It was supposed to add millions of dollars to Algonquin’s coffers, usher in a new era of Middle East engagement and “help democratize post-secondary education,” said former Algonquin President Kent MacDonald, in a 2014 memo.
Instead, Algonquin’s campus in Jazan, Saudi Arabia, which opened in fall 2013, ended up costing the college $9 million over four years of losses and contract termination costs, to wrap up a highly risky venture built on faulty and “overly optimistic assumptions,” said vice-president of international and strategic priorities Doug Wotherspoon in 2015, who was leading the project at the time.
These and other facts were obtained by the Algonquin Times through an access-to-information request filed to the college on Jan. 30, 2017. The request cost this newspaper $930 in processing fees. Even then, 247 pages of the 11 binders of material were redacted. (See related story headlined ‘More than 500 redactions of financial details in Jazan-specific pages’ on this page).
In 2011, Algonquin had already been doing business in Saudi Arabia. In fact the college was part of a large contingent of foreign educational institutions investing in Saudi Arabia.
“Even before we opened the Jazan campus, we were already in Saudi Arabia at the invitation of the Saudis, who sought our expertise to shape important educational reforms in that country,” said Algonquin’s Executive Director of Communications, Marketing and External Relations Scott Anderson in a April 18, 2018 email response to this story. (Anderson’s full response is printed on the next page).
He added the Jazan campus was part of a broader international portfolio that was — and continues to be — “an overall net contributor to Algonquin College.”
According to the college’s strategic international plan, published in October 2013, in order to determine whether the Jazan project was a suitable opportunity for the college, a five-step analysis was created. Those steps included “safety, corruption, economic indicators, education policies, English proficiency, local customs and practices, partnership quality, and market opportunity.”
Even before operations began, the Jazan project failed nearly all of those five indicators, the documents and subsequent events show.
In fact, the process appeared rushed from the beginning of Algonquin’s takeover of an existing campus which Anderson clarified had already been operating, and at which the college had already been working for at least two years prior to Sept. 1, 2013.
Vice-president of international and strategic priorities Doug Wotherspoon said in an Oct. 14, 2014, letter addressing Algonquin management colleagues: “Miraculously we opened our doors in two months of securing final government approval and welcomed the largest incoming class of Saudi students among all of the new international providers.”
The first day of classes was set for Sept. 1, 2013. But in a presentation two weeks earlier on August 14 to the President’s Council, vice president academic Claude Brulé and general manager of the Jazan campus Martin Doyle, told president Kent MacDonald that the transition team wouldn’t be leaving for Jazan until August 15, while registration and testing for the preparatory year program for new students began on the 18th.
They were also wired cash from the college in Ottawa in lieu of “payroll activity,” according to a brief to the President’s Council August 14.
Algonquin also quickly learned that its Canadian policies were not a good fit to Saudi culture, nor did they work well in a start-up environment. More than 45 new policies were created on-the-fly to adapt to that, according to at least two documents obtained by the Times.
That was just the beginning of a series of problems, however.
“After the college opened the Jazan campus in 2013 the price of oil dropped significantly, which affected global markets and the economics of operating overseas. Later, there was a major government shake-up in Saudi Arabia. Both of these factors contributed to our change of course in this venture,” Anderson said in his April 18 email to the Times.
The college continued to defend the Jazan project at town halls with employees, under criticism by union officials, and under the oversight of two presidents — Kent MacDonald, who left the college in July 2014 to take up the presidency of St. Francis Xavier University in Nova Scotia, and his successor Cheryl Jensen, who inherited the venture when she became Algonquin president in August 2014.
In a document provided in May of 2014 to the college’s board of governors executive committee — and despite their Saudi partners providing “misleading information” that hamstrung Algonquin’s success in Jazan — college leadership expressed their belief the Saudi enterprise would work.
But in the same report, Wotherspoon indicated things were worsening.
“Original projections provided by (Colleges of Excellence an educational agency of the Saudi government ) concerning campus size and student attrition have proven to be significantly different than those experienced on the ground,” Wotherspoon’s presentation said in the 2014 report.
That followed some reported early financial success in Jazan when the college reported that the campus added $400,000 to the college’s bottom line in 2013-14. In addition, according to an undated, untitled memo apparently written by MacDonald, the college expected net revenues of $2 million in 2014-15, but actual profits or losses for that period were blacked out in the documents provided to the Times.
