Members for Church Accountability Inc.
2001 Third Quarter
This is the quarterly newsletter of Members for Church Accountability. The objective of this organization is to promote accountability within the Seventh-day Adventist Church. MCA itself is primarily an umbrella organization within which representative/agents and their supporters can work to further this objective.
Section 1 - Financial Report
Summary financial statement for third quarter 2001:
Section 2 – Trustees’ Reports
Norm Smith - Secretary Treasurer
For any of you that would like to contact us by e-mail our address is: firstname.lastname@example.org. Our web site address is: http://www.advmca.org alternatively, http://members.aol.com/~advmca/home.htm. Again we would like to encourage MCA members to read this web site and to invite their friends to read it. If you don't have access to the web, perhaps you could ask a friend who does, to let you read it. We are NOT asking that our members get our newsletter from the web rather than regular mail. It is still better for us to send our newsletter to our members by regular mail, however, this web site is an economical means of spreading the word about MCA to prospective members. Mass mailings to prospective members are quite expensive by comparison. Information about a web site can spread quickly on the Internet. If each person mails the site address with their recommendation to several friends, and they in turn tell others, the word is soon passed to a large number.
Last quarter we sent our newsletter first class to know which addresses are no longer correct. We found that several members have moved. We encourage members to notify us when their address changes. We do appreciate those of you who have sent us your change of address.
Section 4 - Member Letters
This section is for printing the letters that members send in. It provides the means for members to communicate with one another. It is also one way that representative/agents can communicate with those in their group. Needless to say, these letters do not speak for the MCA organization itself. So far as time and budget allow, we intend to print all letters from members which appear to be written for inclusion in the newsletter (please say so if you do not wish your letter to be printed). We will print the shortest letters first. Where it seems appropriate, the editor will make comments in response to letters.
Jim Romero writes (in part): As one of the SDA church members who truly love the church, I would like to congratulate the organizers of MCA for creating this innovative idea of checking our church leaders... I happen to attend the MCA meeting last Sabbath afternoon (Oct. 20) at LLU Chapel... My family an I were expatriate workers (IDW) to few countries in Africa (Nigeria, Liberia, Rwanda, Zambia, & Malawi). I worked as a physician there. I still have a great burden for our work in these developing countries since our world church is sending huge amount of money especially in mission hospitals. MY QUESTION: Since some of our local leadership are continuing to mismanage church funds in these institutions I was wondering as to how could MCA help empower our lay people there (in Africa or in any other mission field) so they could form a "cell" like you here in the US and impact church accountability in that part of the world?...
EDITORIAL COMMENT: Thanks for your interest. We are always interested in ideas for "empowering lay people". Lay people can have an influence in our church, but while many are concerned about what is happening in the church, it does appear that the great majority are not yet very concerned. The General Conference Reform Group within MCA led by George Grames and Stewart Shankel has many members from all over the world. Your friends in Africa are welcome to join this group. Also, MCA is organized so that other groups can be formed within the larger organization. The rules for doing this can be found in our bylaws which are on our web site. The intention of this provision for multiple groups was for those with different approaches to be able to work together within the umbrella MCA organization. The intent was not for geographic divisions, although that would be allowed.
Daniel Augsburger writes: I read with interest the plans for the Oct 20 meeting at Loma Linda. I am amazed, however, that I do not find any reference to the loss of several living centers in the Lake Union some years ago. Somehow, this has never been investigated. Do you know why?
EDITORIAL COMMENT: We are not acquainted with that one. Perhaps some of our readers are. Your question does bring up something worth mentioning. We hope that our readers understand that we who are working on MCA are just run of the mill church members who have a concern for some of the things that have happened in the church and are concerned that such things not continue. We would like someday to be in a position to better track happenings in the church but for now we are just doing what we can.
Charles Tompkins writes (in part): God bless your efforts. The program [Oct 20] looks interesting and informative; perhaps tapes or transcripts will be available later for use in local church settings. Thank you for your careful and loving approach to this terrible problem.
