Notice of Penalty_Hindu Temple Society of Canada

Canada Revenue Agence du revenu Agency du Canadamiddot+

JAN 13 2012

REGISTERED MAIL

Carters ProfessionaJ Corporation Ottawa Office 70 GJoucester Street Ottawa ON K2P OA2

BN 118958420 MODO I Attention Karen J Cooper File 0485094

Subject Notice of Penalty shyHindu Temple Society of Canada

Dear Ms Cooper

I am writing further to our Jetterdated MarchI 2011 (copy enclosed) in which you were invited to submit representations as to why we shouJd not assess a penaJty tothe Hindu Temple Society of Canada (the Society) in accordance with section 1881 ofthe Income Tax Act

Our ietter advised your cJient that we would be prepared to forego revocation action in favour of the imposition ofa penaJtyassessed under subsection 1881(4) of the Act based on amounts provided to non-qualified donees and the signingofa Compliance Agreement containing certain remedial actions that the SQci~ty agrees to undertake to ensure cOmpliance with the Act

Your letter confinns your clients acceptance of the Compliance Agreement and responds to our request for any submissions the Society wished to make as to why it should not be assessed a penalty in the amount of$139520 based on amounts provided to non-quaHfied donees namely the Tamils Rehabilitation Organization (YRO) in Sri Lank~ the Senthilkumaran ReliefOrganization and the Indian Governments of Tamil Nadu and Andhra Pradesh Your letter seeks to negotiate both the imposition and the amounfofthe proposed penalty on the grounds that

bull the imposition ofa monetary penalty and a CompJiance Agreement at the same time is inappropriate

The penalty amount of $139520 represents 105 JCr cent of$132876 provided to non-qualified donles outside Canada

Canada R350 E (OS)

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-aportion ofthe funds disbursed to the TRO in Sri Lanka were sent after an agency agreement was drawn up and signed between the Society and TRO

- it is your clients submission that our letters ofMarch 12011 and March 25 2010 provide~ no evidence that funds sent to non-qualified donees were used for a purpose other than that intended by the Society

bull the Society maintains that it did not intend to provide support to the Liberation Tigers of Tamil Eelam (L TIE) and that our letters did not provide evidence that support was in fact provided to the L TIE and

bull your client is concerned that publication of the entirety or any portion of our letters relating to assessment of a monetary penalty as pennitted by paragraph 241 (32)(g) of the Act is not appropriate in the circumstances and will harm its capacity to continue to operate by misrepresenting the relationship between the Society the TRO and the L TfE

We have carefully considered your representations in support ofyour clients position in particular that the payments in question were outside the normal mandate of the Society However for the reasons set out below our concerns with respect to the Societys non-compliance with the requirements of subsection 1491 (1) of the Act have not been alleviated

On the basis ofour audit we have concluded that the Society provided funding in the amount of $132876 to non-qualified donees outside Canada including $117876 to the Tamils Rehabilitation Organization (TRO) in Sri Lanka an organization that formed part of the support network forthe Liberation Tigers ofTamil Edam a listed entity under the Criminal Code of Canada The extenuating circumstances of the tsunami disaster and the fact that the payments in question appeared to have been oUtside the normal operations of the Society were taken into

account when we proposed the penalty and Compliance Agreement in lieu ofproceeding with revocation action The signing of this Compliance Agreement establishes that the Society certifies that its resoUrces will not be used to provide financial or any other means of support for the LITE or the goal of Tamil independence or the creation of a Tamil state

Appropriateness of Sanctions Proposed

We would point out that for all of the reasons set out in our letter ofMarch 1 2011it remains our view that on a balance ofprobabilities it is reasonable to conclude that the TRO fonned part of the support network for the L TTE that the Society was aware of this affiliation arid that it agreed to provide funding to the TRO in spite of that affiliation These circumstances require a strong clear and balanced regulatory response

Secondly we do not agree that there is any basis to suggest that it is inappropriate for the Canada Revenue Agency (eRA) to combine the use of an intermediate sanction with a Compliance Agreement Not~ing in the concept of the CRA enforcing the registration

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requirements for registered charWes by following along a-compliance continuum starting with facilitating voluntary compliance and moving to taking responsible enforcement measures that progress from monitoring retwns through to revocation action and the collection ofPart V tax is inconsistent with this approl-ch Nor do we see any inconsistency between this approach and the

wording used in our published guidelines for applying sanctions Under the heading General Approach these guidelines rank the tools the Directorate can use to obtain compliance in terms oftheir potential severity In addition to noting that the Act allows US to seleCt the tool appropriate to the circumstances this section of the guide Jines document concludes by stating This describes our general approach However we know that exceptionaJ circumstances arise and we intend to allow for them

Clllculation of Penalty Amount

With regard to your submission that the $90000 paYment sent to TRO Sri Lanka foJlowing the execution ofan agency agreement should not be included in the calculation ofa monetary penalty we would reiterate that the evidence from our audit indicates that this agency agreement amounted to an arrangement in which IRO Sri L3nka exercised fuji direction and control over the use of the funds transferred to it and the Societys role was limited to that of raising the funds requested by TRO representatives Although the Society was abie to show that the TRO received the funds sent to it no evidence was available to the eRAs auditors or has since been provided to est~bIish the SocietyS control over how those funds wenl spent A satisfactory agency re1ationship will not exist for purposes ofmeeting the definitional requirements of a charitable organization under the Act where funds are supplied by a registered charity for the operations ofanother orgaruzation or where the registered charity does not have sufficient authority and control over an organiZ=ition namedasits agent to ensure that funds transferred are used appropriately Moreover the existence of such an arrangement does riot remove a registered charitys obligation to ensure that it is not choosing as its agent an

organization that operates in association with a terrorist group

For a11 of these reasons we consider the $90000 payment sent to TRO Sri Lanka immediately foilowing the exe9ution of the purported agency agreement between the Society and TRO to have been a gift to a non-qualified donee and not the devotion of the Societys resources to charitable activities carried on by it

Non-Charitable Use of Resources

As our letter dated March 1201 I makes clear a registered charity is not meeting the definition ofa charitable organization under the Act when it uses its resources to finance or sponsor the support network of an entity that engages in terrorist activities On this basisand for the reasons elaborated in that letter we do not accept your argument that there is no evidence that support was in fact provided to the LTTE Neither do we acceptthat [t]here was no intention to provide support in any way to the LTTE We would remind you that there is significant evidence to show not only that the relationship of the TRO to the L TTE WQuld have been openly known for many years among Tamil organizations and institutions in the Toronto

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region but that those specifically involved in the funding arrangements made between the Society and th~ TRO network would have known ofthe networks links to the LITE In particular our ietter noted that

bull the Societys records document that Siva Sivalingam played a key mle in the Societys decision top~ovide funding to the TRO In a tribute to Mr Sivalingam after his death in

2010 it is noted that in addition to having been one of the founding trustees of the Hindu Temple Society of Canada Mr Sivalingam was the founding president ofthe Tamil Eelam Society of Canada (TESq In March 1998 Justice Teitelbaum of the Federal

Court ofCanada (Trial Division) ruled thatmiddot as a condition of release Manickavasagam Suresh whom he had previously found to be a dedicated and trusted member of the LTIE sent to Canada by the L TIE to head the World Tamil Movement (WTM) 2 was ordered to not have direct or indirect contact witf any executive n)embers of the WTM or with any of the WTMs employees and affiliated groups ~uch as the executives and empJoyees of FACT or TESC and is not for any reason to visit the offices ofthese organizations Public records show that at that time TESC and TRO (Canada) shared office space and telephone numbers at 861 Broadview Avenue in Toronto

bull a National Post articJe published on December 9 2000 lists the TRO as one ofeight organizations namefl iIi a CSIS report as front organizations for the LTTE The article states The Tigers have traditionally raised money through the use of front groups such as the World Tamil Movement (WTM) and Tamil Rehabilitation Organization (TRO) which collect money for humanitarian purposeS the report says However most funds raised under the humanitarian organizations such as the TRO are charinelled instead to fimd the L TTE war effort

bull another National Post article published on November 23 20[11 concerning adecision by the Departmentmiddot of Citizenship and Immigration not to renew funding to TESt notes that a CSIS report says the society has shared addresses in the past with not only FACT but also th~ World Tamil Movement (WTM) which a Federal Court judge has described as the Canadian ann of the Tamil Tigers It has also shared an address with the Tamil Rehabilitation Organization (fRO) The article goes on to say The TRO and WTM are both considered by CSIS to be actively engaged in fundmising tor the Tamil Tigers guerrilla war effort in Sri Lanka The money they raise in Canada is Shipped to the I LlTEs chief-weapons purchaser in Thailand CSIS claims and finalJy that I

The following information eomeming the World Tamil Movement (WTM) appears on the PubliC safety Canada Inlernct web site ofcurrently listed terrorist entities The World Tamil Movement was created in 1986 and became a known and leading front organization for the Liberation Tigers of Tamil Edam (LTrE) in Canada The leadership of the WTM acts at the directionof the LITE and has been instrumental in fundraising in Canada on behalfofthe LITE WTM representatives eanvas for donat~ons amongst the Canadian Tamil popUlation and have been involved in aets of intimidation and extortion to secure funds Online httplwwwpublicsafetygccalprgfnsllece-engaspx Accessed on 2011-04-19

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bull in his book Cold Terror Stewart Bell of the National Post chronicles the pervasive influence of the LITE within the Tamil community in Toronto citing his visit to the Societys temple as an example As [entered the temple grounds rwaS greeted not by a priest but by eager youths selling LITE flags Photos ofPrabhadaran CDs of his speeches and battle videos were laid out for sale on tables Men nearby waived collection jarS soliciting money for the Tamil Rehabilitation Organization~ bull3

We nole further that since our letter ofMarch 1 20n more information concerning the close nature of the relationship of the IRO tothe W1M and the LTTE has come to light through a pyblication on April 72011 ofThe Honourable Mr Justice Lemieuxs Forfeiture Order under paragraph 83l4(l)(a)ofthe Criminal Code oCanada4 in the matter of Canada v World Tamil Movement oOntarios Exhibit A to the Forfeiture Order is the Affidavit ofCorpora David Kim of the RCMP which contains references to documents seized pursuant to a search warrant executed at the WTM office at 39 Cosentino Drive At paragraphs 136 and 137

of this Affidavit Corporal Kim states

136 I believe that all four documents indicate a strong relationship between the TRO and the WTM The content of the four letters signedby four different individuals all show that the in-charge oft~e WTM is being asked to intervene in the management of the TRO

137 I believe that all four authors ofthe letters believe that the WTM has the authority to effect change in the operations ofthe TRO

