How Canada’s Catholic Church escaped payments to residential school survivors

Jordan It’s hard to imagine an entity being more in the wrong than the Canadian Catholic Church finds itself on the issue of residential schools. The Church has apologized for what it has called grave abuses that took place in these schools. And just last year, they vowed to raise $30 million to support healing and reconciliation. That was not even the first time the Church had agreed to raise tens of millions of dollars for the survivors of residential schools and their families. Maybe this time, though, they will actually pay in full. Earlier this month, court records revealed that the Church managed to Dodge its obligation to pay millions from a previous settlement agreement, claiming that what the government thought was a narrow settlement actually covered the church’s entire obligations to survivors, more than $20 million. And the court agreed, and the decision was sealed and the records were private for five years. But now the whole country knows. So what happens next? Will the new government revisit the decision? Will the Church make good on its promises, even if they’re not legally obligated to or will the Catholic Church try once again to take cover and wait for it to go away?

I’m Jordan Heath-Rawlings, this is The Big Story. Tom Cardoso is a member of the Globe and Mail Investigations Team. Hi, Tom.

Tom Hey, Jordan.

Jordan Maybe you could start by taking us back to when this all began. Does it start with the Indian Residential Schools Settlement Agreement? And what was that?

Tom Yeah. Well, I guess you could say that this started with the residential school system as a whole, which lasted more than a hundred years and saw more than 100,000 children forcibly taken from their homes, many of whom never made it back. And the Catholic Church operated roughly 60% of these residential schools. The number varies depending on the sources that you look at, because it’s not an easy number to count. Some of these institutions would wink out of existence and then come back into being under a different denomination or perhaps be run by the government directly. So the exact number is hard to pin down. But the number that most people, including the Truth and Reconciliation Commission, seem to agree on is roughly 60%.

And so after the residential school system finally ceased to exist in the late 90s, Indigenous leaders started to call for reckoning on all of the harms that had been caused by the system. And so in 2006, this enormous complex legal agreement called the Indian Residential School Settlement Agreement, the IRSSA, was put together. It was a multi-party legal settlement between the federal government, several denominations, including the Catholic Church and Indigenous groups. This settlement, it set aside billions of dollars in restitution for survivors of residential schools, most of which was paid out by the federal government directly, which was the organization that funded all of these schools. While, the Catholic Church might have operated residential schools, the federal government was, in fact, the one footing the bill and creating the legal framework for these institutions to exist.

Under that agreement, the religious denominations also had responsibilities to survivors. And so the Catholic Church was made to pay three forms of restitution in 2006 and 2007. 1st, they had to pay $29 million in cash, 80% of which was to go to an organization known as the Aboriginal Healing Foundation. Second, they had to provide $25 million in what they called ‘in kind services’. So these were religious ceremonies, Church driven proceedings or services of many forms that would benefit survivors. And finally, they were to raise $25 million in a national fundraising campaign benefiting survivors.

Jordan So did they do all that?

Tom No. The answer is complicated, and we’ll get into it in a second. But ultimately, leading up to 2014, the Church had raised $3.6 million roughly of that $25 million national fundraising commitment, and it was $1.6 million short on its cash commitment. The in kind services, that aspect seems to have been covered off. Or at least the Church and the government have both agreed that there was no question as to that. And so really, there was 20+ million dollars outstanding from this deal.

Jordan What happened then when the money was short? Does the government step in? Did the court step in? What happened?

Tom Yeah. So in 2014, the federal government, which was monitoring the churches side of the settlement agreement, stepped in and said, wait a second, why do you owe $1.6 million out of the cash commitment? And they looked at the church’s finances, specifically the financial statements that they’d been provided by the organization that the Church set up to handle these payments. They looked at some of the accounting that had been shared with the government, and they became very concerned. And they eventually brought the Church to court. They alleged that there were financial irregularities in the accounting that the Church had provided. They alleged that there were conflicts of interest between members of the board who are also serving as lawyers to that Catholic Corporation. And they alleged that those in Kind services that we talked about earlier hadn’t been audited to their satisfaction, and their true value was hard to calculate. This is before even talking, of course, about the national fundraising commitment, which again was more than $21 million short.

Jordan So before we keep going on what happened, did we know about any of this at the time? Was it a national story?

Tom We did. We knew about it at the very least in 2016, when this court case wrapped up because the Globe and Mail reported about it. My former colleague, Gloria Galloway wrote a couple of stories about this, and at the time, for whatever reason, it just did not get the same level of attention as it has today. Obviously, the climate today is very different. We have these unmarked graves that have become a national point of conversation over the last several months. But it wasn’t something that was widely discussed. It was seen as a minor legal squabble between the government and the Catholic Church that didn’t really seem to burst into the spotlight for many people.

