Hockey Canada paid $2.9 million in settlements this fiscal year, using player registration fees | CBC News

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Hockey Canada used player registration fees to pay $2.9 million in settlements this fiscal year, including one related to a high-profile sexual assault allegation against members of the 2018 World Juniors team, according to newly released financial records.

The new financial statements confirm that the controversial National Equity Fund was used to pay for all the deals this fiscal year.

The only money going into the fund comes from player registration fees, records show.

“Over the past year, the Organization has been under extreme public and media scrutiny regarding its management and governance of litigation settlements and use of player registration fees,” wrote BDO Canada, the company who performed the audit.

“…The organization is susceptible to claims from various sources. As a result of this risk, the Organization has obtained insurance coverage which is supplemented by keeping funds in reserve to cover uninsured claims.”

Hockey Canada has been embroiled in controversy since May, when it settled with a young woman who filed a $3.5 million lawsuit alleging that a group of eight Canadian Hockey League players sexually assaulted her in 2018 in a hotel room in London, Ontario.

Hockey parents were outraged to learn that their registration fees were going into the National Equity Fund without their knowledge, and that the reserve fund was used to pay millions of dollars in sexual abuse claims over the years.

Hockey Canada told lawmakers that it used the National Equity Fund to settle London’s case, the board of directors “approved the maximum settlement amount and the settlement offer was made and accepted.”

New audited financial statements suggest the settlement in that case was for less than $3.5 million.

CBC News asked Hockey Canada how many deals it paid out during the fiscal year. Hockey Canada did not say. A spokesman said the $2.9 million is an “aggregate figure of legal settlements reached during the fiscal year.”

CEO Scott Smith fired ‘without cause’

Financial records also reveal that Hockey Canada CEO Scott Smith was “terminated without cause.”

Smith and the entire board of directors announced they were resigning after a report commissioned by the organization found serious issues with accountability and transparency.

The financial statements show that, for the first time, Hockey Canada has had to include a previously undisclosed fund, the Participants’ Legacy Trust Fund, in its audited financial report, which showed its balance at $7.5 million as of June.

Hockey Canada’s auditors stated on the cover of the financial statement that the fund “was not disclosed in the prior year.”

The Legacy Trust Fund only came to light in the fall when the Globe and Mail learned of its existence through court documents. The newspaper revealed that the fund was set up in 1999 and that the hockey organization was using player registration fees to build another large financial reserve that could be used to pay for sexual abuse allegations and other claims.

Andrea Skinner, acting chair of the Hockey Canada Board of Directors, told parliamentarians in October that the Legacy Trust “is not an asset of Hockey Canada” and that is why it “does not appear in Hockey Canada’s financials.” (Sean Kilpatrick/The Canadian Press)

During a Commons committee appearance in October, now-former Hockey Canada board chair Andrea Skinner told MPs that the Legacy Trust Fund had been “fundamentally misrepresented in the media” and was not used to resolve claims. Skinner said the fund “is not an asset of Hockey Canada” and therefore “does not appear in Hockey Canada’s financials.”

But once the organization informed the auditor about the fund this year, the auditor determined that it should be on the books because Hockey Canada controls it.

“Trustees of the Legacy Trust are appointed and dismissed by the Organization,” BDO Canada wrote.

The fund is intended to respond to claims prior to September 1995 associated with some of the member branches of Hockey Canada and the Canadian Hockey League, in the event that the National Equity Fund does not have enough money, according to the financial statements.

‘Set the record straight’

Kate Bahen, managing director of Charity Intelligence Canada, reviewed the latest audited financial statements and prior statements dating back to 2008.

Bahen said Hockey Canada’s audited financial statements for those years never disclosed the Legacy Trust Fund.

“This shows that previous management was not forthcoming with information,” Bahen said.

“It sets the record straight. Hockey Canada’s previous management stated that it was not on their books and the auditors said yes, it is on their books under control.”

Hockey Canada’s decision to open its books comes after a review the organization commissioned by retired Supreme Court Justice Thomas Cromwell recommended that the organization do so.

Prior to that, Hockey Canada did not publish its audited financial statements online. The only way to obtain them was by submitting requests under the Access to Information Act.

Bahen continues to call on the federal government to require nonprofit organizations like Hockey Canada, which receive millions in federal funding and tax breaks, to post their audited financial statements online.

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