"To preserve the reputation of the Fraternity unsullied must be your constant care."

Saturday, July 26, 2008

NY Times: "Report on Shriners Raises Question of Wrongdoing"

The New York Times reported on Friday about an internal committee investigation concerning financial improprieties within the Shrine and its fundraising.

The article,"Report on Shriners Raises Question of Wrongdoing"says, in part:

The committee found that the chairman of the Shriners Hospitals Board of Trustees, Ralph Semb, sought to dismiss a fund-raising executive who had refused to hire a direct-mail company Mr. Semb and another board member tried to steer him to.

In its 23-page internal report, the committee found that Mr. Semb and the other board member, Gene Bracewell, who is also the imperial treasurer of the fraternal organization, had violated the organizations’ conflict of interest policy as well as their ethics code and recommended that they be “reprimanded.”

The board, however, decided against taking any punitive action against the men, who deny any wrongdoing.

The report also said that a longtime financial executive of the hospitals, which control an $8 billion endowment, made accusations that there were various financial improprieties in the organization, including the failure of Shrine leaders to report certain benefits they received as income and knowingly filing incorrect tax forms for the hospitals.

But the investigative committee, made up of three former senior elected Shrine officials, was disbanded by the board in June before it was able to finish its inquiry into those accusations, according to John C. Nobles, a member of the committee.

. . .

The committee found that Mr. Semb had unilaterally tried to fire the fund-raising executive, Edgar McGonigal, after he declined to hire a direct-mail company that appeared to have ties to a company owned by the son of a close friend of Mr. Bracewell.

Most of the committee’s report relates to the dismissal and rehiring of Mr. McGonigal, who said he did not hire the direct-mail company favored by Mr. Semb and Mr. Bracewell because the company appeared to have ties with Vantage Financial Services, which had performed poorly for the Shriners in the past.

The Shriners employed Vantage to handle fund-raising for the hospitals from 1999 through 2003. Out of $46.2 million raised by Vantage, the Shrine received only $2.5 million, according to the report.

Early this year, the committee was asked to expand its investigation to look into the accusations by a longtime financial executive, Willard Fawcett, who during an exit interview said there had been wide financial improprieties, including inaccurate information on a 2006 tax form, known as a 990.

The three panel members, Mahlon W. Hessey, Mr. Nobles and Robert N. Turnipseed, wrote in their report that these accusations required a “comprehensive continuing investigation.” But the boards of the Shrine and its hospitals, which share members, voted to disband the panel before it had finished its investigation of Mr. Fawcett’s accusations.

When Mr. Hessey tried to present the committee’s findings at the annual Shrine meeting in St. Louis in June, he was booed and heckled off the stage. He warned that Shriners should expect to hear from the attorney general’s office or the Internal Revenue Service, said C. Douglas Mayes, a Shriner who attended the meeting.

The heckling of Mr. Hessey was not surprising, according to some Shriners. Three of the five Shriners initially appointed to the investigative committee declined to serve on it, said the report, because they might have feared “retaliation.”

Sadly, it implies what can happen when fraternalism takes precedence over right and wrong. It seems the committee was disbanded before it could complete its work. By shutting down the well-respected Nobles who were appointed to look into the matter, it certainly smells like an attempted whitewash.

As the Grand Lodge of West Virginia has found out recently, the Internet has made it virtually impossible to keep such dirty linen hidden from sight. Trying to shut down the investigative committee, and worse, heckling them for doing the job they were appointed to do, endangers the reputation of the Shrine Hospitals. The actions of a few (allegedly) selfish Nobles erodes confidence in the charitable side of the Shrine, and by appearing in the NY Times, it gets widespread coverage.

As a side note, when Ralph Semb served as Imperial Potentate, he pushed for removing or relaxing Masonic membership as a requirement for Shrine membership.

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