Algonquin will cap off its failed Saudi Arabia expansion by paying up to $2.9 million to cancel its contract with the Saudi Colleges of Excellence program.
The money, approved for spending by the Board of Governors at its Dec. 11 meeting, is in addition to $3.8 million the college has already spent in wind-down costs for its controversial male-only Jazan campus, which was opened in 2013. After failing to turn a profit, Algonquin pulled out of the venture in 2016 and transferred management to a British firm.
But pulling out led to a breach-of-contract claim by the Colleges of Excellence, an organization established by the Saudi government to create public-private partnerships with international education providers, including Algonquin College, to train the Saudi workforce. Faced with the choice between costly litigation or a negotiated cash settlement, Algonquin chose the latter.
“This has been a long-standing dispute since we made the decision to close down our campus,” said Peter Nadeau, chair of the BOG. “An international litigation would have eaten up much more than this.”
To date, Algonquin has lost $9 million in the campus, including wind-down costs. If Algonquin had stayed in the contract to continue running the school, losses would have been in the neighbourhood of $15 to $16 million, said Duane McNair, vice-president of finance and administration, in a presentation to the board.
“We left because we couldn’t make money at that campus,” Cheryl Jensen, Algonquin president, told the Times in February 2017. “You get to a point where you have to make a decision when you’re going to cut off expenditures.”
In response to a question about other colleges operating in Saudi Arabia, Jensen said she is aware that Niagara College operates a campus in Taif.
Doug Wotherspoon, the vice-president in charge of Algonquin’s international expansion, added that he recently spoke with Niagara President Dan Patterson, who told Wotherspoon that the Taif campus is “approaching profitability.”
Wotherspoon said there are other colleges that have operated and also pulled out of Saudi Arabia and are now tied up in contract litigation.
A year ago, the Times filed a freedom of information request to the college for records related to the Jazan campus, to determine the decision-making process behind the closure. The college conducted a preliminary search and subsequently estimated the Times‘ request would cost about $88,370 to hand over.
The Times appealed the fee estimate to the Information and Privacy Commissioner of Ontario and the case is currently in mediation pending resolution.