Emil Ford Lawyers

RSL 'cover up' comes to light

 

The recent Report of the Inquiry under the Charitable Fundraising Act 1991 into three arms of the RSL (RSL NSW, RSL Welfare and Benevolent Institution and RSL LifeCare Limited) considered whether each entity complied with its authority to conduct charitable fundraising and had used its funds properly. The Report was highly critical, calling out each entity for their ‘abysmal failures’.

Charitable fundraising noncompliance

For a start, the Report found that each entity failed to comply with its fundraising authority. There was no way to trace publicly donated funds through each entity’s financial records. In addition, each entity failed to set up a Register of Pecuniary Interests (although RSL LifeCare set one up in late 2016) and failed to establish a proper mechanism for dealing with conflicts of interest (although RSL LifeCare established one up in 2017). However, each entity’s failures went beyond omissions to far more intentional and calculated acts.  

Misuse of funds – RSL NSW

The former President of RSL NSW, Mr Donald Rowe, admitted misuse of the RSL NSW credit card and improper conduct in dealing with expenses that were funded or reimbursed by RSL NSW. Over a six year period, Mr Rowe made over $213,000 in cash withdrawals which he reclaimed through RSL NSW as a ‘business expense’. Amongst other things, the cost of mobile phones for his family members was also claimed as a ‘business expense’ of RSL NSW.

This was allowed to happen because ‘overall levels of expenditure were high; multiple processes for reimbursement were being used concurrently; blanket approval appeared to have been granted; and a “culture of entitlement amongst RSL NSW personnel” had thereby been created.’

However, when Mr Rowe’s credit card transactions came to light, RSL NSW offered him a choice: for his credit card transactions to be forensically examined or to resign immediately. Mr Rowe chose to resign and the RSL NSW State Council decided not to conduct a wider investigation into Mr Rowe’s use of the RSL NSW credit card or refer his conduct to the NSW Police Force. The Report described this in itself as ‘at the very least a serious error of judgment.’

But RSL NSW went further and set about actively deceiving its members and the public so that they believed the only reason Mr Rowe resigned was ill health, when the truth was that, but for being confronted with questions about his expenses, he would not have resigned at that time. The false and misleading statements that were published that his resignation was for reasons of ill health were bolstered with statements from various RSL NSW State Councillors and officers and the RSL National President of warm wishes of gratitude for Mr Rowe’s wonderful service and for a speedy return to good health. Yet they all knew that irrespective of any difficulties with his health the real reason Mr Rowe resigned so suddenly was because his improper conduct had been exposed.

Misuse of funds – RSL LifeCare

The misuse of funds was not limited to RSL NSW. There was a regime of payment of consultancy fees to directors of RSL LifeCare. They approved their own consultancy contracts and approved increases in their own consulting fees. Although the Report said there is no evidence that any of the directors conducted themselves dishonestly, ‘there is ample evidence of cronyism, ineptitude and a lack of understanding or appreciation of directors’ obligations in dealing with conflicts of interest to ensure transparency and accountability in respect of the use of funds raised from the public’.

Consequences

The Report recommended that the NSW Minister consider referring those individuals ‘who took or assisted in taking these organisations close to the brink of destruction’ to the appropriate regulators and authorities. As for Mr Rowe, the Report recommended a much wider NSW Police investigation into his misuse of RSL NSW funds and the circumstances of his departure.  

What does this all mean for charitable fundraising generally?

Each RSL entity’s failures are, as the Report found, ‘quite extraordinary’. However, the following are some key take home points for organisations conducting charitable fundraising:

  1. be able to trace publicly donated funds though your charity’s financial records; 
  2. ensure there is a Register of Pecuniary Interests set up and ensure a proper mechanism for dealing with conflicts of interest is established;
  3. do not have multiple processes for reimbursement being used concurrently;
  4. do not have blanket approval for reimbursements; and
  5. do not allow directors to approve their own consultancy contracts and increases in their own consulting fees.

If you would like to know more about charitable fundraising, please contact or .

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