Topics: News, What's New from the Charities Directorate of CRA, Canadian Charity Law, Avoiding 'Charity' Scams
The CRA has released letters on the World Islamic Call Society which was a registered charity but recently revoked by the Charities Directorate.
The main reasons for revocation were under the headings
1. Failure to meet the definition of a charitable organization under the Act
2. Private Benefit to a Director
Here are some quotes from the letter:
“The Society acts at the direction of, and receives all of its funding from, the Libyan-based World Islamic Call Society (WICS-Libya), an organization founded by Muammar al-Qadaffi (Gadhafi) in 1972 whose objects and activities are not confined to the advancement of religion as that term is understood under Canadian law.”
“According to various sources, WICS-Libya is operated under the control of the Government of Libya and funded by allocations made by Muammar al-Qadaffi. (Gadhafi) from “the Jihad Fund”. (FN3) An affidavit and the Plea Agreement filed in the successful U.S. conviction of Abdurahman Muhammad Alamoudi in 2004 on charges of wilfully attempting to violate U.S. economic sanctions against Libya imposed because of Libya’s involvement in terrorist bombings and the downing of Pan Am Flight 103 over Lockerbie, Scotland, attest to the use of the WICS-Libya’s network to move funds on behalf of the
Libyan government in violation of the sanctions against Libya.” (FN4)
“The audit found that the majority of 2006, 2007, and 2008 expenditures made by the Society were for office rent, administrative expenses, and telephone expenses. The rent is paid to its Chairman/President Assem Fadel, and has been since June 2001 when it appears the office was moved to 106 Kent Street, London, a property which Mr. Fadel owns. Mr. Fadel also has a cellular phone paid for by the Society, in addition to a telephone line installed at the Kent Street property. These rent and phone expenses alone represent 52%, 70%, and 77% of the total expenses incurred by the Society for the years 2006, 2007, and 2008 respectively. The financial statements filed with the Society’s 2009 information returns indicate that all of its expenditures are administrative in nature, and
that 78% of these expenditures were for telephone and office rental. We note, in particular, that the $9701 the Society has reported in section D4 of the return as the amount it has spent on charitable programs comprises the amounts paid for rent and telephone expenses.”
“Based on our audit findings and the 2009 return filed, it is our view that the Society’s resources are being primarily devoted to administrative expenses. For this reason, and because there is no evidence of any substantial charitable activity being conducted, it is our view that the Society’s resources are not being devoted to “charitable activities carried on by the organization itself’ and that it therefore does not meet the definition of a charitable organization under the Act.”
“In reaching this view, we have also examined the Society’s past operations to assess whether there are circumstances that should inform our understanding of the Society’s present operations. An analysis of our file indicates a pattern of noncompliance in years prior to the audit in that the Society’s operations have primarily consisted of acting at the direction of·WICS-Libya to transfer funds through Canada to specific groups and individuals.FN9 These transactions contravened the requirements of the Act that a charitable organization devote its resources to its own charitable activities or make gifts only to organizations that are ‘qualified donees’ as defined under the Act. In addition, some of these groups and individuals are alleged to have been involved in terrorism.”
Also here is a link to a Toronto Star article entitled “Mosque’s congregation torn over article praising Libya’s Gadhafi” http://www.thestar.com/news/article/1002682—mosque-s-congregation-torn-over-article-praising-libya-s-gadhafi
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Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.