American court vindicates Bishop De Roo's record and reputation

A May 27 court judgment in Olympia, Wash. has vindicated the financial cumen and administrative record of Bishop Remi De Roo--and gone long way toward redeeming his personal and pastoral reputation. A lead report by the Globe and Mail's Robert Matas features a banner headline under a large colour photo of the bishop that reads: "Bishop De Roo Vindicated." Five years earlier, however, Bishop De Roo seemed to be under a permanent cloud, after a glowing earlier career.

Remi Joseph De Roo served as bishop of Victoria for more than 37 years before retiring in February, 1999, with a stellar record as a leading proponent of the laity-enhancing dimensions of the Second Vatican Council. De Roo was the surest advocate of the social justice model of liberation theology adopted by the Canadian Catholic Church during his long tenure as chairperson of the Canadian Bishop's Social Affairs Commission in Ottawa. He was one of the youngest Council Fathers at Vatican II in 1962, the year of his appointment as bishop.

One year after his retirement, his previously impeccable record was severely tarnished by headlines across Canada that he had made bad, if not foolish, land and show-horse investments in Washington state. He was said to have built up huge debt for the small diocese, and to have broken canon law in the process.

"Six years after the explosive allegations were made, a jury in the Superior Court of Washington has vindicated the bishop," the Globe and Mail article reads.

The American jury awarded De Roo's former business partner, Joseph Finley US$8.2 million for breach of contract by the Diocese of Victoria during the era of De Roo's successor, Raymond Roussin. Roussin's administration was also found guilty of breach of fiduciary responsibility, which means that they would not properly cooperate with their inherited business partner. This lack of cooperation was judged to have cost Finley his share of the profit from the land sale deal. Roussin, a former bishop of Gravelbourg, Saskatchewan, was appointed Archbishop of Vancouver in January, 2004.

Finley was loaned one million dollars in the late 1980's by the Diocese of Victoria in an effort to save his Arabian horse farm at the time when the federal U.S. government changed the tax structure around show horses so that their value was decimated. That million dollars was lost. Finley insisted the Diocese keep that debt on the books and he would endeavour to bring a redeeming deal that would make it good. The Washington land deal was his effort at redemption of the debt in 1997.

Appraised at nearly US$15 million, the diocese was able to buy it for US$5.5 million with the understanding that 160 acres of heavy industrial land would require two to three years to sell. Prior to that time-line expiration, De Roo retired and Roussin replaced him as "Corporation Sole Bishop" of Victoria, the legal and corporate designation of the diocese. Finley's contract was with the Corporation Sole Bank of Victoria.

Bishop Raymond Roussin's financial advisors took a dim view of the arrangement, as well as its sponsors, Finley and De Roo, and refused to work pro-actively on the deal. But Finley proved to the satisfaction of the jury that this resulted in breach of contract and breach of duty to a partner. He also successfully established the value of the land as US$28 million, which determined the amount of the judgment against the Diocese of Victoria in favour of himself. The actual value of the land had been a contentious issue as Finley only gained a profit under the contract if it was over a certain threshold.

The $8.2 million judgment adds hugely to the debt incurred under the Roussin regime. This includes the sale of debenture bonds worth $13 million to buy the mortgage of the property. These have to be paid back from the sale of the actual property. Along the way, the Diocese divested itself of fifteen million dollars worth of surplus property, but at fire-sale prices. It was largely sold to local developers at 50 cents on the dollar, reaping only $7.5 million in return. None of this money went to pay back the debenture bond holders who renewed at a rate of 80 per cent in 2003.

Finley argued in court and in the media that none of this debt was necessary if the Diocese had co-operated with the many deals he brought to the table only to have them all spurned between 2000 and 2004. The judge and jury agreed that had the deal been left to properly mature and sold on schedule, all sorts of money would have been made, all around. The court was convinced by his case and concluded that the deal was originally sound, and as a consequence, De Roo's judgment that the property was a good deal was vindicated.

It was largely "political factors" that clouded the situation at the time, and De Roo had been severely mistreated in the process and in the media in 2000. As Robert Matas reported in the Globe and Mail: "Contrary to the allegations by church officials, the jury decided the bishop had made a solid investment. The court heard that the property at the centre of the controversy may have increased in value as much as fivefold since its purchase."

Ironically, Bishop De Roo, who refused to defend himself or speak publicly during the entire six-years-debacle (except to apologize generally for whatever errors he might have made and for whatever damage these may have caused) was in fact the author of an investment which can still redeem the entire situation because it has increased so radically in value.

This, in spite of all the mounted debt caused by the subsequent decisions. Unfortunately, the same people are advising the newest Bishop of Victoria, Richard Gagnon, a former Vicar General of the Archdiocese of Vancouver. In his first year as bishop, Gagnon has announced that the diocese will appeal the decision, a decision that threatens to cost an estimated two more years of court time, plus lawyer's fees estimated at a further three million dollars.

A further complication is that the land in question was actually sold for US$14 million in January, 2005. However, there is a saving technicality.

If the new bishop would co-operate with Finley even at this juncture, the day could be saved because the January sale is not closed and the Diocese has the final closing option. If rescued, the land could be sold for its proper value of US$28 million. The new purchaser could be bought out for a half million dollars. Time is running out though and the hard feelings that led to the $8.2 million judgment seemed to be far from being resolved. Expensive emotions.

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