Pedophile ex-priest hiding from pension fund scandal here

This pretentious imitation castle along the road to El Valle used to be owned by the publisher of one of Panama’s gory sensationalistic tabloids, but if the old owner’s taste in journalism offended some people the new owner’s police record is an infinitely more serious concern. Photo by Eric Jackson

"I had no idea," Antonio Pope said. The representante of the San Carlos corregimiento of El Espino had heard the tales of a steady stream of young men --- never any women --- going in and out of the estate owned by a tall, wealthy Canadian man in his early 60s, one Ronald Hubert Kelly. But until this reporter came to him with the documented tale, Pope didn't know that the man who is probably the biggest landowner in his constituency has a 10-count record of molesting teenage boys.

Back in May of 1979, Kelly was a Catholic priest in the small Newfoundland town of Piccadilly. He was arrested for and pleaded guilty to ten counts of sexually abusing five boys between the ages of 13 and 17.

One of the boys was paid $5 to perform fellatio while Kelly sat at his desk in the parish office. Another time, Kelly visited a parishioner, who served him drinks, put him to bed and provided a boy to service his sexual desires. In another instance, two boys tried to lock the priest out of their bedroom at night, but were scolded by their mother, who let Kelly in for his idea of fun and games.

After his arrest, Royal Canadian Mounted Police Constable Murray Urquhart testified years later before a government commission, Kelly was in denial. "He was even indicating that the youths were more responsible in their actions than he was."

But while the Mounties and prosecutors were doing their jobs, powerful elements of church and state were conspiring to cover things up. Just two days after Kelly's arrest, Judge Gordon Seabright played host to Bishop Richard McGrath at the judge's home to discuss Kelly's case. Two days after that, Seabright imposed a two-year suspended sentence, on condition that Kelly receive therapy at an Ontario center for the treatment of Catholic priests with emotional problems. The prosecution appealed the lenient sentence, but Seabright was upheld by a three-judge panel, which opined that Kelly was "no criminal in the common sense of the word."

After a few months of therapy, Kelly resumed his priestly vocation, this time in two Ontario parishes. After a couple of years of that, he was transferred to the central offices of the Archdiocese of Toronto and rose to become the top financial aide to Cardinal G. Emmett Carter. In that post he oversaw the construction of new churches, acquired land for cemeteries and managed the church's many real estate holdings. In 1984 he arranged for hotel accomodations for 1,000 dignitaries who came to town for Pope John Paul II's visit to Canada.

The following year, Kelly received a pardon from the conservative government of then-Prime Minister Brian Mulroney. Under the terms of that pardon, the file on his sexual abuse case was sealed.

But meanwhile, years of scandals that had been swept under the rug were working their way out as new political forces came of age in Canadian politics. In particular, Canada's long-standing practice of shipping indigenous kids from remote northern communities to church-run boarding schools was coming under attack from the emerging Assembly of First Nations, which was wont to characterize the practice as cultural genocide. That the "civilizing" process at the boarding schools often included beatings, sexual assaults and other maltreatment aggravated the situation, and the impunity that the abusers enjoyed made it worse yet. A scandal at an orphanage in St. John's, Newfoundland, where there was widepread abuse that had been covered up for years coincided with the ever more powerful indigenous nations' protests led to the appointment in 1990 of a crown commission headed by Samuel Hughes .

So what exactly was the problem of which the events in St. Johns became a symbol? Was it a matter of racism against the children of Canada's first inhabitants? Was the real problem about homosexuality in places where it shouldn't be tolerated? Or was it just that the church habitually got a free pass for conduct that would be harshly suppressed when discovered in secular settings? All of those arguments were made by various witnesses and observers, and the commission looked well beyond the St. Johns case in search of the proper context. For his efforts and conclusions Hughes was alternatively reviled as racist for allegedly belittling the oppression of indigenous kids, homophobic for considering an alleged link between homosexuality and pedophilia, and bigoted for washing the dirty laundry of several Christian denominations in public.

And in the course of the Hughes inquiry, Father Kelly's case came up. The record may have been sealed, but memories had not been suppressed.

Complaining that his case had nothing to do with the infamous St. John's orphanage, Kelly took a leave of absence from the archdiocese, then shortly thereafter renounced his vows.

With his knowledge of finance and real estate from working with the archdiocese, and with ties to business, media, labor and political leaders also acquired in the course of his priestly duties, Kelly went into the consulting and real estate businesses.

Backed by Howard Johnson's executive Stephen Phillips and investments from the 240,000-member Canadian Commercial Workers Industry Pension Plan, Kelly began to buy and develop hotels, convention centers, resorts, shopping malls and food processing plants. Within a few years the pedophile former priest's RHK Capital had a portfolio of assets worth around half a billion dollars.

On the way up the economic scale to opulence, Kelly cultivated political ties across the spectrum. Ontario Premier Bob Rae, who went on to lead his left-leaning New Democratic Party to the most catastrophic election defeat in its history, was there to cut a ribbon at one of Kelly's real estate openings. Kelly hosted a Toronto fundraiser for Canadian Prime Minister Jean Chretien, who later ended a long political career by handing the reins of the Liberal Party to his successor Paul Martin.

