RSL directors voted to pay themselves as organisation teetered on collapse
Saturday, 9th September, 2017
THE directors of the RSL's major charity nursing home provider voted to pay themselves generous "consulting" payments despite advice they may have breached the law and as the organisation was teetering on financial collapse, an inquiry into the organisation was told on Thursday.
RSL LifeCare, a network of more than 30 nursing homes owned by the veterans' charity, has been under scrutiny since Fairfax revealed its directors, including top NSW public servant Jim Longley, had shared in nearly $2.3 million in "consulting fees" that potentially breached state law.
But at a public inquiry on Thursday, RSL LifeCare chief executive Ron Thompson admitted the charity's board had voted in 2007 to pay itself consulting fees just as the organisation was facing potential collapse.
"The debts owed to veterans when they finally exited [our nursing homes] would not allow the company to survive," said Mr Thompson. "The company was facing [a shortfall] of tens of millions of dollars."
Months after the "consulting fees" to board members were voted on by the board members, the charity applied to the NSW Public Trustee for a major restructure of its finances because "for various reasons the trust was no longer viable".
Mr Thompson said he had not connected the issue of the consulting fees and the charity's major financial problems at the time.
The inquiry also heard that the expertise necessary to be a consultant who qualified for the fees was a "low bar".
It is illegal in NSW for directors of a charity to receive any remuneration without the permission of the Fair Trading Minister (a preliminary audit has found no such permission was given).
But RSL LifeCare maintained that its payment of up to $30,000 to $50,000 a year to each of its 10 directors was legal because it was for extra work, additional to their duties as directors.
The inquiry was told those duties included serving on sub-committees to offer "expert advice", something that Mr Thompson said
But Anthony Cheshire, SC, noted that internal guidelines and resigned RSL national president, Rod White, had expressed the view that serving on committees was part of a director's job.
"The RSL could appoint someone [to a sub-committee as a consultant] who effectively had no skills, correct?," asked Mr Cheshire.
"It was a low a bar yes," said Mr Thompson, who said he had received internal legal advice directors' expertise need not relate to aged care but could extend to "other affairs".
There was no advertising or tendering process for serving on these committees, which were exclusively occupied by LifeCare board members, including Mr Longley, a former Liberal MP and a deputy secretary of the Department of Family and Community Services, and included Don Rowe, a former state president who withdrew about $200,000 on his corporate credit card.
Directors regularly voted to give themselves annual increases in their "consulting fees" but also for a $5000 "tools of trade" allowance to cover computers, phones and paper in addition to the reimbursements they were entitled to.
Mr Thompson said he "awoke" to problems with directors voting on their own remuneration years later, but decided against getting members of the RSL to vote on the issue at an annual general meeting after obtaining internal legal advice.
"I awoke to the conflict in 2011, but just accepted the [legal] advice that going to the members wouldn't work because they [had a conflict of interest] as well," he said.