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Christian Brothers auditors raised concerns about assets
Sunday, December 09, 2001

By Emily O’Reilly

The concerns were raised one year before the Christian Brothers of Ireland in Canada Incorporated (CBOIIC) went into liquidation in order to pay massive compensation bills to sexual and physical abuse victims of the Brothers. The CBOIIC liquidator has claimed that he believes some of those assets — alleged to be up to Can$100 million — may have been transferred to an Irish registered company, Richmond Newstreet.

The allegation was trenchantly denied last week by the head of the Christian Brothers worldwide, Brother Edmund Garvey. The claims were first made two weeks ago by RTE’s Prime Time programme.

Details of the auditors’ concerns are contained in internal memos circulated by Ernst & Young accountants, which have been seen by The Sunday Business Post. The memos also questioned the Brothers’ claims about the ownership of a Christian Brothers private school, Vancouver College, an issue which is still going through the Canadian courts. CBOIIC argued that the school was owned by a trust, while the liquidator argued that CBOIIC was the beneficial owner of the property.

One memo stated: “EY (Ernst & Young) has determined that there may be some significant assets which may not be recorded in the organisation’s accounts as at August 31, 1995 . . . There is an argument put forth by legal counsel that Vancouver College’s shares are not owned by the organisation but rather by 4 senior Brothers in trust for Christian Brothers of Ireland. Legal counsel differentiates between Christian Brothers of Ireland in Canada and Christian Brothers of Ireland. Professional scepticism would suggest that it is in the best interests of the organisation not to own the shares as it would protect the $4,000,000 of retained earnings in Vancouver College. There is a clear motive to circumvent the search for the actual shareholdings.”

The memo added: “EY has some concerns about the organisation’s willingness and fullest cooperation in providing all necessary and relevant information. Legal counsel expressed similar concerns in an internal memo, yet provided a professional opinion albeit unsigned.”

Last week, Brother Edmund Garvey claimed that not “a cent” of Canadian money had gone into Richmond Newstreet. He said the company had been formed as a charitable trust in 1996 to collect funds from Christian Brothers organisations worldwide to help with the Brothers’ apostolic and charitable work. “The accounts of Christian Brothers of Ireland in Canada Incorporated were annually audited by the international accounting firm, Ernst & Young, up to the time of liquidation in 1996,” said Garvey. “In these accounts, there is no reference to any transactions, separately or collectively, involving the disposal of Can$100 million, or any part of that amount . . . I therefore confirm specifically that such monies or assets could not, and therefore were not, transferred to any account in Ireland or elsewhere.”

However, The Sunday Business Post has seen correspondence between the company that manages Richmond Newstreet in Ireland, L&P Financial Services Ltd, and Brother Garvey, which proposes that Vancouver College shares be transferred to Richmond Newstreet. In a 1996 letter from L&P chairman Des Lamont, Lamont said: “Ideally, we are of the view that the ownership of the College should ultimately be transferred to Richmond Newstreet — this being the legally established corporate body which retains the resources on behalf of the General Council of the Congregation for the achievement of particular charitable objectives including the provision of education.”

Lamont then warned Garvey: “Conversely, we are concerned that any mention in legal documentation of Richmond Newstreet, which might become public in Canada in the future, might create, or focus, a target for some person or body with litigious interests.” The transfer of shares did not go ahead. However, the Canadian liquidator has stated that he is prepared to seek leave in Ireland to investigate Richmond Newstreet. Auditors to the Christian Brothers in Canada raised private concerns that all of the Brothers’ assets in that country may not have been recorded in their books.

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Sunday, December 09, 2001

Irish company in asset probe on Christian Brothers
Sunday, December 02, 2001 By Emily O’Reilly

The liquidator is expected to ask an Irish court to allow him to investigate the company, Richmond Newstreet. Dublin-based Des Lamont heads up L and P Financial Trustees Ltd, which acts as secretary to the company and shares an address in Clonskeagh in Dublin. Lamont helped negotiate the controversial £20 million loan by beef baron Larry Goodman to Tipperary farmer Joe Kenny in 1990. A lengthy legal dispute arose from the Goodman/Kenny transaction. According to David Wingfield, lawyer to the Canadian liquidators, Richmond was set up in 1994 as an off-shore trust for the Christian Brothers.

Two years later, in 1996, the court appointed a liquidator to the Christian Brothers in Canada in order to release assets to pay massive compensation claims to sexual and physical abuse victims of the Brothers. According to Wingfield, the Brothers claimed total assets of just over $4 million. However, the Brothers own accountants subsequently discovered that many assets had not appeared on official corporate documentation. Wingfield also discovered other documents which cast doubt over the figures supplied by the Brothers.

In one letter to the Christian Brothers, seen by The Sunday Business Post, Lamont suggests transferring assets to Richmond, but warns to keep this hidden from view. “We are concerned that any mention in legal documentation of Richmond Newstreet, which might become public in Canada in the future, might create, or focus, a target for some person or body with litigious interests,” he wrote.

The investigation eventually uncovered papers which revealed the existence of the Richmond Newstreet Trust as well as many official letters from L and P Financial Trustees Ltd, some signed by Lamont. The Christian Brothers told Lamont that only small sums of money had gone to the Trust which they described as an “educational” trust. However, Wingfield told The Sunday Business Post this weekend: “Our suspicions are that Richmond Newstreet was established as a vehicle to hold assets internationally in a manner that makes it very difficult for those assets to be seized by creditors.

“The Christian Brothers accountants concluded that the Christian Brothers had assets that were not properly recorded on corporate financial documentation and there is internal Christian Brothers documentation which reveal assets much greater than they have admitted to. We have grave suspicions about the whereabouts of those assets and believe they may have been diverted off-shore.” Wingfield confirmed that the liquidator has advised the winding-up court that he will seek leave to investigate where the assets have gone. This would involve securing a court order in this country to allow an investigation of Richmond Newstreet.

All of the 12 named directors of the company appear to be Christian Brothers, most of them with addresses at the order’s Rome headquarters. They include the head of the Christian Brothers congregation in Rome, Edmund Garvey.

The liquidator of the Christian Brothers organisation in Canada is preparing to investigate an Irish-registered company in his search for tens of millions of pounds of the organisation’s assets. The liquidator of the Christian Brothers organisation in Canada is preparing to investigate an Irish-registered company in his search for tens of millions of pounds of the organisation’s assets.

Sunday, December 09, 2001 :

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