Scientology has to open its books again, and we dig into the numbers

In some parts of the world — namely, in various parts of Europe — Scientology can’t keep things as secret as they do in the US, and they’re forced to open their books for inspection. Recently, a number of new Scientology financial reports became available, and we turned to our financial maverick, John P. Capitalist, to dive into the numbers and tell us what they mean.

 
Narconon Trust UK Financial Statements

Narconon is required to release financial records under UK law. The financial statements for 2017 were prepared according to the usual financial reporting standards by an outside accounting firm and contain a wealth of information in the footnotes, as well as some useful perspective in the numbers themselves.

Interestingly, the organization says in the introduction that “the activities of Narconon Trust have been facilitated by grants from the International Association of Scientologists, which is currently its main funding source.” Longtime Scientology watchers have long suspected that the IAS slush fund has been employed to bail out failing tentacles of the Scientology organizational octopus for some time, but this is the first time I’m aware of Scientology admitting this in print. There have certainly been some questionable loans on various financial statements, and there have been other indications, such as the ability to complete the Orlando Ideal Org quickly when there are perhaps fewer than 100 Scientologists in the area, and when there wasn’t a sustained fundraising campaign to buy the building. But this is the first time that the organization has stood up and said that the IAS is putting some of the $1 billion plus that I estimate they’ve collected over the last 20 years to work.

Unlike the financial statements of Narconon Netherlands, which we’ve analyzed in detail for each of the last three years, the Narconon Trust UK has apparently avoided a “going concern” warning, where the auditors are saying that the company may be at risk of going out of business without significant work. That said, the finances aren’t exactly in great shape.

It appears from the footnotes on page 15 (“Related Party Disclosures”) that the Narconon Trust is a passive investment trust that holds the Narconon buildings in the UK, but does not appear to actually operate Narconon centers. I point this out because there does not appear to be any revenue or expenses actually involving treatment of addicted people in 2017, versus £1,454,041 in 2016. It’s entirely possible that the flow of victims students dried up completely in 2017, going from approximately 60 people in 2016 to zero a year later, given bad publicity or changes in law for reimbursement. However, it seems more likely that the overall Narconon organization restructured itself and changed so that revenue and expenses from treatment flows through other entities such as corporations for each individual center. It’s thus impossible to get a clear idea how Narconon’s operations are going in the UK until we see the Narconon UK financial statements.

There was a series of grants of approximately £930,368 for property acquisition and renovation, which is apparently mainly focused on the new Irish Narconon facility that has been vehemently opposed by the locals.

 
UK Buildings and Land, Ltd.

This appears to be another asset-holding shell company. Apparently, according to UK law, they’re not required to report an income statement (sales/other revenue, expenses and profit/loss) for this entity. As a result, it’s very difficult to get any sense of what this entity does or how well it’s doing. Again, the footnotes suggest that this entity is a conduit for the IAS to funnel money to other Scientology orgs. Where the audit report notes that the IAS is funding the company, it says “The IAS has agreed to support the company in future and therefore, in the directors’ opinion, it is appropriate to prepare the financial statements on a going concern basis.” In other words, IAS support allows them to dodge the bullet that would require the auditors to say that the financial condition of this entity is so bad it’s teetering on the brink of insolvency, which would be bad for donations.

The IAS contributed £9,600,153 ($12.6 million at current rates) to prop up UK Buildings & Land, Ltd. during 2017. The financials don’t list the real estate holdings of this entity, but given that it claims current assets of £22,083,763 ($29.0 million US, €25.2 million or $14.7 billion Canadian “dollars”), it likely includes the main Saint Hill facility and the rest of the property in the greater East Grinstead area. Perhaps an enterprising researcher can connect property records to this entity.

 
Scientology Hungary Financial Statements

Péter Bonyai forwarded a copy of the 2012-2016 financial statements for Scientology’s Hungarian operations (2016 is the most recently available data). I was surprised at the relative paucity of financial data provided in the financials; Hungary is an EU member and I would have expected EU-compliant financial regulations to require more transparency. Péter said that the charities monitoring agency in the National Office of the Judiciary is swamped, so even if Scientology’s filings weren’t compliant with disclosure requirements, it would be unlikely to face government action.

