“We will continue to monitor our new chronic mental stress program as we help support mentally healthy workplaces across Ontario,” Arnott said.

Yachnin said the board’s approach to chronic mental stress creates unique and unreasonable barriers for people with “harassment-type injuries.”

Workers filing for chronic mental stress, for example, must prove their workplace was the “predominant cause” of their illness — while workers with physical injuries must simply show their workplace was a significant contributing factor.

“That’s subject to a higher legal test than any other workers in Ontario,” Yachnin said, adding in court workers only have to prove employer negligence was one factor in a workplace injury.

Like all workers filing WSIB claims, those with chronic mental health injuries give up their right to sue their employer if they initiate a case at the compensation board.

“All workers with these chronic stressors have been stripped of their right to sue their employer. The replacement right has to mirror the right you took away,” Yachnin said.

The board’s current guidelines were formed after consultation with both employers and worker representatives. According to one submission from an employer association, “stress cases are not the same as ‘other’ kinds of workplace injuries,” and treating them as such is a “momentous miscalculation and policy design error.”

In the WSIB statement to the Star, Arnott said the nature of mental stress injuries are “complex and differ from physical injuries.”

“The use of the predominant cause test is consistent with other workplace compensation boards (Alberta, Quebec, Saskatchewan and British Columbia) across Canada that also compensate for CMS,” she said.

Last year, a coalition of 12 legal clinics and private practice lawyers decried the “predominant cause” test before it came into effect in a letter sent to former premier Kathleen Wynne.

“The Supreme Court of Canada and the Workplace Safety and Insurance Appeals Tribunal have rejected the wrong-headed notion that mental injuries are less real, more subjective and more suspect than physical ones,” the letter said.

According to the WSIB’s chronic mental stress policy, a work-related stressor is considered “substantial” if it is excessive compared to “the normal pressures and tensions experienced by workers in similar circumstances,” although the policy says workers can’t be denied compensation simply because they work in a routinely high-pressure environment.

“In some cases … consistent exposure to a high level of routine stress over time may qualify as a substantial work-related stressor,” the policy says.

Yachnin said logic runs contrary to how physical injuries are treated, where constant exposure to stress or risk would be seen as “positive evidence of causation.”

Board adjudicators must also “be able to identify the event(s) which are alleged to have caused the chronic mental stress,” through “information or knowledge” provided by co-workers or supervisors, according to board policy.

“When you think about harassment in a small workplace, the person harassing you is very likely your employer,” Yachnin said. “Who else in the workplace is going to provide confirmation?”

The low number of claims registered to date may reflect a lack of awareness about legislative changes, Yachnin said — but could also indicate workers see the barriers to winning compensation as insurmountable.

That prevents the employer-funded workers’ compensation system from functioning properly, she added: if employers’ insurance premiums go up because of high injury rates, there is a financial incentive to rectify the safety risks.

“(The costs) are properly borne by the employer community because they were generated by workplace risks,” Yachnin said.

“The system is designed to point out the canary in the coal mine and show where there are health and safety risks factors,” she added. “But you can’t do that if at the front door you’re basically auto-denying them. I don’t know what else to call this.”

Sara Mojtehedzadeh is a Toronto-based reporter covering labour issues. Follow her on Twitter: @saramojtehedz


It looks as if you appreciate our journalism. Our reporting changes lives, connects communities and effects change. But good journalism is expensive to produce, and advertiser revenue throughout the media industry is falling and unable to carry the cost. That means we need you, our readers. We need your help. If you appreciate deep local reporting, powerful investigations and reliable, responsible information, we hope you will support us through a subscription. Please click here to subscribe.

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Canada Revenue Agency is tough on regular taxpayers but goes easy on those with offshore accounts, audit finds

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The tax man goes easy on wealthy Canadians with offshore bank accounts while being harsh on regular taxpayers, according to a damning report made public by the federal auditor general Tuesday.

Wealthy tax cheats are given more time to find receipts and they get their interest and penalties waived, even if they didn’t ask for it.