EDITORIAL COMMENT: Thank you. See below about tapes. A summary transcript is included in this letter. We didn't reprint your encouraging EGW quote, if we started that our letter would be large indeed.
The following is a summarization of the October 20 conference edited by George Grames. Individuals that are interested in a set of audio tapes of the conference should write to the following:
Harold Warram, Audio Cassette Duplicating Service, 1556 Gould Street, San Bernardino, CA 92408-2978. The cost is $6.00 for the set of two tapes plus $2.00 for shipping for a total of $8.00.
The participants in the recent MCA Conference held in the University Church Chapel on October 20 are willing to hold similar conferences in any city or town in the U.S. The only requirements would be for the local church members to reserve a meeting place and arrange for pre meeting announcements in the surrounding churches. Please notify Norm Smith by E-mail or letter if you have an interest in such a conference in your area. There is also the possibility of one speaker presentations available for small groups.
Norm Smith, the Secretary-Treasurer of MCA, opened the conference with a welcome and introductory remarks. Thereafter, eight historical reviews of financial misadventures by church officials were presented. These presentations were followed by a review of the factors that fuel this ongoing train of disasters. Finally, two presentations addressed potential corrective measures.
Good afternoon, I would like to welcome you to this conference on church accountability sponsored by the Members for Church Accountability association (MCA). The sponsors of this conference hope that each of us will leave here with increased dedication to making sure that our church is not hampered in its mission by accountability shortcomings.
I would like to add my voice to those of the other speakers today in an appeal to note carefully the spirit in which the information and discussion of this conference is offered. In the first part of today's program, a pattern of misadventures in our church will be brought to your attention. We believe that ineffective policies and practices in the church, in other words, flaws in the accepted ways the church does business, have provided the environment that allowed these situations to occur. We think "lack of accountability" generally describes these difficulties. We believe that these matters should be of high concern to the SDA church membership. This leaves all of us faced with the delicate task of drawing attention to problems without being destructive. We trust that you will understand that the purpose of MCA and of this conference is to strengthen the SDA church by correcting the way our church does business.
An analogy may help relate our perspective about such difficulties in our church. Think of church members riding in a van, which in this story is the church. Some riders note that the van has a flat tire and voice their concern to the group. The driver pretends not to hear these concerns. Other riders ignore the subject while yet others react with a degree of displeasure at having the subject of a flat tire brought up. These others ask why someone would want to criticize and distract from the van's mission. They point out that this van belongs to the Lord, so let Him fix the flat tire if indeed there is one. The concerned members point out that at best the flat tire has reduced the progress the van is making, and at worst, the van may get stopped by going off the highway. They note other vans stranded by the road. They point out that history would seem to indicate that the Lord expects riders to fix flat tires on His vans. Most riders, however, don't seem to want to think about the situation. As we leave our short story, we notice that in the other vans stranded along the side of the road, most riders have not abandoned their vans but have come to view them as shelters rather than as moving vehicles.
The members of MCA are loyal members of the SDA church who take no joy in voicing accountability concerns. We do, however, have the strong conviction that our church has an accountability problem that is a great threat to progress in the church's mission. We believe that it is a "no brainer" decision that we should make the effort to fix this "flat tire". These accountability shortcomings are not problems that should be inherently difficult to correct. Difficulty only comes from reluctance on the part of some to take corrective action. We trust that all here today will view all that is said as an effort to correct the church's accountability problems in the most constructive manner possible.
A medical doctor turned entrepreneur. His initial endeavor was leasing post office buildings to the Federal Government. However, he expanded his financial empire far in excess of post office property by paying interest on investments with the principal investments of subsequent investors. As a result of his financial operation, church institutions, banks, insurance companies, financial institutions, the Internal Revenue Service, and the elderly poor of the church were fleeced out of millions. He solicited the assistance of church leaders in his scheme by offering them "finders fees" and unrealistically high interest rates on personal investments. Davenport wrote in a letter to Jack Price: "I would not noise around about this 80% return." Davenport made an offer to Pacific Union College in a letter: "If you put $200,000 in, and leave it for two years, I will make a $50,000 contribution to a building or a fund of your choice."