According to a review of 2013-14, contained in the 2014-15 Jazan business plan, the campus admitted 1,095 students to its prep program and 78 to its diploma programs — a total of 1,173. The total number of students present on day one, for all programs, as well as fall and winter prep intake, was 1,253.
Towards the end of the school year, 581 students remained.
Despite that, Algonquin’s executives projected optimistic numbers for the following year, including 474 enrollments for the diploma programs and 1,978 enrollments for the prep program (a total of 2,452.)
But the actuals turned out to be much less. Algonquin admitted 826 students out of 1,130 applicants in 2014-15, according to the 2015-16 Jazan business plan.
The numbers provided in that document only referred to prep program enrollments.
“Break-even point is about 750 students in both programs,” an August 2013 memo to the President’s Council said.
It’s unknown what the subsequent years’ retention and graduation rates were in Jazan, as these were absent from the documents obtained by the Times.
At the same time it sought to open Jazan, it looked to establish a female campus in Qatif, Saudi Arabia — an endeavour that would be abandoned.
“A female campus had been considered long before the Jazan campus was established and was, in fact, part of the College’s original proposal to the Saudi government,” Anderson told the Times in his April 18, 2018 email.
That was significant because more than half of the college students in Saudi Arabia are female and its Jazan operation was a male-only campus, effectively eliminating more than half of the eligible student population, according to The Academic Challenges Facing Saudi Students Report from 2014.
The drop in numbers wasn’t the only indication that Jazan was quickly losing its lustre. At start-up in 2013, students were expected to have knowledge of basic skills to operate a desktop computer, similar to Canadian students. But in the Jazan region, which is rural, many students lacked those skills.
For example, a bilingual student manual was available to students on a 2GB memory stick in their welcome kit — but without feasible computer skills, the sticks were all but useless, according to the Aug. 14, 2013 presentation to the President’s Council.
The college also started a late marketing blitz to increase student registration. A text message campaign to link students to a more in-depth web page was implemented, but again, a lack of computer skills hampered this.
The college identified multiple reasons in the 2014-15 business plan that led to poor performance among Saudi students in 2013-14. These included:
- a low cultural value in education,
- no public transportation in the area;
- student stipends were not paid on time;
- the college lacked senior leadership at the start of the term;
- students often had only one faculty member all semester for every class;
- the student support systems, like attendance tracking, were not in place to start the school year.
In April of 2014, the realities of Algonquin’s venture in Jazan continued to surface.
In the agenda of the President’s Council meeting on April 23, an update was given on the original projections as compared to the current realities. As described in the documents, there was a lengthy discussion about potential financial losses due to the CoE interpretation of attrition rates.
The college would blame this conflict with the CoE on negotiations with “mid-level managers,” according to the 2014-15 Jazan Campus Business Plan and Budget, dated Oct. 7, 2014.
Anderson, in his email to the Times April 18, 2018, clarified that.
“Algonquin administrators did blame a single dispute over payment in 2014-15 on middle managers, but that issue was resolved through in increase in our minimum payment.”
The students were ill-prepared to begin at the Jazan campus, the documents said. The college anticipated better student retention than they experienced but in the documents obtained by the Times, studies conducted from the past decade detailed poor retention by Saudi Arabian students in English and math
In an undated note from a meeting of the Board of Governors Executive Committee, the principle reasons for financial hardship at the Jazan Campus included “incomplete due diligence” and a “lack of ‘heroic’ human resources.”
The memo’s author is unidentified.
Other reasons given for financial challenges included improper guidance by the CoE and overspending on capital expenditures such as equipment and wireless services — with all final figures redacted.
“Cost of internet connection is a concern. Initial quote of $600,000 annually for 100 MB line is six times higher than in Canada,” the memo said.
Evidence that Algonquin’s standards and the Jazan project were a bad match was laid out in a report titled The Academic Challenges Facing Saudi Students. It provided a detailed look at the struggles faced by educational providers in Saudi Arabia, compiled by “the original five international providers.”
The report details the deficit in skills of the Saudi students in math, science and English, and referenced a 2005 report by the World Bank, that said 81 per cent of Saudi students could not meet the “low benchmark” in math and 50 per cent failed in science.
The “low benchmark is the acquisition by the student of some basic mathematical knowledge,” according to the report. It went on to explain that “competition provided by universities would attract the more competent students, meaning that the students applying to technical programs, such as those offered by AC Jazan, would be from the low end of the academic spectrum.”
