Counting the Cost of Abuse Redress

By Conor Ryan
Irish Examiner
October 1, 2012

http://www.irishexaminer.com/ireland/counting-the-cost-of-abuse-redress-209377.html

THE State’s exposure to the child abuse redress bill is growing but efforts to coax religious orders to accept half the costs have failed.

One by one, the 18 congregations have told the Government its desire to split the bill on a 50:50 basis was too much; they would not allow the redress process to bankrupt them.

Negotiations are ongoing on an alternative plan, to sign over school sites, but there has been no resolution and the process has staggered.

The immediate effect is that the State will now have to find at least ˆ1.1bn to fund its portion of a compensation and inquiry scheme that was expected to cost ˆ240m when the indemnity deal was signed in 2002.

Departmental memos show that the overall redress bill is expected to reach ˆ1.47bn — this rose ˆ100m in the last year. It is not known if it will be the final figure.

The Government has resolved, in an explicit resolution, to ensure the 18 orders under the indemnity deal cover half of the amount.

The resolution, voted on in Jun 2011, rejected some of the gestures tabled by orders and asked for school sites to be made available.

Following the publication of the Ryan Report in 2009 the orders, according to their own valuations, committed to give ˆ476m in money and property to the State. This included the assets that were slowly transferred under the 2002 deal.

Crucially, ˆ235m of this increased offer was made up of land and buildings, mostly schools and health facilities. When the department assessed them, they were found to be worth ˆ60m.

This has left a ˆ434m gap between the value of what has been offered (ˆ301m) and what the department wants (ˆ735m).

There is an associated package under discussion with the Christian Brothers to put its playing pitches, worth ˆ127m, into a joint entity of the State and its trust.

In 2010, the orders were written to asking for more but the responses back, according to departmental memos, have used various forms of language to arrive at the word "no".

Since assuming responsibility for the education portfolio in Mar 2011, Ruairi Quinn has met with the orders on numerous occasions.

So far, only the Presentation Brothers has made a tangible promise to add ˆ1m to the sum it offered and separately an additional site — a former primary school — was added to the property schedule.

The papers relating to Mr Quinn’s, and his department’s, engagement were released under the Freedom of Information Act.

They reveal that, at different times, there were polite requests to "explore with the congregations" the possibility of transferring school sites. At other stages, there were efforts to entice them by confirming they will be publicly recognised for their support. More recently, Mr Quinn expressed his frustration at the progress.

At all times, he has noted, and the orders have reminded him, that they are under no legal obligation to up their commitments because they are insulated by the ˆ128m cap built into the 2002 indemnity deal. But even under this deal, the intended contribution has yet to be realised.

So far, ˆ105m worth of assets have been received of the ˆ128m that was promised 10 years ago.

The sites are clearly identifiable but, as with many religious properties, it has proved extraordinarily difficult to secure legal title and finalise a transfer.

The problem is so great the department has been reluctant to accept properties where the orders could sell the sites themselves.

It particular, the Government refused an offer by the Sisters of Mercy to donate properties directly to the Statutory Fund. The order was told to sell the land and sign the cash back to the fund.

The lack of cash for the fund is another problem that emerged before its establishment by the Dail before the summer recess.

In 2009, the orders offered an extra ˆ91m in cash to the Statutory Fund. At least ˆ24m is still dependant on the congregations selling property, which is estimated to take at least 10 years.

The Sisters of Charity, which has ambitions to commercially develop a number of strategic sites in Dublin City, told Mr Quinn it cannot meet the additional promise made in 2009. It said ˆ3m outstanding will not be paid but it has offered to waive its claim to legal expenses.

The stalemate between the religious bodies and the State has undermined the potential of the Fund for victims.

The strategy in the Programme for Government, to secure the transfer of school sites in lieu of money, has been met with a cold response.

The correspondence and briefing notes to Mr Quinn show that the majority of the orders have declared themselves either unable or unwilling to give any more. Some, in particular the Rosminians, claim they are in financial distress irrespective of any additional bills for redress.