Most surprising in the financial statements is the sizable jump in tangible assets, going from €8.25 million ($9.5 million) to €13.8 million ($15.9 million), a jump of €5.5 million ($6.4 million). Obviously, this is due to acquisition of a new property in 2015, which eventually became the Budapest Ideal Org in 2016.

There’s not a lot of information about revenue and expenses, but what is there is interesting. In 2014, Scientology Hungary reported revenue of €3.1 million; this jumped to €5.9 million in 2015. However, it dropped significantly to €1.7 million in 2016. I suspect that this is due to fundraising for whatever buildings were purchased in 2016 having been completed in 2015, and tapering off. Expenses, which weren’t broken down, were high in 2016. Costs of €4.5 million pushed the org to a net loss of €1.5 million in 2016 after being profitable in the prior three years. This may have been due to building renovation costs, but it’s not clear from the financial statements.

But let’s hone in on that €1.7 million revenue and think about what it means for a minute. Hungary is one of the poorest countries in the EU. I did some digging and it appears that the average monthly income per adult in Budapest is only about €700 per month. That’s not likely to yield a lot of disposable income which is what people would spend on Scientology.

Let’s assume that Scientology only appeals to the top 20 percent of incomes in Hungary. That’s a fairly small number of people, and it might yield average disposable income of only about €2,500 per year per person. If Scientology is booking €1.7 million in total revenue, that implies that there are nearly 600 active Scientologists in Hungary, far more than I had expected. In a total population of 9.8 million, that is significant. Compare that to the US, where I have estimated that there are about 10,000 Scientologists excluding imported Sea Org staff. The incidence of Hungarian Scientologists when applied to the US population of approximately 327 million would yield 25,000 Scientologists in a country the size of the US. So Scientology is apparently doing far better in Hungary than I would have expected. There are potentially as many Scientologists in Hungary as there are in the UK, and there are likely more than in France, Germany and the Scandinavian countries combined. I don’t have any idea why that’s the case.

This is correlated by some work Péter Bonyai has done with some fellow ex-Scientologists, putting their heads together to estimate the number of Sea Org members from Hungary; their best guess is over 200 Sea Org members in the US from this small central European country. According to his work, there may be as many as 2,000 people on the membership roster, but his estimate of active members matches what I came up with in the economic analysis above. Peter also suggested to me that there are few, if any, “whales” coming from Hungary who are donating enough as individuals to prop up a struggling organization, which would tend to argue for a larger number of individuals involved.

There are apparently missions or orgs in most of the smaller cities throughout the country like Debrecen, Szeged, Miskolc, Pécs, Győr, Nyiregyhaza and Kecskemét (warning: Western Europeans and Americans should not attempt to pronounce any of these names without extensive training or without access to emergency medical care). Like many Central and Eastern European countries, Hungary is massively centralized – out of 9.8 million people, 3 million live in the capital (Budapest) and these smaller cities range from 200,000 to 300,000 in each metro area. That’s a lot of places for Scientologists to hide without coming up on the radar screen of Western Scientology critics.

The most important takeaway from these financial statements, then, is the idea that Scientology has found a niche where it is definitely larger than we would expect, and where it may be growing, away from the increasingly negative press coverage in most of the West. I’d put this up with Taiwan, Russia, Mexico and Italy as places where the cult is actually seeing some incremental success. That said, I don’t think there’s enough momentum here to reverse the overall downward trend for Scientology’s fortunes as a whole.

Longer-term, this is a 1950s flying saucer conspiracy cult selling an obsolete product that doesn’t have much appeal to modern prospective members. Its loyal members are aging and will shuffle off this mortal coil in not too many years. The avalanche of entheta in the West is not going to end any time soon, as the cult has become the poster boy for abusive high-control groups. Even the recent scandalous revelations about the NXIVM cult haven’t garnered a fraction of the press that Scientology has earned in the last few years. For those and so many other reasons, it’s doomed, despite the bright spot of higher-than-expected membership in a few relatively remote countries.

