Rehab loses challenge to abolition of compensation fund

Rehab the largest of 19 charities benefitting, securing €3.9m of €6m paid in 2012

Then minister for justice Alan Shatter, at a meeting in November 2011 attended by then Rehab chief executive Angela Kerins (above), raised issues including profits of only €9,452 on some €4 million sales of Rehab Lottery scratch cards.    Photograph: Eric Luke/The Irish Times

Then minister for justice Alan Shatter, at a meeting in November 2011 attended by then Rehab chief executive Angela Kerins (above), raised issues including profits of only €9,452 on some €4 million sales of Rehab Lottery scratch cards. Photograph: Eric Luke/The Irish Times

Thu, Jun 5, 2014, 21:05

The Rehab Group has lost its High Court challenge to the Minister for Justice’s decision to abolish the Charitable Lotteries Scheme (CLS), set up to compensate charitable lotteries whose prize funds were capped to protect sales of the National Lottery.

The scheme was initially funded from the National Lottery surplus but from 2005 was 35 per cent funded by the Central Exchequer. Of 19 charities who benefitted, Rehab, Ms Justice Iseult O’Malley noted, was “by far the largest”, securing some €3.9m out of €6m paid out in 2012 when the decision to phase it out over three years was announced.

Then Minister for Justice Alan Shatter, at a meeting in November 2011 attended by Angela Kerins and Frank Flannery of Rehab, had raised issues including about profits of only €9,452 on some €4m sales of Rehab Lottery scratch cards.

Rehab responded it found it difficult to operate economies of scale in relation to lottery products and that affected profitability and added tensions with the National Lottery also hindered sales. Mr Flannery told the Minister it would be “morally wrong” to end the CLS.

In October 2012, the Minister, in a letter noting Rehab had received some €80m under the CLS, said he had concluded the CLS could not be justified in current economic circumstances and must be phased out by 2015. His decision was approved by the Taoiseach.

In juducial review proceedings challenging that decision, the Rehab Group and Rehab Lotteries argued they were denied fair procedures, had not been consulted about the intention to wind down the scheme prior to the formal decision and should have been given an opportunity to make representations.

The Minister denied those claims. The court heard the Minister believed existing criteria for the CLS were “unacceptable” in that they incentivised running charitable lotteries at extremely low profit margins or at a loss. He was also concerned a low proportion of already low profit margins reached those whom it was intended to assist.

In her reserved judgment, Ms Justice O’Malley said the scheme, as Rehab conceded, was not intended to provide compensation arising from the setting up of the National Lottery but was an effort to amemliorate the difficulties faced by some charities.

While the scheme operated, charities would have had rights relating to its administration, including it be operated fairly. It was accepted it was at all times subject to periodic review and the beneficiaries had no legal right to its continuance. There was never any representation any decision to end it would not be taken without consultation.