By Arthur B. C Drache
Over the years, one of our themes has been the need to take steps to protect an organization’s assets even from the possible depredations of employees and volunteers. While no single step can offer complete protection, one of the most basic protective approaches is to require at least two signatures on the organization’s cheques.
Now readers of the Ottawa Citizen have been indirectly shown what problems can arise when this rule isn’t followed.
Officials at a long-established Lutheran church in are alleging that a retired public servant who served as its treasurer for 30 years embezzled more than $600,000 from church bank accounts. Interestingly the approach taken by the Church was to sue in the civil courts and there was no mention in the story about any criminal charges.
In a statement of claim filed April 23 with the Ontario Superior Court of Justice, Saint Luke Lutheran Church alleges that Barton Burron took the money from church chequing and savings accounts between June 2009 and September 2013.
None of the church’s claims has been proven in court and we understand that there will be a defence filed.
The church’s statement of claim alleges that Burron “embezzled over $600,0000 from (the church) and used those embezzled proceeds to buy real and personal property, either directly, or indirectly by paying off mortgages or charges against the said real and personal property.” It also alleges that Burron took $289,000 from the church’s chequing account and funnelled it to his numbered company “for his own personal purposes.”
The church is seeking a declaration from the court that it is the “beneficial owner” of property he owns and which they claim was purchased with the funds.
What we found most telling was the background.
According to the statement of claim, Burron has been a chartered accountant for more than 30 years. Burron retired from the government in 2010.
Over a 30-year period, Burron was responsible for managing the church’s financial activities. He was the sole signatory on the church’s chequing and investment accounts, reconciled bank statements to the church ledger, and maintained records of income, revenue, receipts, expenses, disbursements. assets and liabilities, the church document says. (Our emphasis.)
The statement of claim alleges that Burron “maintained a system of benign neglect that allowed his access to all of (the church’s) financial records, cheques and the like so he could use (the church’s) financial assets as his own.” At some point, the statement of claim alleges, Burron “began to take advantage of his position of trust and confidence.”
As we say, we have no “inside” information and of course it is not yet certain whether the church will be able to back up its claims. But the important thing in our view is the fact that a single individual had unfetterd control over the funds which was am egregious governance error. It is also worth noting that while he filled the role of (we assume) a volunteer accountant for thirty years, the alleged embezzlement only took place in the last five years. Thus, one can infer that there were twenty-five years of no problems which could lull the organization’s board into a sense of complacency.
Coincidentally, just a couple of days after the piece appeared in the Ottawa Citizen, the Non-Profit Quarterly ran a piece entitled When Funds Go Missing, What Can You Do? What Must You Do? The very fact that it appeared indicated how sign ificant the problems can be. The focus on on the actions of Boards after embezzlement is discovered and it is one of the best pieces we have read in recent years about the issue.
The lesson, whatever the upshot of the litigation is that no matter how honest and trustworthy an organizations feels its employees and volunteers are, basic protective steps should always be in place.