Scientology: Game Over? Australia May Be About to Bankrupt Church Operations Down Under (UPDATED)


This story was originally published on September 1

UPDATE: After the jump, new video from Australia about the labor violations report which may end up costing Scientology millions — the final report is due to be released later this week.

On August 28, Melbourne’s Herald Sun reported that the Australian government may be about to hand down a decision that will likely bankrupt Scientology in that country.

The church there has been under heavy attack in recent years, led mainly by an independent federal senator, Adelaide’s Nick Xenophon, who has pushed for government investigations of Scientology after being presented with evidence of the church’s abuse of staff.

And now, the Herald Sun reports, the country’s “workplace watchdog” will soon release a report after an 18-month investigation into the way that Scientology’s workers, particularly those in the hardcore Sea Org, are paid far less than minimum wage.

Scientology could be forced to pay millions of dollars in back pay, as well as taxes on that pay, and raise every worker to minimum wage into the future. Former chief Scientology spokesman, Mike Rinder, who himself is from Australia, says such a decision will immediately bankrupt the church there.

“It will be an utter disaster, worse than losing tax-exempt status,” he says. (The Australian government has also been reviewing Scientology’s tax exempt status, and a decision on that could come soon as well. Update: I got ahead of myself here. It’s the establishment of a charities commission and defining legally the meaning of “charities” which is in the offing for the upcoming year. A review of the church’s tax exempt status could only come after that. But as Rinder says, that’s less important anyway.)

If Scientology were hit with a bill for millions in back pay, Rinder says, they could draw from American reserves to pay it off. “They have the money to do it, but what will happen is, everybody from this point forward will have to be paid, and they cannot do that,” he says.

“Too much money goes to international management, and they’re buying buildings, so they can’t use that money for staff. Everything else is more important. And if that happens in Australia. I promise you that will only be the first. The next place that will follow will be Europe. And then ultimately the US will catch up. Some agency in America will grow a pair and actually do something,” Rinder added.

Rinder is referring to the real estate buying spree Scientology has been on in the last few years, even though numerous sources show that membership in the organization is falling, and by some estimates totals only about 40,000 people around the world. Despite that, parishioners in America are being pressured to raise money for new facilities, as we saw recently in a rather remarkable video.

I asked Rinder if Scientology losing its tax-exempt status wasn’t an even bigger problem because of the way the church has its UK and some Europe and Canadian facilities claiming charity status through an umbrella corporation, the Church of Scientology Religious Education College, Inc. (COSRECI), which is based in Adelaide, South Australia.

Australian journalist Bryan Seymour has reported extensively about that odd arrangement. Here was his original report, from June, 2010:

This past July, Seymour updated the story to show that local Australian authorities still haven’t done anything about COSRECI not paying taxes:

But Rinder tells me tax exempt status and COSRECI are far less important than the back pay decision.

He explains that British churches really get around paying taxes not through their status, but by showing losses and debts each year — so there are no profits to pay taxes on. They do this, he explains, because they send so much of their annual income to Scientology’s American management organizations. Until British tax authorities begin to press the church about those payments, they don’t need charity status, Rinder says. So even if COSRECI loses charity status in Australia, it won’t mean much to the present situation. (COSRECI doesn’t have charity status, so can’t lose it. But as Seymour reported, Australian officials seem to be doing nothing about the way COSRECI is used to shelter UK churches.)

In Australia, it’s the potential back pay order which could really be devastating.

“It’s real money and real people. And the church made what I consider stupid decisions with the ombudsman during the investigation,” he says. “Honestly, it’s not realistic to try and pretend that staff workers of the Church of Scientology are volunteers. They work specific hours, they can’t just come and go as they please — that’s not a volunteer. They may say they don’t want to be paid for their time. But in Australia, if you fall under the definition of a worker, you’re entitled to certain things.”

But why, I asked him, would a decision like this have an effect in Europe? “The laws with respect to workers’ right are much more draconian there than they are in the United States. And there are government entities in Europe that have sort of flailed around with stuff like whether Scientology is a religion or not. But when you get down to something specific like not paying your workers, that’s something they can do something with,” he answered. “Ultimately, I think the people in the United States will take notice and do something.”

Several lawsuits have been filed in recent years here which have raised the issue of Sea Org members working 100-hour weeks for the equivalent of pennies an hour, and under harsh conditions. But they have generated only limited national discussion, and some have been dismissed by courts under the concept that religious organizations can get around labor laws with a “ministerial exception.”

I asked Rinder why Australia, of all the places where Scientology has made a decades long and determined push, has suddenly become so hostile to the church.

“They just have a very low tolerance for bullshit. Just as a general rule, Australians tend to be pretty down-to-earth and straightforward and bullshit don’t fly,” he said.

