Orchestra London board members are growing concerned they may have to personally pay off a six-figure chunk of the near-bankrupt organization’s massive debt, sources tellThe Free Press.

While an expert in tax law believes the orchestra’s 10 directors could be forced by the Canada Revenue Agency to pay $110,000 from their own combined pockets, the board president is expressing doubts that will happen.

But some fellow directors are concerned about the tax man’s wrath.

Asked if they were anxious, one source close to the board said: “That’s a good summary.”

Board members claim they weren’t aware payroll deductions totalling $110,000 hadn’t been handed over to the government.

“(The board was) on top of things as much as (it) could get answers for,” said the source, who asked not to be named.

Board president Joe O’Neill says he believes the orchestra’s insurance will cover him and his colleagues. Whether that’s correct isn’t clear.

David Thompson, a veteran local tax lawyer with no ties to the orchestra mess, is doubtful.

“Most boards would have director and officer insurance. I would be surprised if it would (cover this),” Thompson said. “Maybe you can buy insurance for this but I’d be really surprised if they covered this.”

At issue is the estimated $110,000 deducted from past paycheques for orchestra employees.

Like all employers, the orchestra must give it to the government as employment insurance (EI) and Canada Pension Plan (CPP) contributions.

That didn’t happen — and O’Neill has indicated the board was blindsided that the so-called “source deductions” weren’t forked over to the government.

Orchestra executive director Joe Swan, the ex-politician, resigned this week.

The problem for board members is spelled out in Sec. 227.1 of the Income Tax Act, which states directors must personally cover unpaid source deductions unless it’s found they “exercised the degree of care, diligence and skill to prevent the failure that a reasonably prudent person would have exercised in comparable circumstances.”

How much the board knew is unclear, though alarms started going off publicly earlier this year.

About six months ago, a veteran accountant quit the organization over concerns about its bookkeeping practices. In a lawsuit seeking severance pay, made public by The Free Press, she cited “flaws in the existing bookkeeping system.”

Asked for his reaction at the time, O’Neill said “there’s no problem with the books.”

In September, as Swan ran for mayor, rival candidate Roger Caranci questioned the orchestra’s business model. Orchestra London then ripped Caranci in a news release featuring O’Neill’s name as author.

“The suggestion that we as an organization returned to an old business model that has been tried in the past and was proven to be unsuccessful speaks more to a lack of knowledge on the candidate’s part than a failure on the part of the (orchestra) to meet our strategic revenue and growth targets,” it read.

Asked this week if he now regretted that statement, O’Neill said he played no role in crafting it.

The Orchestra London season that ended in June 2014 has a massive deficit of $332,000, which pushed the organization to the brink of bankruptcy. It also carries a debt of more than $1 million.

It’s been estimated its assets are worth about $100,000. Employees have gone unpaid in the weeks before Christmas and dozens of concerts have been cancelled — with ticket-holder refunds extremely unlikely.

After city council rejected O’Neill’s request for a $375,000 cash infusion, bankruptcy could loom.

That, however, may not resolve the matter of the $110,000 owed to the federal tax man, and the board’s potential responsibility for it.

O’Neill, who works for a major accounting firm and shouldn’t be confused with the similarly named heritage activist, is joined on the board by Ailene Wittstein, David Canton, Janis Wallace, Lezlie Wolfe, Chris Collins, Mary Douglas, Al Edwards, Lorne MacDonnell and Joyce Thomas.

patrick.maloney@sunmedia.ca

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