independent

Thursday 17 April 2014

State funding for Rehab 'should have stopped years ago'

'Temporary measure' continued due to lobbyists' pressure

Minister for Jobs, Enterprise and Innovation, Richard Bruton, T.D., with Angela Kerins, Chief Executive, Rehab Group before the annoucement that Rehab Group plans to recruit 750 staff in its operations over the next three years, with over 400 of those to be based in Ireland. Pic credit; Damien Eagers 16/5/2012
Angela Kerins, Chief Executive, Rehab Group

CIVIL servants wanted to shut down State funding for charity lotteries operated by Rehab and other organisations as long as four years ago, internal government documents obtained by the Sunday Independent reveal.

Officials in the Department of Finance said the State payments to charity lotteries were supposed to be a temporary measure but continued because of lobbying by Rehab and other charities.

One internal memo from 2010 noted that the State was already spending "massive sums of money" on healthcare, including making payments to charities that were already receiving funds under the charity lottery scheme.

The finance documents also reveal that Rehab received almost €600m in State funding in six years. The disability organisation was paid €255m by the HSE from 2005 to 2011 and got €335m from Fas over the same period.

These State funds are in addition to the €87m Rehab earned from the State last year and the €75m it has received in the Charity Lotteries Fund since 1997.

Rehab is the latest organisation to come under public scrutiny amid calls for greater transparency in the charity sector. The not-for-profit disability organisation has so far refused calls to disclose the salary paid to its chief executive, Angela Kerins, on the grounds that the Rehab Group includes commercial entities as well as charities.

The Minister for Justice stoked the controversy last month when he criticised Rehab's miniscule returns on charity lottery scratch cards in the Dail last month. Alan Shatter said an audit showed that almost €4m of scratch card sales raised just €9,452 for the charity in 2010.

While the size of Ms Kerin's salary has dominated headlines, the charity lottery scheme is the main bone of contention between the Government and Rehab. The disability organisation is suing the State for damages for abolishing the scheme in 2012, in a case that has yet to be listed for hearing.

The fund was intended to beenefit charities that were inhibited from competing with the State-owned National Lottery, which the Government is now trying to sell. Charity lotteries had to cap prize funds – currently at €20,000 week – in contrast with the massive prizes offered by the National Lottery. The compensation scheme was supposed to end after three years but it continued under the approval of an inter-departmental committee.

One Finance memo singled out Rehab as "the main pressure" behind the introduction of the scheme" and said that it was "consistently forceful" in its continuance.

Officials suggested cutting the €8.6m Charity Lotteries Fund in 2010 and 2011, but warned of "a backlash" from the cuts, saying they would mainly affect Rehab.

Officials also suggested that State handouts were "perversely" incentivising charity lotteries to continue their draws even though they were raising little or no money for their causes.

The Department of Public Expenditure and Reform echoed the concerns of the finance a year later, officials also targeted the charity lottery scheme.

"It is not satisfactory that over €107m has been spent under the scheme without any verification by this department (other than an auditor's letter) that the money has been spent on bona fide charitable activities," an internal memo said.

In correspondence with finance, Rehab said the Charitable Lotteries Fund was "a commercial arrangement" agreed between the charity lotteries and the Department of Finance to compensate them for not being able to "compete on a level playing pitch with the National Lottery..."

Rehab also disputes the Department of Justice's audit. John McGuire, a director of Rehab Lotteries, said this weekend that Rehab could earn €75m from charity lotteries if their prize draws were not capped.

"Rehab runs two types of lotteries – those that compete directly with the National Lottery and those that don't because they use different distribution channels," he said.

Those that don't compete, such as the Care Trust subscription lottery and the Rehab Bonanza Draw, deliver returns of 53 per cent and 37 per cent respectively for good causes.

"It is the unfair legislation and the cap on charity lottery prizes which is preventing our other lotteries from having better returns – this was recognised by Government in 1996 and every year since in paying compensation and is the essence of why we believe that the compensation must continue or the cap on the prizes on charity lotteries is removed," he said.

Irish Independent

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