Official Minutes of the Extraordinary Church Administrative Committee Meeting
March 16, 2006
Members Present: His Beatitude, Metropolitan Herman, Archpriest Paul Kucynda, Archpriest Gregory Safchuk, Archpriest John Onufrey, Dr. Alice Woog, Robert Kornafel.
Mr. Stephen D. Lamos of Lambrides, Lamos & Moulthrop, LLP
Sarah S. Gold and Celia Passaro of Proskauer Rose, LLP
His Beatitude, Metropolitan Herman opened the meeting with the singing of the hymn "O Heavenly King" at 11:45 a.m.
He read the following statement:
STATEMENT OF METROPOLITAN TO ADMINISTRATIVE COMMITTEE
"Meeting at the Chancery of the Orthodox Church in America
Syosset, New York
March 16, 2006
At the fall meeting of the Metropolitan Council, I announced that at my direction, a New York-based accounting firm would be engaged to conduct an Independent Audit of the financial records of the Orthodox Church in America for the years 2004 and 2005.
I also announced that we would subscribe to "Best Practices Principles for Non-Profit Financial Accountability" as the standard to which the financial activities of the Church would be subject. This project is moving forward under the direction of our Acting Treasurer, Father Paul Kucynda, in consultation with Protodeacon Peter Danilchick. You are aware as well that I endorsed Primary Policies and Procedures proposed by our Acting Treasurer in the fall of 2005. In January 2006, I endorsed Procedures for Scheduling Events/Activities proposed by his office as well. These documents were subsequently distributed to all diocesan bishops, Metropolitan Council members, Auditors, Church ministry chairpersons and their members and consultants.
In January 2006, I authorized the Acting Treasurer to engage the firm of Lambrides, Lamos and Moulthrop LLP to perform an Independent Audit of all Church financial records for the years 2004 and 2005. They began their audit on January 24, 2006 with the hope of finalizing and presenting their report to the Church by March 31, 2006. Their work has been slowed due to the lack of documentation available for some transactions that are integral to the year 2004 audit.
After much prayer and pastoral concern for the well-being of the Church, as the Primate of the Orthodox Church in America, and according to our Statute, Article IV, Section 2-i, I retained the law firm of Proskauer Rose LLP to undertake an internal investigation of allegations relating to the finances of the Church.
At this time, I have also authorized the Acting Treasurer to extend the engagement of the firm Lambrides, Lamos and Moulthrop LLP to examine the disposition of monies collected through OCA appeals from 2001 through 2005 as requested by the Holy Synod of Bishops at their meeting of March 1, 2006.
Finally, if necessary, I will authorize any additional engagements with the accounting firm as requested by the attorneys conducting the internal investigation.
In addition, in my capacity as Primate of the Church, I am reporting to you that after much painful and prayerful consideration, I decided to present a letter of termination to Protopresbyter Robert S. Kondratick relieving him of his service as Chancellor of the Orthodox Church in America effective immediately. My decision was prompted by an accusatory and intimidating letter which I received from Father Kondratick's attorney, Harry H. Kutner, Jr. I do interpret his attack on me as Primate as an attack on the whole Church. It is with sadness that I report this to you."
Additional Comments by Metropolitan Herman
Metropolitan Herman elaborated on his Statement.
He reported that when he was elected Primate of the Orthodox Church in America in 2001, he appointed Father Kondratick as his Chancellor. He anticipated that Father Kondratick's activity as Chancellor would comply with his directives and not function with the degree of autonomy that was permitted by his predecessor.
Unfortunately, the Chancellor on numerous occasions did not comply with the Metropolitan's requests. In some instances, his actions directly contradicted the directives of the Metropolitan. During 2005, the Metropolitan asked for Father Kondratick's resignation a number of times. This was refused.
A letter dated March 15, 2006 from Father Kondratick's attorney, Harry H. Kutner, Jr., was hand delivered to the Metropolitan's office. It was marked "PERSONAL & CONFIDENTIAL" "NOT TO BE RELEASED". Its content was filled with false accusations and other statements intended to intimidate the Metropolitan.
The Metropolitan's response to Mr. Kutner's letter was offered in the morning of March 16, 2006, when he presented a letter of termination to Father Kondratick in the presence of Archpriest Paul Kucynda and Mr. Robert Kornafel.
Metrpolitan Herman asked Mr. Kornafel to be present when he presented Father Kondratick with his letter of termination because of Mr. Kornafel's business experience particularly in relationship to personnel issues.
Comments by Members of the Administrative Committee
Mr. Kornafel explained the steps that are usually taken when a person is terminated from a position of employment. He suggested that in this case, Father Kondratick be permitted to take personal items from his office by the end of the day; that the lock of the chancery building be changed; and that the final terms of remuneration be negotiated by the attorneys engaged by the Metropolitan on behalf of the Church.