Students had an “inability to perform post-primary levels of computation or conceptual understanding,” according to the World Bank report. “Simple math concepts such as percentages had to be introduced, explained and taught.”
Language skills were no better. Students had struggled with their native Arabic, and English was a great challenge for most students.
“The link between native language attainment and learning a new language is well documented in the literature,” the report explains. Using the Key English Test, developed by Cambridge, Saudi students scored among the lowest, with only 49 per cent passing with the world average sitting at 68 per cent, in 2013. The next year would see those rates rise, 54 per cent and 75 per cent respectively.
A second metric, the International English Language Testing System, ranked Saudi Arabia second worst of all countries in English language testing; only the U.A.E. ranked worse.
A third metric, Test of English as a Foreign Language, which is an exam taken by students who wish to go to university, Saudi students ranked last when compared to its regional neighbours in the Middle East.
A fourth study looked at success rates for learning a new language when students are immersed in that environment. There is no substitution for spending time in an “immersion environment” and that environment could not be replicated by AC Jazan staff.
The report went on to explain that there is no way to replace that kind of experience and that more instructional time would not be sufficient to bolster the skill set of Saudi students.
The report concluded that “the majority of students we have seen thus far are unable to perform to the standards demanded of the providers (who were acting on the standards demanded of them) due to their profound lack of preparedness upon entering the programs.”
A lack of cooperation
Algonquin continued to bankroll Jazan knowing their Saudi partners were not doing their part.
“Unfortunately, with all this success we continue to face financial pressures that are much steeper than anticipated,” Wotherspoon said in a March 12, 2015 letter sent to Dr. Saleh Alamer, former Chief Executive Officer Colleges of Excellence. “The lower than expected English entry skills, the challenge of acclimatizing students to the rigor of the CoE/Algonquin program of study, and the abundance of university spaces, has made running an institution at a break-even level virtually impossible. Unfortunately, the assumptions articulated in the RFP (Request for Proposal) have proven overly optimistic.”
At the time, Anderson said in his email to the Times, Algonquin was trying to renegotiate their contract and “were successful in those renegotiations until a change in leadership in Saudi Arabia led to those renegotiations falling through — which, in part, prompted our departure.”
A document titled 2015-16 Jazan Campus Business Plan & Budget cites the reason for the decrease in applications being a “significant pullback of College of Excellence initiated marketing and public relations with responsibility for promotion shifting to each individual provider.”
A risk management committee document from September 2015 goes on to say:
“CoE support was not received at the promised level. Its Chief Executive Officer, Dr. Saleh, is reported to have resigned. The shake-up is due to system-wide lack of success in terms of progressing students past the (preparatory) stage. As a result of low oil prices, budgets are also restricted ACJ is planning based on two factors:
“(1) reducing costs as much as possible in 2015/16 and restructuring Jazan Administration in 2016/2017;
“(2) maximizing revenue by attracting better students through a successful sponsorship program. Sponsored students receive (REDACTED) triple the normal stipend.”
The report suggests that the stipend could be docked if students don’t attend and that a more focused preparatory program would be offered.
Those changes were expected to reduce the break-even point to 660 students in 2016-17.
But those plans never went ahead because Algonquin pulled out before they were implemented. In August 2016, the college announced it was transferring responsibility back to the Colleges of Excellence.
But as late as October 2015 the college was still supporting the Jazan campus. An International Update Report presented to the Board of Governors on Oct. 13, 2015 recommended they “accept the business plan as presented” and “Approve the loan of $X.X million (sic) to support the current operations through August 31, 2016.”
In a presentation to the Board of Governors, it was said, “For over two years, Algonquin College — Saudi Arabia…has clearly and succinctly explained to Colleges of Excellence that its current business model is not sustainable and that as a public institution Algonquin College – Canada is unable to fund losses incurred by AC-Saudi Arabia, which operates as a distinct legal entity in the Kingdom. We went further by highlighting that as a result, AC-Saudi Arabia may therefore not be able to continue to meet its obligations as a going concern.”
“Last year, the situation was seemingly remedied when AC-Saudi Arabia secured written acknowledgment from CoE for changes to its funding model which would have secured the long-term viability of the Jazan campus. This understanding was reflected in AC-Saudi Arabia’s budget projections, with the expectation of a modest profit through the remaining duration of the contract.