In summary it is our view that the TRO network acted in concert with the L TIE ~d that funds under its control were used tomiddotsupportthe objectives and operations of the LITE

Importance of PU blic Disclosure

It is also our view that the Government ofCanadas efforts to prevent the use or misuse of charitable organizations to support the financing of terrorism are not best setved by allowing registered charities found to have given financial support to organizations operating in association with terrorist groups to avoid public scrutiny of their actions The deterrent effect both on the charity itself and on other charities would be lost and the opportunity to better inform the general public aboutthe nature and extent ofsupport being provided to terrorism by Canadian organizations would be missed if the CRA agreed to limit its enforcement actions to avoid public disclosure of the basis for its concerns regarding the charityS actions

) Stewart Bell Cold Terror How Canada Nurtures and Exports Terrorism Around the Woild ff John Wiley amp Sons

CanadaLtd 2006 page 65 4 Section 8314

(I) The Attorney General may makc an application to a judge oflhe Federal Court for an order of forfeilUre in respect of (0) property owned or controlled by or on behalf of a terrorist group

5 Docket No T middot308-09

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We woulddraw your attention in this regard to the following excerpts from the Final Report ofthe Commission ofInquiry into the Investigation ofthe Bombing of Air India Flight 182 (the Conunission) on Resolving the Challenges ofTerrorist Financing (Volume 5 Chapter VII)

782 Intermediate Sanctions Imiddot ~ It is particularly helpful for the CRA to make full use ltfthe intermediate sanctions now available to it (for example monetary penalties or the suspension

ofa chantys power to issue tax receipts for donations) to encourage charities to clean house by removing directors and trustees who may be involved in terrorist activities Creative and robust use of intermediate sanctions can indirectly achieve som~of the goals that are obtained in the United Kingdom through a charity commission

786 Publicity

The eRA should when practicable publish reasons for denying or revoking the registration ofcharities or [non-profit organizations] NPOs and for applying intennediate sanction to charities fndeed pUblicity will be an important factor if

these sanctions are to influence charities andNPOs to reform themselves and to alert potential donors that a given organization supports terrorism The Commission acknowledges the tradition of keeping income tax infonnation confidential These concerns are laudable but the traditional protection of taX infonnation from disclosure needs to be reconsidered in light of concemsabout terrorism

Accordingly in aU of the circumstances ofthls case we are not prepared to accept your representations as to the quantum ofthe penalty to be assessed or your proposal that in place of a penalty being assessed under the Act the terms Qfthe Compliance Agreement be altered to require that the Society instead pay an amount to be determined to an eligible donee in order to prevent the CRA from disclosing information relating to the imposition ofthis penalty as is contemplated by the provisions of subsection 241 (32) of the Act

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Penalty Assessment

Consequently for each of the reasons mentioned in our letter dated March 1 2011 1 wish to advise you that pursuant to section 1881 of the Act 1propose to assess a penalty to the Society

The penalty assessed by the CRA is calculated as follows

Fiscal Period Fiscal Period Fiscal Period Ending EndingEnding

December 312007Decem ber 31 lOO5 December 31 2006 Gifts made to non-qualified donees - TRO in Sri Lanka $ J15000 $2876 - Indian Government ofTamil Nadu - Indian Government of Andhra Pradeshmiddot -Senth ilkumaran Rei ief Organization

Total

Applicable penalty in accordance with subsection 1881(4) of the Act Total Penalty Owing per subsection 188J( 4) of the Act

$5000 $5000

$5000

$50005125000 $2876

105105105

$5250 5131250 53020

Tn accordance with subsection 189(63) of the Act the penalty may be paid to an eligible donee as defined in subsection] 88(13) An eligible donee in respect of a particular charity is a registered charity

I of which more than 50 of the members of the board ofdirectors or trustees of the registered charity deal at anns length with each member of the board ofdirectors or trustees of the particular charity

2 that is not subject to a suspension of tax-receipting privileges

3 that has no Wlpaid liabilities under the Income Tax Act or the Excise Tax Act

4 that has filed all its information returns and

5 that is not subj~t to a security certificate under the Charities Registration (Security Inormation) Act

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The CRA requires the following dodumentation to confirm that the eligible donee received the penalty payment

bull a letter addressed to the Director Review and Analysis Division (mail to address below) signed by an authorized representative of the eligible donee confirming that the penalty payment was received and that the amount was paid and

bull a copy ofeither the cancelled cheque or evidence ofa non-cash transfer i (

Should you choose instead to make your payment to the eRA please make the cheque payable to the Receiver General for Canada and mail it to

Director Review arid Analysis Division

Charities Directorate Canada Revenue Agency 320 Queen Street 13th Floormiddot Ottawa ON KIA OL5

Please note that in accordance with subsection 1491(11) of the Act the penalty payment made to an eligible donee shall not be deemed to be an amount expended on charitable activities

nor a gift made to a qualified donee

Failure to pay this penalty amount of make arrangements for payment will result in us reconsidering our decision notto proceed with the issuanceofa Noticeoflntention to Revoke the registration of the Society in the manner described in subsection 168( I) of the Act

If you have any questions or further information or clarification regarding the penalty payment please corlta(~tl

Appeal Process

Should you wish to appeal this Notice ofPenalty in accordance with subsection 165( I) of the Act respectively a written Notice ofObjectidn which includes the reasons for objection and all relevant facts must be filed within 90 days from the mailing oftrus Jetter The Notice of Objection should be sent to

Tax and Charities Appeals Directorate Appeals Branch Canad~ Revenue Agency 250 Albert Street Ottawa ON K I A OL5

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Public Notice

By virtue of paragraph 24 J(32)(g) of thc Act the following infonnation relating to the Societys penalty will be posted on the Charities Directorate website

Name of Organization Hindu Temple Society of Canada Recistration Number I 118958420 RROO01 Effective date of Penalty January 13 2012 Reason for Penalty Undue benefits to non-qualified donees Act Reference 1881(4)1881(5) 1491(1) Amount of Penalty $t39520

I trust the foregoing fully explains our position

C thy Hawara D ector General ChllIities Directorate

Attachments - Notice of Assessment

-eRA letter dated March 1 2011 (less enclosure) - SocietyS responsedlted April 72011

- Signed Compliance Agreements (2)

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NOTICE OF ASSESSMENT- AVIS DE COTISATION

Date of mailing - Date de Ienvol Business Number - Numero dentreprise Taxation years - Annaes dlmpositionmiddot

January 132012 118958420 RR0001 2005 2006 and 2007

NAME OF ORGANIZATION - NOM DE LORGANISME

HINDU TEMPLE SOCIETY OF CANADA

Penalty amount Amount paid Balance owing $139520 $0 $]39520

IMontant de la pena_te___l-M____o~n~t paye Soldedfi

Explanation of assessment - explication de la cotisation

Penalty assessed in accordance with subsection 1$81(4) for making a gift to an entity other than a qualified donee The penalty is equal to 105 per cent of the amount of the gift

Linda Lizotte-MacPherson Coll1Iilissioner ofRevenue

Commissaire du revenu

Canada

1+1 CANADA REVENUE AGENCE DU REVENU AGENCY DU CANADA

REGISTERED MAIL

Carters Professional Corporation 21 J Broadway PO Box 440 Orangeville ON L9W lK4

BN 118958420 RROOOI File 0485094

Attention Mr Terrance S Carter BA LLB

March J 2011

SUbject Audit oftbe Hindu Temple Society of Canada

Dear Mr Carter

This letter is further to the field auditofthe Hindu Temple Society of Canada (the Society) conducted by the Canada Revenue Agency (CRA) commencing on April 9 2008 and responds to your letter of May 25 2010 The audit related to the operations of the Society for the period from January 1 2004 to December 31 2006 Jater events up to ~e date ofthe audit were also reviewed

In out Administrative Fairness Letter (AFL) dated March 252010 the Society was advised that the CRA had identified specific areas ofnon~compJiance with the provisions of the Income Tax Act andor its Reguliiltions and was invited to provide representations on these matters The CRA granted the Society two extensions of time in which to respond We have considered aU of the representations made in your letter dated May 25 2010 and i~ remains our v-jew that there are sufficient grounds for revocation middotof the Societys registra~ion under section 168 of the Act

We note that your letter closes by indic~ting that your client is prepared to take whatever remedial action is required to address the concerns expressed in the AFL and any other concerns the CRA may have with respect to its operations in the interest of preserving this important cultural and reJigious institution and that youmiddot would be pleased to discuss a possible Compliance Agreement to avoid its revocation We are prepared to offer to your client the terms of the attached Compliance Agreement together with a proposal to impose a penalty in the amount of $ 139520 as an alternative to proceeding with revocation action Any representations you wish to make as to why this penalty provision should not be applied agairist the Society must be received by

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Aprii 11 2011 1 Unless the Society also agrees at that time to the conditions outlined in the attached Compliance Agreement wei are prepared to proceed with revocation action based on the following grounds

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AREAS OF NON-COMPLIANCE Issue ITA Reference

Subsection 1491 (1) charitable organization Failure to operate in compliance with the definition ofa1

paragraph 168( I )(b)

bull Gifts to Non-Qualified Donees

bull Devotion of Resourcesto Non-Charitable Purposes and Activities

Receipting Improprieties Subsection 1491 (2) paragraph 168( 1)( dl

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1) Gifts to Non-Qualified Donees

a) Audit Observations

The audit revealed that the Society made gifts to non-qualified donees as follows

bull $14576500 to the Tamils Rehabilitation Organization in Sri Lanka (TRO Sri Lanka) between Oecem1ler 10 2004 and November 24 2006 either directly or indirectly through TRO Canada

bull $10000 to Andhta Pradesh Chief Ministers Relief Fund India $5000 on December 28 2004 and $5000 on January 32005

bull $10000 to Tamil Nadu ChiefMinisters Relief FlUld India $5000 on December 28 2004 and $5OOO on January 3 2005 and

bull $5000 to the Senthilkumatan Relief Organization on December 31 2007

b) Societys Representation

Your submission does not address the fundamental issue that theSe payments were made to non-qualified donees It focusesinstead on the timing of the Government of Canada Matching FlUlds Program and the fact that this program was perceived by the Society as not providing immediate relief to the areas of interest to the Society in the

North and East ofSri Lanka Your submission is that Taken in this context the charity

I In our conversation of February 8 20 II we indicated that we would provide additional time for the Society to respond in consideration of the Mardi break period

