Perks or fraud?
“Fish cannot live where the water is
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,
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
Owner suspicions can be dubious. One owner asked in an e-mail:
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
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
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
“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
witch-hunt looking for evidence that may not exist.
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."
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".
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.
When one ex-director told some of the owners about the board's conduct,
the board sent out this notice.
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
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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