REHAB leased cars for staff using money provided by the State to subsidise its struggling charity lottery, audit documents reveal.
The funds were only supposed to be used for charitable purposes – not spent on administration.
But the Department of Justice claims Rehab money that was supposed to go to charity was also spent on advertising, professional fees, software licences, and stationery costs.
Court documents, seen by the Irish Independent, will raise fresh questions about the use of funds at the under-fire charity headed by Angela Kerins.
The funding in question was part of a deal with the State to compensate charities for loss of business following the setting up of the National Lottery.
Using the Charitable Lotteries Scheme money for these purposes was "in breach of the explicit condition that all such funds received must be used for charitable activities and cannot be used for administrative purposes", court affidavits said.
Rehab has been put under huge pressure over its use of funds since Justice Minister Alan Shatter revealed that its lottery scratch card game, which raised €4m from cards in 2010, made less than €10,000 in profit.
However, the Rehab Lottery – which also includes a more profitable radio bingo game – receives millions in taxpayer money, with €10.4m ploughed into propping it up over the past three years alone.
The Department of Justice has claimed that a 2012 audit it carried out of the disabilities charity revealed that some of the funds Rehab received under the Charitable Lotteries Scheme were used for the leasing of staff cars and other administrative costs.
But in an increasingly bitter war of words, charity CEO Ms Kerins – who has refused to reveal her salary – denied that the Rehab Group misused funds under the scheme.
"There has been no expenditure for administrative purposes, as opposed to charitable purposes," said Ms Kerins, in one of several affidavits filed during an ongoing and increasingly bitter court battle.
Ms Kerins, whose charity is suing the State over the planned withdrawal of the Charitable Lotteries Scheme, said that its residential services for people with significant disabilities would not be possible if it were unable to transport severely disabled people with "appropriately adaptable cars".
Ms Kerins rejected aspects of the department's audit as "completely ill-founded".
A new low in relations between Rehab and the Government was reached as the charity's board said it would meet to decide whether to make public the salary paid to Ms Kerins, who is known to have earned €234,000 two years ago.
Taoiseach Enda Kenny and several of his Cabinet intensified the pressure on Ms Kerins to reveal her salary yesterday.
Attending the World Economic Forum in Davos, Switzerland, Mr Kenny was asked if Ms Kerins should reveal her salary. "She should," he replied.
"Where the public purse is concerned in respect of charity, where people are concerned about their donation to charity, they need to know, they need to be comforted, that everything is above board, that everything is accountable, that it is transparent," he replied.
Mr Kenny said after the recent debate and "nauseating spectacle" of the Central Remedial Clinic, a stronger charity sector would emerge.
The pressure prompted a statement from Rehab Group chairman Brian Kerr.
He said the remuneration of Ms Kerins was a matter for the Rehab Group board.
Since the organisation's "last voluntary disclosure" of her salary in April 2011, he said Rehab had received no formal request from any relevant authority to do so again.
"This matter is properly a matter for the board and not Ms Kerins, and some of the pressure that has been placed on her and her family has been entirely unfair and very personal," he said.
Mr Kerr said he was conscious of the public interest in the matter.
"I have decided, in response to today's request from the Taoiseach and with the full agreement and encouragement of our CEO Ms Angela Kerins, to consult with my fellow directors to consider disclosing again the details of the Group CEO's salary," he said.
Mr Kerr said he intended to convene a special board meeting of the Rehab Group to discuss the matter on February 17.
Justice Minister Alan Shatter told Rehab two years ago that he was phasing out the compensation scheme, prompting the charity to take High Court proceedings to quash the decision.
In court filings, the Department of Justice – which described Rehab's administration costs as "unacceptably high" – says it fears that some of the private lotteries benefiting from the scheme have "become mechanisms for leveraging government funding rather than vehicles for raising charitable funding directly from the public as originally intended".
In response, Ms Kerins said that it was "utterly unfounded" in the case of Rehab that its lottery was a mechanism for leveraging funding.
The State said that people who buy Rehab lottery products were likely to be unaware that a low proportion of profits actually reach those in need.
The High Court heard the Rehab challenge last year and a decision is pending.
Meanwhile, Deirdre Garvey from The Wheel, which represents 930 charities, called for a "speedier" investigation into how Rehab's funds were spent.
She said "in light of charities that have nothing to do with it" a speedier investigation must be carried out by the charity's board.
"Every day that goes by without clarity on it is damaging charities in general that have nothing to do with this."
"The beneficiaries of these charities are the ones that are suffering," she told RTE Radio's News At One.