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can hardly be criticized for its decisionto fund TROs tsunami relief operations in the North and East of Sri Lanka (as well as the government programs in the Indian states of Tami Nadu and Andhra Pradesh) It is also your contention that the Society acted in accordance with the CRAs published guidance by signing an agency agreement with the Tamils Rehabilitation Organization in Sri Lanka and should on that basis be considered to have been conducting its own charitable activities when it transferred funds directly and indirectly through TRO Canada to TRO Sri Lanka

c) eRAs Position

A registered charity is not permitted to make gifts to non-qualified donees Subsection 1491 (I) of the Act requires that a registered charity operating as a charitable organization devote all of its resources to charitable activities carried on by the organization itself Subsection 1491 (6) provides that a charitable organization shaH be considered to be devoting its resources to charitable activities carried on by it to the extent that in any taxation year it disburses not more than50 of its income for that year to qualified donees The terrn qualified donees is defined in subsection 149] (l) ofthe Act to mean only those organizations to which Canadian taxpayers may directly make charitable gifts (or gifts to the Crown) which can be claimed when filing their income tax returns Thus the Act requires that a charitable organization must control and remain accoWltabJe for the use of its resources This requirement is lifted only when charitable organizations give their resources to a qualified recipient under the Act

It is a matter offact that neither TRO Canada TRO Sri Lanka the Chief Ministers Relief Fund in Andhra Pradesh the Chief Ministers ReIiefFund in Tamil Nadumiddot nor the Senthilkumaran Relief Organization is a qualified donee as that tenn is defined in the Act The Societys own records establish that it was aware that TRO Canada had not qualified to be a registered charity mid in fact that there had been pUblicity in Canada about fRO which made it problematic for the Society to deal with it

A registered charity may use an intermediary to carry out its activities and your representations focus in this regard on the fact that an agency agreement between the Society and TRO Sri Lanka was drawn up and signed by the respective parties on March 31 and April 7 2005 We note that~ by that point three cheques totaling $52889 had already been issued to TRO Canada for transmittal to TRO Sri Lanka A further $90000 was wired toTRO Sir Lanka one day later on ApriJ8 2005

As is clear from the Federal Court ofAppeals decisions in The Canadian Committee for the Tel Aviv Foundation v Canada 2002 FCA 72 and Bayt Lepletot v Canada (Minister ofNational Revenue) 2006 FCA ]28 sigrung an agency agreement is not sufficient to show that a registered charity is not acting as a conduit to funnel donations overseas in contravention of the Income Tax Act requirements In this regard your letter criticizes the CRAs guidance for registered charities operating outside Canada because it provides only general guidelines as to the contents ofan agreement formiddotthe purposes of having an outside party perform charitable works for the Charity In

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publishing such guidance it is impossible to give precise guidelines to cover all situations and theCRA must look at the facts in a particular case A satisfactory agency relationship

will not exist where funds are supplied by a registered charity for the operations of another organization or where the registered charity does not have sufficient authority

and control over an organization named as its agent to ensure that funds transferred are used appropriately Moreover an agency agreement cannot be used to legitimize an

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inappropriate organizational association such as to allow a registered charity to mask its association with aterrorist entity We would also note that such a document is not capable of establishing the existence of an agency relationship prior to its execution2

Based on our review of the audit materials summarized in our AFL and the representations you have provided~ it remains our view that the Societys records reflect that it acted essentially to put funds at the disposal ofTRO Sri Lanka t9 satisfy a commitment to the leadership of the TRO to raise $140000 towards it~ Tsunami Disaster Relief Fund notwithstanding the drafting of a agency agreement between the Society and TRO Sri Lanka purportedly giving the Society direction and control over TRO Sri Lanka in the use of those funds In our view the evidence indicates that this agency agreement amounted to an arrangement in which TRO Sri Lanka exercised full direction and control over the use of the funds transferred to it and the SocietyS role was limited to that of raising the funds requested by TRO representatives Although tbe Society was able to show that the TRO recei ved the funds sent tQ it no evidence was available to the CRAs auditors or has since been provided to establish the SocietyS control over how those funds were spent 3

It therefore remains our position that by reasOn alone of having provided funding to the non-qualified donees named above the Society has ceased to comply with the requiremen~s of the Act for itS continued registration and is subject to revocation action pursuant to paragraph 168(l)(b) ofllie Act

In these circumstances subsection 1881(4) of the Act also provides for the levying of a penalty based on the amounts provided to non-qualified donees According to our audit findings~ the Society is liable to pay a penalty of $139520 as follows 4

a) 2005 Taxati~)D Year $131250

TRO 2005-01-03 $ 25000

2005-04-08 90000 )15000 x 105 penalty= $120750

Z Canadian Magen David Adom for Israel v Canada (Minister ofNational Rev~nue)bull2002 FCA 323 (CA) [hereinafter CAMDIJmiddot

1 Canadian Committee for the Tei Aviv Foundation v Canada 2002 FCA 72 bull Equal to I 05 of the benefit amount applicable 10 taxation years that begin after March 22 2004

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Indian Governments of Tamil Nadu and Andhra Pradesh 2005-01-03 $ 5000 I

2005-01-03 5000 IpOOO x 1 05 p~nalty == $10500

b) 2006 Taxation Year $3020

TRO 2006-10- 14 $ 1001 2006-11-24 1875

2876 x 105 penalty $3020

c) 2007 Taxation Year $5250 i

Senthilkumaran Relief Organization 2007-12-31$ 5000 x 105 penalty = $52~O

2) Devotion of Resoures to Non-Charitable Purposes and Adivities by Makiag Resoures AvaiiabJe To Organizations That Operate Witbin the Overall Structure of the LTTE


The audit revealed that the So~iety provided funding in the amount of$] 45765 both directly and indirectly (through TRO Canada) to TRO Sri Lanka an orgBJlization that we have conCluded operated in association with and support for the Liberation Tigers ofTami1 Eelam (LITE) s Another $5000 was provided to the Senthilklimaran Relief Organization which for the reasons set out in our AFL vie believe to have been established to transfer furids to the TRO network As noted in our AFL the LTTE is listed in Canada as a terrorist organization under both the UnitedNatons Suppression 0 Terrorism Regulations and the Criminal Code oCanadaIt has been an offence since

S The following information concerning the L TIE appears on the Public Safety Canada Inlernel web site ofcurrently listed entities Founded in 1916 the Liberation Tigers ilfTarnii Eelam (LTTE) is a Sri Lankan-based terrorist organization that seeks he creation of an independent homeland ltaled Tamil Eeam for Sri Lankas ethnic Tamil minority Over the years the LTIE has waged a violent secessionist campaign with the help ofground air and naval forces as well as a dedicated suicide bomber wing LTTE tactics have included full military operations terror attacks against civilian centres and political assassinations such as the successful assassinations of Indian Prime Minister Rajiv Ghandi and Sri Lankan President Ranasinghe Premadasa The LTTE has also had an extensive network of fundraisers political and propaganda officers and arms procurers operating in Sri Lanka and wihin the

Tamil diaspora Although the LTTE was militarily defeated in May 2009 subversion destabilization and fundraising continue particularly in the diaspora~ Online lthttpwwwpublicsafelygccalprglnsllece-engaspxgt Accessed on 2010-02-09

The mission and aims statements ofTRO Canada were identical to those ofTRO Sri Lanka eRA has concluded that TRO Canada was established in order 10 support the objectives ofTRO Sri Lanka and thai the TRO network operated in support of Ihe LTTE Your letter corroborates this by reference to the statement made in the World Food Programs 2005 Tsunami Flash Appeal that it works with the Tamil Rehabilitation Organisation (TRO) and other LTTEauthorilies

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I November 7 2001 for any person in Canada to knowingly provide or collect by any means directly or indirectly funds with the intention or in ttie knowledge that the funds in whole or in part are to be used by or will benefit the L TTE


Your letter asserts that

bull the CRA is obligated to show that the Society kriowingly made its resources available to an entity that raises funds for and supports the LTTE

bull the Society could notbe expected to have been aware of reports about or concerns over the TRO networks affiliation to the L TIE at the time its decision was taken to provide funding to TRO Sri Lanka directly and indirectly through TRO Canada

bull the CRA has not taken into account the political realities in Sri Lanka which motivated the Societys decision to provide funding to TRO and that

bull the Societys funding was provided prior to the CRAs letter to the TRO dated June 12006 advising it thaUt did not meet the requirements for registration based in large part~ on evidence that it operated within the overall structure ofthe LITE and prior to any listing of the TRO itself as aterrorist entity by Sri Lanka or any other government6

c) eRAs Position

Non-Charitable Purposes and Activities Contrary to Canadian Public Policy

Providing support to organizations operating in association- with the L TIE is notmiddot charitable on two grounds First political objectives jncluding the achievement of nationhood or political autonomy for those ofaparticular ethnic or religious identity are not recognized in the law as charitable purposes In addition it is well established that an organization will not be charitable in law ifits activities are illegal or contrary to public policy 7 On both of these grounds the use ofa registered charitys resources to sustain the objectives and operations of the L TIE either directly or indirectly through organizations that operate as its support network is inappropriate

6 As detailed in our letter of June 12006 to the TRO and previously provided to you the CRA has received numerous applications for registrationfrom the Tamils Rehabilitation Organization and has repealediy since March 1999 indicated in respons-e that it did not meet the requirements for regisration because of its strong ties to TRO Sri Lanka and the LTTE

1 Everywomans Health Centre SOCiety (1988) v Canada (Minister aNotional Revenue) [1992]2 FC 52 and CAMDI

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Canadas public policy recogni~es that depriving terrorist organizations of access to funds is a fundamental tool in undermining terrorist activities as it weakens their supporting logistical and social infrastructures 8 As part of its anti-terrorism strategy Canada has taken measures to prevent charities from being misused to provide support for terrorism and particularly to prevent organizations that help to provide resources to terrorist groups from having access to th~ tax benefits extended to registered charities under the Act9

In this regard Canada has implemented the binding elements of Resolution 1373 of the United Nations Security Council and has ratified the United Nations International Convenlionfor the Suppression othe Financing oTerrorism The preamble to the Convention recalls General Assembly Resolution 511210 which calls upon all States

3 (d) To investigate when sufficient justification exists according to national laws arid acting within their jurisdiction the abuse of organizations groups or associations including those with charitable social or cultural goals by terrorists who use them as a cover for their own activities and

3 (f) to take steps to prevent and counteract through appropriate domestic measures the financing of terrorists and terrorist organizations whether such financing is direct or indirect through organizations which also have or claim to have charitable social or cultural goals