Meanwhile, if a salaried employee can’t find a receipt, it’s automatically disallowed and they’re reassessed, the report said.

“Most taxpayers are individuals with Canadian employment income. We found that the (Canada Revenue Agency) requested information from these taxpayers more quickly, and gave less time to respond, than it did with other taxpayers, such as international and large businesses, and taxpayers with offshore transactions,” said the report.

Auditor General Michael Ferguson highlighted a double standard that many Canadians have personally experienced, where the CRA aggressively pursues regular people for small amounts of tax owing, while offering amnesty and anonymity for those involved in sophisticated offshore tax schemes.

In the five years from 2013-2018, the CRA accepted voluntary disclosures from 140 people who were already being audited, and waived $17 million they owed in interest and penalties.

The voluntary disclosures program, which encourages tax cheats to come clean by pledging not to prosecute them and offering to waive some or all of their penalties, has since changed its rules to prevent those who are already being audited from taking part.

“Does the CRA have a culture of conveniently ignoring tax-evaders who have the means to hire a lawyer?” asked Green Party Leader Elizabeth May in reaction to the report. “The CRA needs to shift its Sheriff of Nottingham approach to tax-collection and have the rich pay their fair share rather than concentrate audits on hardworking Canadians because it’s easier to have them pay.”

In response to the report, Revenue Minister Diane Lebouthillier pledged to “ensure that our tax system is fair for everyone, throughout Canada.”

Ferguson’s team put together a list of eight recommendations that focused on the lack of consistency in how the CRA applies tax law. Consistency, the auditors pointed out, is enshrined in the Taxpayer Bill of Rights. They nevertheless found wide discrepancies in how people were treated by the CRA depending on their region and activities.

In one example cited, the CRA gave regular taxpayers 90 days to produce a receipt and automatically disallowed the deduction if it wasn’t provided in time.

But those with offshore transactions were given much more time to produce documents, and that timeframe “was sometimes extended for months or even years.”

“Sometimes, the agency did not obtain information at all, and the file was closed without any taxes assessed,” the report stated.

On average, the CRA took more than 18 months to complete audits that included offshore activity.

“The CRA continuously strives to apply the law consistently while taking taxpayers’ individual circumstances into account,” Lebouthillier said in a statement. “The agency will review its internal processes and procedures to ensure its compliance work follows sound and transparent processes.”

Since the Panama Papers were made public in 2016, the Liberal government under Prime Minister Justin Trudeau has added more than $1 billion to the CRA’s budget to crack down on tax cheats, with a focus on those using complex offshore schemes.

In the last two years, the CRA says it has collected $21.5 billion in additional revenues from the stepped-up audits and other compliance activities.

But Ferguson’s report says those numbers are not only imprecise — based on estimates rather than actual revenue — they’re also overstated.

“The additional revenue the agency reported … did not reflect the taxes that it could not collect from taxpayers. This means that the impact on the government’s fiscal results was significantly less than what the agency estimated,” the report stated.

The auditors found the CRA reported at least $1.3 billion in additional revenue that was never collected.

“This previously reported additional revenue will never be collected because the assessments were overturned through the objection process,” the report said.

Lebouthillier agreed that reporting could be improved.

“I agree with the auditor general’s recommendations related to improving reporting and processes,” Lebouthillier said in a statement. “The CRA has already started to produce more strategic performance indicators, such as the tax gap estimates launched in 2016. The CRA will continue to build on this work with additional estimates to better report on our successes to Canadians.”

It looks as if you appreciate our journalism. Our reporting changes lives, connects communities and effects change. But good journalism is expensive to produce, and advertiser revenue throughout the media industry is falling and unable to carry the cost. That means we need you, our readers. We need your help. If you appreciate deep local reporting, powerful investigations and reliable, responsible information, we hope you will support us through a subscription. Please click here to subscribe.

Marco Chown Oved is a Toronto-based investigative reporter. Follow him on Twitter: @marcooved

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