Hockey Canada moved cash from fund used for sexual assault claims to avoid encouraging more claims: report | CBC News

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A controversial reserve fund that Hockey Canada publicly promised it would stop using to settle sexual assault allegations has been significantly depleted after the organization transferred millions of dollars in recent years to another account, a new interim report reveals.

Former Supreme Court Justice Thomas Cromwell’s interim report on the governance of Hockey Canada, released last week, contains damning details about the organization’s management of its National Equity Fund, a fund that Cromwell says will be in deficit by 2023. .

Hockey Canada commissioned the Cromwell review in response to outrage from hockey parents after learning that the National Equity Fund, made up in part of player registration fees, was being used to pay millions of dollars over accusations of sexual assault without your knowledge.

Cromwell learned of a third fund to which the Hockey Canada board of directors approved the transfer of $10.25 million in reserve funds from the National Equity Fund (NEF) in 2016. Further financial analysis found that at least another $7 million. from the NEF to the third fund since then.

The money moved after Hockey Canada auditors recommended a change to the organization’s disclosure in its audited financial statements that “increased the National Equity Fund’s reported balance by several million dollars,” Cromwell found.

Cromwell concluded that the organization’s board of directors feared that an account with more money would attract more claims.

“Hockey Canada was concerned that this change in financial statements would artificially inflate the NEF balance, which could indicate a large amount of funds set aside for potential claimants and thus could increase the likelihood of additional claims,” ​​Cromwell wrote. in your report.

In November 2016, Hockey Canada’s board of directors transferred the money from the NEF to another fund called the Insurance Rate Stabilization Fund (IRS), which was created years earlier to “act as a buffer against future increases in insurance rates.” insurance,” according to the report. . Athletic was the first to report on the new fund and money transfers.

$17 million transferred

The board justified the transfer by saying it was a way to expand the scope of the IRS Fund “for the purpose of providing financial support against possible future uninsured claims,” ​​the Cromwell report says.

Cromwell said that Hockey Canada also widely expressed that changes to its transparency “were not suitable for its organization, such as making financial statements and members’ meeting minutes available to the public.”

“While Hockey Canada has achieved considerable financial success over the years, Hockey Canada is concerned that being viewed as a ‘deep pocket’ organization may create some negative implications,” Cromwell’s report said.

“For example, this could have an effect on their bargaining power with respect to settling claims, and this could also influence the amount of money sponsors would be willing to offer in the future.”

Kate Bahen, director general of Charity Intelligence Canada, said Cromwell’s report showed “there was an intent to hide funds”.

Examining Hockey Canada’s audited financial statements, Bahen found that the NEF’s “actual balance” was $15.7 million in 2016 before the organization ended up transferring $9.5 million to the other fund. (Cromwell’s report says the board approved a transfer of $10.25 million, but depositions show $9.5 million was moved, according to Bahen.) That transfer brought the NEF closer to its $5.2 million level in the prior year, before accounting changes, he said. .

Bahen said he also found that Hockey Canada’s board approved the transfer of $17 million from the National Equity Fund to the IRS Fund between 2016 and 2021.

“This was not just a one-time occurrence in 2016…Hockey Canada has kept its books closed for years and years and has fought against financial transparency,” said Bahen, who was provided with Hockey Canada’s audited financial statements obtained under access to information act.

She said that Hockey Canada spent as much NEF money on staff salaries, travel, meals and allowances between 2014-2021 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, softened that message in July when he told Hockey Canada members and executives that the organization has “stopped using the fund to resolve sexual assault claims pending the outcome of our review of governance by an independent third party.

CBC News asked Hockey Canada what funds would be used to resolve the sexual assault allegations and was told the organization is awaiting Cromwell’s final report.

Bahen said audited financial statements show NEF’s 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 group sexual assault involving eight hockey players, including members of the World Junior team, he said.

The new NEF balance, which Cromwell said is depleted, will be announced at Hockey Canada’s annual general meeting on Dec. 17.

‘A culture of secrecy’

NDP MP Peter Julian is part of a parliamentary committee that held public hearings on Hockey Canada’s handling of sexual assault allegations.

“[The funds transfer] demonstrates once again that this funding labyrinth was designed to avoid public scrutiny and accountability,” he said.

Sébastien Lemire, sports critic for the Bloc Québécois, said the existence of a “third fund is not surprising and is a testament to the culture of secrecy that exists within the organization.”

“Knowing that the fund that was originally supposed 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,” Lemire said. .

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Liberal MP Anthony Housefather said he asked Hockey Canada interim board chair Andrea Skinner earlier this month if there were any other funds besides the two known to the committee.

Skinner responded that, to the best of his knowledge, no other funds were used.

“It reflects what I thought was misleading testimony in committee,” Housefather said.

The NEF has paid out 21 settlements since 1989, 11 of which related to sexual misconduct, according to Cromwell’s interim report.

Nine of those 11 settlements were based on landmark cases and were awarded to whistleblowers against perpetrators Graham James, Gordon Stuckless, and Brian Shaw. All three names were on a list given to Hockey Canada’s insurer and were excluded from insurance claims when Hockey Canada expanded its insurance policy in 1998 to provide sexual misconduct coverage for the organization.

The 10th case involved a landmark sexual assault claim against a referee, someone the insurer said Hockey Canada was aware of and should have warned the insurer about. The eleventh matter was the 2018 group sexual assault allegation involving members of the World Junior team.

Bahen said he has posted all the audited financial statements on his website and hopes other accountants and experts will look into them as well.

Hockey Canada has not yet responded to CBC News’ request for comment.

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