The Christian Brothers said while it has financial assets of about ˆ50m, it will not be able to release ˆ20m of its extra commitment for up to 15 years because of the downturn in the property market. Three sites it put on the market last year could not find a buyer.

The Christian Brothers said it would bankrupt the order to act quicker and it was expecting bills to come from legal cases relating to its management of day schools.

The Sisters of Mercy said it would engage with the department on the possible transfer of schools but it did not want this to have anything to do with the redress process.

It said that to accept the 50:50 approach would effectively tarnish all its members as having been guilty of abuse. This same point was raised by the Sisters of Charity.

In the 12 years since the indemnity deal, the orders sold at least ˆ468m worth of property. They retained assets worth over ˆ3bn.

But three years since the publication of the Ryan Report, the State is still holding out the collection plate, hoping to limit its exposure to the swelling cost of redress.

ORDER’S RESPONSES

Orders’ responses

The responses of a selection of religious orders to the Government’s request for them to contribute 50% towards the cost of redress and the message they delivered to Education Minister Ruairi Quinn at meetings:

* The Presentation Brothers The only body to respond positively to the Government’s request, it put an additional ˆ1m on the table to help fund the building of the new children’s hospital. It said it wanted to advance the process and was happy to cooperate with negotiations.

* The Dominicans

The order said it would not volunteer additional resources but it would cover 50% of its legal costs arising from the redress process. It was one of six orders to deliver its additional cash offer in full.

* The Oblates

Having made a substantial cash offer following the publication of the Ryan Report, it said it was not in a position to do more. But it said it would waive its claim to legal bills and said its overall contribution was fair and reasonable. It also queried whether redress could be expanded to cover all former students.

* Sisters of St Clare

The order said while it was shocked at the Ryan Report findings, the 18 congregations under the indemnity deal only managed about 100 of the 139 institutions investigated and other management bodies should contribute. It said its members were taxpayers and paid PAYE and Vat on building projects. It delivered its additional cash offer in full and said it could give a school site in Ballyjamesduff, worth ˆ275,000, to the VEC, but a 50:50 split was a bridge too far.

* De la Salle

It said it had a mission to carry out and if it was prevented from doing so, it would have no reason to exist. It has offered ˆ1m but this is subject to the terms of the statutory fund being acceptable to the order and trust law.

* Brothers of Charity

The order said it was trying to deliver services to people despite cutbacks in the health budget but those services were suffering.

* Presentation Sisters

It asked why the Government wanted orders to sign over school sites if they could not be sold for cash. They said its property was key to its mission and suggested Mr Quinn was trying to take ownership of schools from congregations. It was worried the Government was implying if the orders did not increase their offers, the education budget would be cut.

* Sisters of Nazareth

It said it was happy to meet with Mr Quinn and offered ˆ2m in a rent waiver to the HSE for the use of its nursing home in Sligo. The offer was refused.

* Daughters of Charity

It looked for the issue of proportionality between the various orders to be addressed, but said its assets were being used to serve clients with intellectual disabilities and it could not offer more. In lieu of cash, it said it would give land beside Phoenix Park to the OPW. This was declined by the Cabinet.

* Good Shepherd Sisters

The order said it had given a full report on its assets and had no more funds with which to offer.

* Hospitaller Order of St John of God

The order paid the money it committed in 2010. It told Mr Quinn it was not mentioned specifically in the Ryan Report and all of its assets were used to support services it offered. It said any attempt to find a 50:50 split "required creativity".

Sisters of charity

Offer from 2009: It offered to give ˆ5m but recently told the Government it cannot afford to sign over the last ˆ3m.

Position on meeting the 50:50 target: It cannot meet its commitment.

Explanation:

When it met Education Minister Ruairi Quinn in Jul 2011 it expressed concern congregations were being portrayed as being 100% responsible for the abuse.

