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Audit finds NAACP exercised little control over officers' expense accounts

THE BALTIMORE SUN

MINNEAPOLIS -- The NAACP's controls over its top officers' spending were so lax that the nonprofit civil rights group paid for then-Executive Director Benjamin F. Chavis Jr.'s purchases of toys, maternity clothing, electronic games and furniture with no questions asked, according to an internal audit presented to the board last week.

A summary of the audit, which focused on questionable expenses by Dr. Chavis and former Chairman William F. Gibson, was made public at the NAACP convention here.

But a review of the complete audit, which is as thick as the Baltimore White Pages and was made available to The Sun, gives a more detailed picture of the Baltimore-based National Association for the Advancement of Colored People's financial disarray.

Among the findings of Coopers & Lybrand LLP's audit of NAACP officers' spending from January 1989 through August 1994:

* The NAACP paid expenses charged to a corporate credit card by the chairman of the board and executive director "without obtaining and analyzing any detailed supporting documentation or backup." Expense records were "disorganized and in disarray."

* No NAACP employee had the authority to question charges by the chairman and executive director. In 1993 and 1994, the board of directors' travel costs "were seriously overrun by $80,000, yet no corrective actions were taken."

* NAACP officers did not take responsibility for personal charges to the corporate credit card.

* Cash advances of up to $12,000 were made to NAACP officers. In one case, a $10,000 cash advance was made in April for a July convention. (The audit does not say to whom.) In another instance, Dr. Gibson received a $10,000 "travel advance" that was actually a personal loan, later repaid with $300 "interest." The audit said loans to board members were prohibited in New York state, where the NAACP is incorporated.

The auditors recommended 29 ways to improve the NAACP's financial management. Chairwoman Myrlie B. Evers-Williams, who defeated Dr. Gibson by one vote in a February board election, said the controls were being put into effect. An employee of the Price Waterhouse accounting firm has been installed as the NAACP's acting chief financial officer.

The NAACP is $3.8 million in debt and desperately needs contributions from members, foundations and corporations to meet its payroll.

Mrs. Evers-Williams said in an interview that the NAACP's more than 400,000 members had "every right to feel angry and frustrated" about how the organization spent their donations and dues. Corporate credit cards have been revoked, and the 64-member board has been asked to pay its own way to meetings, she said.

"This is not a gravy train," she said.

While the audit did not cover the NAACP's deficit, it did note some excessive spending:

* Dr. Chavis racked up more than $120,000 in limousine rental charges during his tenure. Red Top limos transported Dr. Chavis, aides and non-NAACP employees around Washington and New York at a cost of hundreds of dollars a day.

* Dr. Gibson stayed in a $1,083-a-night suite (including tax) at a Beverly Hills hotel in the fall of 1994 and ran up a total bill of $4,827 for three nights -- while the NAACP faced a $3 million deficit.

* A 14-person NAACP delegation traveled to South Africa in the summer of 1993. Everyone traveled business class, and the NAACP paid $2,700 each at the last minute for three passengers to upgrade their seats from economy class. The auditors found the trip "unreasonable, given the organization's then current fiscal circumstances."

Dr. Gibson and Dr. Chavis, who was fired in August after secretly committing up to $332,400 to settle a sexual harassment claim, were the big spenders of NAACP funds, the report found.

In 16 months at the NAACP, Dr. Chavis, who was paid $200,000 a year in salary, charged $200,300 to his NAACP credit card -- $22,749 of which was for personal expenses, the report found.

The former executive director bought toys at Toys 'R' Us in Catonsville, shirts at Brooks Bros. in Washington and eyeglasses at Pearle Vision Center in Towson, among dozens of other personal expenses. Eight days before he was fired, he charged $113.15 in beauty supplies from Cosmetics Plus in New York to his NAACP card, the report showed.

Dr. Chavis' personal expenses totaled more than $32,000 overall, including a $2,600 personal lifetime membership for United Airlines airport lounges and $4,756 in airfares for his wife's relatives. He is negotiating repayment to the NAACP.

Dr. Gibson, who was chairman for almost a decade, charged $300,100 over the nearly five years examined. The auditors have questioned $93,908 in Dr. Gibson's charges, plus nearly $20,000 in other expenses. They haven't made a final determination about how much of Dr. Gibson's spending was unjustified because he did not respond fully to their questions.

The former chairman also received a total of $164,700 in monthly "stipends" to cover office expenses and loss of income from his Greenville, S.C., dental practice. Although no formal document authorized the payments, the report said, both Dr. Chavis and his predecessor, the Rev. Benjamin L. Hooks, knew of them.

The audit found that some of Dr. Gibson's charges should have been covered by the monthly stipend. Dr. Gibson told auditors that he was "not required to keep receipts to support" the monthly stipends, the report said.

Among Dr. Gibson's questioned expenses were several airline tickets for a female friend; hotel stays in Myrtle Beach, S.C., and other travel in South Carolina, where Dr. Gibson is state NAACP president; $4,378 in hotel charges for family members; and $603.75 for a briefcase. (A Gibson associate, who asked not to be identified, said the bill included other items. The double-combination-lock briefcase alone cost $302 and "is still in operation today six years later," he said.)

Dr. Gibson did not answer most of the auditors' questions on the advice of his New York lawyer, Jeff Greenup. Mr. Greenup accused Coopers & Lybrand of sending Dr. Gibson a "monstrous submission" of 2,998 questions and said Dr. Gibson should be paid for time spent answering them. Dr. Chavis and Dr. Hooks did cooperate with the audit.

In correspondence with Coopers & Lybrand, Mr. Greenup contended that stolen NAACP records had been used in a "vicious campaign of slander and libel unleashed against Dr. Gibson." Syndicated columnist Carl T. Rowan wrote a series of columns exposing Dr. Gibson's spending, based on NAACP documents.

"Dr. Gibson has certainly appreciated the extent of the personal harm done to him and his reputation by the selective and slanted release of parts of the stolen records to accomplish his unseating as chairman of the board," Mr. Greenup wrote Coopers & Lybrand on June 26. The lawyer said Dr. Gibson did not have access to many necessary records.

But the audit firm replied on July 6: "As Dr. Gibson well knows, does have custody over a majority of the financial records that we have requested, and we understand many of these were never sent to the NAACP headquarters."

The audit found that lax controls over officers' expenses existed while Dr. Hooks was executive director from 1977 to 1993. The monthly payments to Dr. Gibson began in 1987, and the board of directors routinely overspent its travel budget beginning in the late 1980s.

The report uncovered relatively few discrepancies involving Dr. Hooks himself. It said that he charged about $5,000 in trips that "may have been partially or totally for personal reasons." But it also reported that the NAACP owed Dr. Hooks $16,000 in consulting fees.

Dr. Hooks' contract allowed him to keep up to $25,000 a year in speaking fees, plus related expenses, the report showed. Dr. Hooks charged as an expense an unspecified salary paid to his wife, Frances, his administrative assistant and scheduler.

Dr. Hooks said in an interview that his wife "became an integral part of the NAACP. When I was out of town she answered all my phone calls. She answered about half my letters. But because of the talk of nepotism, the NAACP decided it wouldn't pay her."

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