“Unfortunately, following a change in leadership at Colleges of Excellence, the new CoE leadership team declined to honour the previously negotiated arrangement and subsequently rejected alternative options for securing the ongoing viability of the campus. More recently, CoE went further by informing AC-Saudi Arabia that for the final two years of the contract its minimum guarantee would fall from the current 635 students to 300 students.
“These changes have curtailed AC-Saudi Arabia’s ability to operate as a going concern and have shifted AC-Saudi Arabia’s projects for the remaining duration of the contract from a budget (REDACTED) dollar profit to an expected loss of, at a minimum, (REDACTED).
That same report went on to say that “while it is critical that we keep the details of our negotiations private to ensure the best-negotiated settlement we have prepared a communication plan to ensure transparency.”
Yet, the report is short on specifics.
Asked what the financial implications were for the college’s wrap-up with Jazan, the report said, “We believe there are approximately (REDACTED) in additional ongoing liabilities due in the short term, including legal fees and monies to be paid pursuant to certain ancillary contracts.”
In December 2017, the Board of Governors gave the green light for the college to pay CoE $2.9 million to cancel its contract and avoid a lawsuit. This is in addition to $3.8 million the college spent in costs related to winding down its operation of the campus.
Operation of the campus was transferred to a British firm and all the losses were covered by the college’s cash reserves, and not public money, according to college officials and public records.
WITH FILES FROM:
NOTE: The story above was sent to college administration three days prior to publication to enable comments/response. It was published in our paper issue This is the reply we received on April 18, 2018:
Thank you for sending us an advance copy of the Algonquin Times story regarding the Jazan campus. We appreciate having the ability to provide some feedback to you prior to publication.
We take exception to this article on a number of levels — primarily its lack of context, lack of comment from people who are quoted, lack of balance, gaps in information and editorializing in what is presented as a news feature.
I want to stress that, as a former newspaper editor, these are errors I have seen in stories written by some of the country’s most experienced and respected journalists. Freedom of Information requests are important tools, but they are also fraught with the potential for errors of interpretation and assumption. On these points, I would urge you to take another, closer look at your analysis of the documents you received.
I want to give you a starting point for your re-examination of the material and offer the following points for consideration.
LACK OF CONTEXT
• This story fails to indicate that the Jazan campus was part of a broader international portfolio that was — and continues to be — an overall net contributor to Algonquin College.
• Your reporters do not mention many of the other factors that contributed to Algonquin’s decision to cease operations in Saudi Arabia. After the College opened the Jazan campus in 2013 the price of oil dropped significantly, which affected global markets and the economics of operating overseas. Later, there was a major government shake-up in Saudi Arabia. Both of these factors contributed to our change of course in this venture.
• On page 3, the article raises the College’s consideration of a female campus in Saudi Arabia but makes the assumption that early financial success with the Jazan campus was the “rationale” for a female counterpart. This is also not true. A female campus had been considered long before the Jazan campus was established and was, in fact, part of the College’s original proposal to the Saudi government.
• Your statement that the College blamed a specific conflict with the Colleges of Excellence on negotiations with “mid-level managers,” is also not accurate. Algonquin administrators did blame a single dispute over payment in 2014-15 on middle managers, but that issue was resolved through in increase in our minimum payment. Your article makes it sound as if Algonquin blamed everything on middle managers, and that is simply not true.
• Your article notes that “Algonquin continued to bankroll Jazan knowing their Saudi partners were not doing their part.” This misses the context that we had a contract that we were trying to renegotiate and, in fact, were successful in those renegotiations until a change in leadership in Saudi Arabia led to those renegotiations falling through — which, in part, prompted our departure.
LACK OF COMMENT
• A number of people are quoted in the story but none was asked to confirm or elaborate on their comments. This is not responsible journalism, which demands that the views of all subjects are fairly represented, particularly when their viewpoints are central to the story or can cause reputational damage. Had, for example, a student reached out to Vice President Doug Wotherspoon regarding his 2015 quote, “This is an institution that will be here for the next 100 years, not 100 days,” they would have learned that Mr. Wotherspoon was, in fact, referring to Algonquin College as a whole, not specifically to its Jazan campus, which is how this quote is framed in your story. The end result is that Mr. Wotherspoon’s comment is used to bolster the argument that the College turned a blind eye to problematic issues surfacing in Jazan, which we categorically dispute.
