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Friday 19 September 2014

Row erupts between Rehab and Justice Minister Alan Shatter over scratch card sales

Minister reveals in Dail that Rehab card sales generate €4m of sales – but made less than €10,000 profits

Published 22/01/2014 | 02:30

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Angela Kerins, chief executive of Rehab
Angela Kerins, chief executive of Rehab
Angela Kerins, chief executive, Rehab Group

LESS than €10,000 profit was generated from €4m of sales of Rehab Lotteries instant-win scratch cards.

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Justice Minister Alan Shatter revealed the "low profit margins" from lottery products run by the charity.

The revelations will stun the tens of thousands of people who play the Rehab lottery each year, believing that a significant portion of their money is going to the charity.

But Rehab hit back last night, questioning why the minister would comment on matters before the courts.

Rehab has been locked in a legal battle with the State over the ending of the Charitable Lotteries Fund, claiming it will do irreparable damage to the organisation and affect services to people with disabilities. But in response to those claims, the High Court previously heard that some charities were running inefficient or "zombie" lotteries.

Rehab is headed by Angela Kerins, who herself has been under scrutiny over her failure to disclose her salary, which is known to have been €234,000 two years ago.

Mr Shatter last night revealed that the proportion of the face value of instant-win scratch card retained for the charity's benefit averaged around 1pc.

This was based on an audit, which found that in 2010 the majority of the money generated by this form of fundraising by Rehab was written off on the costs of administering the lottery, plus prizes.

The costs of generating the lottery sales ate up a significant percentage of revenue, and scratch card sales of €3,969,000 yielded profits of only €9,452.

However bingo sales of €3,190,000 in the same year yielded profits of €548,000.

Therefore gross sales of almost €7.2m between the two competitions yielded a net profit of €558,000 or 8pc. Mr Shatter said he met with Rehab more than two years ago and queried the profits from the scratch-cards which had yielded less than €10,000 in 2010.

"I noted that the profit ratio seemed disproportionate and expressed concern at the approach being taken to public fund raising," he said.

He said he was phasing out the Charitable Lottery Scheme, where charities are compensated for losing their ability to raise funds since the National Lottery's introduction in 1987.

The total amount paid out in any one year is determined as part of the budget allocation and was at its highest €8.618m in 2009 and 2010, and at its lowest €4m in 2013.

Mr Shatter said Rehab gets about two-thirds of the funding each year from the scheme.

Mr Shatter told the Dail: "There is no requirement for such a lottery to be operated efficiently, or indeed at a profit.

"There is no incentive for such charities to keep their operating costs of such lotteries down."

UNFAIR

Mr Shatter added: "It was unfair to the donors that a low proportion of monies donated was being used for charitable purposes and that the scheme had essentially evolved into a mechanism to obtain taxpayers and National Lottery surplus funds."

However Rehab expressed "considerable surprise" that Minister Alan Shatter made comments in the Dail "on matters that are clearly pending before the courts".

"That the Minister for Justice should do so is an abuse of his position and a serious undermining of the judicial process," it claimed. "We are very disappointed in the minister's conduct. This was no accident."

Mr Shatter also touched upon the "disturbing" controversy of charitable donations used to top-up salaries and pensions at health organisations, including the Central Remedial Clinic.

"We are all concerned at the impact these disclosures are having on Ireland's charities, many of which are excellently run," he said.

He added that a new Charities Regulatory Authority is being set up as a matter of urgency.

Fionnan Sheahan, Group Political Editor

Irish Independent

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