Three Part Series Continues:
The Culture of Fear,
Half Truth and Deception: Part Two
A multi-page letter mailed this week to members of the OCA Metropolitan Council and obtained by OCANews provides fresh insights into the fear, half truths and deception emanating from Syosset.
In this first of three articles, published yesterday OCANews revealed Syosset’s ongoing campaign of intimidation against whistle-blowers, despite its public declaration of ‘Best Practices’.
Today, we examine the two year audit currently underway in Syosset. While trumpeted as a 'Best Practices’ response to questions of financial mismanagement, evidence from the Metropolitan Council letter reveals this as a half-truth, at best.
On Monday, we conclude the series with additional documents demonstrating how the Chancery has misinformed, misdirected and deceived the hierarchy, clergy and laity of the OCA since 1996.
Part Two: Half Truths
The Origin of the Audit
On November 2, 2005 Protodeacon Eric Wheeler's "A Call to Accountability" appeared on the internet. In the ten page letter, addressed to the OCA's Metropolitan Council, Wheeler alleged the central administration of the OCA with, among other things, financial mismanagement, corruption, misuse of special appeal funds and misdirection of church funds for personal use.
An uproar ensued. At the subsequent Metropolitan Council meeting on November 9, 2005 it was reported: "His Beatitude, Metropolitan Herman, addressed numerous concerns that arose in response to information and statements circulated in recent weeks, primarily on the internet. Emphasizing that all financial matters are his responsibility, Metropolitan Herman informed council members that he plans to order independent audits by an outside CPA firm licensed within the State of New York. He further reported that the results of the independent audits will be made available to the Church at large. "
Many remained skeptical. Wheeler's allegations concerned financial misconduct from 1995- 2002. Would all these years be audited; or just some? Others assumed the question had already been answered, when, in his concluding remarks to that same meeting Metropolitan Herman stated:
"...I have asked Father Paul Kucynda, as acting treasurer, to arrange for a full and complete independent audit of our financial records. Also, beginning January 1, 2006, the Chancery of The Orthodox Church in America will employ 'Best Practices' for non-profit organizations. I believe that this decision will serve us well in both the present and the future."
To many, supporters and critics alike, the Metropolitan's public willingness to allow a full, complete, independent audits of the Church's financial records, to report these publicly, and to adopt 'Best Practices' seemed to herald a new day in the OCA.
The Lesser Synod Backtracks
And yet almost immediately, rumors began to circulate that there would not be a full, complete, independent audit of the financial records. The answer to these rumors was made public by the Lesser Synod, on January 20, 2006, almost two months after Wheeler's allegations, and again in the face of a torrent of criticism. This time the questions came not only from the internet, but from priests, laity and, from one of the hierarchs of the Lesser Synod itself, Archbishop Job.
To quell the criticism the Synod released a long statement with the goal of restoring "peace and harmony among those who have been adversely affected by this matter, and among all faithful people of good will.." As regards the question of the audit, the Lesser Synod stated:
"Metropolitan HERMAN has provided for a yet higher level of accountability, in directing that financial audits will be performed by a professional accounting firm, in addition to those performed by the auditors duly elected by the All American Council. His Beatitude has further initiated the process of adopting 'Best Practices' procedures in administration, and administrative practices established by other similar not-for-profit religious institutions, and the Lesser Synod fully endorsed these measures. Further, the Lesser Synod strongly encourages all levels of the Church's administration to adopt such practices. An audit of the past two years is being undertaken by January 24, 2006, and a report will be presented by March 31, 2006."
(Read the full statement of the Lesser Synod here)
Crafted as a means of quelling unrest, the statement of the Lesser Synod had the opposite effect. Archbishop Job himself immediately wrote to his Diocese encouraging them to continue asking questions. Indeed, the Lesser SynodÕs half confession - admitting "mistakes", "error, lack of good judgement and sin" - without bothering to say who was responsible, what was done, or how anyone would be held accountable - raised more questions than it answered. In fact, the Lesser Synod's statement made the OCA fodder for the news media. Stories on the statement have been carried this past week internationally by Interfax, the international Russian new agency, by ENI - the Ecumenical News Network, as well as nationally in the Russian language press, most notably, Novoye Russkoye Slovo, the largest Russian daily in the United States.
The Lesser Synod did answer the audit question, however: There would be no full, complete audit of OCA financials. Only two years, 2004 & 2005 would be audited.
The Pattern of Misdirection Through Half Truths
Critics felt confirmed. Public pronouncements to the contrary, there was to be no full, complete audit of OCA financial records. In fact, the proposed audits would not even cover the years Wheeler alleges massive financial misconduct took place. (1995-2000) The inadequacy of the response was made even more clear to critics when questions were raised on January 28, following the Lesser Synod meeting, about missing 9/11 Funds (Read Story here). Only additional audits of 2001 and 2002 could answer these new questions. To many, it was just the latest example of Syosset's classic pattern of misdirection: sweeping promises to assuage the public, followed by halfhearted actions that result in no real change in day to day practices.
In yesterday's article, we examined this same pattern as it appeared in the OCA's heralded adoption of 'Best Practices'. Here the OCA made comprehensive and specific promises, only to coyly reduce their scope and meaning as weeks went by; while at the same time silencing priests who asked for accountability. Every action on the part of Syosset in this regard was in blantant contradiction to the fundamental tenets of 'Best Practices' they so loudly proclaimed to the public. (1)
New Evidence Now Revealed
And in the case of the audit, Syosset's misdirection and half truths are even more telling than in the case of 'Best Practices'. A new document, sent to OCANews, makes clear that far from being ordered by Metropolitan Herman, far from initiating 'Best Practices', far from heralding a "higher level of accountability", far from even attempting to address Wheelers allegations, the two year audit is simply a partial requirement of the commercial bank from which Syosset wishes to qualify for a badly needed loan.