It had offered to give an extra ˆ5m towards the Statutory Fund but was concerned that the costs of redress appeared to be rising. Since then, the order has won a High Court challenge to the Dublin City Development plan that would have killed off plans to redevelop some strategic sites at Sandymount, Walkinstown and Harold’s Cross.

It wrote to the Department in June and said the ˆ5m it offered initially was beyond its means and would be reduced to ˆ2m.

It was the first order to reduce its offer and blamed the decision on the property market collapse. "The Sisters paid ˆ1m to the Government in 2010, expecting the trust fund to be set up immediately. They have the second payment of ˆ1m ready to pay since 2011 but they cannot release it until the Government puts the trust fund… in place.

"Since the value of their properties has depreciated hugely and the ability to sell property is still severely affected by market conditions — so the nature of their offer has changed," said a statement in June.

Christian Brothers

* Offer from 2009: ˆ30m plus the transfer of ˆ127m worth of playing pitches to a joint trust.

* Position on meeting the 50:50 target: It has told the department it will not be able to increase its offer.

* Explanation:

The Christian Brothers rejected Education Minister Ruairi Quinn’s request to give more sooner. It claimed if it acted as he desired the order would be bankrupt.

Instead it said the property market had handicapped its effort to sweat its assets and find the money it needed to contribute to the Statutory Fund in the short term.

The order said it has already given substantially to the cost of redress and had to keep money aside because it predicts significant claims to arise from its role in the management of day schools. These were not covered under redress.

The first installment of its cash offer, worth ˆ10m, is to be paid in a staggered fashion over the first five years of the Statutory Fund.

The order had offered an additional ˆ20m in cash. But it has informed the department this will not be handed over quickly as it depends on property sales.

Three sites it put on the market in 2011, which were expected to raise ˆ3m, could not be sold.

A sum of ˆ4m towards counselling services was included with its offer, but the department discounted this when it realised the money would be paid to Faoiseamh and not to the Statutory Fund.

The Christian Brothers had already transferred its schools infrastructure to a linked trust, the Edmund Rice Schools Trust, prior to the publication of the Ryan Report.

It said these were worth ˆ480m and this should be included in the calculation of its contribution.

The department indicated, in meetings with the order, that it believed it could do more and sign over money sooner. It said Christian Brothers had financial assets of ˆ63m. The order said by the end of 2011 this had fallen to ˆ50m.

"The minister noted that ˆ50m was still a significant sum and suggested an early payment of a cash contribution. Br [Edmund] Garvey responded by stating that such an early payment could bankrupt the congregation," the record of the meeting said.

Mr Quinn told the order he did not want to put it out of business, but asked for a gesture.

The order said the "congregation is now at the pin of its collar to meet even the current requirements of its charitable and other commitments".

The Rosminians

* Offer from 2009: It was not able to make any offer due its financial circumstances.

* Position on meeting the 50:50 target: It cannot give any more.

* Explanation:

The order has told the department it is badly in debt after its attempt to commercially develop a Drumcondra site and build a school for the blind with the proceeds.

Before the publication of the Ryan Report, it submitted plans to build 359 houses on its campus in Drumcondra. But this has not progressed.

Instead, it told Department of Education officials at a meeting in February it had substantial debts.

It owed ˆ5m relating to the redevelopment of the St Joseph’s complex in Drumcondra. It said the State should be liable for some of this because it was party to the preparations for the new school.

A property in Gracepark Gardens was sold for ˆ630,000 and the proceeds are being used to pay down the interest.

Its provincial, Fr David Myers, said it had offered land which had been collateral for the loan back to the bank to cancel the debt but this was refused.

Preparing the planning application cost it ˆ1.5m and ˆ1.5m was spent building alternative accommodation for priests in anticipation of the redevelopment.

The Department asked it to consider signing over some playing fields beside its former residential home at Upton, Cork.

Sisters of Our Lady of charity

* Offer from 2009: ˆ1.5m plus one creche

* Position on meeting the 50:50 target: It said it is unable to offer more.