Jordan What was going on beneath the surface of that minor legal squabble because this is the meat of the story you guys broke, right?

Tom That’s right. We’ve been reporting different facets of this legal fight since August, since July even. on the surface, it might seem like a really particular and technical fight about $1.6 million. But what happened was that this fight became very acrimonious between the Church and the government. The government was making some pretty forceful allegations, and the church’s lawyers eventually came back and offered to settle. And this is not unusual. It doesn’t speak to whether the government’s claims were accurate or not. But the Church did come back and say, we would like to settle this for $1 million. And eventually the government said, okay, well, you know, we can do 1.2. And so they agreed on $1.2 million.

And that’s when things really took a turn because the Catholic Church lawyer said that that $1.2 million was in exchange for a full release from all of the aspects of the settlement. So the in kind services, any questions about the national fundraising campaign, and, of course, the $1.6 million. The government, meanwhile, maintained that that $1.2 million was only meant to address the outstanding $1.6 million. So basically, this became a court fight unto itself.

And so there was a court case within the court case where the government and the Church had to now debate whether a deal had been legally struck at all, whether there had been a legal meeting of the minds, as they say. And so the lawyers who had been squaring off on this question of the deal, eventually both became witnesses that had to be examined by other lawyers. And so this case kind of turned inwards and became about itself. And ultimately, in 2015, a judge in the Saskatchewan Court of Queen’s Bench who was overseeing the whole matter decided that there had been a legally enforceable deal, meaning that the Church got that full release from all of their obligations that they were seeking. So in exchange for 1.2 million, the Church was off the hook for its national fundraising campaign. The Church was off the hook on any questions that the government might have posed regarding its in kind services, and the Church was released from the remaining cash commitments because it ended up paying 1.2 million of was a $1.6 million shortfall.

Jordan So in total here, what are we talking about that the Church ended up avoiding having to pay, I guess the 20 plus million and the 1.6 million and then an audit, perhaps of all the in kind services. Is that right? I’m just trying to make sure we understand how much is at stake here. It’s a little confusing.

Tom It’s super confusing. Outstanding, before the government took the Church to court would have been roughly $23 million. And after everything was said and done, in theory, the Church still owed a large amount on its national fundraising commitment. Of course, they were legally released from that. And there was language in the agreement that said that they only had to make, quote, unquote, best efforts to raise that money. And so they argued at the time that best efforts had been made that they had gone to their parishioners, that they had gone to the donors that they were hoping to solicit money from. And that was all they managed to collect was $3.7 million or so. And so that still leaves a 21 plus million dollar hole to say nothing of the bigger, unmet commitment, which was their some would say, their moral commitment to survivors. And this is I think what has really frustrated and upset people in some of these stories has been the fact that the Church said they were going to do these things for survivors and then didn’t.

Jordan on the one hand, stories about legal fights over $20 million are not that unusual, especially when you’re talking about billions of dollars in government spending. But in the bigger picture, like these court documents offer great detail on just how technical the Catholic Church was trying to be to wiggle out of their commitment to people harmed by these schools. And I think that’s what really makes people stop and stare.

Tom Yeah, well, this is something that we’ve heard from many of the people we’ve spoken with. One man, Mike DeGagné, who was the executive director of the Aboriginal Healing Foundation, this was the organization that was supposed to receive most of the cash from the Catholic Church. This was an Indigenous run foundation that specifically worked with Indigenous communities to fund educational programs. They would help… oh God, you name it. They were doing it. It seems like it was a very important and effective organization. Mr. DeGagné told me that his experience with the Church was vastly different from his experience with any of the other denominations that were party to the settlement, the United Church, the Presbyterians, the Anglicans. He said that they really pushed back legally and that kind of defined his experience of working with them. There was a way in which the Church was administering this deal, I suppose, that has stuck with people.

Jordan Why didn’t they just pay? And I realize you can’t answer that question, but maybe answer this question. This is the Catholic Church, right? They have more than enough money that this would be a tiny drop in a huge bucket.

Tom Well, it’s an interesting question because I think it’s a question that’s existed for 2000 years. How much money does the Catholic Church have? That’s actually a question that we set out to answer back in August. The Catholic Church is this complex, sprawling organization in Canada. The Catholic Church is not a central entity. There’s no central clearing house for the church’s assets in Canada. It’s extremely decentralized. In fact, if you ask spokespeople for the Church, they’ll tell you that there is no Catholic Church of Canada. It’s actually an assortment of dioceses and Archdiocese and parishes and religious orders and whatnot.