Canadas commitment to combating terrorism is also reflected in its membership in the Financial Action Task Force (FA TF) 10 The F ATF is an intergovernmental policy making body comprised of over 30 countries that has a ministerial mandate to establish international standards for combating money laundering and terrorist financing Over 180 jurisdictions havejoined the FA TF or an FATF-style regional body and committed at the ministerial level to implementing the FATF standards and having their anti-money laundering (AML)counter-terrorist financing (CTF) systems assessed The FATF has adopted nine recoriunendations on combating the financing of terrorism including Special Recommendation VIII which states that countries should take measures to ensure that charities cannot be misused

bull by terrorist organizations posing as legitimate entities

See Backgroundcr TerToris[ Financing Government of Canadas Air India Inquiry Action Plan in Response to the Commission of Inquiry into ihe Investigation ofthc Bombing of Air India Flight 182 Onlinc lthttpwwwpubJicsafctygccamedianr20 1 0nr20 1 0207-3middotcngaspxgt Accessed on 2011middot02middot1 L

9 Final Report of the Commission oflnquiry into the Investigation of the Bombing ofAir India Flight 182 Volume 5 TCrTorist Financing

bull0 ~What is thc FATFT Online lthttpwwwfatf-gafiorgdocumemsl57103343en_32250379_32235720_34432121__I_I_ bullbull OOhtmlgt Accessed on 201 1middot02middot11

I

8

bull to exploit legitimate entities as conduits for terrorist financing including for the purpose of escaping asset freezing measures and

bull to conce~l or obscllre the clandestine diversion of funds intended for legitimate purposes to terrorist organizations

However the clearest expression of Canadas public policy in this regard is found in the Charities Registration (Security Information) Act which was enacted as part of the Anti-terrorism Act to demonstrate Canadas commitment to participating in concerted international efforts todeny support to those who engage in terrorist activities to protect the ihtegrity ofthe registration system for charities under the IncomeTax Act and to maintain the confidence ofCanadian taxpayers that the benefits of charitable registration are made available only to organizations that operate exclusively for charitable

purposesmiddot The Charities Registration (f)ecurity l1formation) Act is designed to deal with the situation where relevant security and intelligence information shows that an organization is supporting terrorism and this evidence is needed to establish that the

organization should not be allowed to obtain or retain registration as a charity

Where these special provisions are not needed to establish that a registered charity has acted in a manner that is contrary to Canadas public policy in regard to charities and terrorism it is entirely appropriate for the eRA to use its regulatory powers under the Income Tax Act to take enforcement action in such cases Specifically when a charitable organization is found to have used its resources to finance the operations of an organization working to provide support for a terrorist entity it will not have met the requirements in subsection 1491(1) ofthe Income Tax Act that it devote all of its resources to charitable activities carried on by it and is therefore subject to revocation under paragraph 168(1)(b) of the Act

Many of the policy and guidance statements for charities published on the CltA Internet website call attention to the need to observe Canadas laws and public policy in this regard For exampleour pUblication entitled CRA Guidance - Canadian Registered Carrying Out Activities Outside of Canada warns

Charities have to remember their obligations under Canadas antishyterrorism iegislation As with all individuals and organizations in Canada charities are responsible for making sure that they do not operate in association with individuals or groups that are engaged in terrorist activities or that support terrorist activities

Civil context and absence ofa mens rea requirement

It is your clients position that the CRA has an obligation to prove that the Society knowingly made its resources available to an entity that raises funds for and supports the LITE ifit is to base a decision to revoke registration on funding of the TRO We find no

II Charities Registration (Security Inormation) Act Section 2 (Purpose and Principles)

fa I I

9

I grounds for this assertion in the requirements for registration under the Income Tax Ad Your letter further contends that if the eRA is to exercise its administrative authority to revoke the Societys registration because ofsuch actions it has an onus to establish the charitys prior knowledge by showing that public infonnation linking TRO to the L TIE wouJd have been available to your client before and not after those funding decisions were made These assertions import a criminal law standard ofproof into the civil law context of the CRAs determination as to whether an organization should be given or continue to benefit from the tax privileges granted to a registered charity based on the requirements of the Act There is no mens rea requirement under the relevant Income Tax Act provisions In circumstances where the CRA believes that a charity has ceased to comply with the requirements of the Act for its registration subsection 168( I) of the Act provides a discretionary power to decide whether notice should be given to the charity that the Minister proposes to revoke its registration

According to well-established principles of administrative law in d~tennining whether an organization has operated in compliance with the requirements for charitable registration the CRA is required to w~igh the evidence and reach a determination based

on the civil law standard of balance ofprobabilities

In makingthis administrative determination it is open - if not increasingly incumbent upon us - to take into account and to draw reasonable inferences from relevant information that is in the public domain whether that information emerges before or after an organization has taken a particular course of action

In our view it is not unreasonable to assume that there will be a certain lag time between knowledge of the existence of front groups operating for the benefit ofa terrorist

entity withih a diaspora community most directly affected Or involved and the time when awareness of those links will come to wider public attention through court decisions designation or listing actions takeri by various jurisdictions or from media reports or other publiCly available sources This does not mean that the CRA is precluded from relying upon such infortnation in reaching a decision as to whether there are sufficient grounds to deny or revoke charitable status The CRAs obligation in relying upon infonnation from news reports and from the internet is to give an organization the opportunity to be heard in relation to that evidence 12

middot

Proper Context for the Societys Actions

Your submission maintains that the infonnation provided in our AFL regarding evidence of the I inkages between the TRO network aild the L TIE should not be used to impugn your clients actions in providing funding to TRO because the useofthat information amounts to application ofa hindsight standard You further contend that information connecting the TRO to the L TIE was not readily available to the Society prior to its decision to fUnd the TRO

12 CAMDI

10

By extension you are asking us to accept the proposition that the Society could only have been aware ofthe TROs association with the LITE by reason of the infonnation provided to it in our AFL or the appearance of the TRO itself in terrorist listings In particular your letter claims that your client would not have been aware of the TRO networks affiliation with the LITE prior to the actions of various govenunents to fonnally designate the TRO as a terrorist entity and prior to publication of the Human Rights Watch report referenced in our AFL extensively documenting L TIE fundraising in the Tamil diaspora including Canada through such organizations as the World Tamil Movement and the Tamils Rehabilitation Organization In our view this premise is faulty and moreover asks us to ignore certain facts and evidence which lead us to believe that the Society is likely to have been fully aware ofevidence pointing to the TROs

relationship to the LITE

As reflected below it is our view that it is reasonable to believe that this information was in fact common knowledge within the Tamil community worldwide and in the Toronto area before the tsunami in December 2004 and the SocietyS decision to send funds to TRO Sri Lanka

In this regard your letter indicates that the Societys temple complex hasmiddot developed into the largest Hindu Temple in North America built under the Agama Sastra traditions You advise that it attracts more than 10000 Hindu devotees to its more than 200 days of festival celebrations each year and has more than 400 life members In this context we note the following observations from the Human Rights Watch Report referenced in our AFL

bull the largest numbers of Sri Lankan Tamils outside Sri Lanka are found in Canada and the vast majority of Canadian Tamils live in the Toronto area creating a hrrger urban Tamil popUlation than is found in any city in Sri

Lanka itself

bull As Tamils settled abroad particularly in areas with high Tamil ccmcentrations such as in Toronto tney established a range ofTamil institutions and organizations including religiouS temples and cultural political and service organizations 10 ensure both political and financial support the L TTE sought - and gained - influence or contro lover many of these institutions One Toronto Tamil remarked Whatever is happening in the Tamil community they make sure their agenda is there

bull The majority of Tamils are Hindu The Toronto area has approximately forty Hindu temples attended by Sri Lankan Tamils Because the temples provide both ready access to the Tamil community and to a potential source of funds the LTIE has sought control over temple events management and revenue and

I I

bull The L TIEs influence is apparent in many Hindu temples in the West Temples may display photographs ofPrabhakaran the LITE leader and sell LTTE flags CDs ofPrabhakMan s speeches or videos and DVDs promoting the LITE The temple may also collect funds for the Tamil Rehabilitation or other L TIE front groups

In fact this example ofLTTE influence in the Tamil diaspora mirrors precisely what Stewart Bell reported in his book Cold Terrorregarding his visit to jour clients celebration of the completion ofits temple renovations In September 2001 I bull Ina chapter entitled The Snow Tigers he chronicles the pervasive influence of the L TTE within the Tamil community in Toronto citing his vIsit to your clients temple as an example

As I entered the temple grounds I was greeted not by a priest but by eager youths selling LTTE flags Photos ofPrabhadaran CDs of his speeches and battle videos were laid out for sale on tables Men nearby waved collection jars soliciting money for the Tamil Rehabilitation Organization 14

Moreover the SocietyS insistence upon channelling monies to the TRO network is teHing in view of cleat indications that the Government of Canadas concerns over the TRO networks links to the LTTE would have been openly known for many years within the leadership of organizations and institutions within Torontos Tamil community and to those specificaJJy involved in the funding arrangements made between the SocietY and TRO Canada For example

bull our letter of JUlle I 2006 to the TROIS made note of the eRAs earlier refusal in March 1999 to register the Tamils Rehabilitation Orgaruzation as a charity based on publicly availableevid~nce at that time of the TRO

networks strong ties to the L TTE 16

bull the Societys records docUment that Siva Sivalingam played a key role in the Societys decision to provide funding to the TRO In a tribute to

Mr Sivalingam after his death in 2010 it is noted that in addition to having been orie of the founding trustees of the Hindu Temple Society of

IJ Stewart Bell ~Cold Terror How Canada Nurtures and Exports Terrorism Around the World John Wiley amp Sons Canada Ltd 2006 page 65middot

14 besc same facts were referenced in our AFL at footnote 20 15 A copy of our letter of Iune 12006 was previously provided 10 you with our letter of May 72010 16 For example our letter cited IhcJain Commission Reponlndias official investigation into circumstances of and the

conspiracy leading to Rajiv Gandhis murder as having lamed the Tamils Rehabilitation Organization as one ofa numberof L TTE front organizations I also referenced Rohan Gunaratnas book International and Regional Security Implications ofthe Sri Lankan Tamil Insurgency published in 1997 in which he reports that a bulk of the war budgct ofthe L nE is raised from the heartland ofcontinental Europe and North America the main centers for LrTE activity are in London and Paris for Europe and New Iersey and Toronto for North America The LrTE have established offices and cells around the world Most of these offices engage in disseminating propaganda and coilecting mOlley In most countries the LITE would collect money for the purchase of armaments under the guise of supporting rehabilitation and that Today when money is collected by the Tamil Rehabilitation Organization (TRO) the rehabilitation wing ofrhe LITE it is welJ known among thedonors that the money is in fact spent 1I0t only on rehabilitation but also to procure weapons It is an unwritten understanding both among the collectors and donors

