A controversial contingency fund that Hockey Canada has publicly promised to stop using to settle sexual assault allegations is significantly depleted after the organization transferred millions of dollars over the past few years to another account, a source reveals. new interim report.
Former Supreme Court Justice Thomas Cromwell’s interim report on Hockey Canada’s governance, released last week, contains details about the organization’s management of its National Equity Fund – a fund that Cromwell said , is expected to be in deficit by 2023.
Hockey Canada commissioned Cromwell’s review in response to the outrage of parents of hockey players after learning that the National Equity Fund – made up in part of player registration fees – was being used to pay out millions of dollars for allegations of sexual assault without their knowledge.
Cromwell learned of a third fund to which the Hockey Canada Board approved the transfer of $10.25 million in reserve funds from the National Equity Fund (NEF) in 2016. Another analysis financial revealed that at least another $7 million has been transferred from the NEF to the third fund since then.
The money was moved after Hockey Canada’s auditors recommended a change to the organization’s disclosure in its audited financial statements that “increased the reported balance of the National Equity Fund by millions of dollars,” said observed Cromwell.
Cromwell concluded that the organization’s board feared that an account with more money would attract more claims.
“Hockey Canada has expressed concern that this change in financial statements artificially inflates the NEF balance, which could signal a large pool of funds set aside for potential claimants and thus increase the likelihood of additional claims,” said wrote Cromwell in his report.
In November 2016, Hockey Canada’s Board of Directors transferred money from the NEF to another fund called the Insurance Rate Stabilization (IRS) Fund, which was created years earlier to “act as a buffer against future insurance rate increases,” the report said. . Postmedia and The Athletic were the first to report on the new fund and the money transfers.
$17 million transferred
The board justified the transfer, saying it was a way to expand the reach of the IRS fund “for the purpose of providing financial support against possible future uninsured claims,” Cromwell’s report said. .
Cromwell said Hockey Canada has also widely expressed that changes to its transparency “were not well suited to its organization, such as making financial statements and minutes of members’ meetings available to the public.”
“While Hockey Canada has enjoyed considerable financial success over the years, Hockey Canada is concerned that being seen as an organization with ‘deep pockets’ could have negative repercussions,” Cromwell’s report states.
“For example, it could have an effect on their bargaining power when it comes to the settlement of lawsuits, and it could also influence the amount of money sponsors are willing to offer in the future.”
Sports Minister Pascale St-Onge told CBC News that Cromwell’s report shows “serious governance failures that have fostered a culture of silence.”
“They treated the sexual violence allegation as an insurance issue,” she said in a statement. “Now I wait… for the new council [to] make the changes necessary to create a healthy environment.”
Kate Bahen, chief executive of Charity Intelligence Canada, said Cromwell’s report showed her “there was an intention to hide funds”.
Reviewing Hockey Canada’s audited financial statements, Bahen discovered that the NEF’s ‘true balance’ was $15.7 million in 2016 before the organization ended up transferring $9.5 million to the other. funds. (Cromwell’s report says the board approved a $10.25 million transfer, but filings show $9.5 million was moved, according to Bahen.) That transfer brought the NEF closer to its level of $5.2 million the previous year, before accounting changes, she said. .
Bahen added that she also found out that the Hockey Canada board had approved the transfer of $17 million from the National Equity Fund to the IRS Fund between 2016 and 2021.
“It wasn’t just a one-time event in 2016…For years and years, Hockey Canada kept its books closed and fought against financial transparency,” said Bahen, who received the statements Hockey Canada audited financials obtained through the Access to Information Act.
She said Hockey Canada spent about as much of NEF money on staff salaries, travel, meals and subsidies between 2014 and 2021 as it did on insurance claims.
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Hockey Canada said in June that “effective immediately” it would no longer use the National Equity Fund to settle sexual assault claims.
The organization’s chief financial officer, Brian Cairo, said in July when he told Hockey Canada members and executives that the organization “has stopped using the fund to settle sexual assault claims pending the result of our review of governance by an independent third party”.
CBC News asked Hockey Canada what funds would be used to settle sexual assault claims and was told the organization was awaiting Cromwell’s final report.
Bahen said audited financial statements show the NEF balance as of June 2021 was $9.6 million. Since then, the fund has paid the maximum amount of a $3.5 million lawsuit alleging a 2018 gang sexual assault involving eight hockey players, including members of the world junior team, she said. .
The new NEF balance – which Cromwell says is sold out – will be released at Hockey Canada’s annual general meeting on Dec. 17.
“A culture of secrecy”
NDP MP Peter Julian sits on a parliamentary committee that held public hearings into Hockey Canada’s handling of sexual assault allegations.
“[The funds transfer] proves once again that this maze of funds was designed to avoid public scrutiny and accountability,” he said.
Sébastien Lemire, the sports spokesperson for the Bloc Québécois, declared that the existence of a “third fund is not surprising and testifies to the culture of secrecy that exists within the organization”.
“Learning that the fund that was originally intended to help injured players is now empty, in part because Hockey Canada used it to settle sexual assault lawsuits, only reinforces the idea that the executives associated with this scheme should resign. “said Lemire.
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Earlier this month, Liberal MP Anthony Housefather asked Hockey Canada Acting Board Chair Andrea Skinner if there were other undisclosed funds being used to “fund these types of claims.” related to sexual responsibility or sexual assault”.
“I’m not sure I agree with the premise of the question, but I don’t believe you do,” Skinner replied.
“This reflects what I thought was misleading testimony to the committee,” Housefather said.
Earlier in the interview, Skinner said there were “four main elements of Hockey Canada’s finances,” including “an insurance rate stabilization fund.”
The NEF has paid 21 settlements since 1989, 11 of which were related to sexual misconduct, according to Cromwell’s interim report.
Nine of those 11 settlements were based on historical cases and given to plaintiffs against authors Graham James, Gordon Stuckless and Brian Shaw. All three names were on a list given to Hockey Canada’s insurer and excluded from insurance claims when Hockey Canada expanded its insurance policy in 1998 to provide sexual misconduct coverage to the organization.
The tenth case involved a historic sexual assault claim against a referee – someone the insurer said Hockey Canada knew about and should have told the insurer about. The eleventh case was the 2018 gang sexual assault allegation involving members of the world junior team.
Bahen said she posted all of the audited financial statements on her website and hoped other accountants and experts would review them as well.
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