National lacrosse at odds
Fed-up players and managers want CLA officials to resign over financial issues
The players and management of Canada’s national men’s lacrosse team are demanding the resignation of some of the Canadian Lacrosse Association’s top officials.
Following Canada’s 19-6 win over the United States in Saturday’s Heritage Cup in Hamilton, the players submitted a letter to the CLA board, signed by 19 members, demanding the resignation of CLA president Joey Harris, director Sohen Gill, director of high performance Doug Luey and athlete director Derek Graham, The Examiner has learned.
The management team of Dean French, Gary Gait, Dave Huntley and John Mouradian submitted a separate letter, signed by all four, demanding three steps by the CLA by March 31, 2018 or else they will resign.
The management team, which oversees five national teams, has been at odds with the CLA leadership for its lack of action to restore its Registered Canadian Amateur Athletic Association status stripped in 2010 by Canada Revenue Agency for participation in a $60.7-million gifting program the CRA says violated tax laws. The management team also want better insurance coverage for players who put their professional lacrosse careers at risk to represent Canada.
National team players have paid thousands of dollars to play for Canada at world championships because funding for the program falls short of covering all costs. In addition, the CRA’s revocation of RCAAA status means they can no longer issue tax receipts making it difficult to recruit sponsorship or donations for the national teams, say players.
CRA documents state the gifting program, set up initially by The Trafalgar Group’s ParkLane Financial, gave money through a trust set up in Bermuda to donors to inflate donations to the CLA who issued tax receipts multiple times the value of the initial donation amount.
The CLA immediately transferred the funds to a tax shelter in Bermuda which immediately repaid to the trust the inflated amount of the donation. Donors were recruited by the program’s promotors, with CLA knowledge, on the promise they’d make money by getting a tax benefit greater than their true donation.
For its role, the CLA received one per cent of all funds collected and a percentage of yield from tax shelter investments. The CLA also partnered with EquiGenesis in a similar program.
CRA documents show the CLA flowed $60.7 million through its account to the offshore tax shelter and retained $608,447 or one per cent. Harris said on Saturday the CLA continues to receive approximately $500,000 annually from EquiGenesis investments and about $5 million since joining. The fund is projected to pay out for 20 years, said Harris.
He said CLA no longer has a relationship with ParkLane, which has settled two class action lawsuits, totalling more than $45.5 million, filed by donors who were later assessed tax bills with interest for their donations by CRA for lacking donor intent. EquiGenesis has filed suit against CRA alleging they attempted to work with CRA to comply with tax laws and were treated unfairly.
The issue for Canada’s national lacrosse teams is they rely on fundraising and sponsorship to make up for the rest of the $200,000 to $250,000 annual budget not covered by the CLA’s annual $100,000 funding for senior teams and $75,000 for U19 teams.
Prior to 2012, the CLA provided $20,000. It’s meant players paying to make up the differential. That figure is estimated to be $4,000 per player for next year’s men’s world field championships in Israel. CLA board and staff have all expenses paid.
Team Canada goalie Brandon Miller said players are concerned the CLA hasn’t taken steps to regain RCAAA status. A CRA directive outlining steps required include removal of all board members involved during the gifting program which includes Harris and Gill.
“It’s time for action,” Miller said.
The management team took their concerns to Luey and Graham in March hoping it would spur action. Seven months later nothing has happened, so players are demanding Luey and Graham resign.
Miller said none of these issues were ever brought to their attention by the CLA board.
“We’re the guys bleeding and sweating for these games strictly to try to build our sport,” said Miller.
It would be a major loss, he says, if the management team walked away.
“I don’t know any of the board members personally,” said Miller. “I know the four gentlemen (on the management team) very personally and I thank them every time I see them because they do so much for Team Canada. It’s all voluntary and you can see they have a passion for it. That’s where their anger comes from, as much as the players, to see we are taking steps backwards here. We have funding that could be available to us if it weren’t for strict penalties from the CRA caused by certain board members.”
Katie Guy, co-captain of the women’s team that won silver at this year’s world field championships, says she’s paid more than $20,000 to represent Canada four times, including more than $11,000 in 2007. She says players want accountability from the board.
“When you Google search the CRA’s correspondence letter to the Canadian Lacrosse Association it is shocking what you will find,” Guy said. “I find it strange that these facts are not well known across lacrosse families in Canada.
“I find it imperative people understand the consequences that this loss has on all lacrosse players across Canada.”
Guy said it hurts lacrosse’s reputation.
“There needs to be a change in the CLA board of directors including the addition of two elected player representatives, from the men’s and women’s national teams, to have a voice for all players,” said Guy.
When asked why the CLA hasn’t applied to regain its status Harris said they’re waiting for EquiGenesis to finish court proceedings.
“We’re waiting for the results of that court decision because it might revoke the initial decision of the CRA and one particular auditor who removed the charitable donation status,” said Harris.
He said the auditor who handled the CLA case revoked status for three sports organizations while another auditor who reviewed other sports groups involved simply instructed them to cease the program without revoking their status.
When the time comes to reapply, Harris says, he’ll leave. He understands from talking to Football Canada officials, who regained their status, it’s about a two-year process.
“People have to be removed from the board who were there at the time the decision was made and that would be me. I have no problem leaving if that’s what it takes,” Harris said.
He said “a few million” of the funds went into establishing the Canadian Lacrosse Foundation, of which he is a board member, as an endowment fund when it appeared the CLA might lose its Sport Canada funding, which was $435,000 this year. Other funds have gone to numerous programs across the country, to administration costs and to increased stipends for national teams, said Harris. He says the increase to $100,000 annually, would never have been possible without EquiGenesis. A lot of the funds, he said, go to grassroots projects.
Registration has been decreasing and Harris said emphasis has to be on growing the game. As important as national teams are, he said, there are other priorities.
“There is a program in Saskatchewan which requires $20,000 to get off the ground. There is a program in the Maritimes where we’re paying $30,000 for a co-ordinator so they can run lacrosse. It’s not all about the national team,” said Harris. “I don’t think people understand we have to look at building the base. We are losing players and that doesn’t mean throwing money into the national team. It means throwing money into grassroots programs.”
As for players paying to play for Canada, Harris said, “that’s not uncommon for amateur sport in Canada.”
The CRA criticized the CLA for not doing due diligence before entering the gifting program by relying on legal advice from the promoters rather than an independent opinion.
Harris said the CLA was struggling financially and they were told of other sports and nonsports organizations in similar situations benefitting from the tax shelters. He said it would have cost $20,000 to $30,000 to seek a third party lawyer’s advice so they relied on the promoter’s legal team which included respected Bay Street lawyers, he said.
“You can go to five lawyers and they can all give you different opinions but we had two consistent opinions on it and people were jumping in,” he said. He says one board member abstained from voting over concerns with the program but the rest voted in favour.
The CLA AGM and elections are Nov. 18 in Winnipeg. Harris wouldn’t comment on whether he’ll run again for president.