 
— John P. Capitalist

 
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Tampa Bay Times finds fun tie to Scientology in strong-mayor Clearwater campaign

Tracey McManus has a really fun piece today at the Tampa Bay Times about a tie between a strong-mayor initiative on Clearwater’s November ballot and the Church of Scientology, which may be counting on the change in local government to have even more influence over how the town develops into the future.

Mike Rinder cautions in the piece that Scientology may not be banking too much on the initiative passing, but City Manager Bill Thorne tells McManus that Scientology leader David Miscavige made a remark suggesting that the church is counting on the initiative passing. Miscavige was clearly frustrated that Clearwater’s city council stymied a land deal he favored last year, and some observers believed that Miscavige wanted the change in local government and might be behind it. But there had been no obvious tie between Scientology and the campaign, until now.

Tracey’s excellent story has the details. Head on over there and soak them up.

 
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Scientologists do the wave

Our thanks to the tipster who sent along this gem sent out by Scientology’s “Auditor Activation Chief,” requesting photos of Scientologists waving to the camera. It’s must-see TV!

Dear I HELP Member,

For Scientology Media Productions we need waving shots (10 sec video and 3-4 photos) of your group.

These shots should be taken outside (not inside the building). Ideally, they should have a banner for their group. If not you could do it without a banner. You should have as many of your group members in the shot as possible and the picture should be filled from side to side with the group waving with a bit of space above their heads showing the background. The banner should be no higher than the lower third of the shot.

First off all send me every waving photos or videos you have done since December 2017.

I need these videos and photos
in the next 2 days.

All photos and videos must be sent to my e-mail address
ihelp@ihelp.org
. Do not send them to the SMP web portal.

We need your photos and videos!

ML,

Vladimir Leskov
Auditor Activation Chf, I HELP INT
6331 Hollywood Blvd,
Los Angeles, CA 90028

 
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Scientology’s celebrities and ‘Ideal Orgs’ — now with comments!

We’re building landing pages about David Miscavige’s favorite playthings, including celebrities and ‘Ideal Orgs.’ We’re hoping you’ll join in and help us gather as much information as we can about them, in order to build a record and maintain a watch as Scientology continues its inexorable decline — and yes, we finally have comments working on these new pages! Head on over and help us with links and photos and comments.

Previously, we posted pages for celebrities Anne Archer, Beck Hansen, Catherine Bell, Chick Corea, Elisabeth Moss, Erika Christensen, Ethan Suplee, Giovanni Ribisi, Greta Van Susteren, Jenna Elfman, John Travolta, Juliette Lewis, Kelly Preston, Kirstie Alley, Laura Prepon, Marisol Nichols, Michael Peña, Nancy Cartwright, Tom Cruise Danny Masterson, Stanley Clarke, Edgar Winter, Alanna Masterson, Billy Sheehan, Judy Norton-Taylor, Terry Jastrow, Eddie Deezen, Sofia Milos, Bodhi Elfman, Rebecca Minkoff, Doug E. Fresh, Christopher Masterson, Justin Meldal-Johnsen, Michael D. Roberts, Michelle Stafford, and Jim Meskimen. And for the Ideal Orgs of Portland, Oregon; Sydney, Australia; San Diego, California; Denver, Colorado; Nashville, Tennessee; Perth, Australia; Tokyo, Japan; Sacramento, California; Las Vegas, Nevada; Silicon Valley, California; Rome, Italy; Orlando, Florida; Moscow, Russia; Amsterdam, Netherlands; Seattle, Washington; Dallas, Texas; Melbourne, Australia; San Fernando Valley, California; Pasadena, California; Bogotá, Colombia; Budapest, Hungary; Phoenix, Arizona; London, England; Orange County, California; Atlanta, Georgia; Auckland, New Zealand; Miami, Florida; Basel, Switzerland; Berlin, Germany; Birmingham, England; Brussels, Belgium; Buffalo, New York; Cambridge, Ontario; Copenhagen, Denmark; Dublin, Ireland; Greater Cincinnati (Florence, Kentucky); and Hamburg, Germany.

Today it’s Lynsey Bartilson and Harlem, New York!

 
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Posted by Tony Ortega on October 19, 2018 at 07:00

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