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Tuesday 30 September 2014

Rehab made €468 profit from €3.4m scratch card sales

Paltry surplus intensifies pressure on charity funded by State to tune of €32m

Shane Phelan Public Affairs Editor

Published 13/03/2014 | 02:30

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Rehab boss Angela Kerins Photo: Collins
Rehab boss Angela Kerins Photo: Collins

A REHAB lottery, which has received huge amounts of state funding, made a profit of just €468 from selling almost two million scratch cards.

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Rehab Lotteries recorded the paltry surplus in 2012 when it sold 1.9 million scratch cards with a value of €3.4m, documents seen by the Irish Independent reveal.

The group has received over €32m since 2007, as part of a deal with the State to compensate charities for loss of business following the setting up of the National Lottery.

The fresh revelations about the poor performance of scratch cards will heap further pressure on the embattled disability charity and commercial group, which has been stumbling from one controversy to the next in recent weeks.

The matter is set to be discussed at today's meeting of the Dail's Public Accounts Committee (PAC), which is expected to recall Rehab executives amid unhappiness about the quality of information provided by the charity on the salaries and pensions of its management team.

The committee is also set to write directly to former Rehab chief executive Frank Flannery, who claimed yesterday he was not formally invited to the last hearing.

Mr Flannery resigned from the Rehab board and from his position as a Fine Gael election strategist earlier this week, amid controversy over his non-appearance at the PAC to answer questions about his pension.

Fresh details of the poor performance of the lottery scratch card operation came to light yesterday, after the 2012 accounts for Rehab Lotteries were provided to the committee.

They revealed that despite sales worth €3.4m, the scratch card game barely broke even. In the same year, Rehab received almost €4m from the Department of Justice under the charitable lotteries compensation fund.

The scratch card sales figures were almost completely wiped out by the awarding of €2.3m in prize money and the €1.1m cost of running the operation.

A radio bingo game run also by the lottery fared better, recording a €514,000 profit following sales of almost €3m the same year.

The disclosures come just weeks after Justice Minister Alan Shatter revealed an audit found the lottery scratch card games made a surplus of just €10,000 on sales of €4m in 2010.

COMPENSATION

Mr Shatter plans to phase out the charity lotteries compensation scheme, which he criticised for encouraging inefficient fundraising practices and high administration costs.

Rehab, which has challenged Mr Shatter's decision to phase out the compensation fund in the High Court, said both the scratch card and bingo products were "experiencing great difficulties in generating sales".

This was in part due to "unfair restrictions", which mean charity lotteries can only have a maximum prize fund of €20,000 in any one week, a spokesman said.

"Scratch cards have been particularly hard hit with the annual sales having fallen from over €10m to just over €3m," he said.

"With this dramatic decline in sales, coupled with the requirement to pay back 67pc of sales income in prizes and a further 12.5pc in retail commission, Rehab has struggled to maintain profit levels on scratch cards as a significant infrastructure is required to operate this business," the spokesman added.

He said staff numbers at the lottery have had to be gradually reduced from 35 people to just 11.

Other records given to the committee reveal another lottery draw run for Rehab, the Central Remedial Clinic (CRC) and the Mater Hospital made a profit of €249,079 following sales of €2.95m in 2012.

BENEFICIARIES

Accounts show 31 staff shared salaries totalling €1.5m at The Care Trust Ltd, which runs the prize draw.

The spokesman added that the income made by The Care Trust Ltd represented the commission received for acting as an agent of the three beneficiaries – Rehab, the CRC and the Mater Hospital.

"The company made a profit of €249,079 on this income," he said.

The spokesman said the gross revenue from lottery sales generated by The Care Trust Ltd was €7.39m in 2012.

He said that the total amount distributed by the company to beneficiaries was €3.88m in 2012 – €1.82m to Rehab, €1.82m to the CRC and €0.25m to the Mater.

Irish Independent

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