The Toronto Sun noticed the apparent business success and the humiliating sex abuse convictions, and went to talk with Kelly about these things in 1997. The result was a sympathetic article of the up from adversity by the bootstraps variety. In that article Kelly attributed his sexual misconduct to alcoholism and claimed that he had dried out after his arrest. Without much apparent skepticism the Sun thus gave the ex-priest a forum to pose as that mythical beast so often favored in certain religious circles, the reformed former homosexual. Kelly said that if the right woman came along he might marry. About his pedophile past he said "The way I deal with it is 'that's the past and I dealt with it' and I think I've gone for the right treatment ... and I've gotten on Like so many other North American capitalists, Kelly began to diversify offshore. He bought and renovated the British Colonial Hotel in Nassau and another Bahamian resort. He became one of the movers and shakers in the Americas International Bank, also in the Bahamas. He acquired tourist hotels in Kingston and Ocho Rios, Jamaica. By sometime in 2001, he had obtained a bank account in the Banco Atlantico on Calle 50 in Panama City.

This business empire, however, was not built with Kelly's money. It was mainly founded upon some $235 million invested by the Canadian Commercial Workers Industry Pension Plan, the largest multiple-employer private pension fund in Canada. Founded and more or less run by the United Food and Commercial Workers union that represents employees at a number of supermarket chains and meat packing companies, the plan created a maze of subsidiaries, which were intertwined with another maze of subsidiaries that Kelly created for his RHK Capital.

The empire began to crumble. A shrimp processing plant in Newfoundland and a potato processing plant in Idaho went bust. Although the British Colonial Hotel in Nassau began to attract the rich and famous and was the backdrop for two James Bond movies, it renovation went way over budget.

In 2001, the Americas International Bank folded, but not before the bank paid Kelly $3 million, which was deposited in the Banco Atlantico here. Last year a Bahamian court held that the payment amounted to a fraudulent preference, but Kelly is appealing.

(Did the deposit of the proceeds of a bankruptcy fraud in the Bahamas into a Panamanian bank amount to money laundering under our laws? Yes, opines law professor Miguel Antonio Bernal, who cites Inter-American and United Nations anti-corruption treaties. But the UN treaty was only recently ratified by Panama and the statutes implementing the terms of the 1990s Caracas Convention may not have been in effect when the money transfer in question took place, although the treaty itself undoubtedly was. And of course, all such questions are based upon the dubious proposition that we have the rule of law in Panama.)

In 2003, Kelly and RHK Capital began to default on their obligations. In 2004, members of the United Food and Commercial Workers were told that future retirees would see their pension benefits reduced by some 20 percent, and that workers would have to put in more years on the job to even qualify for a pension.

Dissidents within the union had been complaining for years about mismanagement and lack of transparency in their pension fund, and about the UFCW's financial ties with a child molester. Finally, despite Kelly's ties with Canada's ruling Liberal Party and its former leader Jean Chretien, the Financial Services Commission of Ontario opened an investigation in 2003. It recently issued an 82-page report on its findings.

The commission, which has to power to impose civil fines but not criminal penalties, alleged conflicts of interest, lack of due diligence in investment decisions, insufficient monitoring of the ways that pension funds were used and bad record keeping. The pension fund trustees, most of them current or former UCFW leaders, disputed the findings. Dissident workers demanded that the police and prosecutors be brought in to conduct a criminal investigation.

The pension fund trustees claim to have cut their ties with Kelly, which their critics in the labor movement dispute by citing offices and telephone numbers shared by the fund and by RHK.

Meanwhile, if RHK Capital may arguably be insolvent its namesake is apparently in much better financial shape.

Kelly bought one of the landmarks on the road to El Valle, the sprawling estate with the faux medieval wall once owned by former El Siglo publisher Jaime Padilla Beliz. Coming with the land and the several houses on it was a private zoo, some of whose animals this reporter observed by looking over the fence and through the trees from a rise across the road. According to neighbors, Kelly employs six or seven men full-time to maintain the premises. But the compound that the pedophile ex-priest bought from the former necro-porn publisher is the smaller part of Kelly's real estate holding in El Espino. Kelly has also acquired a much larger, mostly wooded adjacent tract to the south of Padilla Beliz's old place and neighbors say that in all Kelly's holdings encompass at least a square kilometer and probably much more than that.

But does Kelly have any legal right to be here at all? The unanimous consensus of legal opinion sought by The Panama News is that he does not.

A spokesman for Migracion said that for any foreigner seeking a visa to live in Panama, a lifetime judicial history is required. He added that people with known convictions for child molesting are not allowed in Panama.

Attorney Juan Ramón Vallarino J. pointed out that the immigration form asks not only about criminal convictions but also about arrests, and without providing a specific exception in the case of pardons our immigration law generally excludes people with criminal records.

Law professor Miguel Antonio Bernal concurred with the immigration spokesman about the absolute requirement to reveal a conviction for sexual abuse when applying for a resident's visa. He also noted that Article 12 of the Panamanian Constitution, which regulates naturalization, allows for the exclusion of individuals on, among others, moral, safety or mental health grounds and argued that this would be meaningless if visa applicants were not required to reveal such things as a criminal record of pedophile offenses.

Ronald Hubert Kelly has attended functions of the local Canadian Association, and is known to some members of the local gay community. But while there are those who are reputedly impressed by the wealth the man displays, both the Canadians and the homosexuals with whom this reporter talked about Kelly would prefer that he be expelled from Panama.

The Kelly matter has been brought to the attention of the Public Ministry, which could possibly pursue one or more of any number of investigatory angles. The Panama News has been informed that it has been referred to a prosecutor who handles sex offenses.

And the local officials? This reporter went to the city hall in San Carlos to interview the representante in El Espino, but as it turned out Antonio Pope and three of his fellow San Carlos city council members mostly interviewed this reporter to see what information The Panama News had about the Canadian in the weird castle. None of them appeared to be very pleased about Ronald Hubert Kelly's presence in their community.

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