Former Supreme Court Justice says Hockey Canada’s handling of funds used to pay sexual assault claims was flawed | CBC News

A new report commissioned by Hockey Canada says a controversial reserve fund used to settle a multimillion-dollar lawsuit alleging a group sexual assault in 2018 involving World Junior players went was necessary, but there were serious problems with the management of this fund, CBC News has learned.

CBC News viewed and verified Parts of a more than 100-page preliminary report authored by retired Supreme Court Justice Thomas Cromwell recommending sweeping changes.

The report found that Hockey Canada had no policies and procedures to govern the use of its reserves, did not fully disclose its funds in financial records, and violated the rules by failing to notify members of large payouts.

Hockey Canada hired Cromwell in August amid calls for its executives to resign after it was revealed it had used its National Equity Fund — set up to cover uninsured or underinsured claims — to settle sexual misconduct claims .

The hockey organization has come under intense public scrutiny since May after a woman filed a $3.5 million lawsuit alleging eight hockey players — some of them members of the 2018 World Junior Hockey Team — sexually assaulted her.

Hockey parents were outraged to learn that Hockey Canada was using the National Equity Fund – made up in part of their registration fees – to pay for a settlement in this and other cases.

Parliamentary testimony later revealed that since 1989 an additional $7.6 million had been withdrawn from the fund for other alleged sex abuse settlements.

“Protect Predators”

Cromwell reviewed Hockey Canada’s governance structure and found that while some provincial associations were aware that the National Equity Fund was responding to historical claims, these members said they “did not believe its use would ‘conserve predators’ in future would include”.

Hockey Canada is required to report to its members when new settlements, claims or judgments could cost more than $500,000, but Cromwell noted that the hockey organization has at times failed to notify members.

Cromwell has identified six cases since 1999 with settlements worth over half a million dollars that should have been disclosed. The report states that this did not happen.

“Our review of the summaries of members’ meetings over this period shows that members have not received any formal notification of these matters,” Cromwell’s report reads.

“However, Hockey Canada advised that all of these discussions would take place on camera and that they would not on camera log those parts of the meeting.”

WATCH: Hockey Canada CEO, board of directors resign

Cromwell concluded that not only is it prudent to have the National Equity Fund to “address uninsured and underinsured liabilities… failure to do so would be a serious oversight.”

“Use is reasonable [National Equity Fund] Means of meeting potential uninsured and underinsured liabilities for Hockey Canada and/or any participant for whose benefit the reserve is maintained,” the report reads.

Cromwell nevertheless made a number of recommendations.

More than half of player fees go to the National Equity Fund

Cromwell reported that Hockey Canada’s website and information given directly to parents did not reveal how much money from players’ annual registration fees is set aside to fund uninsured claims.

Cromwell noted that of the $20.80 insurance fee players pay annually, more than half ($13.65) goes to the National Equity Fund. He said the participants needed to know that.

“Hockey Canada did not directly notify participants of the $13.65 that is paid into the National Equity Fund each year to pay premiums, deductibles and uninsured losses,” Cromwell wrote.

The report found that policies and procedures were not in place to govern the use of Hockey Canada’s reserve funds. He recommended creating guidelines on who can access the funds, who will sign payments and how such payments are reported to the board, provincial associations and players.

The Legacy Trust Fund established by Hockey Canada between 1986 and 1995 to cover uninsured claims by its members also had “no formal guidelines,” Cromwell wrote. The Globe and Mail first reported on the fund, which Hockey Canada said has not yet been used.

Elizabeth Watson, an international governance expert, said the report shows the case is an “example of what can go wrong”.

She is the founder of Watson Advisors which has worked with hundreds of organizations on good governance tools. She said the report suggested a “culture of athlete protection” – something she had previously seen in cases where the rules were not followed because of “high reverence for elite athletes”.

“In this case, there really weren’t any rules and it was a way of making sure the athletes were protected, regardless of the overall sense of values ​​the organization was supposed to stand for,” Watson said.

Liberal MP Anthony Housefather said the report “sounds very similar” to what a parliamentary committee looking into the Ice Hockey Canada scandal had “diagnosed”.

“I think it’s perfectly fine to have a fund like this to cover uninsured claims, provided you’re transparent,” said Housefather, who has yet to see the report. “And assuming the contributors know what the fund is for and what they are paying for. That was missing here.”

Hockey Canada executives testified before a parliamentary committee considering the matter in July and said they used the National Equity Fund to help the complainant.

Hockey Canada CFO Brian Cairo told MPs the organization settled the lawsuit because “we didn’t know all the details of the night, but we believed damage was done.”

Scott Smith, who resigned as President and CEO of Hockey Canada this week, also testified this summer that there were “some questions” about Hockey Canada’s sexual misconduct insurance policy and “we were concerned that it could take months and maybe years to clarify this”.

“We have made the decision to come to terms in the young woman’s best interests,” Smith testified on June 20. “We didn’t want to process this. We didn’t want to go through the process…and challenge them by putting them through that circumstance.”

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Julie Macfarlane of the University of Windsor Law School called Hockey Canada’s argument a “completely disingenuous argument”.

“There was never a need to walk the victim through the court process,” said Macfarlane, who also co-founded a campaign called Can’t Buy My Silence to end non-disclosure agreements.

“If they accepted liability, there would have been settlement negotiations and no chance of a jury trial. Nor would they have had to bind the victim to secrecy and silence in a non-disclosure agreement. This was solely for their own protection.”

Report recommends larger board

The provincial hockey associations met virtually Wednesday after Smith resigned and the board announced his resignation.

The provincial associations discussed the Cromwell report and are expected to meet in person on Saturday in Toronto to vote on a number of recommendations in the report related to the voting process.

Cromwell’s report also recommends improving gender parity on the board, increasing the number of members from nine to 13 and extending director tenures.

The board election was postponed a month to allow this report to come out first, CBC News reported.

The election is scheduled for December 17th.

When asked when Hockey Canada would publicly release the full report, the organization said, “Updates regarding the ongoing governance review will be made in due course.”