Gospel for Asia Canada Seeks Protection from Creditors Amid Donor Lawsuit

The Canadian iteration of Gospel for Asia has filed for creditor protection at the same time it is being sued in multi-million dollar action by donors who claim the charity did not use funds as donors intended. The action appears to be a stalling tactic since the charity doesn’t have any significant creditors except the possibility of paying back donations that didn’t go where donors thought they would go.

Read the affadavit filed by GFA’s Pat Emerick here

Read the Court order on creditor protection here. 

The order prohibits GFA from disbursing any funds without permission of the court and sets up Price Waterhouse as GFA’s overseer. GFA has asked the court to stay this prohibition but the court has yet to rule on that request.

Of course, the donors don’t want GFA to be able to send money out of the country until GFA can satisfy donors and the authorities that the funds are being used as promised. They favor the hold on sending funds out of the country. I would like to add that funds cannot be sent to Gospel for Asia in India or Ayana Charitable Trust or Believers’ Church or at least two other NGOs because the Indian government removed their ability to accept foreign funds. I hope this court action explores where the funds are actually going and how they get from shell NGOs with no actual structure to the people in need.

This is a missing link that no one at GFA has ever spoken about. No one has ever said how funds get from the U.S. to needy people in India since the organizations with a structure to distribute them can’t accept them. I understand the Believers’ Church has set up shell NGOs but this seems like it could be a stealthy and perhaps illegal way to funnel foreign funds to organizations which the Indian government has prohibited from getting them.


In Hamilton Spectator Gospel for Asia Story, Canadian Director Contradicts GFA-US Executive

Steve Buist reporter for the Hamilton Spectator has written a major expose’ of Gospel for Asia. Published today, a shorter version will also appear in the Toronto paper tomorrow. The headquarters for GFA-Canada is in Hamilton so the story is a local and national one there.
In the story, GFA-Canada Director Pat Emerick denies one of the first claims told to me by GFA-US COO David Carroll. Emerick denied that Canadian donations had been lumped together with American donations:

“There has been no mingling of funds and field partners can absolutely account for the originating source of all deposits,” Emerick stated.

“All funds sent to the field have been accounted for separately in annual reports to the respective international boards as well as according to national accounting standards in the receiving countries,” Emerick stated.

He is not exactly answering the question. The fact is that Canadian funds were not reported to the Indian Home Ministry as coming from Canada. In May 2015, Carroll told me that Canadian funds were lumped in with American funds. He said there was no requirement for them to be reported separately.

The Canadian funds were combined with U.S. funds by our auditor in India for various accounting reasons. There is no requirement that they be reported separately.

Buist’s assessment is that the funds were combined without proper reporting.

Meanwhile, Gospel for Asia officials in the U.S. told an American evangelical financial accountability group last summer the charity didn’t exert any control over its Indian affiliates and how they spend the money.

Taken together, it means Canadian donations were lumped in with the American donations sent to India but the American charity didn’t exercise any control over the Indian affiliates receiving the money.

This would appear to be in violation of the CRA’s rules that state the Canadian charity must maintain control and direction of its donations and be able to account for how they have been spent, even when done through an intermediary.

Buist covers the waterfront and cites Bruce Morrison and me on a variety of financial matters. The entire class action suit is embedded online.
Readers of this blog will recognize much of the facts but Buist does a very fine job of weaving it all together in one place.

Gospel for Asia CEO K.P. Yohannan Dismisses Canadian Board Members; Former Director Seeks Government Investigation

Logo from GFA website

A former board member of Gospel for Asia Canada is alleging that he was illegally dismissed by board president and GFA International Director K.P. Yohannan. Garry Cluley asked the Canadian Revenue Agency (CRA) to investigate the recent dismissal of two Gospel for Asia Canada board members. In an alleged violation of GFA’s bylaws and Canadian law regarding charities, former Board member Garry Cluley was dismissed by Yohannan via letter dated December 8, 2015. In the letter (see below), Yohannan stated that Cluley’s term of service was up and he was being dismissed because “The Board needs to welcome the fresh perspective and ideas that new members can offer.” GFA’s bylaws nor Canadian law regarding charities provide for dismissal of a director without due process of board action. Cluley alleges that his dismissal was not allowed by law and occurred as he was asking for financial statements and GFA’s joint ministry agreement.
A time line of events was recorded in Cluley’s letter to the CRA:

I, Garry Cluley, became a board member in 2013.
Due to allegations of wrong-doing against our organization, in a board meeting held on July 17, 2015, I requested a copy of our joint-ministry agreement along with financial statements and   audits related to it.  I was assured that these would be given to me. (I had only recently become aware of their existence.  I was not informed of them when I became a board member and they were never mentioned at board meetings.)
Over three months went by without these documents being sent to me. On November 25th, December 2nd, and December 8th, I requested them again from the person in charge of the Canadian office, Pat Emerick.  On December 8th I phoned Pat and spoke again of the importance of me having the aforesaid documents. He agreed to send them.  To be sure, I followed the call with an email in which I said, in part:

I understand that you will be sending the joint ministry agreement and the audits and that you will be sending them by registered mail.  Again, thank you for your time, and for your work for God.

The next day, December 9th, I received a letter via email from KP Yohannan, the chairman of our board and president, informing me that I had been dismissed from the board.  A copy of the letter is attached.
KP Yohannan stated:
The board needs to welcome the fresh perspective and ideas that new members can offer
I have only been on the board for two years therefore the claim of a need for a “fresh perspective” seems disingenuous.  I believe that the true reason for his action is that he does not want me to see the joint-ministry agreement or their associated financial statements and audits.

The same day Cluley was told he would get the GFA documents, a letter dismissing Cluley was written by K.P. Yohannan.
That letter is below (see a pdf of it here).
Dismissal letter Cluley red
As Cluley noted, he had only been on the board since late 2013. Furthermore, the GFA Canada bylaws do not define a board member’s term. Cluley was not informed of any board action or meeting for the purpose of deciding his fate as a board member.
Although the CRA has not responded at this writing about the possibility of an investigation, the basis for a government inquiry appears sound. Based on the documents I have seen (more documents are available at the end of the post), it appears that Cluley attempted to fulfill his fiduciary responsibility as a board member by looking into allegations against GFA. He was stonewalled by his own organization and then when he refused to stand down, he was dismissed in apparent violation of GFA’s bylaws and Canadian law. I spoke with Cluley yesterday and he informed me that the remaining board member not named Yohannan told him there was no board meeting to dismiss the Cluley. It seems highly unlikely that a board meeting to dismiss Cluley took place. On December 8, Cluley was promised documents by Canadian director Pat Emerick and then also on December 8, a letter was prepared by K.P. Yohannan dismissing Cluley from the board.
Cluley has also contacted GFA’s U.S. board of directors regarding his dismissal with no reply from them.
I call on GFA to explain why Garry Cluley and Rob Thiessen were dismissed and to provide a legal basis for the action.
More information:
Gospel for Asia Canada Bylaws, formative documents and Canadian regulations. — As Cluley noted in his letter to the CRA, there is no bylaw 4.02 in the bylaws. Nothing in the Canadian law nor in the bylaws allow the removal of a board member the way K.P. Yohannan did it.
Memo from Garry Cluley to the US Board – The US board is sitting on their hands without comment or response to Cluley about this allegedly illegal action.