Perks or fraud?
“Fish cannot live where the water is too clean.”
—Chinese proverb

What one man considers rightful perks of office may well be considered fraud by the owners.

One owner took her board to Superior C ourt where the judge ruled that the board members had to pay back bonus money they gave themselves, including interest charges, which was not covered by a by-law as is stipulated in the Condo Act. (Docket # 99CV167316.)

Another Ontario website has received letters from owners in a dozen Ontario condos where the directors give themselves unlawful "salaries" of $600 to $1,800 a month.

Suspicion can be corrosive
Owner suspicions can be dubious. One owner asked in an e-mail:

Could you tell me if it is OK for Directors to have a fabulous Christmas party at the expense of the condo funds? Is it against Condo Act and if so could I get references etc.?

I wonder if this owner has other, more serious issues that are bothering him?

It is important to know that corruption exists but do not assume that your present board is on the take if you have no proof.

Don't rule out stupidity
Sometimes owners confuse corruption with errors or incompetence. Most board members and some building managers don't have a clue about building maintenance so they hire incompetent contractors or contractors who take advantage of the board's ignorance to inflate their bills.

Be prudent
“You are all crooks.”
—shouted out by an owner at an AGM

Don't slander the board members and don't accuse them of actions that may not be true. If other owners say that the manager and/or the board are crooked, ask them what proof do they have.

Do not repeat the accusations that you hear. Finally, don’t go on an unfounded witch-hunt looking for evidence that may not exist.

Unpaid directors
The Act states that the directors are unpaid and that any compensation must be approved by the owners as a by-law that needs to be renewed every three years. Fair enough.

Ignoring the Act
Sometimes the board simply ignores the Act and gives itself, the property manager, district manager and certain employees “Reimbursement of Expenses” or "Christmas Bonuses".

At least once, an ex-director ratted out on this practice in court and Justice Kiteley made the directors and the owner of the property management company pay back the money (plus interest).

In part, the judgment states:
"In keeping with the “open book” principle, the objective of this section is to ensure that those who are in control of the corporation do not use their authority to pay themselves without disclosure and approval by the members of the corporation."

Meeting expenses
Far more often, the directors and property management hide payments in the corporation's expenses. One large property management company hides catered dinners and restaurant meals, during and after board meetings, in the corporation expenses as part of "Meeting Expenses."

Other boards hide their perks under "other expenses".

Gratuities
One board in Scarborough gives retiring directors a payment of $50 for each year that the director served on the board. Their latest retiring director received $400. They also give the property manager, the superintendent, cleaners and security guards a yearly Christmas bonus. The same board also decided to pay 50% of their property manager's training courses.

None of these remunerations were passed by the owners as a by-law, or clearly stated in the financial statements, and the owners are unaware of these expenses.

The board's rebuttal
When one ex-director told some of the owners about the board's conduct, the board sent out this notice.

"We, the current Board members, sacrifice countless hours serving residents. We act with the utmost integrity, fairness and transparency. In serving this building, we use our own cars, gas, computers, printers, ink cartridges, paper, cellphones, supplies, etc., which is NEVER reimbursed. We answer countless late-night door knocks and phone calls, attend emergencies, run errands, write petitions, assist the employees ... the list is endless.

The false rumours portraying us as big spenders who recklessly waste your money are completely UNTRUE. We fight aggressively to cut costs and Board members have spent their own money travelling to various suppliers in order to find cheaper prices. We never seek reimbursement for these costs which come out of our own pockets."

Well, I think this board does spent time and some of their own money conducting their duties. I did the same when I was a cub scout leader, when I worked for a Toronto based charity, when I helped organize farmworkers in California and when I worked on several political election campaigns.

That is the nature of volunteer work.

However, I do think this particular board is exaggerating more than a little. Did they buy their personal motor vehicles, computers, printers, and cell phones solely to perform their director duties?

Countless hours and countless late-night door knocks? Really? If the unpaid positions are so demanding and unrewarding, then why do they try so hard to discourage candidates from running for the board?



Perhaps they can reflect on "their utmost integrity, fairness and transparency" the next time they dine on take-out food from various restaurants, at the owner's expense, during their board meetings.

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