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University of British Columbia.Martin Dee

Another member of the University of British Columbia's board of governors has stepped down, saying he does not want an ongoing legal dispute over corporate taxes to become a distraction for the school.

Advanced Education Minister Andrew Wilkinson issued a statement Thursday confirming that Greg Peet, a tech entrepreneur, had notified the government of his ongoing tax case before he was appointed to the school's board in 2012. He was reappointed to another three-year turn last year. Mr. Wilkinson defended the governance of the university amid a tumultuous school year that saw former president Arvind Gupta resign abruptly last summer.

"He is doing this out of the best interests of the university as he does not want to be a distraction from the essential academic missions of UBC in teaching and research," Mr. Wilkinson said in the statement. "As UBC is an autonomous institution under the University Act, government has no intention of getting involved in board activities at UBC as it would not be appropriate."

Mr. Peet told the provincial government he was stepping away from the board after a report surfaced online Wednesday detailing a Supreme Court of British Columbia decision. Last December, a judge concluded that his company Veracity Capital Corporation avoided almost $1.2-million in taxes during the 2003 fiscal year. Mr. Peet is appealing the court decision.

Aside from his role on the university's finance committee, he also had a seat on a 21-person group tasked with finding a new president by the end of June. A university spokesperson said the school will soon fill Mr. Peet's position on the search committee.

Mr. Peet will also be stepping down as co-chair of the Premier's Technology Council, a body of entrepreneurs and academics formed in 2001 to advise the province on how to grow the high-tech sector.

In his ruling, Justice George Macintosh found that Mr. Peet's company used a tax loophole called the "Quebec year-end shuffle" to juggle transactions between companies in that province and B.C. The two provinces' fiscal years end at different times.

"This is a simple case of a tax not being paid anywhere, which ought to have been paid somewhere," Justice Macintosh concluded.

Mr. Peet could not be reached for comment, but his lawyer, Tim Clarke, said there is a good chance his client's appeal will succeed.

"There are very good arguments to support the fact that the tax benefits were entirely permissible and, if you read the judgment, the judge commended both sides for their well-founded submissions," Mr. Clarke said.

"If there was anything nefarious about this, the [tax] department would have assessed penalties, but they didn't even consider that."

David Robinson, executive director of the Canadian Association of University Teachers, called Thursday's news the latest in a "series of black eyes that the university has gotten," referring to professor Jennifer Berdahl's resignation earlier this week from the committee searching for a new president.

"At a broad level, it speaks to ongoing governance problems at the university that started when president Gupta was unceremoniously let go last August," said Mr. Robinson, whose group represents 68,000 Canadian teachers, librarians and researchers at 122 colleges and universities. "This isn't just a number of isolated cases, there's a systemic problem with governance."

He echoed a call from the school's faculty association for an external review of the board, which the administration has so far refused.

In January, the university mistakenly released confidential correspondence and documents relating to Dr. Gupta's resignation, which led to him breaking his confidentiality agreement and asserting that he was pushed out after meetings with a small group of board of governors' members that included Mr. Peet.

Prof. Berdahl, an expert on female leadership and diversity in business, resigned from the search committee, in part to protest that those behind Dr. Gupta's ouster were still part of the group deciding on who will lead the school next.

James Tansey, the director of UBC's Centre for Social Innovation and Impact Investing, said the administrative dysfunction at the university is being overblown by a small group of professors.

"FA has come to mean Friends of Arvind [Gupta] not Faculty Association, they don't represent the faculty as a whole," he said. "In my view, the only problems with UBC at the moment is we had an ineffective president for 12 months and we haven't had a [permanent] president for a further 12 months.

"And so the sooner we get a new president in place, the sooner the organization can get back to normal."