Hockey Canada told federal hearings Wednesday that it has paid $8.9-million since 1989 to settle 21 cases of alleged sexual assault, with the bulk of that money coming from a special fund built through registration fees that wasn’t disclosed to parents and players.
Senior executives said Hockey Canada has used a reserve known as the National Equity Fund to pay out nine settlements in that time worth $7.6-million, without putting those claims through the organization’s insurance policies and further scrutiny.
The figures are the first public disclosure of how much Hockey Canada used the special fund to settle allegations of sexual assault.
A Globe investigation last week found that Hockey Canada offered no transparency about the National Equity Fund, which was fed by registration fees that were said to be for insurance premiums, and there was no disclosure on how some of that money was used.
“I can understand that parents aren’t happy. I wouldn’t be happy as well,” Hockey Canada chief financial officer Brian Cairo told a parliamentary committee examining the organization’s handling of an alleged sexual assault involving members of the 2018 Canadian world junior team. “But that’s the reality of the situation in terms of some risks, you can’t insure them.”
Hockey Canada settled a $3.55-million lawsuit in May, for an undisclosed sum, with a woman who alleged she was assaulted by several players in a hotel room in London, Ont., after a 2018 fundraiser honouring the world junior team.
The organization hasn’t said why it didn’t use the insurance coverage it carries to settle the claim, or why it deemed the matter uninsurable. Instead, Hockey Canada moved this spring to settle the lawsuit in a matter of weeks, despite not knowing which players were alleged to be involved or what transpired in London.
“We didn’t know all the details of the night, but we did believe harm was caused,” Mr. Cairo said.
Liberal MP Anthony Housefather, a former corporate lawyer, called the settlement very unusual, saying he could not imagine another organization agreeing to pay out a claim in such a manner. Conservative MP Kevin Waugh questioned the lack of disclosure over the National Equity Fund, which the government acknowledged this week it did not know was used to settle sexual-assault cases.
“The National Equity Fund caught everyone off guard,” Mr. Waugh told the hearing.
“Did you know about the National Equity Fund and what they were doing with it?” Mr. Waugh asked Barry Lorenzetti, the president of BFL Canada, which is Hockey Canada’s insurance broker.
“I did not know personally about the equity fund, no sir,” Mr. Lorenzetti replied.
Mr. Lorenzetti said he believed it was not uncommon for organizations to operate contingency funds, and thought it was prudent risk management.
“If Hockey Canada had not kept the fund and eventually had an uninsurable loss of some significance … the only way they could probably recover is to go and actually increase registration fees for these kids. So this is prudent,” Mr. Lorenzetti said.
However, Liberal MP Lisa Hepfner questioned whether having such a fund allows alleged perpetrators to escape accountability for their actions, and helps perpetuate problems.
Hockey Canada did not disclose to parents and players that some of their money, which they were told was for insurance, was instead going toward a reserve for sexual-assault settlements. Players of all ages, from beginner Timbits Hockey to senior leagues, pay a $23.80 fee to Hockey Canada for insurance, and some of that money was being channelled into the National Equity Fund.
Though little has been known about the fund and how it was operated, The Globe’s investigation found that the National Equity Fund had exceeded $15-million in recent years, and also drew revenue from investments and interest. At federal hearings in Ottawa last month, Hockey Canada chief executive officer Scott Smith was asked whether government funding was used to pay the settlement in May.
Mr. Smith said no public money was used, saying Hockey Canada instead liquidated some of its investments. He made no mention of the National Equity Fund and its relationship to player registration fees purported to be for insurance coverage.
At Wednesday’s hearings, Mr. Smith did not say how much the claim involving the alleged 2018 assault in London was settled for, but said Hockey Canada’s board approved paying out the full amount discussed in settlement negotiations.
“The board approved the maximum amount of the settlement, and the settlement offer was made and accepted,” Mr. Smith said.
Hockey Canada also used $287,000 from the National Equity Fund to pay the law firm Henein Hutchison LLP to look into the allegations starting in 2018, though its investigation could not determine what transpired, in part because not all players on the team agreed to be interviewed.
A lawyer for Henein Hutchison said on Tuesday that the firm has reopened its investigation and now has the mandate to compel players to co-operate or they will be named publicly and suspended from playing for Hockey Canada in the future. Police in London have also reopened their investigation into the allegations after the lawsuit came to light.
Meanwhile, Hockey Canada is facing allegations of sexual assault involving players on the 2003 world junior team. Police in Halifax, where the tournament was played that year, have opened an investigation after TSN reported the claims.
At the hearings Wednesday, Mr. Smith faced calls from several MPs to resign as CEO. He told the committee that he believed he could help rebuild credibility at Hockey Canada, but said if the board decided he shouldn’t continue, he would accept that decision.
The extent to which Hockey Canada used the National Equity Fund surprised MPs on the committee.
Of the $7.6-million the special fund had paid out since 1989, $6.8-million of settlements were related to the abuse perpetrated by disgraced former hockey coach Graham James, Mr. Cairo said.
Mr. Cairo said Hockey Canada has settled 12 additional claims through its insurance coverage, for a total of $1.3-million. Those insured settlements were reached since 1996, when Hockey Canada’s existing insurance policy for sexual misconduct began.
Those figures – totalling 21 claims and $8.9-million – do not include the settlement Hockey Canada reached in May over the 2018 sexual-assault allegations.
Mr. Cairo did not give a definition of how Hockey Canada determines whether a claim is considered uninsurable. By not passing the claim through its insurance company, it would allow the settlement to be reached without a full investigation. Mr. Smith said the settlement was done with the interests of the alleged victim in mind.
“We haven’t used money to protect our image, we’ve used money to respond and support victims,” Mr. Smith said.
“We made the decision to settle in the best interests of the young woman. We didn’t want to litigate this or we didn’t want to go through the procedure that you make reference to and challenge her by putting her through that circumstance.”
MPs disputed those assertions, saying it was unusual to settle a case so quickly without investigating.
The use of the National Equity Fund for sexual-assault claims was not disclosed in Hockey Canada’s annual report or its financial filings, nor was it listed in the organization’s handbook for parents and players on the various forms of insurance provided by their registration fees.
Hockey parents across Canada have told The Globe that they were upset to learn that their registration fees were used in such a manner. Hockey Canada has since halted the use of the fund for settling sexual-abuse claims.
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