Scientology is shrinking fast and getting richer. How is this possible?

Paul Schofield was rebuilding his life. It was the late 2000s and he was working at a factory in Knox, in Melbourne’s outer east, when he noticed a Holden Kingswood parked across the street.

The car was there every day. For months. A mate he worked with had gone through a “shitty divorce”, he says, and he knew what private investigators did. Schofield was under surveillance.

Ex- Scientologist Paul Schofield had worked for nearly 30 years for the controversial religion and its offshoots.Credit:Peter Stoop

But it was not marital strife that had prompted Schofield’s unwelcome visitor. He had recently split from his church, Scientology, after nearly 30 years working for the controversial religion and its offshoots. So deep was his involvement that he’d done 80 courses, been ordained as a minister and had even become a professor of Scientology.

“They had someone following me because I was protesting,” Schofield, now 64, recalls. “I had a friend [who also left] whose dog was poisoned.”

The process of leaving Scientology had been slow and full of loss and grief. “It was a continuing story of abuse,” Schofield recalls now of his time in the church. “But you had the mindset, ‘yes, it’s bad here but it needs to survive for the sake of the planet or else everyone is going to be dead forever’.”

Some defectors had fared considerably worse than Schofield. In the US, in particular, its pursuit of former members has become notorious. There, Scientology has been accused of beatings, forced abortions and forced labour. In its usual style, the church aggressively denies this.

The rear of Scientology’s church in Ascot Vale. Australia has become a haven for $326 million in assets.Credit:Justin McManus

Scientology in Australia is an unusual religion, and a wealthy one. Since at least the mid-2000s, it has been shrinking in size, with the number of members falling to fewer than 1700 adherents. Even so, its wealth has increased. An investigation this week by The Age and The Sydney Morning Herald found it made nearly 30¢ of profit for every dollar of revenue in Australia and its assets nearly tripled between 2013 and 2019. Australia has become a haven for $326 million in assets, largely cash and property, located in Britain and Australia. Millions of dollars also flow through its Australian accounts from the US, with more unspecified amounts from Scientology operations in Taiwan and Japan.

If the High Court had not classed it as a religion in 1983 it would be one of the country’s more successful mid-sized businesses.

Xenu and the thetans

Founded by US science fiction writer L. Ron Hubbard in the 1950s, Scientology has its own elaborate belief system and a long and important history with Australia which has set precedents that have shaped its practices here and elsewhere.

L. Ron Hubbard, founder of Scientology, using an e-meter to determine whether tomatoes suffer painCredit:Hulton Archive

It was one of a number of “new religious movements” to emerge in the past 100 years but it has proved “the single most unpopular and controversial”, according to a 2019 paper by the University of Notre Dame’s Dr Bernard Doherty and the University of Nevada’s James Richardson.

“Perhaps the four most salient aspects of this have been its ongoing conflicts with mental health professionals and anti-psychiatric beliefs; its sometimes aggressive and litigious approach to critics; its disputed status as a bona fide ‘religion’; and concerns about its internal discipline of its members,” they write.

From the outside, some of its beliefs can appear unusual, including the religion’s foundation story involving Xenu, an intergalactic warlord, which is only revealed to members when they become “operating thetan level three” – after they have already spent many years and tens of thousands of dollars on courses.

Xenu, according to the once-secret writings of Hubbard, brought billions of people to Earth 75 million years ago and killed them with hydrogen bombs near volcanoes. This created body “thetans” which still cling to humans today. Removing them is a kind of cleansing, an important part of advanced Scientology.

In a society such as ours, people are largely free to believe what they like. But one difference between Scientology and mainstream religions is that the revealed truths, such as the story of Xenu, come at a huge financial cost.

When Scientology emerged in the 1950s, it quickly gained a following in Australia, in particular in Melbourne, where its emphasis on personal development struck a chord with some in the post-war years. Its first course in Australia was run in Kew in 1954.

Charlatanism and religion

Investigative journalist Steve Cannane’s book, Fair Game: the incredible untold story of Scientology in Australia, noted the emphasis on money from the start, with 10 per cent of income from Melbourne in the late 1950s going straight into the bank account of a Hubbard organisation.

Hubbard knew Australia after having served here during World War II. He had once described it as “the country perhaps with the greatest and brightest future on the face of the Earth today”.

“The only story here is the unprecedented growth of the Church of Scientology in Australasia and around the world.”

But within a few years, his religion was under pressure. Campaigning by the Truth newspaper in Victoria and the medical establishment led to the lengthy Anderson inquiry in the mid-1960s. Its eventual report was scathing.

“Scientology is evil; its techniques evil, its practices a serious threat to the community medically, morally and socially; and its adherents sadly deluded and often mentally ill,” the report found.

Mike Rinder, a former senior executive in Scientology.Credit:SBS

The fallout was huge. Scientology was banned in Victoria – the first place in the world – and later in South Australia and Western Australia.

Within a few decades, however, Australia swung entirely the other way. While it was still facing intense legal battles in the US over its legal status – infamously, Scientology operatives had infiltrated the Internal Revenue Service and other US institutions – in 1983, the Australian High Court granted it vast legal protections and tax-free status as a religion.

