Hockey Canada paid out nearly $2.9-million in legal settlements in the past year, according to newly released audited financial statements.
That number includes the amount paid to settle a lawsuit filed by a young woman in London, Ont., who alleged she was sexually assaulted by several members of the 2018 national junior team.
In documents released Thursday, Hockey Canada said it paid $2,851,692 in legal settlements during its 2021-22 fiscal year, which ended June 30.
The records don’t say how many claims were paid, or how much it cost to settle the 2018 case. But the figure shows the sexual-assault lawsuit was settled for less than the original claim.
An agreement was reached on the $3.55-million lawsuit in May, three weeks after it was filed, for an undisclosed sum. In a statement of claim, the young woman alleged she was sexually assaulted by several players in a hotel room in London, Ont., after a Hockey Canada fundraising event.
Former Hockey Canada CEO Scott Smith told parliamentary hearings in July that the organization believed “harm was caused” and said the board of directors approved a payment, made from a fund built by player registration fees. But he did not disclose the amount to MPs.
“On May 14, we had an additional board meeting, just in advance of the long weekend, when we discussed our approach with respect to settlement,” Mr. Smith told the parliamentary committee investigating Hockey Canada on July 27. “The board endorsed up to the maximum settlement number.”
However, it is not known what the maximum settlement number negotiated between the two sides was.
Hockey Canada financials for the first time disclose details of fund set up for potential sexual-assault claims
Hockey Canada has been criticized for its handling of the alleged sexual assault, including statements made during federal hearings, where executives said they could not determine the identities of players allegedly involved in the incident.
MPs in Ottawa have accused the organization of failing to properly investigate the incident and for trying to cover up the case by using a little-known fund comprised of player registration fees to settle the claim quickly on behalf of the players. After a Globe and Mail investigation revealed details of the National Equity Fund in July, Hockey Canada acknowledged the claim was paid from that reserve.
Hockey Canada told MPs it did not keep records, including meeting minutes, of the board discussions about the payment. Liberal MP Anthony Housefather called the circumstances surrounding the settlement, in which Hockey Canada paid the claim on behalf of eight unnamed players listed in the lawsuit, “highly unusual.”
Hockey Canada has faced intense criticism over its use of registration fees to pay sexual-assault settlements, without disclosing to parents and players how their money was used. In October, after a governance review by former Supreme Court justice Thomas Cromwell, which raised concerns over the funds, the board of directors announced it would step down and said Mr. Smith had departed.
Hockey Canada’s audited financials for the 2021-22 fiscal year say Mr. Smith was “terminated without cause.”
A new board of directors was elected this month by the organization’s provincial members and will serve for a year as Hockey Canada looks to restructure its operations in the wake of the controversy.
In addition to the revelations about the National Equity Fund, a subsequent Globe investigation in October revealed that Hockey Canada created a second financial reserve, containing millions of dollars, which could also be used for sexual-assault settlements. That reserve, known as the Participants Legacy Trust Fund, was also created using player registration fees.
Hockey Canada didn’t previously disclose its audited financials on its website or in its annual report. In response to the criticism the organization has faced this year over a lack of transparency, it has now posted documents for the past six years, dating back to 2017.
A Globe investigation in November disclosed nearly 20 years of Hockey Canada’s audited financials dating back to 2003, which showed Hockey Canada has vast financial reserves that have grown substantially over the years, including several multimillion-dollar reserves such as the National Equity Fund and others.
The latest financial documents show that Hockey Canada has total assets of $119-million, including cash reserves of $5.1-million and investments worth more than $101-million, including equities and bonds.
Those numbers are down from the previous year, when Hockey Canada reported assets of $153-million, including $25-million in cash and $118-million worth of investments.
The drop is attributed to several factors, including higher costs such as insurance premiums and national team spending, lower marketing revenue, smaller investment returns and the impact of postponing last winter’s World Junior championship in Edmonton because of the pandemic.
The financial fallout caused by major sponsors pulling their support for Hockey Canada amid the sexual-assault controversy this summer, and the drop in revenue from the World Junior championship being rescheduled to August in Edmonton, which struggled to fill seats, won’t be fully known until next year’s audited financials. The impact of those items mostly occurred after the fiscal year ended in June.
Even with the fluctuations, Hockey Canada oversees a massive financial war chest. Registered as a non-profit, the organization does not pay tax. It reported net funding reserves of $98.4-million for the year, a number that analysts liken to accumulated profit since it represents the money non-profit organizations retain in surplus. That figure was more than $143-million the previous year.
The nearly two decades worth of audited financials analyzed by The Globe in November show that Hockey Canada has grown significantly since 2003, when it reported total assets of $28-million, including $8.4-million worth of investments. In 2003, its net funding reserves were $21-million.
Kate Bahen, managing director of Charity Intelligence Canada, which scrutinizes non-profits across the country, said it was encouraging to see Hockey Canada making its audited financial statements public. Previously, they could only be accessed by the public through an access-to-information request to the Canada Revenue Agency.
Ms. Bahen said all national sport organizations should be required to disclose their financial statements as a condition of receiving public funding, and as a function of their tax-free status.
“There’s improved disclosure,” Ms. Bahen said of Hockey Canada’s decision to release the audited financials. “It’s long overdue.”