In checking with CHT over the summer regarding the court action against CRA, I was told that a report regarding the settlement phase would be coming in September.
So it came as a surprise to me when I was forwarded a copy of CRA’s settlement offer for the cash portion along with a waiver and CRA’s intent to reassess again! Of course I forwarded this right away, as is my practice, to CHT for comment to which they forwarded it to legal counsel.
We were advised to wait for a CHT response shortly as there were time deadlines imposed by CRA on their offer. Then after some difficulty, they got CRA to agree to a 30 day extension on the deadlines.
Naturally it therefore came as quite a surprise that CHT’s response indicated a desire to bail on the action and report that there were no longer any legal funds to continue the fight and the tone indicated that we should take this offer even though it was somewhat smaller than we would like. Subsequently, many donors were left wondering what to do with this.
I find this disconcerting, particularly as I believe in the program and the tremendous good it has brought to so many people (82 million people in 48 countries and about $1 billion in medicines).
I understand the trust rules under Section 107 of the Income Tax Act, and how it pertained to the CHT trust and believe it is worth fighting for – particularly as we are so close to a likely win, as indicated by CRA’s unprecedented offer to settle.
In checking around, it appears that it would not have taken that much more to pursue this fight further. I have been given estimates of $100,000 –$150,000, which spread amongst 1000 donors is peanuts. However, you need the cooperation of both CHT and the participation of all donors. CHT could have easily arranged this amongst its donors at any time.
In giving us our cash portion as a valid donation, which represents about 20-25% of our total refunds received this would indicate to me that CRA had some issues in going to court with this. Could it be by giving us this offer which is ‘unprecedented’ that perhaps they were not prepared to win a value argument on the trust portion?
Here CRA is at its weakest and we should be pursuing them, but instead are abandoning the action. I think for $100,000 - $150,000, we should have finished what we started years ago – and if CHT didn't’t want to carry on, then we should have a least been given the opportunity to pony up the legal fund and seek alternatives as a class, not individually, rather than being left stranded with the CRA.
In my view knowing that the defense funds were dwindling and unprepared to put in more of their own money, they should not only have put in place a contingency plan long before now, but should have given us the heads up while we still had the time and resources to do so.
To bring us to this point where with no time, no money and no way to organize a body of donors to find an alternative, we’ve been given no choice but to take the CRA offer and sign the waiver under duress and coercion to seek the partial interest relief offered.
No matter how much they have helped us with this over the years, and now their “generous” offer to assist us by negotiating a financing plan with CRA for us, I can, as a donor myself, understand how donors could feel abandoned. Nonetheless, it appears that there is nothing else we can do but to accept the CRA offer regardless that I think CHT could have and should have done better for us.
Again we are being faced with another governance issue of the promoter in an unregulated industry where there are no rules, standards, or ethics for promoters to abide by. Again this is why the necessity of a regulatory authority such as PGC has been created in order to move the industry forward as a compliant and viable regulated industry.
Unfortunately, this applies to a future of regulator approved and certified programs and comes too late for this past industry where we are being left with this present carnage to clean up, trying to protect donors as much as possible in the process. As far as I’m concerned the older pre PGC industry has just been killed, however we are having a new better industry being reborn in PGC and future approved programs, promoters, and reps. We all just have to be patient and weather the storm for now.
Paul Lauzon