12

Canada Mr SivaJingam 1s the founding president of the Tamil Eelam Society of Canada (TESC)17 In March 1998 Justice Teitelpaum of the Federal Court of Canada (Trial Division) ruled that as a condition of release Manickavasagam Suresh whom he had previousiy found to be a dedicated and trusted member of the L TfE sent to Canada by the L TTE to head the WTM was ordered to not have direct or indirect contact with any executive members of the WTM or wlthany ofthe WTMs employees and affiliated groups such as the executives and employees of FACT or TESC and is not tor any reason to visit the offices of these organizations Public records show that at that time TESC and TRO (Canada) shared office space and telephone numbers at 861 Broadview Avenue in Toronto 18

bull onJanuary 14 1999 the Special Senate Committee on Security and Intelligence issued a report that identified charitable fund raising in Canada by international terrorist groups as a problem and recommended changes to the Income Tax Act The Toronto Star reported

~The Committees concern was that these charitable groups conduct enforced fundraising in the community says the consultant to that committee Don Gracey in an interview from Ottawa The Tamil Rehabilitation Organization was one group identified by the committee that in fact raised money for guns and materiel used by the Tamil Tigers J9

bull newspaper coverage of a fund-raising rally on the lawn of Queens Park sponsored by the World Tamil Movemenro (WTM) in June 2000 to mark the success of the L TIE in capturing the strategic gateway to the northern laffna peninsula notes that the charity the World Tamil Movement say receives much ofits 1JI0ney the Tamil Rehabilitation Organization is

11 A Life Well Lived - Nagaratnam (Siva) Sivalingam i940 to 2010 TNS News (March 3 2010) Online lthnp(wwwtamiteelamnewscomgt Accessed on 2011-02-24

IS Online lthllpllwwwtroorgauAddrcsslAddresshtmgt Accessed 2001-01-29 Also online lthttpwebarchiveorgwebIl9981202140846Ihttpfltesoccomlgt Accessed on 201 1-02-25 Dushy Ranetunge middotBritish charities fund terrorists The Island (October 4 2(00) Online lthttpwwwislandlkl20001007news02htmlgt Accessed on 2000-11-21

19 Michael Swan Tamil War casts long shadow Hindu Buddhist Anglican and Catholic Tamils still caught in homelands strife Toronto Star (february 27 1999)

20 As your letter notes the WTtvt was itself listed as a terioristentity under the Criminal Code aCanada on June 13 2008 The listing found on the Internet web site of Public Safety Canada at lthttpwwwpublicsafetygccalprglnsllec1e-engaltpxgt contains the following information The World Tamil Movement was created in 1986 and became a known and leading front organization for the Liberation Tigers of Tamil Eelam (ITIE) in Canada The leadership of the WTM acts at the direction of tile LTIE and has been instrumental in fundraising in Canada on behalf ofthc L TfE WfM representativescanvas for donations amongst the Canadian Tamil population and have been involved in acts of intimi dation and extortion to secure funds hlthis regard we note that the Affidavit of RCMP Corporal Deanna Hill filed with the Federal Court ofCanada in the matter of Her Majesty the Queen and The World Tamil Movement oOtitariosceking ali order to restrain and manage property of the WTM pursuant to sections 8313(l)(b) and 8313(2) of the Criminal Code oCanada slates that donation receipt books seized from the WTM office inCluded tickets or donation receipt books for various fUl1draising schemes including the Tamil Rehabilitation Organization Relief Fund (para 382 at page 233~

13

itself controlled by the Tigers accordingmiddot to officials with several independent non-govern6ental organizations in Sri Lanka21

bull a National Post article pub ished on December 9 2000 lists the TRO as one ofeight organizations named in a CSIS report as front organizations for the L TIE The article states The Tigers have traditionally raised money through the use of front groups such as the World Tamil Movement (WTM) and Tamil Rehabilitation Organization (TRO) which collect money for humanitarian purposes the reports says However most funds raised under the banner ofhumanitarian organizations such as the TRO are channelled instead to flind the L TIE war effort22

bull another National Post article published on November 232001 concerning a decision by the Department ofCitizenship and Immigration not to renew funding to the Tamil Eeam Society of Canada notes that a CSIS report says the society has s6ared addresses in the past with not only FACT but also the World Tamil Movement (WTM) which a Federal

Court judge has described as the Canadian arm of the Tamil Tigers It has also shared an address with the Tamil Rehabilitation Organization (TRO) The article goes on to say The TRO and WTM are both considered by CSIS to be actively engaged in fundraising for the Tamil Tigers guerrilla war effort in Sri La~ The money they raise in Canada is shipped to the LTIEs chief weapons purchaser in Thailand CSIS claims23

bull again in June 2002 the National Post reported A secret list of LTIE front organizations in Canada compiled by the Canadian intelligence service lists the WTM at the top along with the Ellesmere Road address of the strip mall as well as seven other non-profit associations in Toronto Ottawa Mdntreal and Vancouver The Tamil Eelam Society of Capada Tamil Rehabilitation Organization Federation ofAssociation ofCanadian Tamils Tamil Coordinating Committee Eelam Tamil Association of

British Columbia WorJd Tamil Movement (Montreal chapter) and the Eelam Tamil Association of Quebec24

bull a Hamilton Spectator article published on January 142005 reported that a Hamilton medical centre backed out ~fa plan to donat~ medical supplies for tsunami relief to the Tamils Rehabilitation Organization after learning

21 Somini Sengupta Feeding the Tamil Tigers Fuelling An rnsurrection Sri Lankans in Canada send millions to support rebels in their homeland but Onawa is preparing 10 crack down on contributions to terrorist groups EdmOnon Journal (July 232000) page EA_

22 Stewart Bell Groups act as tTonts for terror CSIS Tamils reject report deny any part in covert operations National Posr (December 9 2000) page AI_FRO

2J Stewan Bell Ottawa won I renew funding ofTamil society Panel gets final say CSIS report named group as front for terrorist Tigers National Post (November 232001 )page A2_ 24 Stewart Bell Blood money on tap National Post (June 12002) page B1FRO

14 i I

that it had been named oy the Canadian Securit~ Intelligence Service as a front for the Liberation Tigers of Tamil Eelam 5 and

bull a Globe and Mail report on January 18 2005 documenting attempts being made at that time to influence then Prime Minister Paul Martin to have the TRO granted charitable status in Canada also referred to an independent report posted in 1999 on the Internet web site of the Canadian Security Intelligence Service describing the TRO as a front ~or the L TIE

Finally the Societys own records document that its officials were very much aware ofconcern in Canada over the TRO and confirm in fact that they were aware that these concerns had prevented it from being given charitable status in Canada In an e-mail dated March 3 2005 concerning monies sent to TRO expressed his concern to Siva Sivalingam saying U(I do Dot have to repeat what was printed and broadcast in the various media in Canada) It is an organization yet to get acceptance in Canada (It would have been great ifit had the correct status You and I know it is not a government organization and further more in Canada the TRO has not been able to register as a charity So what ever we do with TRO for obvious reasons has to be carefully handled (bold emphasis added)

However even ifinformation about the TROs ties to theLTIE had not been so clearly widespread and available to the Society (particularly if it were to have engaged in any meaningtll due diligence process) it remains our view that a registered charity is not meeting the definition ofa charitable organization under the Act when it uses its resources to finance orsponsor the support network of an entity that engages in terrorist activities

PolitiCal Realities in Sri Lanka

Your representations also convey your clients submission that our AFL fails to take into consideration the political realities that existed in post-tsunami Sri Lanka and which directly impacted its deCision making-process in determining where aid was to be sent On the contrary it is our view that the Societys decision-making process was very much influenced by political considerations This is tacitly admitted in your submissions that

bull the tsunami response reflected the underlying pathologies of the state and the competing systems of governance in Sri Lanka with each party seeing the devastation as an opportunity to strengthen its legitimacy through the control and distribution of resources

IS Daniel Nolan Medical donation postponed Centre learns ofTamil groups terro linlcs~ Thf Hamiltoll Spectalor page A01

15

bull the Government ofSriLanka s response to the tsunami was unfavourable compared with that of its rivals even including the Liberation Tigers of Tamil Eelam (LITE)

bull within days of the tsunami [the LITE] established coordination offices staffed by the local NGO consortium

bull Sri Lankan humanitarian organizations like theTRO benefitedfrom a huge influx ofdiaspora funding enabling it to orchestrate a significant responSe in the North and East and

bull it is well known in the Tamil diaspora that few ofthe mainstreams NGOs are able to open suppJy routes out ofCoJombo and outside of govemment~ controlled territories and that the TRO is the primary NGO providing

huirianitarian assistance in the North and East

With reference to these statements and in particular the agreement the Society entered into on March 31 2005 for the sponsorship of two TRO projects (the building of a pre~school and 100 water tanks) we would point out that the study by Shawn Teresa Flanigan Nonprofjt Service Provision by Insurgent Organizations The Cases of HizbaHah and the Tamil Tigers previously referenced in our AFL and provided to you on May 72010 documented the LITEs control over humanitarian aid projects through the TRO26 The study provides what is in our yiew an objective and very credible assessment of the relationship between the TRO and the LTTE and the role of the TRO in exerting control over humanitarian assistance in the north and east ofSri Lanka on behalf ofthe LTTE The foIlowing observations most particularly provide important context for your statement that it is well known in the Tamil diaspora that the TRO is the primary NGO providing humanitarian assistance in the North and East

bullbullbullAlthough the government in Colombo provides some financial support to schools hospitals and other parts of the bureaucracy in the LTTE provinces the Sri Lankan government is reluctant to provide too much assistance to the

area for fear of being perceived as overly supportive of Tamil separatists The Tamil Tigers ar~ equally interested in keeping government assistance out o~ their territories As Philipson and Thangarajab (2005) noted The L TTE also has been very watchful of any attempt by the government to use rehabilitation and development programs as a means of further undermining the LITE in both the North and the East (32) Recognizing the power ofservice provision as a means of generating community support the LITE is eager not to give such an advantage to the Sri Lankan state While the L TTE often tolerates the Sri Lankan governments activities in its regions allowing the Sri Lankan government to provide too much aid in Tamil Tiger areas could undermine popular support for the organization

The Tamil Tigers have realized that the people will be bebolden to those that take care of them In an effort to capture tbat community support the Tamil

26 Studies in Conflict amp Terrorism (June 2OQ8) 31 6 pages 499 to 519

16

Tigers have ensured that the commuDities in LTTE-controlled provinces perceive health aod social services as coming from the LTTE itself The LTTE has accomplished this goal through ~n elaborate effort to direct the service activities of the I~al and internaional NGO communities create its own NGOs and appoint steering committees to Sri Lankan government agencies that provide services By creating this public image of a welfilfestate the LTTE ensures tbat the population under its control sees it as the primary provider of relief and rehabilitation

the Tamil Tigers meet the social service needs of the population in its territories by using the resources of the local and international NGO community The LITE makes use ofthese resources by taxing NGOamp by steering the activities oftbe NGO community to meet its needs and through the work of its own NGO the Tamil ReHef Organization (TRO)

