InDaily revealed yesterday that the not-for-profit’s CEO and three board members have walked away in recent weeks, while auditors have been called in to try and balance the books.
It now appears the failure to sell six lots of land on the Victor Harbor foreshore by December has evidently triggered more than $1 million in new liability.
It’s understood the organisation is hoping to recoup around $600-800,000 from the sale of property in Linden Park, currently home to the Royal Australian Regiment Association.
The RSL needs to be more businesslike than it has been in recent years
That sale has prompted a backlash from the RAR as well as local and state politicians, with Liberal deputy leader Vickie Chapman writing to RSL state president Tim Hanna to demand its retention.
“I am mindful that the state division of the RSL is facing some financial challenges but impecuniosity should be no excuse for community-valued organisations to be left homeless,” Chapman wrote.
“Returned service men and women should not be punished for the poor financial decisions of others.”
She said Burnside mayor David Parkin “shares my concern that this valuable headquarters will be sold”.
However, it’s likely the sale would do little to offset the organisation’s ongoing woes, with former Liberal MP Ivan Venning – who this week quit the board due to ill health – confirming a long-standing commitment to guarantee the mounting debts of the troubled Alice Springs sub-branch was recently cancelled, amid the realisation “they couldn’t pay the money back”.
“There’s no way they could,” he told InDaily.
“It’s gone from $1.2 million to 1.4 then 1.6… it’s now not quite $2 million [and] we’ve walked away from that guarantee as of December last year. The fact is that they owe us technically nearly $2 million bucks and we’ve got no hope of getting it – we know that.
“The bottom line is we’re responsible for it, one way or another.”
The debacle stems from an initial bailout of around $600,000 to the Alice Springs sub-branch, where a former club manager was charged with the theft of a similar amount.
That allowed the club to continue operating, with then-CEO of RSL SA Sam Jackman telling ABC at the time “they will still be responsible for local commemorations and that sort of thing and also linkages to the veteran community”.
Hanna said in 2012 the Alice Springs club still had financial problems but “we have developed a business plan now to examine the viability of the club for the future”.
Venning said today the management at the time “made this crazy decision” and “didn’t put the brakes on them”.
“When I got on the board, it was about $1.2 million down [and we thought] we’ll hedge the debt against their asset there… but now we find we can’t sell it, because it’s on sacred ground, that sort of thing.
“The NT Government won’t let us sell it.”
In the old days you got away with it, but now you have to cut your cloth
Venning says he “personally went up there and met the (former) chief minister” to lobby for help, but “the government is not about to throw away two million bucks because of poor management”.
“So we’ve decided to step away and stop our guaranteeing – we’re not responsible for any more debt,” he said.
“They still owe us $2 million, and we’ve got Buckley’s hope of getting it… we might recover 7 or 800,000, that would be better than nothing.”
Venning said the debt “wouldn’t have been a problem three or four years ago, because there was enough money around to fix it”.
“In the old days you got away with it, [but now] you have to cut your cloth – and we weren’t,” he said.
“That’s all there was to it.”
Venning says it was recently acknowledged that the SA RSL had accumulated “20-odd employees, and we needed about seven or eight”.
“We got rid of six in the last three or four weeks,” he said.
Hanna said he did not want to comment specifically on any financial matters, but insisted: “We have not written off that loan.”
He said the views of Chapman or other politicians had no bearing on internal financial decisions, saying: “In the end the RSL needs to be self-sustaining, and needs to be more businesslike than it has been in recent years.”
“To do that we need to look at its assets and look at what we can do, and this decision [selling Linden Park] needs to be made with that in mind.”
But he added there was “also a moral question to this” because the tenants were RAR and “we recognise their long connection with the facility there and investment of time and energy”.
“We need to find them a home; this is not a straight numbers game,” he said.
That suggests any financial benefit from the sale would be offset by renting new digs.
But financial statements suggest the RSL’s liabilities are racking up.
The last published financial statement (2015) of the Poppy Day Trust Inc, which provides housing services and emergency care for veterans and their families, says the entity “is dependent on continuing funding from the [RSL SA Branch] to continue to meet its ongoing expenses”.
The 2015 statement, tabled online last year and co-signed by Hanna, says the association has a net deficiency of current assets to current liabilities of $1,322,936.
“Notwithstanding the association’s deficiency in net current assets, the financial report has been prepared on the going concern basis [which has been] adopted as the association has received a guarantee of continuing financial support from RSL SA to allow the association to meet its liabilities and it is the belief of the committee that such financial support will continue to be made available,” it says.
It also details loans of $600,000 from RSL Care SA and $700,000 from the ANZAC Remembrance Appeal, related to “funding provided by RSL Villas and the ANZAC Remembrance Appeal – 1965 Trust Fund to facilitate the purchase of land at Victor Harbor in 2004”.
InDaily revealed yesterday this land, on the Victor foreshore, turned out to have zoning restrictions that have left it both disused and to date unable to be resold.
The financial statement says the loans are non-interest bearing “with repayment required in the event of the sale of the land, or by 31 December , whichever is earlier.
“In the event that the land is not sold by 31 December 2016, Poppy Day Trust Fund Inc will rely on fundings from the RSL SA to meet its obligation to repayment of the loans in their entirety,” it says.
The land was not sold as of last December. Hanna said yesterday he still hoped it could fetch up to $1.6 million.
The financial woes could yet lead to a broader shake-up. InDaily understands grassroots members are mobilising to call an extraordinary sub-branch conference, at which they will seek to remove key members of the board and attempt to replace Hanna, who is one year into his second three-year term as president.
The RSL’s state constitution holds that it needs 10 per cent of its 138 sub-branches to force such a meeting, and it’s understood more than a third of that number have already voted in favour.
Hanna said there was “always a guarantee of vigorous discussion at any AGM”.
“We’ll go through the election process, which is due every July, and that will determine who the next directors of the board are,” he said.
We value local independent journalism. We hope you do too.
InDaily provides valuable, local independent journalism in South Australia. As a news organisation it offers an alternative to The Advertiser, a different voice and a closer look at what is happening in our city and state for free. Any contribution to help fund our work is appreciated. Please click below to become an InDaily supporter.