In his "Report of the Acting Treasurer of the OCA to the Lesser Synod of Bishops", contained as a addendum to a recent memorandum sent to members of the Metropolitan Council and OCA Auditors this week, OCA Acting Treasurer Fr. Paul Kucynda tells the Lesser Synod:
"The Metropolitan Council acknowledged that the current indebtedness of the Church to vendors and to certain accounts of the Church must be rectified. They authorized the Acting Treasurer to investigate the possibility of consolidating the indebtedness and securing a loan from a commercial bank.
The filing requirements for such an application includes audited financial reports for years 2002, 2003 and 2004. Because of this, no further work can be done until we receive the audited report from Gregory D. Hostelley, CPA, for the year 2004 which is currently being completed. We anticipate receiving this report within the next two weeks. If it is found that we are considered eligible for such a loan, our requirements and the bank's terms for such a loan will be presented to the Metropolitan Council for consideration." (2)
The Bank, not the Metropolitan ordered the audit. "Higher levels of accountability", "Best Practices", "Independent CPA's", etc., were all half truths at best to spin the realities of the loan requirement. (Read the whole "Report" here)
Following the Fall Session of the Holy Synod of Bishops in October 2005, copies of the statement of the financial position of the OCA as of December 31, 2003 were distributed to the hierarchs. These were shared by some hierarchs with their Diocesan Councils, from which OCANews has learned the following:
• The OCA Adminisration in Syosset has already borrowed $500,000 from a bank
•The OCA owes Father Robert Kondratick, the Chancellor, $300,000; ($60,000 for a personal loan and $240,000 for improvements to his OCA-owned 'rectory' at 216 Martin Drive in Syosset,
• And the OCA owes its own special appeals (seminary, mission, charity, etc.) $630,475
In the All American Council paper devoted to the program 'Funding the Vision', the operating deficit for the year 2004 was posted at $430,203.65. If one totals everything together, as of December 31, 2004, the OCA's debt stands at $1,860,678.65. And unless 2005 was a banner year for the OCA, church watchers estimate the current debt to be very close to $2,000,000. The specifics of the debt are not fully known outside of Syosset. (3)
According to the Statute of the OCA, only the Metropolitan Council may place the Church in debt. Thus, in his letter Kucynda continues:
"This (receiving the letter of eligibilty for a loan) will be followed by a conference call where all members of the Metropolitan Council will have the opportunity to ask for any clarification that may be needed in order to make an informed decision. This will be followed by a roll call vote."
Even hardened OCA watchers are stunned by this latest document. As one former member of the Metropolitan Council, who requested to remain anonymous, repeated back to me:
"Let me get this straight. The OCA is about to go into $2 million debt on a conference call.....based on an audit of only the past two years that fails to mention the outstanding allegations of financial corruption for the eight years preceding.....done by an auditing firm that has already demanded to be held harmless once because of its concerns in Syosset's accounting procedures.....to pay back, in part, the special charity, mission and seminary accounts in which the monies were collected, but not use for these designated purposes.....as well as to pay back the Chancellor for a personal loan (with interest) he made to the Church on the house it owns, but in which he lives in for free.....on the word of people who have admitted error, mistakes, lack of good judgement and sin - but not culpability.....and that this whole presentation has been packaged to the Church in the guise of 'Best Practices' and 'higher levels of accountability?"
The answer is, yes.
- Mark Stokoe
1) Interestingly, in the newly released document, Fr. Kucynda makes clear that the 'Best Practices" applicable to the OCA are now purely financial in scope, and six in number. He writes:
The following best practice principles for financial accountability applicable to the Orthodox Church in America are:
* Ensure clear and decisive financial governance
* Adopt ethics and conflict of interest policies
* Implement appropriate financial controls
* Conduct regular independent financial audits
* Ensure transparency of financial data and performance
* Maintain knowledge on emerging non-profit issues
2) In this memorandum to the Metropolitan Council and OCA Auditors, Kucynda clarifies that the auditing firm has been changed from his original report to the Lesser Synod and gives the dates for the release of the audits:
"After making initial contacts with the firms recommended by Mr. Hostelley, il was determined that no final decision would be made without considering the firm of Lambrides, Lamos and Moulthrop LLP who had been engaged to conduct the annual Independent Audits during the early to mid-1990's.
After a meeting with Stephen D. Lamos one of the partners in the firm of Lambrides, Lamos and Moulthrop LLP, a follow up letter of engagement was received from Mr. Lamos related to the proposed Independent Audits for the years 2004 and 2005. The terms of engagement (attached) from partner Stephen D. Lamos, was accepted by Metropolitan Herman. At his direction, I signed the proposal and returned it to Mr. Lamos earlier this month.
As noted in the letter of engagement, the Independent Audit of all accounts of the Orthodox Church in America for the year 2004 will begin on January 24, 2006. Also, the letter indicates that their independent Audit Report will be issued on March 31, 2006. This will be followed by the Independent Audit of all accounts of the Orthodox Church in America for the year 2005."
3) Nowhere in the statement of financial position as of December 31, 2003 of the OCA is any mention made of a balance of funds for the 9/11 Emergency Appeal. This means that those were either fully distributed, the publicly stated documents are just wrong, or they just disappeared...