The LTIE is able to direct these humanitarian activities by requiring NGOs to conduct their work through the TRO and local NGO partners By requiring NGOs to direct their resources and efforts through these entities the LTTE can maintain ~ relatively bigh degree ofcontJol over how resources are used and what programs are implemented It is in the Tamil Tigers interest to exert control over the NGO sector and make the services appear as if they are coming from the LTIE itself because thiS boosts the LTIEs legitimacy in the eyes of the Tamil community in the north and east Some experts on Sri Lankas NGO sector suggest that the LITE actively uses development projects to gain public support from the community an~ therefore uses the TRO and its services as a tool to ensure dependency on the LTIE for reliehnd rehabilitation services (pbilipson and Thangarajab 2005) Chandrakanthan (2000) noted that the LTIEs provision ofvarioilS servicesmiddotand development of infrastructure has had the added benefit of causing Tam~1 youtll to feel they are part of a distinct nation to which theymiddot should be loyal which aids in generating geruJine community support and reducing the LTIEs reliance on silenCing ald coercion

The close relationship between the Tamil TIgeri and the TRO is noted bymiddot scholars as well (Wayland 2004) Some observe that the LTTE bas appointed

the eastern bead ofTRO as the LTIEs political chief for tite east of the country and ci1e tbis as an exampie of the unity of the two organiZations (philipson alJd Thangarajah 2005) Some of the interview participants reported an explicit relationship between the LITE alid the TRO stating tbatin theLTIE areas the TROis known simply as The Relief Organization rather than the Tamil ReliefOtganization and is widely viewed by tbe local population as the LTIEsofticial social services arm As one indhtidual describes

They wouldn~t like it if anybody says it but yes tbe TRO is the humanitarian arm of the LTTE Basically they are the LTIEs socialmiddot services department Thats one thing they do bave They have their own courts~ they ha~e their own police they have their own army and they have tbeir own social service department the TRO Everything else all the other departments are regular Sri Lankan government departments

17

As Wayland (2004) noted Certainly some or most of the TRO funds support legitimate relief efforts but only those that are in keeping with the wishes of the L TTE leadership (422) According to tbeir financial report the TRO is engaged in the construction of permanent and temporary housing education and early childhood services water and sanitation projects and health and medical relief among other activities (TRO200S)

Whether an independent entity or an official arm of the LITE most interview

participants described the TROs activitiesas symbolic and believe tbat tbe TRO primarily serves as a fund-raising mechanism for the LTTE In fa~

numerous scholars have noted the tremendous amount ofresourccsthe LITEmiddot receives from the Tamil diaspora worldwide and some cite the TRO and other organizations engaged in relief activities as a potentially important source of LTTE funding (La 2004 Wayland 2004)

A number of international aid agencies reportedly contract with the TRO in their development a~tivities and many interview participants suggested that theTRO inDates their prices far beyood those of other NGOs operating in Sri

Lanka and then funnels tbemiddotexcess fuods to tbe LITE One NGO worker told the following story

Otber tban a few projects the ~O bas no serious development activities becauS~ to a fairly large extent the NGOs are abo a way of making money for the LITE International agencies have to give moneymiddot to them and then they quote well for example toilets We were building toilets for 11000 rupees thats almost $200 The quote we got from themiddot TRO was 3~000 rupees OfCourse they have their own overhead minimal but they do But everything else is just hidden bere and tbere and then taxied out to the LTTE Tbe quality of what they provide isnt any better tban tbe otber NGOs even though tbeir priceS are bigher

Particularly since the W04 Asian tsunami the TRO lias played an iniportant role in channeling aid from donor countries and international NGOs to LTTE- controlled areas (Hogg 2006) As describedearJler NGOs bave come under pressure to work witb TRO in tsunami reconstruction activities and tbere are reports tbat in some cases relief camps operated by other NGOs were taken over by force There is a great deal of concern in the NGO community that considering tbe current context ofterror existing in the east of the country tbe TRO slowly will gain the compliance of the majorityofNGOs working in these areas as it seeks to bring all reliefand development activities under its umbrella (Philipson and Thangarajah 2P05)

Your submission strengthens our view that it was with first hand knowledge of these political realities in Sri Lanka that the Society was asked and agreed to s)nd funds to the TRO

With regard to due diligence and the Societys efforts to draw up an agreement with TRO Sri Lanka to shelter its actions under the protection ofan agency arrangement we would point out that the existence of such an arrangement does not remove a registered charitys obligation to ensure that it is not choosing as its agent an organization

18

thatoperates in association with a terrorist group In our view to suggest that your client did so unwittingly in this instance is not credible in all of the circumstances

We would also point out that our AFL did not in fact assert that the Society blindly entered into an agreement with the TRO with no consideration ofthe type of project the Society wished to support or the need to comply with CRA regulations bull Rather on the basis of the facts detailed in our AFL it is our view that the Society undertook to send funding requested by the TR021 and then later realizing that this action could be challenged by the CRA put an agency agreement in place to validate its actions Nothing in your submission changes our view that on a plain reading ofthe facts the leadership of theTRO turned to the Society as a source of funding and that once provided the monies gent to TRO Sri Lanka were no longer administered under the Societys direction and control

In summary based on the infonnation that the CRA has examined and conveyed to your client it remains our view that on a balance of probabilities it is reasonable to conclude that the TRO fonned part of the support network for the L TTE that the Society was aware of this affiliation and that it agreed to provide funding to the TRO in spite of that affiliation

Our position therefore remains that the agency agreement your client erltered into with TRO Sri Lanka cannot be considered to have been either valid or appropriate Both before and after the agreement was put in place the Society operated essentially toput funds at the disposal ofthe TRO Sri Lanka either directly or through TRO Canada It is our view that in so doing the Society made its resources available to an organization operating in association with and in support for a terrorist group contrary to Canadian public policy and the requirements of the Income Tax Act for its continued registration For this reason the Society is subject to revocation action pursuant to paragraph 168(1)(b) of the Act

Field Auditors Working Papers

Your submission argues that the comments of the field auditor have been largely ignored in the preparation of the AFL In this case however the Headquarters directivemiddot to the field in advance of the audit specified that the audit papers compiled in the field were not t6 provide conclusions relating to the Societys activities and that the audit documentation was to be forwarded to the Headquarters Audit Advisor for conclusion In these circumstances the field auditors working papers represent preliminary observations for which the authority to make final decisions with respect to the results of the audit remained with the Charities Directorate which is the eRAs centre ofexpertise in relation to the requirements for charitable registration

We would comment however that it is difficult to see how the field auditorS notes regarding the Societys collection of funds sent to the TRO read in their entirety

21 As first reflected in the meeting minutes of the Societys Board ofTrustees on December 282004

I bull

19

can be misconstrued as being inconsistent with the grounds for revocation proposed by our AFL The auditor had clearly recogbized that the Society was collecting funds to be sent to the TRO and that th~ TRO was not a qualified donee He notes further that the Society had signed an agency agreement with the TRO which we do not dispute and that the Society was able to provide him with a copy of the agreement Beyond that his notes reflect that if anything the Societys responses to his requests for documentation evidencing its continuing control over the use of funds transferred were not wholly satisfactory He notes for example that the Charity was able to obtain some supporting documents trom TRO as per audit queries indicating that the documents he was eventually able to obtain had been under the control ofTRO and not immediately at hand He also notes that initially the Charity was unable to provide details of the use of funds sent to TRO in Sri Lanka for the Tsunami relief although some details were later provided

Other notes you have excerpted are completely irrelevant to the matters raised in our AFL such as the auditors observation that the charity has full control on the income and deposits There are no unusual deposits into the bank account

Matching Funds Program

Your response to our AFL takes issue with our observations that the Society chose to send funding to TRO Sri Lanka for its tsunami relief operations rather than to channel tsunami aid through organizations selected by the Government of Canada for its Matching Funds Program as being Canadian organizations with experience in disaster relief and a ready presence in the affected countries to which Canadians coulci donate with confidence ancftrust

In response to your comments we would point out that five of the six payments made by the Society were transacted after the December 302004 announcerpent ofthe Matching Funds Program and before the January II 2005 cut-offfor matching of contributions

FUrther in relation to your statement that the Matching Fund Program was a program to encourage donations from individual Canadians not inter-charity transfers we would also note that the CRAs Questions and Answers web page entitled Tsunami Relief Effort addressed the situation where an organization would like to collect donations from its members to forward them to an eligible charity as follows

Where all organization collects donations from its members then fOlwards these to an eligible charity these donations may be receipted by the eligible charity In this instance the organization will be viewed as collecting donations on behalf of the e~gible charity 28

In other words there was an opportunity for the Society to take advantage of the matching program to maximize the donations of its members for tsunami reliefin a way

28 Online lthttpwwwcra-arcgccalchrts-gvnglchrtsltsnmJq-enghtrnlgt Accessed on 20) 0- 10-01

20

that would have been consistent with the requirements Of the Act Its decision not to proceed in this manner is not in itself grounds forrevocation action but it does in our view point to the Societys interest in funding TRO Sri Lanka ahead of other considerations As you suggest just because there is a government matching gift program this is no basis to suggest that donations to other organizations are improper However the choice made in your clients case to fund a non-qualified donee rather than ofle of the eligible registered charities under this program was a contravention of the terms of its registration under the Act Moreover none of the matters you have raised as justifying the Societys decision inCluding actions taken by other governments overcome the fact that the Government ofCanada did not endorse the TRO as a partner in its tsunami relief efforts nor did it encourage a more relaxed approach to a charitys due diligence considerations following the tsunami The latter point is most aptly illustrated by the terms of the Matching funds Program

3) Receipting Improprieties


The audit revealed that the official donation receipts issued by the Society did not fully comply with the requirements ofRegulation 3501(1) of the Act as follows

bull Regulation 3501(1) ofthe Act requires that every official donation receipt mustmiddot show a statement that it is an official receiptforincome tax purposes This statement did not appear on the receipts issued by the Society

bull Regulation 3501(1)(g) of the Act requires thatthe name and aQdress of the donor including in the caSe ofan individual his first narneandinitial be listed on each donation receipt issued This information was incomplete on the receipts issued by the Society

bull Regulation 3$01(4) of the Act requires that an official donation receipt issued to replace an official receipt previously issued must show clearly that it replaces the original receipt and in addition to its own seriai number must show the serial number ofthereceipt originally issued The Society did not meet this

requirement andmiddot

bull Regulation 3501(5) of the Act requires that a spoiled offiCial donation receipt must be marked cancelled and together with the duplicate must be retained by the registered charity as part of its records The Society did not meet this requirement

