Canada: Failed adoption agency had little oversight, jurors told

Date: 2014-06-23

By Brian Caldwell
KITCHENER — There was almost no financial oversight of an international adoption agency that collapsed amid scandal five years ago, jurors at a fraud trial heard Monday.

Chris Hughes, a founding board member at Imagine Adoption, testified directors had a largely “visionary” role as the Christian organization rapidly grew to include hundreds of clients.

That meant the board of directors, a legal requirement for a non-profit, had no involvement in hiring or firing, setting salaries or approving day-to-day expenditures.

Hughes said he didn’t know, for instance, how much top executives were paid or that several people at the Cambridge agency had the use of corporate credit cards.

Suspect credit card purchases and agency cheques allegedly used to pay for home renovations are at the heart of the trial of Rick and Susan Hayhow, now in its second week in Kitchener court.

The former husband and wife are accused of ripping off Imagine — actually an umbrella organization for two related adoption agencies and a related charity — for about $300,000 before it went into bankruptcy in the summer of 2009.

Susan Hayhow, 48, was then the executive director and spent much of her time in Africa after starting the agency on her own just four years earlier.

Rick Hayhow, 49, was the chief financial officer after joining the agency once it had been in operation for about a year.

They drew a combined income of $320,000, drove leased agency vehicles and racked up about $850,000 in credit card bills in the two and a half years before the agency failed.

Hughes, now a teacher, had adopted two children from overseas, but had no experience as a director of a non-profit group when Susan Hayhow asked him to take on the unpaid position in 2005.

According to minutes of a board meeting in 2006, directors were only supposed to approve major “structural changes” at the agency.

“The board will provide support through prayer, discussion, ideas and involvement in the business plan,” the minutes say.

Hughes said directors never set a policy for use of corporate credit cards, including a requirement, for instance, that personal purchases be reimbursed.

He testified he believed the agency was on solid financial ground until Rick Hayhow left with a year of severance pay — about $140,000 — and continued use of his leased vehicle over his wife’s affair with agency employee and board member Andrew Morrow.

That scandal triggered financial scrutiny of the agency by Hughes and another director, leading to the discovery of alleged personal expenses.

Included were vacations, shopping at high-end clothing stores, extensive home renovations, cosmetic surgery, the purchase of a horse and season’s tickets for the Toronto Raptors basketball team.

About 400 families across the country were left in limbo at various stages of the costly, lengthy process of adopting a child from overseas, primarily Ethiopia.

Cross-examination of Hughes by defence lawyers suggested the Hayhows will blame each other for any questionable expenses and the failure to repay them.