In the U.S., on the other hand, while the church is mocked, people rarely do anything about its reported abuses. “You see it with everything the church does here, and people are incredulous that they get away with it. The New Yorker parody thing is one thing, and the Squirrel Busters. While people are incredulous here, people don’t say anything about it. But in Australia, people will speak up, they’re pretty fearless. Look at Bryan Seymour, that guy will take on anyone at any time. So will Nick Xenophon. He feels like everybody has the right to stand up and have the world see what’s really going on. I see that much more so there than anywhere else I’ve been.”

UPDATE, SEPTEMBER 13: Australia’s Lateline program today reported that it had a draft copy of the Fair Work Ombudsman’s report, which alleges that some of Scientology’s workers were paid about $10 a week. It says that stories of imprisonment may violate Australia’s slavery laws, and that the Ombudsman isn’t buying Scientology’s argument that its underpaid or unpaid workers are volunteers. Reporter Steve Cannane says that it was a fellow ABC program, Four Corners, from March 2010 that prompted the Ombudsman to begin looking into allegations of labor violations. He says in this report that a final version of the report is due “later this week.” This report generally repeats what we’d heard earlier — that Scientology is finally being investigated for having staffers work incredible hours for almost no pay — but there’s still no definite word on what sort of penalty the church will face. Still, this report by Cannane does appear ominous…

The Top 25 People Crippling Scientology
#13: Janet Reitman (and other journalists)
#14: Tory Christman (and other noisy ex-Scientologists)
#15: Andreas Heldal-Lund (and other old time church critics)
#16: Marc and Claire Headley, escapees of the church’s HQ
#17: Jefferson Hawkins, the man behind the TV volcano
#18: Amy Scobee, former Sea Org executive
#19: The Squirrel Busters (and the church’s other thugs and goons)
#20: Trey Parker and Matt Stone (and other media figures)
#21: Kendrick Moxon, attorney for the church
#22: Jamie DeWolf (and other L. Ron Hubbard family members)
#23: Ken Dandar (and other attorneys who litigate against the church)
#24: David Touretzky (and other academics)
#25: Xenu, galactic overlord

@VoiceTonyO | Facebook: Tony Ortega

See all of our recent Scientology coverage at the Voice

Tony Ortega is the editor-in-chief of The Village Voice. Since 1995, he’s been writing about Scientology at several publications. Among his other stories about L. Ron Hubbard’s organization:

The Larry Wollersheim Saga — Scientology Finally Pays For Its Fraud
The Tory Bezazian (Christman) Story — How the Internet Saved A Scientologist From Herself
The Jason Beghe Defection — A Scientology Celebrity Goes Rogue
The Paul Haggis Ultimatum — The ‘Crash’ Director Tells Scientology to Shove It
The Marc Headley Escape — ‘Tom Cruise Told Me to Talk to a Bottle’
The Jefferson Hawkins Stipulation — Scientology’s former PR genius comes clean
The Daniel Montalvo Double-Cross — Scientology lures a young defector into a trap
A Church Myth Debunked — Scientology and Proposition 8
Daniel Montalvo Strikes Back — Scientology Hit with Stunning Child-Labor Lawsuits
When Scientologists Attack — The Marty Rathbun Intimidation
A Scientologist Excommunicated — The Michael Fairman SP Declaration
The Richard Leiby Operation — Investigating a reporter’s divorce to shut him up
The Hugh Urban Investigation — An academic takes a harsh look at Scientology’s past
Giovanni Ribisi as David Koresh — A precedent for a Scientology-Branch Davidian link
Janet Reitman’s Inside Scientology — A masterful telling of Scientology’s history
The Western Spy Network Revealed? — Marty Rathbun ups the ante on David Miscavige
Scientology’s Enemies List — Are You On It?
Inside Inside Scientology — An interview with author Janet Reitman
Scientology and the Nation of Islam — Holy Doctrinal Mashup, Batman!
Scientologists — How Many of Them Are There, Anyway?
Roger Weller’s Wild Ride — Scientology When it was Hip
The Marc Headley Infiltration — A Scientology Spying Operation Revealed
Placido Domingo Jr: Scientology’s Retaliation is “Scary and Pathetic”
An Interview with Nancy Many, Former Scientology Spy
The Paulien Lombard Confession — A Scientology Spy Comes Clean
The Deputy Benjamin Ring Hard Sell — Scientology wants your 401K
The Top 25 People Crippling Scientology — the whole series!
The Squirrel Busters Busted — Unmasking the Scientology PI in Charge
Tommy Davis, Scientology spokesman, secretly recorded discussing ‘disconnection’