HI j bull

21


The Societys representation did not address or provide examples of remedial action taken by the Society for the above requirements

c) eRAs Position

Pursuant to section 168(1 )(d) ofthe Act the Mipister may revoke a charitys registration if it issues a receipt for a gift or donation otherwise than in _ accordance with the Act or one that contains false information Additionally the Regulations list the required contents of official donation receipts issued by a registered organization29 _ _ - _ _ shy

No representations as to corrective measures concerning these issues have been provided Therefore the CRA position remains unchanged The Society did not comply with the requirements of Regulation 3501(1) of the Act and on these shygrounds is subject to revocation action under paragraph 168(1)(d) of the Act shy

Compliance Agreement Option

As indicated above the CRA has considered the Societys willingness to take whatever remedial action is required to address the concems expressed in our AFL in the interests of preserving its assets for the benefit of the community it serves We are therefore prepared to give the Society the option to avoid revocation action by entering into a Compliance Agreement with CRA to ensure that appropriate control over the Charitys charitable resources are maintained and are not directed to organizations that may support terrorist organizations The Societys Board must confirm in Writing that it will implement the CRAs conditions to keep i~ registration by signing the attached Compliance Agreement the tenns of which it must agree to allow the CRA to make pUblic shy

If the Society wishes to resolve these issues through the implementation ofa Compliance Agreemeneo please sign and date the agreement and forward it to the undersigned at the address below by April 112011 We will also require by that date any submissions your client wishes to make as to why it should not be assessed a penalty under subsection 1881(4) of the Act in the amountof$139520 based on amounts shyprovided to non-qualified donees

If no reply is receiv~d from the Society by that date or if the Society does not agree to these tenns the CRA will propose to revoke the registration of the SocietY by

29These are explained in Interpretation Bulletin IT I 10R3 - Gifts and Official Donation Rece-ipts online at lthttpcra-arcgccalchrts-gvngleipubtpitIIOrJitl IOrJ-epdfgt and Charities Checklist - rssuing Complete and Accurate Donation Receipts online at lthttpcra-arcgccalchrts-gvnglchrtslchcklstslrcpts-enghtmlgt Accessed on 20 I 1-02-23

l~ The CRA may also elect to impose sanctions whether or not the Society agrees to sign the attached Compliance

Agreement

22

issuing a Notice of Intention to Revokein the manner described in subsection 168(1) of I

the Act

If you have any questions or require further information or clarification please do not hesitate to contact the undersigned at the numbers indicated below

Charities Directorate

Telephone _ Toll Fre~ 1-800-267-2384 Facsimile 613-941-4401 Address 320 Queen Street

Place deVille Tower A Ottawa ON KtA OL5

Enclosure Compliance Agreement

I

COMPLIANCE AGREEMENT

Between

HINDU TEMPLE SOCIETY OF CANADA (the Society) 10865 Bayview Ave bull

Richmond Hill ON US 1M1 11895 8420 RR0001

And

THE CANADA REVENUE AGENCY (the CRA)

During the audit of the Societys books and records conducted by the CRA covering the period from January 1 2004 to December 312006 and extending to the commencement of the field audit on April 9 2008 the folowing areas of non-compliance with the provisions of the Income Tax Act andor its Regulations were identified By signing this document the Society agrees that it will not promote sponsor fund or otherwise aIow its resources to be used to pursue non-charitable purposes and will take the following corrective measures to rectify the identified areas of non-compliance It also consents to allow a copy of the entirety or any part of the terms of this Compliance Agreement to be made public

1) Corrective Measures Concemlng Devotion of ResourC8$ to NonshyCharitable Purposes and Making Reeources Available to Organizations that Operate within the Overall Structure of the l TIE

The Society acknowledges that support for the creation of a Tamil State or any form of independent Tamil governance within Sri Lanka is a political objective that is not ancillary or incidental to the religious purposes for which the Society has been registered as a charity and is therefore not an allowable use of its resourCes under the Inoome Tax Act

By signing this agreement the Society certifies that its resources will not be used to provide financial or any other means of support for the LTIE or the goal of Tamil independence or the creation of a Tamil state This certification specifies that the Society will not

bull engage in activities or use its resources in any manner to promote or support Tamil independence or the creation of a Tamil state

bull enter into any financial or operational arrangement with the Tamils Rehabilitation OrganIzation (fRO) or other organizations engaged In the pursuit of activities in support of Tamil independence or the creation of a Tamil state or

2

bull allow its temple premises or other facilities to be used for any activities of individuals or groups invorved in promoting fundraising or otherwise working to advance the political agenda of Tamil independence in Sri Lanka I

2) Corrective Measures Concerning Funding of Non-Qualified Donees

Where the Society wishes to support the operations of another organization it will commit funds onlv to organizations that are qualified donees as defined by the Act (see attached appendix)

The Society will also ensure that when it Wishes to make a gift to a qualified donee it will obtain the exact name and BNRegistration number on the CRA Internet web site of each recipient organization before transferring any funds an~ will properly report these transactions by completing the Quarified Donees Worksheet (Form T1236) when filing its annual Registered Charity Information Return (T301 0)_

3) Corrective Measures Concerning the Use of an Agent

If the Society wishes to use an agent to conduct activities on its behalf the Society must be able to establish that any acts that purport to be its own activities are effectively authorized controlled and mon~tored by it

Prior to any transfer of resources the SOciety will enter into a valids~ructured written agreement reflecting the Societysauthorny over the actions of its agent and its ongoing direction and control over the use of resources transferred A written agreement does not remove the Societys responsibility to ensure that its resources are used to further the charitable purposes for which it is established to actually undertake its responsibilities as the principal in the agency relationship and to make certain that its resources are not made avairable either directly or indirectly to an entity that is a listed entity as defined in subsection 8301 (1) of the Gtjminal Code 0 Canada or to any other entity that engages in terrorist activities or activities in support of them

The Society undertakes to be able to provid~ the CRA with credible evidence that the activities to which its resources are devoted are in fact and law charitable activities being carried on by the Society itself At a minimum this requires that the SOCiety be able t6 demonstrate that

bull It communicates a clear complete and detailed description of the activities to be conducted by an agent

J Online lthttpwwwcra-arcgccachrts-gvngllstingslmenu-enghtmlgt Accessed on 201 1-02-23

3

bull It provides clear complete and detailed instructions to an agent on an ongoing basis

bull It conveys clear cJirections as to the nature and scope of decision~ making being delegated to an agent and actively monitors and supervises fts undertaking of the a~ivities authorized by the agreement

bull It has taken steps to control and monftor the use by an agent of the resources provided to it and its use of those resources amounted to the carrying on by the Society of its own charitable activities

bull It requires that its funds be segregated from those of an agent and that an agent maintain separate books and records for activities undertaken on behatf of the Society illustrating that the Societys role in

themiddotactivities being undertaken are identifiable as its own charitable activity rather than those of the agent Specifically an agent must maintain and provide on demand banking records evidencing the separation of the Societys funds from its own

bull It has the authOrity to suspend payments to an agent and that payment schedules provide for periodic transfers of resources based on d~monstrated performance ofthe agent

bull Its agent regularly provides some system of continuous and comprehensive documented reporting inciuding source documents as described in InfonnationCircular IC78-10R5 - Books and Records RetentionlDestruction2

to the SOciety reflecting the use of funds transferred to it

bull It has maintained in Canada all necessary books and records pertaining to its activities outside of Canada and that

bull It has conducted and documented due diligence measures taken in selecting an agent that are thorough meaningful and appropriate to the circumstances and that will insure that the Society does notmiddot operate in association with individuals or groups that are involved in terrorism or in supporting a terrorist entity It will not be a sufficient exercise of due diligence on the part of the Society to include a clause in an agreement wfth an agent precluding the agent from supporting terrorism

zOnline lthttpwwwClll-arcgccalElpubltpic1S-I0r5IREADMEhlmlgt Accessed on 1010-O1()8

4

4) Corrective Measures Concerning Official Donation ReceiptS

The Society will only issue officialdonation receipts that comply with the requirements of Regulation 3501(1 of the Act The Society undertakes to

ensure that al official donation receipts issued in the future contain prescribed infonnation pursuant to the Act including

bull A statement that the official donation receipt is an official receipt for income tax purposes

bull The serial number of the receipt bull The name and address iri Canada of the charity as recorded with the

eRA The charitys BNlregistration number bull The fair market value oUhe property transferred to the charity bull The eligible amount of the gift bull The full names and addresses of the donors bull For property other than cash

bull The day on which the charity received the donation bull A brief description of the property donated bull The name and address of the appraiser (if appraised)

bull The place or locality where the receipt was issued bull The signature ofanauthorized individual bull The day on which the receipt was issued when it differs from the

donation date bull The name and Intemet web site address of the eRA bull The serial numberof the replacement offICial receipt that replaces the

original receipt that is retained by the charity bull the word cancelled is marked on spoiled receipts and on a duplicate

copy that is retained by the charity bull A reconciliation of the official donation receipts to the receipted

amounts reported on the T3010 returns and financial statements is prepared andprovided on demand and i

bull A list of all offICial donation receipts issued is maintained and provided on demand

The completion of the audit does not give permission to destroy the books and records thatwere audited The Society must retain the records examined in accordance with the policy described in the Information Circular IC 78-10R5 shyBooks and Records RetentionDestruction

It is the responsibility of the Society to maintain and keep abreast of current legislation concerning its operations to ensure that it satisfies its

5

registration requirements An effective tool is to access the CRA Internet web site dealing with webinars information sessions and other news 3 Date of Implementation of all Corr~tive Measures

The Society shall implement al corrective measures on or before Apr 11 2011

By signing below the parties certify that they have read understood and agree to the terms of this Compliance Agreement The SocietY further acknowledges that should it fail to implement all corrective measures in accordance with the terms of this Compliance Agreement the eRA may apply the penalties and suspensions provided for in sections 1881 andor 1882 of the Act which include suspension of the Societys authority to issue official receipts and suspension of its status as a qualifred donee The CRA may by registered mail also give notice that it proposes to revoke the registration of the Society by issuing a bull mtifiJ2 ~e ma~r~~_if01100~~~~

Charity per Authorized Signatory with Wltnes~ the authority to bind the Charity

m Amgt1 KlP~7H Name and position of signatory Name of witness (please pri11) (p~se print) se amp- v~ 4-I

(- ((-euroSiJ) ~ blA V1 d-n ~M ) L tiP ~0 vi~ ry rNC Camp-fiLiJr

--L-1yenQ~ampJr1-oj~middot---I~er-Vol-15c-thJ_JCi-d)u2_fE__middot_ V amp---I-tAWJ~+-6=d-middotYIift Lt- rW l-l1 I fYJ )

