Sunday 21 December 2014

Q&A The Rehab row

Shane Phelan Public Affairs Editor

Published 23/01/2014 | 02:30

Justice Minister Alan Shatter
Justice Minister Alan Shatter

* What is the row between Rehab and Justice Minister Alan Shatter about?

Mr Shatter wants to abolish the Charitable Lotteries Scheme, a fund set up in 1997 to compensate charity lotteries, whose revenues slumped following the launch of the National Lottery a decade earlier.

It was intended to be used to offset decreased scratch card revenues and the effect of a prize cap of €20,000 per week that was imposed on the charities.

Rehab argues that the scheme was found to be "necessary and relevant" by the Department of Finance and that the cap undermines their ability to raise funds.

* What sort of money is involved?

Around 20 eligible charities, including Rehab, were able to apply for €4m worth of funding from the Government under the scheme in 2013.

But funding for the scheme has been slashed in recent years and is now less than half what it was in 2010.

Mr Shatter says it will decrease to €2m this year and €1m in 2015 before being phased out altogether in 2016.

* Why does the minister want to do away with the scheme?

Mr Shatter says the country can't afford to keep it anymore and that it is "an inefficient and uneconomic use of state resources".

He believes it encourages inefficient fundraising practices and high administration costs, while also incentivising charities to run their lotteries at a low profit margin or a loss. More compellingly, he argues that because of the way these lotteries are run, very little of the money they raise ends up beings spent on charitable works. In a Dail debate this week, he cited Rehab as an example of this.

An audit by his department found the charity only had a surplus of €10,000 after selling scratch cards worth €3.97m in 2010. Profits were eaten up by the cost of selling and marketing the cards, which came to €1.3m. Scratch card players won €2.6m in prizes that year.

* How has Rehab been fighting its corner?

Rehab Group and Rehab Lotteries filed judicial review proceedings in a bid to halt the scrapping of the scheme. It is also embarked on a separate lawsuit, seeking €1.5bn in damages for lost revenue as a result of the setting up of the National Lottery.

Rehab has also described Mr Shatter's comments in the Dail as "unacceptable" and "simply outrageous", while claiming the information he provided was "misleading".

* What happens now?

A High Court judgment on the judicial review proceedings is still awaited.

In the meantime, Mr Shatter is showing no sign of backing down on his plan to phase out the scheme.

His speech in the Dail has also turned the spotlight on Rehab and whether there is enough transparency surrounding its operations.

* So Rehab faces further scrutiny?

Most definitely. It now faces a host of questions over the operation of its lottery and why administrative costs are so high.

The charity is also coming under mounting pressure to come clean on the salary and pension packages of its senior executives.

Chief executive Angela Kerins, whose last known salary was €234,000 for 2011, has stonewalled on this in recent months.

The HSE is currently seeking answers on salary levels, while the Public Accounts Committee is also gearing up to investigate.

Irish Independent

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