On 7 July 2010, in my capacity as Liquor and Gambling Commissioner, I declined to issue further charity licences under the Collections for Charitable Purposes Act 1939 for four trusts controlled by the Cancer & Bowel Research Association Inc (CBRA), namely the Cancer & Bowel Research Trust, Breast Cancer Australia, Kids Cancer Research and Prostate Cancer Australia.
These trusts (which I refer to as the “formerly licensed trusts”) had been licensed under the Act for a number of years. CBRA also held licences for the trusts under corresponding legislation in a number of other States.
A new incorporated entity, operating only in South Australia, has now been established under the name Cancer & Bowel Research Association (SA) Inc (CBRA SA). CBRA SA acts as trustee of four new trusts, namely the Cancer & Bowel Research Trust (SA), Breast Cancer Australia (SA), Kids Cancer Research (SA) and Prostate Cancer Australia (SA). On 24 June 2011 I granted licences under the Act for the new trusts (which I refer to as the “currently licensed trusts”). This statement explains the background to my decision to refuse licences for the formerly licensed trusts and to issue new licences for the currently licensed trusts.
I decided to refuse to issue further licences for the formerly licensed trusts because I was not satisfied that the trustee, CBRA, had operated in a sufficiently transparent manner for a charity. For example, in its 2008 financial statements CBRA initially reported that it had paid a total of $726,519 for research projects and $72,746 in key management compensation. Following a management review, CBRA later amended these figures to
$71,352 and $1,206,822 respectively. This is not to say that I formed the view that CBRA or its officers were acting dishonestly but to say that CBRA did not present their financial statements in a transparent manner.
The members of the board of CBRA have since acknowledged to me that the financial statements for the 2007 and 2008 financial years “were, albeit unintentionally, not transparent and apt to mislead” in –
• understating the total remuneration paid to employees of CBRA;
• in omitting to disclose that employee entitlements of senior employees had been paid through a related (unlicensed) trust, Australian Cancer Education and Prevention Fund; and
• in overstating the amount applied to “research grants” and correspondingly understating the amount applied to “prevention and awareness campaigns”.
CBRA challenged my decision to refuse further licences for the formerly licensed trusts by instituting proceedings in the Supreme Court. In March 2011, on the first day of trial, the case was settled in principle and the Court proceedings were adjourned to enable the settlement to be carried into effect. That has now occurred and the Court proceedings have been terminated with both parties bearing their own legal costs.
The settlement negotiations were initiated by CBRA. I was willing to enter into the negotiations because the settlement proposed met most of my concerns and included certain features which could not be achieved through formal litigation.
Under the settlement the four formerly licensed trusts remain unlicensed in South Australia. They are not permitted to collect money for charitable purposes in South Australia. However, as I have indicated, new licences have been issued to CBRA SA for each of the four currently licensed trusts: Cancer & Bowel Research Trust (SA), Breast Cancer Australia (SA), Kids Cancer Research (SA) and Prostate Cancer Australia (SA). Funds raised in this State by CBRA SA, after the deduction of legitimate expenses, will be applied exclusively to charitable outcomes within South Australia, in accordance with the terms of the new trusts.
There is some common membership of the boards of CBRA and CBRA SA. However, the chief executive of CBRA, Mr Troy Manhire, is not a member of the board of CBRA SA. It is a condition of the new licences granted that Mr Manhire will not be involved in the management of CBRA SA or the currently licensed trusts in any way. It is also a condition of the new licences that CBRA SA will provide quarterly reports to my office giving details of its fundraising and expenses. Finally CBRA SA has agreed to meet the cost of a report by an independent accountant who has been instructed to examine the set-up and operations of CBRA SA to ensure that it operates separately from CBRA.
On the information available to me, I am satisfied that the arrangements which have put in place for CBRA SA to operate as a charity in South Australia are satisfactory.
As with all charities, donors should make an informed decision before giving money. Donors can access information about all licensed charities in South Australia by visiting www.charities.sa.gov.au .
The Office of the Liquor and Gambling Commissioner, in its role as watch-dog, will continue to monitor the charity industry. The South Australian public generously supports the important work of various charities and must therefore have confidence in the effective regulation and proper conduct of the industry.