Dr. Alice Woog expressed great disappointment with the process leading to the termination of Father Kondratick. She questioned whether a more dignified way to terminate Father Kondratick would have been found. She also questioned the authority of the Metropolitan to take such a unilateral action.
Archpriest Gregory Safchuk spoke about the Administrative Summit held at St. Tikhon's in 1993 which addressed the issue of the Metropolitan's prerogatives as the Primate of the Church.
This discussion led to the redrafting of Article IV, Section l "Among the bishops of the Church, the Metropolitan enjoys primacy being the first among equals. He is the Primate of the Orthodox Church in America." and to the adoption of Article IV, Section 2i, which affirms that the Metropolitan "has the right of pastoral initiative and guidance, and when necessary the right of pastoral intervention, in all mattes concerning the life of the Church within the framework of the holy canons."
These provisions were approved at the Eleventh All-American Council held in Chicago, IL in 1995.
Lambrides, Lamos & Moulthrop, LLP
Mr. Stephen D. Lamos
Metropolitan Herman introduced Mr. Stephen Lamos, a partner in the accounting firm of Lambrides, Lamos and Moulthrop, LLP who explained the work he was engaged to do. He also gave a preliminary report of his findings to date.
The firm was established in 1929 and has been involved in not-for-profit accounting ever since. Mr. Lamos has been a part of the firm for the past 40 years.
However, this is his first engagement with The Orthodox Church in America. When the firm was engaged in the past, others from the firm worked on the engagement, but Mr. Lamos did not.
Mr. Lamos spoke of the Year 2004 Independent Audit and issues related to it. In order to establish the opening balances on all 2004 accounts and on restricted accounts in particular he had to research as far back as 1998 and 1999. Using the balances available from the audits and the compilations reports, Mr. Lamos was able to establish the opening balances for 2004. Thus far, he found that during that period, tens of thousands of dollars were withdrawn in cash from the general fund and also from designated accounts for distribution in other countries and domestically. He especially questioned the domestic distribution of funds in cash. There is no documentation for these distributions.
Proskauer Rose, LLP
Sarah S. Gold and Celia Passaro
Metropolitan Herman introduced Sarah Gold and Celia Passaro from the law firm of Proskauer Rose.
Sarah Gold explained the reasons Proskauer Rose has been engaged and the importance of the engagement. Ms. Gold explained that the investigation was being conducted to prepare for anticipated possible regulatory investigations or litigations arising out of the allegations. Since the Church is a not-for-profit legal organization with a 501.C.3 tax exempt status, the Church must act responsibly within the United States of America and conform to the required legal expectations that come with this status.
When allegations are made, the Church must be in a position to show that the allegations have been responsibly investigated. The Church would be vulnerable to a number of government agencies if it does not conduct this investigation in a timely manner. For these reasons, there is no other option than to do an internal investigation with the guidance of appropriate legal counsel.
Allegations have been made by members of the Church concerning the management of Church finances. As such, the Church is obligated to respond to the allegations so as not to risk losing its present status as a not-for-profit legal organization. Since most of the dioceses, institutions and parishes of The Orthodox Church in America enjoy their federal tax exempt status via the umbrella tax exemption of The Orthodox Church in America, the loss of this status could have far reaching implications.
Ms. Gold outlined the procedures that Proskauer will use to respond to the public allegations. Proskauer will:
Review all appropriate documents.
Interview numerous people who might have relevant information.
Review the allegations and prepare to respond to them by systematically investigating them to the point of origin.
Review financial accounts and funds of the Church and restricted accounts to see if the money was used in accordance with the terms under which it was given.
With the approval of the Metropolitan, Proskauer will utilize the expertise of Steve Lamos and his firm, where their work would be of assistance in the investigation.
Specifically, the Metropolitan authorized Lambrides, Lamos & Moulthrop, LLP to perform any additional work necessary at the request of and under the direction of the lawyers.
While the audit work would be conducted independently, the accountants will be responsible for any additional work directly to the lawyers and through them to the Church.
The members of the Administrative Committee decided to take the following actions:
To authorize the Treasurer to continue his attempts to secure a loan to cover the outstanding debts and to restore the restricted funds to their appropriate levels.
To circulate this information to all members of the Metropolitan Council and then follow up with a conference call to give them the opportunity support or reject the proposal.
They also gave serious consideration to the suggestion of Mr. Lamos that the Martin Drive property be sold at the appropriate time with the proceeds used to repay a part of the loan.
Metropolitan Herman affirmed his desire to learn from the past, correct our mistakes and make serious plans to move forward. We must evaluate the condition and needs of the Church and plan accordingly. Those who have serious concerns about the health of the Church and have the ways and means to positively improve our situation will be sought out. Every effort will be made to be inclusive of all members of the Church as we move forward.
Metropolitan Herman thanked everyone who participated in the meeting and asked for their prayers as we work through this difficult period in the life of The Orthodox Church in America.
The meeting concluded at 3:45 p.m. with the singing of "It is truly meet".
Archpriest Paul Kucynda, Secretary