LACK OF BALANCE
• There is no comment whatsoever in this piece to explain the College’s reasons for opening the Jazan campus in the first place. There was no mention, for example, of the fact that, even before we opened the Jazan campus, we were already in Saudi Arabia at the invitation of the Saudis, who sought our expertise to shape important educational reforms in that country.
• There is no information to indicate that Algonquin was not the only academic institution to open a campus in Saudi Arabia, nor was it the only Canadian post-secondary to do so. This is critical to the reader’s understanding that Algonquin was not acting alone or in a reckless fashion. In fact, the College was part of a large contingent of foreign educational institutions investing in Saudi Arabia.
GAPS IN INFORMATION
• There are several gaps in information in this piece, the effect of which is to create an unnecessary and damaging bias. One example of this is the description of the Government of Canada’s travel advisory discouraging all travel within 80 kilometres of the Yemen-Saudi Arabia border. In fact, no such advisory existed at the time the College established the Jazan campus. By reaching out to Global Affairs Canada, we confirmed this advisory was implemented on Nov. 3, 2017, a date well after we had ceased operations in Saudi Arabia. Your story, however, leaves the impression that the College willfully ignored a government advisory, which is false. Your story also indicateds that the “conflict in Yemen has been ongoing since 2011.” This statement is also inaccurate. Yemen has been in political crisis since 2011, but the Yemeni Civil War did not begin until 2015.
• A description of an exchange and presentation involving Vice President, Academic, Claude Brulé and Martin Doyle, general manager of the Jazan campus at the time, is also problematic due to omissions of information. What is missing from the story is that Algonquin College was already present in Jazan under a different arrangement, so with Algonquin taking over campus operations under the Colleges of Excellence, the story makes it sound as if the College was starting from scratch, whereas in fact, there were already a number of things in place to assist with the 2013 Fall term start-up. In building the narrative that the College was unprepared for the first day of classes, your reporters fail to mention that in establishing the Jazan campus, Algonquin College was taking over an existing campus that was already fully operational and at which we had already been working for at least two years prior to Sept. 1, 2013.
•The story indicates that employees were sent to Saudi Arabia while negotiations “to acquire their health insurance was still ongoing and not guaranteed.” This statement is based on a false assumption — no one ever worked on the Jazan campus without health insurance.
• On page 2 and on page 6, the story makes reference to information regarding campus size and student attrition and attributes comments to Vice President Doug Wotherspoon. However, the story does not explain that the source of the College’s information was McKinsey, which is one of the world’s most respected consulting firms. This is important to note because of the story’s insistence that the Jazan campus was not carefully considered before it was established. Again, we dispute this and, if an Algonquin Times reporter had asked Mr. Wotherspoon where he had received his information, he would have had the opportunity to clarify this point.
• The story concludes that any losses were covered by the College’s reserves, “according to college officials.” This line makes it sound as if the fact that no public funds were used to cover any resulting losses could not be corroborated except through numbers supplied by College administration. This is not the case. As a public institution, and in the interests of transparency, Algonquin College is required by law to release all its financial information and does so on a regular basis. All of this information, including much of the financial information related to the Jazan campus, is readily available online.
• Many of the words used in this article have clearly been chosen with a bias in mind. The Jazan campus is referred to as “ill-fated,” a term that suggests an enterprise is destined to fail. Clearly, the College is not in the business of entering into ventures that are destined to fail, and to suggest the College knowingly did so is false.
• Finally, the article’s language reveals further bias — the College did not continue to operate the Jazan campus, it “continued to bankroll Jazan” or “was still pumping money into the Jazan campus.” We would argue that word selection in several places is prejudicial.
In the end, there is very little in this story that the College has not already revealed, but it has the overall effect of painting an inaccurate and unfair picture of the events that led to Algonquin establishing and later ceasing operations in Saudi Arabia.
Accuracy, according to the ethics guidelines created by the Canadian Association of Journalists, is “the moral imperative of journalists…and should not be compromised, even by pressing deadlines.” It also notes that “We do not allow our own biases to impede fair and accurate reporting.” We feel that, unfortunately, this story is in violation of these principles.
As such, I would encourage you to take steps to make this story a better reflection of both, no matter how long it takes — as journalists about to embark on your careers, your reputation is not a small matter to consider. I hope this process will be a learning experience for you and your classmates, and would welcome the opportunity to assist you should you wish to collaborate in the interests of presenting a more fair and accurate story.
Executive Director, Communications, Marketing and External Relations