So back in August, my colleague Tavia Grant and I set out to answer this question, how much is the Catholic Church worth? So we went through thousands of Canada Revenue Agency tax records, and what we found was that the Church was the largest charitable organization in the country. In fact, it had taken in $886,000,000 in donations in 2019, and it had, at least by a very conservative estimate, $4.1 billion in net assets. So this is cash investments and a lot of real estate.

Jordan In terms of the ruling that there was a legal agreement made and the Church was let off the hook. What do people who advocate for Indigenous Peoples, but also, especially the academics and lawyers that have looked at this ruling, think of it?

Jordan Yeah. It’s a ruling that has frustrated some experts. One of the people that we’ve spoken with a fair bit during the series, Mary Ellen Turpel-Lafond, she was a judge in Saskatchewan previously. And now she’s a law professor at the University of British Columbia and an Indigenous person herself. She has said she does not agree with that decision, and she thinks that ruling ended up having this enormous outsized impact where it effectively bound the Church and the government on a deal that really could have benefited survivors further.

I realize that $20 million doesn’t sound like that much, but this is a group of people that have been so systemically disadvantaged and ignored by the government in the past, by the media, that any amount really does make a difference. And we’re seeing it now, right. We’re seeing that the survivors today are still reckoning with all of this, especially in the wake of these ongoing discoveries of unmarked graves.

Jordan Are there still options here? I guess maybe first, did the government have options at the time? Could they have appealed the decision? And if they neglected to, do they still have options now that this is making news? And now, obviously, as you mentioned, that the climate is finally changed to the point that millions of Canadians are angry about this stuff?

Tom Well, the appeal question is very interesting. There was actually an appeal filed. The government actually did file a notice of appeal almost immediately after the judges decision came down. Now, this might have been pro-forma, that might have been just something that they do every time. That’s less clear to me. But we do know that they had an intent to appeal the decision, and they then withdrew that decision on November 10, 2015. That would have been a few days into the Liberal government taking over. It’s not clear to us why the appeal was withdrawn or abandoned. It’s not clear where that decision was made in the government and for what reason. The documents that I have that show the appeal being withdrawn simply say that they’re dropping it. They don’t give a reason or name a list of people who are involved in the decision.

Jordan Did the experts that you talked to think that the government dropped the ball by dropping the appeal? Did they think there was a case there?

Tom If you were to ask Professor Turpel-Lafond, she would say, absolutely.

Jordan Can they do anything about that now? Are there still options?

Tom It’s tricky. Because the appeal itself, that door is now closed. But I have spoken to some experts who suggested that there are other doors that could still be walked through if the government chose to do so. I don’t know if any of those options would be feasible. But I have spoken to some experts who seem to think that there are other possibilities for readdressing some of these issues that were first raised in 2014 and 2015 by the government.

Jordan Tom, thank you so much for this. And for all your work on this. I’m going to ask you one more question before you go. I assume that you are not done with this investigation yet, so you don’t have to scoop yourself here, but how bad is it going to get?

Tom We’d like to do more on this. From the beginning, we’ve been telling people that, you know, there’s a lot we don’t know. The settlement agreement was extremely complex, and while it did pay out billions of dollars to survivors, it’s still seen by a lot of people as a pretty frustrating deal. I’ve spoken with many survivors who told me that they would like to see a full reexamination of the government’s involvement, not only in the appeal but in the settlement process as a whole. We don’t know yet everything that we would like to know about the government’s dealings with the Church in 2015. And there’s a lot more that we would like to know about what’s going to happen next.

The government has announced a lot of money for survivors and Indigenous communities, including to help locate, identify, and repatriate some of these remains in these unmarked graves. Ottawa has also appointed an independent official to help kind of liaise with Indigenous communities and kind of work as air traffic control, if you will. So there are many more stories to come. I think for us we would just like to continue to explore both the Catholic Church but also the government’s involvement in this deal because it’s clearly something that people still feel very strongly about.

Jordan I will be watching for it, thanks again.

Tom Thanks Jordan.

Jordan Tom Cardoso of the Globe and Mail.

That was the Big Story. If you want more head to thebigstorypodcast.ca find us on Twitter at @TheBigStoryFPN. Talk to us anytime you want by sending an email theBigStoryPodcast@rci.Rogers.Com [click here!]. And find us in your favourite podcast player. Apple, Google, Stitcher, Spotify, it doesn’t matter.

Thanks for listening. I’m Jordan Heath-Rawlings we’ll talk tomorrow. Back to top of page