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State RSL could lose charitable status over "non-compliances"

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The besieged South Australian branch of the Returned and Services League faces the prospect of having its charitable status revoked, after an investigation by the national charities regulator found “several” governance breaches, InDaily can reveal.

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The state’s RSL went into voluntary administration in April amid a cash-flow crisis – details of which were first revealed by InDaily – and an independent audit by the Australian Charities and Not-for-profits Commission, which oversees all charities and not-for-profit organisations in the country.

State president Tim Hanna has written to sub-branches in a letter that has been obtained by InDaily, telling them the ACNC advised on July 4 “that they consider that RSL-SA was not compliant with several aspects of the ACNC governance standard under the Australian Charities and Not-for- profits Commission Act and its Regulation”.

Hanna said the state branch has since responded “and in doing so, acknowledged that there have been shortcomings in certain aspects of our business since 2012”.

“The key areas of concern are sourcing of services, finance, management of conflict of interest and records maintenance,” he said.

“Our response described the work that has been undertaken in recent months to address these non-compliances.

“Nonetheless, there remains the possibility that RSL-SA will have its charitable status revoked.”

Hanna said the withdrawal of charitable status would mean the SA RSL is subject to “different tax arrangements, including being required to pay tax on any profits made during the year”.

“Just under two thirds of our sub-branches do not have charitable status and continue to deliver services to veterans across SA and NT,” he wrote.

Hanna confirmed the contents of the letter to InDaily today, saying the ACNC had given “notice to show cause” why RSL-SA shouldn’t lose its charity status.

“We’ve responded to that and we await their decision,” he said, adding that the branch has asked the regulator to fast-track a determination “in the next couple of weeks”.

Asked if losing charitable status would be a devastating blow, Hanna said: “I don’t think so.”

“Clearly when you’re a charity it isn’t the best thing to have that status taken away and I wouldn’t want to underplay that, but at the same time a lot of our sub-branches operate not as charities, and there’s nothing in our charter that says we have to be a charity.”

In his email, Hanna told the sub-branches it would be “disappointing” to lose charitable status “and we hope to maintain it”.

“We have worked hard to address the ACNC’s concerns and the current board and proposed Interim Board is confident that RSL-SA has a pathway for the future,” he said.

But in a separate letter to members sent today, Adelaide sub-branch president Nathan Klinge writes: “From my perspective this is very serious situation indeed.”

In my opinion, public confidence in the RSL is already at an all-time low

“I suspect that if the State Branch does in fact lose its charitable status due to the indicated poor governance practices the impact on the entire ‘RSL brand’ will be quite significant, because in my opinion public confidence in the RSL is already at an all-time low and this will only make it worse,” he wrote.

“This is as much to do with issues from interstate as anything else but we can’t blame the situation on that alone, because we have certainly created our own problems here in SA that we cannot step away from.”

He urged members to “simply get behind the new board when they are appointed”.

“They will have their work cut out for them in terms of trying to turn the situation around, and in real terms they will be fighting to fix a range of problems that they didn’t create,” he said.

“I will work hard to support this new board, and I ask that you also do your bit by supporting them publicly and privately whenever you are given the opportunity to do so.

“If the RSL is to survive and flourish in SA through this current challenge, we will all need to be pulling on the same piece of rope.”

It’s understood all current and prospective board members are meeting today. The administration has faced a major shakeup after a string of resignations in recent months, and wholesale redundancies after administrators Rodgers Reidy moved in.

Hanna told the Sunday Mail on the weekend that he intended to resign once the current financial crisis was resolved, saying: “I wasn’t forced at a state level, however I did have pressure from the national board.”

He said he was “confident” the state branch would survive, adding he believed creditors would be paid “100 cents in the dollar” from avenues including the Anzac Appeal funds, sub-branch contributions and property sales – likely to include the Royal Australian Regiment’s Linden Park headquarters.

Hanna told InDaily today his resignation would take place “in the near future… once we’ve sorted a few matters out and I’m confident that the organisation’s heading in the right direction for the future”.

“It will be in the near future but until we’ve clarified a few things it’s a bit premature to put a precise date on that,” he said.

It’s understood his weekend interview angered critics of the current board, after all parties had apparently mutually agreed not to speak to the media.

Hanna said the media blackout “seems to have slipped a little” and he seeks guidance from the administrators on what he says publicly.

The ACNC investigation is ongoing.

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