Full name and address of Charity

-----=--___- 2011

Name and position of signatory (please print)

Date of signing MAV ~ 2011

See the eRA Internet web site Webinars Information Sessions and Other News Online lthttpwwwcra-arcgccalchrts-gvngfchrtslcmmnctnlmenu-enghtmlgt Accessed on 20t 0-07middot19

Appendix

QUALIF1ED D9NEES

Qualified Donees are those entities defined in subseCtion 1491(1) ofthe Income Tax Act bull registered Canadian charities bull registered Canadian amateur athletic associations bull registered Canadian national arts service organizations bull hejusing corporations resident in Canada and exempt from tax under Part 1 ofthe Act by

paragraph 149(l)(i) bull municipalities in Canada bull for gifts made after May 8 20M municipal or public bodies perfonning a ftmction of

government in Canada bull the United Nations or agencies thereof bull universities outside Canada prescribe4 to be universities the student body ofwhich

ordinarily includes students from Canada bull charitable organizations outside Canada to which Her Majesty in right ofCanada has

made a gift during the taxpayers taxation year or the 12 months immediately preceding that taxation year

bull Her Majesty in right ofCanada or a provmce and agents thereof

-2shy

-aportion ofthe funds disbursed to the TRO in Sri Lanka were sent after an agency agreement was drawn up and signed between the Society and TRO

- it is your clients submission that our letters ofMarch 12011 and March 25 2010 provide~ no evidence that funds sent to non-qualified donees were used for a purpose other than that intended by the Society

bull the Society maintains that it did not intend to provide support to the Liberation Tigers of Tamil Eelam (L TIE) and that our letters did not provide evidence that support was in fact provided to the L TIE and

bull your client is concerned that publication of the entirety or any portion of our letters relating to assessment of a monetary penalty as pennitted by paragraph 241 (32)(g) of the Act is not appropriate in the circumstances and will harm its capacity to continue to operate by misrepresenting the relationship between the Society the TRO and the L TfE

We have carefully considered your representations in support ofyour clients position in particular that the payments in question were outside the normal mandate of the Society However for the reasons set out below our concerns with respect to the Societys non-compliance with the requirements of subsection 1491 (1) of the Act have not been alleviated

On the basis ofour audit we have concluded that the Society provided funding in the amount of $132876 to non-qualified donees outside Canada including $117876 to the Tamils Rehabilitation Organization (TRO) in Sri Lanka an organization that formed part of the support network forthe Liberation Tigers ofTamil Edam a listed entity under the Criminal Code of Canada The extenuating circumstances of the tsunami disaster and the fact that the payments in question appeared to have been oUtside the normal operations of the Society were taken into

account when we proposed the penalty and Compliance Agreement in lieu ofproceeding with revocation action The signing of this Compliance Agreement establishes that the Society certifies that its resoUrces will not be used to provide financial or any other means of support for the LITE or the goal of Tamil independence or the creation of a Tamil state

Appropriateness of Sanctions Proposed

We would point out that for all of the reasons set out in our letter ofMarch 1 2011it remains our view that on a balance ofprobabilities it is reasonable to conclude that the TRO fonned part of the support network for the L TTE that the Society was aware of this affiliation arid that it agreed to provide funding to the TRO in spite of that affiliation These circumstances require a strong clear and balanced regulatory response

Secondly we do not agree that there is any basis to suggest that it is inappropriate for the Canada Revenue Agency (eRA) to combine the use of an intermediate sanction with a Compliance Agreement Not~ing in the concept of the CRA enforcing the registration

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BN 118958420 RROOOI File 0485094


March J 2011


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January 132012 118958420 RR0001 2005 2006 and 2007









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REGISTERED MAIL


BN 118958420 RROOOI File 0485094


March J 2011


Dear Mr Carter




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-----=--___- 2011




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Public Notice








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January 132012 118958420 RR0001 2005 2006 and 2007









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REGISTERED MAIL


BN 118958420 RROOOI File 0485094


March J 2011


Dear Mr Carter




2


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-----=--___- 2011




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Appeal Process



I iii I

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Public Notice








I I



January 132012 118958420 RR0001 2005 2006 and 2007









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REGISTERED MAIL


BN 118958420 RROOOI File 0485094


March J 2011


Dear Mr Carter




2


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-----=--___- 2011




Appendix

QUALIF1ED D9NEES







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Total


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Appeal Process



I iii I

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Public Notice








I I



January 132012 118958420 RR0001 2005 2006 and 2007









Canada


REGISTERED MAIL


BN 118958420 RROOOI File 0485094


March J 2011


Dear Mr Carter




2


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-----=--___- 2011




Appendix

QUALIF1ED D9NEES







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Penalty Assessment





Total


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$50005125000 $2876

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Appeal Process



I iii I

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Public Notice








I I



January 132012 118958420 RR0001 2005 2006 and 2007









Canada


REGISTERED MAIL


BN 118958420 RROOOI File 0485094


March J 2011


Dear Mr Carter




2


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-----=--___- 2011




Appendix

QUALIF1ED D9NEES







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Appeal Process



I iii I

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Public Notice








I I



January 132012 118958420 RR0001 2005 2006 and 2007









Canada


REGISTERED MAIL


BN 118958420 RROOOI File 0485094


March J 2011


Dear Mr Carter




2


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-----=--___- 2011




Appendix

QUALIF1ED D9NEES







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Public Notice








I I



January 132012 118958420 RR0001 2005 2006 and 2007









Canada


REGISTERED MAIL


BN 118958420 RROOOI File 0485094


March J 2011


Dear Mr Carter




2


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HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







I I



January 132012 118958420 RR0001 2005 2006 and 2007









Canada


REGISTERED MAIL


BN 118958420 RROOOI File 0485094


March J 2011


Dear Mr Carter




2


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2

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I bull tJj I I

I

I 3


c) eRAs Position





4




I






TRO 2005-01-03 $ 25000

2005-04-08 90000 )15000 x 105 penalty= $120750



I I bullbull j I

5


2005-01-03 5000 IpOOO x 1 05 p~nalty == $10500


TRO 2006-10- 14 $ 1001 2006-11-24 1875

2876 x 105 penalty $3020









6 i








c) eRAs Position





I

7

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8












fa I I

9







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12 CAMDI

10






Lanka itself



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12









13











14 i I









15











16







17











18









I bull

19










20










HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES








REGISTERED MAIL


BN 118958420 RROOOI File 0485094


March J 2011


Dear Mr Carter




2


~-







2

L












I bull tJj I I

I

I 3


c) eRAs Position





4




I






TRO 2005-01-03 $ 25000

2005-04-08 90000 )15000 x 105 penalty= $120750



I I bullbull j I

5


2005-01-03 5000 IpOOO x 1 05 p~nalty == $10500


TRO 2006-10- 14 $ 1001 2006-11-24 1875

2876 x 105 penalty $3020









6 i








c) eRAs Position





I

7

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I

8












fa I I

9







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12 CAMDI

10






Lanka itself



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12









13











14 i I









15











16







17











18









I bull

19










20










HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







2


~-







2

L












I bull tJj I I

I

I 3


c) eRAs Position





4




I






TRO 2005-01-03 $ 25000

2005-04-08 90000 )15000 x 105 penalty= $120750



I I bullbull j I

5


2005-01-03 5000 IpOOO x 1 05 p~nalty == $10500


TRO 2006-10- 14 $ 1001 2006-11-24 1875

2876 x 105 penalty $3020









6 i








c) eRAs Position





I

7

I










I

8












fa I I

9







middot



12 CAMDI

10






Lanka itself



I I












12









13











14 i I









15











16







17











18









I bull

19










20










HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







I

I 3


c) eRAs Position





4




I






TRO 2005-01-03 $ 25000

2005-04-08 90000 )15000 x 105 penalty= $120750



I I bullbull j I

5


2005-01-03 5000 IpOOO x 1 05 p~nalty == $10500


TRO 2006-10- 14 $ 1001 2006-11-24 1875

2876 x 105 penalty $3020









6 i








c) eRAs Position





I

7

I










I

8












fa I I

9







middot



12 CAMDI

10






Lanka itself



I I












12









13











14 i I









15











16







17











18









I bull

19










20










HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







4




I






TRO 2005-01-03 $ 25000

2005-04-08 90000 )15000 x 105 penalty= $120750



I I bullbull j I

5


2005-01-03 5000 IpOOO x 1 05 p~nalty == $10500


TRO 2006-10- 14 $ 1001 2006-11-24 1875

2876 x 105 penalty $3020









6 i








c) eRAs Position





I

7

I










I

8












fa I I

9







middot



12 CAMDI

10






Lanka itself



I I












12









13











14 i I









15











16







17











18









I bull

19










20










HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







5


2005-01-03 5000 IpOOO x 1 05 p~nalty == $10500


TRO 2006-10- 14 $ 1001 2006-11-24 1875

2876 x 105 penalty $3020









6 i








c) eRAs Position





I

7

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8












fa I I

9







middot



12 CAMDI

10






Lanka itself



I I












12









13











14 i I









15











16







17











18









I bull

19










20










HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







6 i








c) eRAs Position





I

7

I










I

8












fa I I

9







middot



12 CAMDI

10






Lanka itself



I I












12









13











14 i I









15











16







17











18









I bull

19










20










HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







7

I










I

8












fa I I

9







middot



12 CAMDI

10






Lanka itself



I I












12









13











14 i I









15











16







17











18









I bull

19










20










HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







8












fa I I

9







middot



12 CAMDI

10






Lanka itself



I I












12









13











14 i I









15











16







17











18









I bull

19










20










HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







9







middot



12 CAMDI

10






Lanka itself



I I












12









13











14 i I









15











16







17











18









I bull

19










20










HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







10






Lanka itself



I I












12









13











14 i I









15











16







17











18









I bull

19










20










HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







I I












12









13











14 i I









15











16







17











18









I bull

19










20










HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







12









13











14 i I









15











16







17











18









I bull

19










20










HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







13











14 i I









15











16







17











18









I bull

19










20










HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







14 i I









15











16







17











18









I bull

19










20










HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







15











16







17











18









I bull

19










20










HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







16







17











18









I bull

19










20










HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







17











18









I bull

19










20










HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







18









I bull

19










20










HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







19










20










HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







20










HI j bull

21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







21



c) eRAs Position









Agreement

22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







22


the Act






I


Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES








Between



And








2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







2











3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







3












4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







4
















5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







5









-----=--___- 2011




Appendix

QUALIF1ED D9NEES







Appendix

QUALIF1ED D9NEES







Documents

Notice of Penalty_Hindu Temple Society of Canada