The High Court found that “charlatanism is a necessary price of religious freedom” and that a “lack of sincerity or integrity” from a religious leader was not “incompatible with the religious character of the beliefs, practices”. Courts in Britain and New Zealand have cited that decision, while a decade later the IRS gave up after years of legal battles and granted Scientology tax-free status.

“Unfortunately, the High Court set a very bad precedent,” says Mike Rinder, an Australian who rose to become one of Scientology’s top executives and an official spokesman.

“If there had been lawyers on the government side that really understood Scientology and how it operates and what its policies are, they would have been able to make far better arguments.”

Rinder, who is now a prominent critic, grew up in a Scientology family and says accumulating money has always been central to its operation, from Hubbard’s time and now under his successor, David Miscavige.

According to the documentary Going Clear, Hubbard’s ex-wife, Sara, claimed he had said many times during their marriage the only way to make any real money was to start a religion.

Scientology dismissed the documentary maker as a “propagandist” and Hubbard’s ex-wife as a “gold digger” who later backed away from the statements.

Tax-free status

Until now, Scientology’s finances have been largely shrouded in secrecy.

In the US, its tax-free status allows the church to not report its wealth. A partial picture emerged about a decade ago in tax filings of a few of its many entities which showed Scientology in the US had wealth of at least $US1.5 billion ($2 billion). The overall figure is guesswork.

Former senator Nick Xenophon used parliamentary privilege to detail allegations of abuse against Scientology.Credit:4BC

It’s the same almost everywhere in the world. When former Australian senator Nick Xenophon in 2009 used parliamentary privilege to detail horrific stories told by ex-Scientologists – including that of Paul Schofield – he called it a “criminal organisation” and wanted a Senate inquiry into it. That bid failed when the major parties refused to back it. However, it led to a separate broader Senate committee that recommended the establishment of a charities commission.

That became the Australian Charities and Not-for-profits Commission, created in 2012. It is one of the only bodies in the world to require Scientology to report financial data. It is this financial data – covering a dozen Scientology-related corporate entities both here and in Britain – which has allowed the best look anywhere at its profitability and wealth.

The results show net profits from the Church of Scientology Australia, its main corporate entity, of $65.4 million from 2013 to 2019. Its assets nearly tripled to $172.4 million, while in Britain it grew at a similar rate.

Church of Scientology International spokeswoman Karin Pouw says it “is in the midst of an explosive expansion in Australia, ongoing since 2007” but would not say whether she accepted the census data that it has a small and declining number of followers.

“The only story here is the unprecedented growth of the Church of Scientology in Australasia and around the world,” says Pouw, who described most of the questions sent from The Age and the The Sydney Morning Herald as “absurd”.

But while the ACNC has allowed far greater transparency, the charity laws here are weaker than in Britain in one key respect.

The Church of Scientology’s headquarters in Chatswood.

Charities, including religions, in Australia have to pass a public benefit test but the presumption is that religion is for the public benefit. To lose that status, a case would have to be made to the ACNC commissioner. That’s a weaker regime than in Britain, which has no presumption about public benefit for religion. Scientology has not passed the British public benefit test.

Melbourne Law School professor Ann O’Connell this week questioned if religions that did not provide charitable services should as a matter of policy be eligible for tax concessions.

Despite its claims of growth, when I visited Scientology’s Ascot Vale church on a recent weekday morning, I was the only visitor in a brightly lit information room that included tributes to Hubbard and touch-screen videos on their approach to getting off drugs and the like.

Ascot Vale was opened only a decade ago by former planning minister Justin Madden and then lord mayor Robert Doyle. A few years later, the “Ideal Advanced Organisation” centre for the Asia Pacific was opened in Sydney at a cost of more than $50 million.

These property openings, says a long-term researcher on Scientology, journalist Tony Ortega, are part of a corporate strategy that has evolved over time as the church got smaller.

“After 1990, it really started to shrink,” he says. “There was less and less emphasis on auditing [a session where a minister questions an adherent] and growing membership [as it struggled to find new followers] and more and more emphasis towards real estate, in appearing to expand, not by memberships but through buildings.”

‘Rampant capitalism’

When Paul Schofield started in Scientology in 1979, he said he was lucky to earn $2 a week working for the organisation. Over the years, he was paid a modest wage but when he left nearly 30 years later, he barely had any money. He had never owned a decent car.

But he lost much more than a lifetime of earnings.

He’d lost one daughter after she ingested potassium chloride, which was used in Scientology’s purification programs. Another daughter, at 14 months old, died after falling down the stairs of a Scientology building in Sydney while under the care of others. Schofield says the church had pressured him not to ask for a coronial inquiry – a claim denied by the church when the stories were made public by Xenophon in 2009.

Schofield, who is articulate and intelligent, has rebuilt his life working on the NSW Central Coast. But he won’t stop campaigning against Scientology, its abuses and its focus on money.

“This is rampant capitalism,” he says of its approach. “Wealthy people and not-so-wealthy people have been used to pay for real estate that doesn’t get used.”

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