Scientology in the UK: a status report

by Chris Owen (Chris Owen)
SubjectScientology in the UK: a status report
Date2 Feb 2002 07:24:29 -0800

[Links added. -k]

Four years ago this week, I had a look at the Companies House files on Scientology's corporate entities in Britain. I went back there this week to see how things have changed. For anyone wanting to convert the figures below into dollars or euros, the current exchange rates are £1 = $1.41270 and £1 = EUR 1.63403.

Scientology's corporate structure in the UK

Scientology in the UK is represented by seven corporate entities that I know of:

In addition, a number of associated "front groups" also exist:

Compared with only a few years ago, however, it's clear that a pretty severe winnowing has occurred. All of the following are now dissolved, most between 1992-95:

There were also a number of unincorporated missions around the country which no longer exist. Some of this represents tidying up (the Hubbard Association of Scientologists Ltd was inactive for many years prior to being put out of its misery in 1994), some represents consolidation (as in the case of the Mission of Brighton — now part of COSRECI) and some represents genuine failures (as in the case of the Missions of Chicester, Leeds, Southampton and York, none of which now exist).

The main Scientology body in the UK is COSRECI, a South Australian corporation set up on 19 October 1976 which began activities in the UK on 1 May 1977. It took over management of UK Scientology from the Church of Scientology of California (which was subsequently asset-stripped to prevent Larry Wollersheim from collecting his settlement). It appears to have been set up as a vehicle for getting back-door tax exemption in the UK, which was gained under reciprocal UK-Australian tax rules.

COSRECI was probably only ever intended to be a temporary home for Scientology's UK assets, until such time as charitable status under UK law could be obtained. Church of Scientology (England and Wales) was the intended recipient of this status (its statement of incorporation constantly refers to it as "The Charity"). In 1999 the Charity Commission rejected Scientology's application for charitable status. As far as I know no appeal against this decision has yet been lodged, or at least reported. In the meantime, Church of Scientology (England and Wales) remains dormant.

One significant recent success for Scientology has been the acquisition, in October 2000, of exemption from Value Added Tax (VAT, the equivalent of the US General Sales Tax) which I assume was applied to its members' "donations" and its own sales. Scientology had been arguing about the issue with Customs & Excise and the VAT Tribunals since at least 1974 but finally got its own way just over a year ago. This means that, in terms of its tax privileges, it now has pretty much the same privileges as have been awarded in the US. Charitable status is the last major hold-out.

The Missions of Poole and Bournemouth are the last surviving independently constituted orgs in Britain and have, I think, now combined — the one at Bournemouth is no longer listed. The others, in Birmingham, Brighton, East Grinstead, Edinburgh, London, Manchester, Plymouth and Sunderland are all owned by COSRECI. (One curiosity is that Scotland doesn't permit Scientology to call itself a "church"; the Edinburgh org is officially and somewhat ironically named the "Hubbard Academy of Personal Independence".) In addition, there used to be a whole bunch of other missions around the UK, at least 15; all are now apparently dead. Scientology's physical footprint in the UK is now probably at its smallest since the 1970s.

Greenfields Educational Trust is the corporate name for Greenfields School, the Scientology school in Sussex which uses Hubbard's "educational technology". I haven't looked at its accounts yet. One thing I have tried to find — in vain — has been some independent assessment of the school's performance. It appears that it has so far managed to avoid being subjected to a government inspection, unlike virtually every other school in the county.

Narconon London is a new arrival. Quite how it relates to Narconon UK (a separate organisation, and Scientology's only charitable entity) I don't know — I'll have to look into this.

Nesta Investments and SOR Services (UK) are mysterious entities. Nesta is actually the oldest Scientology entity in Britain, having been established as long ago as 1962 for the purpose of the "holding of investment properties". One of its three directors is listed as G. R. Wilson, who I assume is Graeme Wilson of OSA UK. According to Nesta's accounts for 2000, it's doing little actual business other than a token £1,000 turnover in 1999 and 2000. COSRECI is revealed as Nesta's major (only?) investor, holding £180,003 worth of shares. Nesta is spending next to nothing but has major assets — in 2000, £475,000 of fixed assets and another £393,346 of current assets. What these assets are is not revealed by the accounts, but I suspect that it's either some kind of market investment (perhaps in shares or commodities), or otherwise Scientology's UK properties. The latter would make sense — if a court case resulted in COSRECI's assets being seized, the actual properties would thus be immune.

SOR Services (UK) is totally opaque. The COSRECI accounts reveal that COSRECI holds £1000 worth of shares in SOR Services, whose business activities are given as "provid[ing] bookkeeping services". It's been suggested that SOR stands for Sea Org Reserve, Scientology's strategic contingency fund, in which case SOR Services is presumably the body which manages the UK element of the reserve. We already know from the US IRS that there's a SOR Services (Cyprus) — Cyprus, like the UK Channel Islands, is a well-known offshore haven for all kinds of murky financial services.

COSRECI's accounts

Scientology undoubtedly peaked in the UK in the late 1960s, when Saint Hill was booming and Hubbard was still in residence. At that time, the Saint Hill org alone was raking in over £50,000 a week — in the year 1967-68, the Church of Scientology of California (as it was then) recorded a total income of £1,076,018. In real terms that is probably the most that Scientology has ever earned in the UK. 15 years later in 1982, with the pound worth very much less, income was still only £1,409,990. The figures have improved since then, with a major boost in income following Hubbard's death in 1986. By 1988, turnover had reached £5,262,466. It has remained at around the same level ever since. The most recent figures show a turnover of £5,704,655 in 1999, with an average turnover of £5,569,914 during the eight years between 1992 and 1999.

