A governance review of Hockey Canada is calling for the organization to be more transparent about how it settles lawsuits – including disclosing to the public where the money to pay sexual-assault claims comes from and ensuring that such allegations are not kept secret.
The governance review, conducted by retired Supreme Court justice Thomas Cromwell, was commissioned by Hockey Canada this year after it came under fire for its handling of sexual-assault allegations made against several national junior-team players.
Hockey Canada faced criticism from sponsors, the public and federal MPs after it quietly settled a lawsuit this spring in which a young woman alleged that she was assaulted by several members of the 2018 national junior team. The settlement was reached without fully investigating the matter and MPs have accused the organization of trying to cover it up to avoid public scrutiny.
Though Hockey Canada said it determined that harm was caused, it did not hold any of the players allegedly involved financially accountable, and instead turned to registration fees from players and parents across the country to foot the bill, without disclosing how their money was being used.
Mr. Cromwell said participants weren’t properly informed about Hockey Canada’s use of its National Equity Fund, a multimillion-dollar reserve built by registration fees, to settle sexual-assault lawsuits. The fund also lacked proper oversight and controls governing its use, he concluded.
In his final report, issued Friday, Mr. Cromwell called for Hockey Canada to be more transparent with the public.
“We recommend that Hockey Canada take steps to provide timely disclosure of publicly available information to its members regarding ongoing and potential claims,” Mr. Cromwell wrote.
“Once a settlement is reached, we recommend that Hockey Canada disclose all publicly available information” including the nature of the claim, “while respecting the restrictions of any non-disclosure agreements in force,” the report said.
“For example, where a non-disclosure agreement only precludes the disclosure of a settlement amount, Hockey Canada could inform its members of the nature of the claim, the fact that a settlement was reached and how/when the settlement would be funded.”
The findings call on Hockey Canada to conduct itself much differently than it has.
At federal hearings in June, Hockey Canada was vague about where the funds to settle the $3.55-million lawsuit came from. It quickly reassured government and corporate sponsors that none of their money was used, since both were concerned about being connected to a sexual-assault case that MPs said was handled improperly. The lawsuit was settled for an undisclosed sum.
The Globe and Mail was first to report in July that Hockey Canada built a financial reserve known as the National Equity Fund, with registration fees from players across the country, which was used to settle sexual-assault claims. Hockey Canada did not disclose this information to parents and players.
A subsequent Globe investigation last month found that Hockey Canada also transferred $7.1-million in registration fees from the National Equity Fund to create a second financial reserve that could be used in sexual-assault cases, known as the Participants Legacy Trust Fund. This reserve has sat idle as a massive financial war chest.
A Globe investigation this week, examining nearly 20 years of Hockey Canada’s audited financial reports, found that the organization has stockpiled large financial reserves far beyond what financial experts and its own auditors believe are necessary. The investigation revealed that Hockey Canada’s assets grew to $153-million last year, from just $28-million in 2003, despite its status as a non-profit organization that does not pay tax.
Though Mr. Cromwell said it is reasonable for organizations to create financial reserves for legal contingencies, his report determined that the National Equity Fund was not acceptable under good governance practices. Hockey Canada did not place proper oversight or controls on the money, nor was there sufficient disclosure into how it was being used.
Mr. Cromwell found at least six withdrawals exceeding $500,000 from the National Equity Fund since 1999 where Hockey Canada did not make formal disclosures to its provincial associations, as was required, or did not keep proper records.
“We recommend that Hockey Canada establish a formal policy governing the NEF, with a particular focus on where funds are collected, how they are and can be used, what types of approvals are needed to use the funds, and how Hockey Canada must report to the board, members, participants and the public when it uses the NEF,” the report said.
Such restrictions will ensure that the fund’s balance only represents what is needed, the report said, “and that the funds are only used in ways that are consistent with that purpose.”
After the sexual-assault settlement was reported by TSN in May, MPs questioned Hockey Canada about why the 2018 incident had not been disclosed earlier.
Mr. Cromwell said Hockey Canada is now at a pivotal moment to restructure itself and rebuild trust. “Hockey Canada is at a crossroads,” he wrote. “Confidence takes time to build, but can be quickly lost. Hockey Canada’s recent experience is testament to that.”
Hockey Canada’s board announced last month that it would step down in December. It also announced the immediate departure of chief executive officer Scott Smith.
Mr. Cromwell’s report calls for the board be reconstituted with more gender diversity, different voices and a more appropriate skill set to run such an organization.
“It is now time for the whole hockey community, including all those under the Hockey Canada umbrella, its stakeholders, and Sport Canada to work together to make our game the safe and inclusive sport that it ought to be,” Mr. Cromwell wrote.