Millions Meant for Residential School Survivors Spent on Catholic Church Lawyers, Administrations: Documents

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The Roman Catholic Church spent millions of dollars that were supposed to go to residential school survivors on administration, lawyers, unapproved loans and a private fundraising firm, as per documents obtained by the media.

The documents include a host of other revelations. They seem to contradict the Catholic Church’s public claims about money paid to survivors.

“There are also a large number of serious accounting discrepancies that are alarming to Canada,” states one document, a 53-page federal government “factum” summarizing the evidence in a 2015 court matter.

None of the other churches involved in the landmark Indian Residential Schools Settlement Agreement of 2005 — Anglican, United and Presbyterian was involved in any of these practices. They all settled the full amounts agreed to years ago without issue.

The Catholic Church never ended up having to legally justify its activity. On the eve of the 2015 hearing on the issue, Sask. Court of Queen’s Bench Justice Neil Gabrielson approved the church’s controversial buyout proposal, and the case was closed.

Advocates for survivors say they are pissed off and that the Catholic Church must be held accountable.

“This is unbelievably, absolutely gross. It’s completely wrong,”

said Mary Ellen Turpel-Lafond, an ex-Saskatchewan provincial court judge and director of the University of British Columbia’s Indian Residential School History and Dialogue Centre in Vancouver. She reviewed the documents at the media’s request.

“How could anyone do something like this?”

Not a single lawyer involved in the 2015 case could be reached for comment on Wednesday.

The Canadian Conference of Catholic Bishops (CCCB) declined an interview request. An official noted the CCCB was not a party to the deal. Individual dioceses and orders created a corporation to oversee the deal.

However, the official said Canada’s bishops “are committed to continue engaging and listening.” She noted the “historic delegation” going this December to the Vatican.

That delegation intends to ask Pope France to visit Canada and issue a residential schools apology, a call initially made many years ago by some bishops, Indigenous leaders and the Truth and Reconciliation Commission.

Document lays out where church claims money went

The factum and other documents obtained by the media formed part of the court record in the 2015 case involving the federal government and the Catholic Church. A source directly involved in the case verified their authenticity. The media is not naming the source due to fear repercussions.

The opening paragraph of the factum states that the Catholic Church “has breached its obligations in the Indian Residential Schools Settlement Agreement.”

Apart from a failed $25-million fundraising campaign, the church was required to pay $29 million in cash with strict criteria for its use. The church was also allowed to meet its final $25 million commitment with “in-kind services.”

The factum, written by federal lawyers Alexander Gay and Anne McConville, listed the following expenses and deductions claimed by the church. Many of these details are also listed in the transcribed cross-examination of the Catholic Church’s accountant, also obtained by the media.

For the $29-million cash payment:

  • $2.7m was paid to lawyers for legal work and unapproved “representation” unrelated to the compensation agreement. Two of the law firms receiving a total of 80% of this money also had lawyers on the board of the national Catholic corporation that approved the expenses. One of those lawyers billed for legal and consulting expenses for attending the same events.
  • $2.3m was spent on administration costs. Although no other Christian churches claimed administration expenses, the Catholic agreement permitted for the federal government to reimburse “reasonable” claims. The government agreed to pay $1m of this amount.
  • $1.6m was claimed for donations made outside the approval process to projects with a “First Nations” component. No explanation or invoices are supplied as evidence.
  • The church deducted over $8m for amounts paid to survivors before the 2005 settlement agreement was reached. This appears permissible in the agreement, but it has not been mentioned publicly by church officials when asked about the $29m.
  • The Catholic Church did not file annual financial statements to the government as required until 2012, 5 years into the agreement.

For the $25 million of in-kind services:

  • The Catholic Church accountant testifies that $25m worth of services were provided, “even though he has not audited these records and accounts, has no basis on which to value these services, and relies only on minutes of meetings” supplied by Catholic officials.

For the $25-million fundraising campaign that netted $3.9 million:

  • The church accountant said that a lot of the donations had a “string attached,” telling him where to put the funds, contrary to the agreement. “Somebody will pay $50,000 and say, well, $40,000 of this has to be distributed back to this project,” the accountant testified.
  • $1.8m was loaned from the $29-million cash account to the Catholic Church’s fundraising arm and the private company contracted. Roughly $1.3m of that was never repaid. The church had agreed the funds should stay separate and did not obtain federal government approval to make this move.

The factum ends with some requests by the federal government’s lawyers. It asks the judge to give the following orders to the Catholic Church officials.

  • No more expenses can be accumulated or diverted without prior approval by the government.
  • Recover all payments made to law firms whose lawyers sat on the board approving the settlements.
  • Explain to the court within 10 days what comprised the unspecified $2.7m in “legal services.”
  • Direct an investigator to review all administration costs.
  • Declare that the Catholic Church is in default of its obligations.

Judge ruled federal opposition to deal wasn’t clear enough

The hearing was supposed to start shortly after the factum was issued. The Catholic Church’s lawyer, Gordon J. Kuski, asked for an adjournment, and Gabrielson gave it for a month.

Kuski approached federal lawyer Alexander Gay with a settlement offer. When it became clear the churches were giving just $1.2m more, Gay used phrases in emails such as, “We may have a problem” and “We have no agreement on the terms of the settlement.”

After months of correspondence, there was still no written or oral agreement. Kuski said this did not matter, and when the case returned to court, he asked Gabrielson to declare an agreement has been reached.

Gabrielson sided with the Catholic Church, saying Gay was not clear enough in his opposition to the proposal, and a “reasonable person” would conclude that a deal had been reached. The hearing was cancelled.

Catholic officials paid the $1.2m and dissolved the corporation formed to oversee the settlement deal.

Court officials decline to release file

This month, the media requested the 2015 file from Regina court officials. They refused, saying a formal application and hearing is necessary.

The media asked Court of Queen’s Bench Chief Justice Martel Popescul to immediately produce the file. He also refused, saying proper procedure is being followed and that he can’t interfere once another judge has become involved.

Legal experts interviewed disagree, saying the file is public and should be available right away. Survivors say they have a right to see it. The Federation of Sovereign Indigenous Nations, which represents Sask. First Nations, on Tuesday called for Popescul’s resignation.

Amid calls for church boycotts and revelations the church devoted over $300m to cathedral and church construction during these same time periods, bishops across the country have agreed to revive the fundraising campaign.

In recent weeks, the media has been asking Catholic officials from across Canada regarding the compensation deal. They admitted the fundraising campaign fell short of expectations, but many endorsed the $25m worth of in-kind services, though none may offer a comprehensive list.

Others mentioned the $29m cash payment, though none mentioned the millions apparently spent on administrators, lawyers or other expenses.

“$29 million — paid by Catholic dioceses and religious orders that operated residential schools — this was completed,” an official with the Archdiocese of Toronto said in an email to the media earlier this month.

Bishop Mark Hagemoen of the Roman Catholic Diocese of Saskatoon stated in an open letter last month there had been a “payment of $29 million in cash, which was directed to programs and services under the supervision of First Nations organizations and services.”

UBC’s Turpel-Lafond said whereas it’s important for the truth to eventually be exposed, these disclosures feel like a “gut punch”.

She went on to say that it shows the Catholic Church was not serious about its responsibilities to survivors.

“This was supposed to be sincere reconciliation, not another chance to run up expense claims and billable hours,” she said.

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