The figures in full are as follows (the returns for 1989-91 seem to have been mislaid):

Year Turnover Expediture
1982 £1,409,998 £2,767,995
1983 £2,956,999 £2,750,005
1984 £2,630,541 £3,973,042
1985 £1,932,796 £2,332,860
1986 £2,781,407 £3,318,111
1987 £3,036,181 £2,147,901
1988 £5,262,466 £4,717,092
1989 ? ?
1990 ? ?
1991 ? ?
1992 £4,935,704 £6,661,193
1993 £5,026,035 £4,840,122
1994 £6,015,363 £5,523,557
1995 £5,678,380 £5,012,722
1996 £6,392,936 £4,518,250
1997 £5,652,482 £5,520,391
1998 £5,153,760 £5,411,336
1999 £5,704,655 £5,951,708

As the figures show, turnover and expenditure have been very close for many years, with expenditure frequently exceeding income. However, COSRECI is relatively asset-rich — in 1999 it had £10,071,267 in fixed assets and £4,769,365 in current assets, as against liabilities of £1,045,809 owed to creditors. This resulted in a net figure of assets less liabilities of £13,794,823. COSRECI clearly has considerable resources behind it.

Between 1992 and 1997, the accounts gave the number of employees and the wages bill. Dividing one by the other gives some indication of how much they are being paid on average — not surprisingly, it's a pittance, well below the national minimum wage and below even state unemployment benefit. (Yes folks, you would be better off unemployed than employed by Scientology.) Staff pay is normally the largest single cost element of a business, but Scientology seems to have avoided this particular problem:

Year Employees Wages Average wage
per person
per week
1992 453 £614,726 £26.10
1993 444 £596,492 £25.84
1994 445 £850,452 £36.75
1995 428 £667,826 £30.01
1996 426 £559,669 £25.26
1997 495 £600,935 £23.35

One curious aspect of the accounts is the huge amounts "due to associated churches":

Year Assoc Churches
1982 £3,215,983
1983 £2,286,608
1984 £2,030,051
1985 £3,271,398
1986 £6,157,295
1987 £3,135,009
1988 £4,338,779
1989 ?
1990 ?
1991 ?
1992 £8,809,208
1993 £9,256,214
1994 £9,292,317
1995 £9,390,808
1996 £8,621,799
1997 £9,133,846
1998 £9,107,817
1999 £9,524,671

This presumably represents the flow of money to Scientology's overseas entities, most likely the Church of Spiritual Technology which formally owns Hubbard's works and "licenses" them to the rest of Scientology. It's particularly noteworthy that the amounts "due to associated churches" are considerably in excess of COSRECI's turnover — typically between 130-180% of turnover. How is it financing this deficit? A similar pattern, incidentally, exists in Narconon's accounts — probably not a coincidence.

Scientology in Bournemouth

Only two Scientology missions in the UK have survived as independently incorporated entities — those in the neighbouring towns of Bournemouth and Poole on the south coast of England — but they appear to have merged their operations, as the Bournemouth mission is no longer listed as active by Scientology and all the action now seems to be in Poole. The Dianetics and Scientology Mission of Bournemouth Limited (aka DSMBL) was established in 1989 and started trading the following year. However, it's evidently had a lot of financial problems. The figures tell their own story:

Year Turnover Admin Exp Donations Assets Less
1989 0 0 0 0
1990 £34,278 £48,855    
1991 £172,683 £187,250    
1992 £413,176 £515,757 0 £316,149
1993 £335,659 £726,382 £190,444 £613,768
1994 £684,057 £542,995 £211,430 £959,111
1995 £925,050 £665,491 £224 £1,267,872
1996 £425,075 £342,589 £52,878 £1,412,518
1997 £299,404 £226,636 £4,284 £1,415,203
1998       £598,632
1999       £980,314

The mission's turnover peaked in 1995 as a result of advance payments made by its members, but at the same time it suffered an extraordinary 99.9% drop in the amount of "donations". It also overspent considerably on several occasions and was clearly lacking in terms of financial management; its auditors refer to poor auditing processes operating within the mission. One consequence of this was a hefty fine of £45,695 for late VAT registration. The result through the mid-90s was a rapidly escalating deficit, peaking in 1997 at 1,415,203.

In 1998 the mission sacked its auditors and, taking advantage of a provision in the Companies Act, began submitting only "abbreviated accounts". These are the absolute minimum a company can get away with submitting (and then only if it meets certain criteria). Unfortunately — and probably deliberately — the accounts no longer include such mundane things as turnover and expenditure, but they do show the deficit. This showed a drastic improvement — reduced by £816,571 — but how this was achieved is nowhere explained. The financial problems have evidently not been resolved, as the deficit ballooned again by nearly £400,000 the following year.

The number of employees and their wages are also given for the first five years of the accounts — I've calculated the average weekly wages per employee:

Year Employees Wages Wages Per
Per Week (52)
1989 0 0 0
1990 6 £5,540 £17.76
1991 21 £16,711 £15.30
1992 43 £59,685 £26.69
1993 60 £141,027 £45.20

Having posted these basic details, I'll post a separate analysis of what I think they mean.