* Explanation:

When the Ryan Report was published in 2009, the order offered an extra ˆ1.5m towards the cost of redress. It also said it would sign over its childcare facility at Gracepark to the HSE.

However, when the Government set its 50:50 target and asked orders for more, the answer from the order was straightforward.

A quote from correspondence said "it was unable to make any further cash contribution".

According to its valuations, the Sisters of Our Lady of Charity had property assets worth ˆ17.1m.

It enjoyed a significant windfall during the boom, when it sold land beside its former Magdalene Laundry in Drumcondra for ˆ62m in two tranches.

But when it met Mr Quinn and department officials on Dec 16, 2011, the order said it was caring for 29 sisters and 38 former residents, and groups were ageing. Financial advisor John Kidney said it had shelved plans to sell more property because of the state of the market.

Mr Quinn said he appreciated the complexity of its position but wanted a beefed-up offer. In the minutes, regional leader Sr Sheila Murphy put it on record that "the congregation had no liability to additional contributions as there was no agreement in place regarding the matter".

Sisters of Mercy

* Offer from 2009: ˆ107m in property to the State and voluntary sector and ˆ20m in cash to be paid in installments over five years.

* Position on meeting the 50:50 target: It was a flawed idea and unacceptable to the order.

* Explanation:

The Sisters of Mercy told Education Minister Ruairi Quinn if it accepted the principal that orders should cover half the cost of redress, it would effectively be declaring all of its members were guilty of abuse. It said the concept of a 50:50 share of the ˆ1.47bn bill was flawed.

Congregation leader Sister Coirle McCarthy said the order had begun to deal with abuse victims in 1995 and co-operated fully with the 2002 deal. But the increase in the bill was the State’s problem.

The order said its contribution to the State, through the provision of service, could be worth as much as ˆ1bn. "[Sr McCarthy] noted that he 2002 indemnity agreement was to a voluntary contribution to the State and that the congregation had met its obligations under that agreement. The congregation did not believe it owed 50%: if that position was to be agreed to it would amount to saying that all of the congregations members were guilty of abuse," the records said.

The order also said its additional offer from 2009 was "just, generous, and adequate".

Problems have surfaced regarding the properties it offered to the State. The Cabinet voted to reject its proposal to donate 16 properties directly to the statutory fund as it would only accept cash.

The order said it would sell two sites but there has been no resolution to the remaining 14. The order also wanted 16 plots it committed to the voluntary sector to count towards its contribution. But the Cabinet said no. Only one ˆ200,000 building, available for Comhaltas Ceoltoiri Eireann in Tulla, Co Clare, was considered reckonable after it got the support of the Department of the Arts.

The order met with Mr Quinn separately at its own request. He paid particular attention to the decision of the Government to ask all the orders to shelve plans to transfer education infrastructure into dedicated trusts. However, the order said many of its schools were being transferred to local patrons and its second level sites were placed in the Ceist/Educena trust.

While it was willing to discuss the schools issue, it wanted this done separately to redress negotiations.

Daughters of the heart of Mary

* Offer from 2009: ˆ1.5m in cash.

* Position on meeting the 50:50 target: It would not enhance its offer.

* Explanation:

The congregation met with the Department in Dec 2011 and stood firm.

It said it would not give any more towards the cost of redress.

The order told Education Minister Ruairi Quinn it had "serious reservations" about the principal of a 50:50 burden sharebetween the State and religious orders. It said it paid its legal costs during the redress process.

The order said it wasnot referred to specifically in the Ryan Report and the amount it contributed was more than it would have expected to pay out in court awards if the indemnity deal had not been agreed.

It told officials its members had made a significant contribution to the care of children and this was not paid for.

Its delegation said it was not under any obligation to provide funding towards the new national children’s hospital.

Mr Quinn asked the order to reassess its position and warned it that failure to do so may attract negative publicity.

"[The minister said] any cash contribution or any property transfer by the congregation would be publicly acknowledged.

"By the same token the refusal of the congregation to enhance its contribution would have to be noted in a report to Government," the minutes said.