Foundation set no money aside for annuities, insurance workers allege
Claims by the Banyan Tree Foundation that it has set money aside in annuities for more than 20 charities are being disputed by former employees of a Bahamian insurance company that facilitated the work of the Canadian foundation, which is under federal investigation.
The existence of annuities, which were supposed to support the charities for 25 years, was "a charade," alleges Roshan Noronha, the former comptroller for Nassau-based Hampton Insurance.
The employees also allege the $65-million donation that the charitable foundation said it made to the University of West Indies Mona Campus didn’t happen.
"I think it's all smoke and mirrors," charged Lester Turnquest, the former managing director of Hampton. "Somehow they were able to paper the donation there, but the money didn't stay there."
The Toronto-based foundation is being investigated by the Canada Revenue Agency for issuing $208 million in tax receipts, even though only a small percentage of the money has been paid out in charitable donations.
The $65-million donation to the university is also being reviewed, because it led to tax credits worth $30 million for a company that was sold several times through Montreal investment managers.
Foundation head refuses comment
Robert Thiessen, head of the foundation, declined to be interviewed further on this topic.
In earlier interviews with the CBC, he said the Canadian charities that were supposed to get their annual payments in January would receive their money from annuities, but the money was tied up by a lender in the Caribbean pending the outcome of the CRA investigation.
The former employees of Hampton Insurance allege that, too, is hogwash.
A CBC investigation revealed weeks ago that the CRA regarded the Banyan Tree as "a sham," even though it did not officially say the foundation's charitable status was under review until after the CBC broadcast aired.
The CRA has refused comment on any aspect of the investigation of the foundation.
In a typical transaction, the foundation sold investors a unit for $2,900 and lent them $10,000, which was then donated to the foundation, resulting in a charitable donation receipt for $10,000.
Under the government's 46.4 per cent tax credit for charitable donations, the receipt would net the investor a $4,640 tax refund. About half of the $2,900 would go toward paying back the loan over 10 years, and the rest of the original donation would pay administrative costs.
Now the CRA is telling the investors/donors they have to pay back the tax credit plus interest — and they are also on the hook for the loan, which is held by Rochester Financial.
Thiessen is a former director of Rochester Financial who gained 100 per cent control of the firm in February.
Signed papers in good faith: ex-insurance company director
Turnquest, who not only signed the annuity contracts Hampton Insurance sent to the charities, but also signed over shares in a company as part of the $65-million donation the Banyan Tree says it made to the University of West Indies, told CBC News in the Bahamas that he wasn't part of internal discussions about the transactions, but signed the papers in good faith.
After some discussions with Noronha, the comptroller at the time, he realized he was being duped, he said, and both he and Noronha left Hampton last year. Turnquest said he wrote a letter of complaint to the regulator in the British Virgin Islands that oversees Hampton Insurance.
"When annuity payments were due to be made, the funds would come in from somewhere in Canada into Hampton’s account, and Hampton would make the payments as if the funds had originated with Hampton," said Turnquest.
Noronha added: "I got information saying annuities were in excess of $100 million. I never saw those funds, even held by a custodian. I was trying to obtain some third-party support, but there was always some long-winded story."
Turnquest said he felt he was in the midst of a giant pyramid scheme.
Hywel Jones, the owner of Hampton Insurance, refused to respond to requests for interviews, so the CBC’s Alison Crawford confronted him outside a restaurant in the Bahamas.
"Well you know, I'm in a position where, of course, I can't say anything about that. You know that. It's subject to Bahamian regulation and secrecy laws and all that stuff," Jones said in reply to Crawford's repeated request that he put charities at ease and tell them their money is safe.
Jones also owned shares of a company called West Point Ventures that were valued at $65 million and were used in the donation to the University of West Indies.
Canadian J. Bradley Heney, one of Jones's employees, was integral to the donation to the university. In a February 2004 e-mail obtained by the CBC, Heney says: "If CCRA [CRA] stops the sale, then the donation will be returned and the deal unwound. Assuming the deal goes through, we will repeat several more times.
"Let's jump in boys."
'It's a tragedy brought on by greed': Turnquest
There is no evidence of the $65-million donation to the University of West Indies endowment fund on the university website, and the university and its lawyers have ignored a dozen attempts by the CBC to get clarification.
Turnquest said many people have been affected by Banyan Tree's activities.
More than 3,000 donors have to pay back money to the CRA, "charities extended themselves, their employment obligations and outreach programs based on the promise of this money, and people might have left other jobs to join these charities," he said.
He is worried that some people might associate the Bahamas with chicanery, and he is upset that the players in this deal have besmirched the name of the University of West Indies.
"It's a tragedy," Turnquest said, "brought on by greed."
Several charities in Canada that received funding for up to three years of what were supposed to be 25-year annuities are reeling from the lost income.
Danielle Forbes of the National Service Dogs, a charity that trains golden and Labrador retrievers to help children with autism, said losing what was supposed to amount to a $4-million donation means children will now have to wait up to three years to get a dog.
"You feel betrayed," said Forbes, who helped found the Cambridge, Ont.-based charity. "We moved forward in this process in good faith, and we made our long-term plans and we were excited.
"It's just disappointing and disheartening all the way around to be involved in anything like this."
With files from Alison Crawford
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