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Pascale St-Onge, Minister of Sport, arrives to appear as a witness at the standing committee on Canadian Heritage in Ottawa on July 26.Sean Kilpatrick/The Canadian Press

Top officials at Sport Canada say the government knew of the existence of Hockey Canada’s National Equity Fund, but had no idea that some of the money was used to settle alleged sexual-assault claims outside of the court system, as The Globe and Mail revealed last week.

The comments were made on the first of two days of federal hearings in Ottawa Tuesday examining Hockey Canada’s handling of an alleged sexual assault by eight hockey players, including members of the 2018 Canadian world junior team.

“We were aware of the existence of that fund, but my knowledge of that fund was limited to what you could read in the organization’s financial records – and the definition of the fund does not mention anything about the sexual-assault allegations,” Michel Ruest, senior director of programs at Sport Canada, told the hearings.

A Globe investigation was first to report that Hockey Canada operated a financial reserve known as the National Equity Fund, which was fed by registration fees and was used to settle sexual-assault lawsuits without involving its insurance company. That allowed the organization to pay out claims without being subjected to an investigation that its insurer would require before settling.

The National Equity Fund had exceeded $15-million in recent years, but its use on 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 Canada has since halted the use of the fund for settling sexual-abuse claims.

Deputy minister of Canadian Heritage Isabelle Mondou told the hearings that the government was not aware of the inner workings of the National Equity Fund, given the minimal disclosure by Hockey Canada in documents such as its annual report.

“There was no question of sexual assault or anything in that report.” Ms. Mondou said.

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In the past week, hockey parents across Canada told The Globe that they were upset to learn their registration fees were used in such a way.

At hearings last month, Hockey Canada said it couldn’t determine which players were involved in the alleged 2018 case, or what transpired after a fundraising event in London, Ont., where a woman said she was assaulted in a hotel room by several players. However, it settled the $3.55-million lawsuit for an amount that has not been disclosed.

Minister of Sport Pascale St-Onge told the hearings that she only learned of Hockey Canada’s use of registration fees to pay out alleged sexual-assault settlements through the article, and said it was unacceptable that Hockey Canada wasn’t disclosing this practice.

“I share the parents’ indignation. There are enrolment fees that went to pay for that,” Ms. St-Onge said. “I learned that through the media. I think that Hockey Canada has an obligation to be transparent to the people who are giving them money, whether that’s the parents of children who play hockey, or sponsors, or the Canadian public through federal funding.”

The government called hearings last month to determine if Hockey Canada used any public money to settle the lawsuit. At those hearings, Hockey Canada chief executive officer Scott Smith said no federal funds were used and that the organization liquidated some of its investments to pay the alleged victim, whose identity is confidential. Not satisfied with the answers, the parliamentary committee called a further two days of hearings for this week, which conclude Wednesday.

Though Hockey Canada carries insurance for sexual-assault lawsuits, its use of the National Equity Fund to pay out claims with minimal disclosure is now at the centre of a controversy over how the organization runs its finances. That includes what oversight there is on money collected from more than 600,000 registrants across the country.

Lawyers representing an injured player who is suing Hockey Canada after he was denied an insurance payout in the wake of a 2014 on-ice collision that left him partially paralyzed allege that the organization moves money in and out of several funds on its books at its own discretion, using the money for purposes other than for what it was collected.

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Court documents associated with that case allege Hockey Canada used money from a fund known as the Health Benefits Trust (HBT), which is set up as an emergency medical and dental fund, to pay expenses on its insurance policies for directors and officers (D&O). Those policies are used, among other things, to shield Hockey Canada officials from liability in various kinds of lawsuits.

In documents from the discovery phase of that trial, the plaintiff’s lawyers allege, “Hockey Canada has admitted to using the HBT to offset expenses associated with the D&O policy.”

Hockey Canada entered those documents into the public record this month, but said on Tuesday that it denies the allegation.

In a statement sent to The Globe, Hockey Canada said “we do not use funds from our Health Benefit Trust for anything other than health and dental claims and associated costs to administer those claims.”

However, lawyers representing the injured player allege that this was done by Hockey Canada in the past, based on evidence gathered in the case.

The evidence includes a transcript from the examination for discovery of Glen McCurdie, who was Hockey Canada’s senior vice-president of insurance and risk management until last year, when he took a leave of absence and retired soon after.

The McCurdie transcript is not public, but Thomas Conway, the lawyer for the injured player, called on Hockey Canada to release it.

“If Hockey Canada seems so sure of itself, why don’t they just hand over the entire McCurdie transcript?” Mr. Conway said in an e-mail.

The matter involving the $6-million Health Benefits Trust will be argued in court in November, when the injury case goes to trial.

Before retiring, Mr. McCurdie had presided over Hockey Canada’s insurance plans since 1988, and had knowledge of the National Equity Fund and how it was used to settle sexual-assault lawsuits, according to court documents.

Mr. McCurdie is scheduled to appear at the hearings in Ottawa Wednesday, along with Hockey Canada’s chief financial officer, Brian Cairo, and Barry Lorenzetti, president of BFL Canada, the organization’s insurance broker.

At the hearings on Tuesday, Sport Canada officials said an audit they are conducting on Hockey Canada will be completed later this year. “That investigation is under way, the first steps started in late June, early July, and we expect preliminary results in the fall,” Mr. Ruest said.

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