Scrapping of lotteries scheme was considered in 2008

The Government was considering scrapping the controversial Charitable Lotteries Scheme years before Justice Minister Alan Shatter decided to phase it out, arguing was no longer “fit for purpose”.

Since 1997 the scheme has provided €120m in state funding to charities whose lottery sales suffered as a result of the imposition of a cap on prizes following the establishment of the National Lottery, which offers unlimited prizes.

Mr Shatter told the Dáil the scheme was to end because it incentivised charities to maximise sales, with no regard for costs or profitability. The decision has resulted in a bitter war of words between Mr Shatter and the Rehab Group, which has received €21.6m from the scheme over the past five years.

A four-year-old memo from the National Lottery section of the Department of Finance suggests cutting the scheme to save money for the exchequer.

The memo, dated Jul 2010, two years before Mr Shatter decided to phase out the scheme, suggests phasing out or “abolishing” the scheme in an effort to “secure savings in the departmental vote”.

Minutes from a Nov 2008 meeting of the Charitable Lotteries Review Group say “given the current economic climate” consideration should be given to stopping the scheme.

A damning Department of Justice audit on how little profit Rehab Lotteries made from its scratch card games has been provided to the Dáil Public Accounts Committee, which is considering whether to invite Rehab chief executive Angela Kerins and other executives to discuss the scheme and senior executive pay.

The audit, which uncovered the minuscule €9,452 profit from overall scratchcard sales of €3.9m in 2010, resulted in Mr Shatter informing Rehab and other charities in Oct 2012 that the scheme would come to an end over a three-year period.

Apart from criticising the high cost and low profitability of Rehab Lotteries games, the audit also said:

* Rehab was unclear in its distinction between administration expenses and front-line services when grants from the Charitable Lotteries Scheme were not to be spent on administration;

* It recommended regular site inspections at Rehab projects funded by the scheme — there had not been any in the past;

* There was no signed agreement between the providers of the scheme and Rehab.

In a letter sent to the Department of Justice in Aug 2012, Ms Kerins rejected the findings, saying the report “demonstrates serious and material misunderstanding of the Charity Lottery Compensation Fund” and she offered to meet the head of the internal audit Walter Johnston.

However, a letter dated Jan 30 this year, written by the justice department’s secretary general Brian Purcell, states it was not possible to conclude the audit process as “the management response to the audit findings and recommendations sought from Rehab as a routine element of the audit process were not received”.

A special board meeting of Rehab is due later this month and is expected to reveal the salary of Ms Kerins, who earned €234,000 in 2011.