At the time of bankruptcy, Davenport had enlisted 130 individual investors who invested up to $250,000. He had joint business ventures with 19 individuals, the investment in 12 of the 19 ranged from $100,000 to $2,351,614. Twenty-seven church institutions including most of the union conferences invested millions. Davenport’s method of operation was, in his words, to form "close personal relationships with numerous leaders of the Church and other individuals in the Church," offer high rates of interest on personal loans, and establish joint business ventures with key church officials. These same church leaders influenced church conference and church union executive committees to invest church funds with Davenport.
Judge Finney, one of members of the General Conference Committee appointed to investigate the Davenport matter stated that, "if some of the culprits in the Davenport scandal had appeared in his court they would have ended up with prison sentences."
HARRIS PINE MILLS:
In 1951 a Seventh-day Adventist couple, Clyde and Mary Harris, donated their $5 million, Pendleton, Oregon-based, redwood, outdoor-furniture manufacturing business to the General Conference Corporation. For 28 years, former North Pacific Union secretary-treasurer Charles Nagele led the operation to tremendous growth—from four plants to twenty-six. Its annual income had reached nearly $60 million by 1984 when it employed 2,282 Adventist students.
In 1985 financial and management difficulties panicked the chairman of the board, Neal C. Wilson, who was also president of the GC Corporation. As chairman of the board, Neal Wilson forced Harris into Chapter 7 bankruptcy, even though its assets outweighed its debits by roughly $15 million. After changing the liquidation filing to a more flexible Chapter 11 reorganization status, bankruptcy trustee John Mitchell told the February 6, 1987, East Oregonian, "It’s the best situation I’ve ever seen for restructuring. Harris Pine basically is back in operation. . . . We should be able to restructure and be profitable by the end of June."
Wilson has never explained why, when the bankruptcy trustee made clear that the business was recoverable, he was unwilling to be reunited with the business that, weeks earlier, he had described to Adventist Review readers as "this marvelous asset."
Eventually most of Harris’ timber holdings became the property of the Louisiana-Pacific Corporation. Harris’ primary lumberyard and sawmill in Pendleton, Oregon, is now the site of a Wal-Mart store. The loss to the denomination is incalculable.
FULLER HOSPITAL AND PAWTUCKET:
In the Atlantic Union was Fuller Memorial Hospital, a psychiatric hospital, and Pawtucket Institute of Health Services, a nursing home facility. This is a tale of two institutions.
A visit to the Rhode Island State House and the Pawtucket City Hall revealed that initially Fuller Hospital was part owner of Pawtucket Institute of Health Services, but as the limited partner in a limited partnership. The General Partners were: Gerald Shampo, the administrator of Fuller memorial Hospital, Eugene Sirois, and Anthony Lawrence.
The Amended Agreement and Certificate of Limited Partnership, dated April 7, 1977, indicated that Fuller Hospital’s percentage interest was 24% and its capital contribution was $145,000. Shampo, Sirois, and Lawrence’s percentage interest was 76% and each contributed $1.00. The three general partners and Stuart R. Jayne for Fuller Memorial Hospital executed this document.
The Pawtucket Institute of Health Services was constructed with a mortgage loan of $3,163,000.00 and opened on April 23, 1978. One month later, on May 30, 1978, the Fuller Executive Committee voted to purchase Pawtucket. The sales agreement was finalized on December 29, 1978. The three General Partners and J. L. Dittberner for Fuller Memorial Hospital executed this Sale Agreement. Dittberner was also President of the Atlantic Union. Under the terms of the agreement the General Partners sold their 76% interest to Fuller Hospital for $560,000, plus $88,886 interest. The payment plan was $90,000 down and $110,000 yearly for 5 years.
The obvious question that every church member should be asking is: Why would church leadership participate in a financial scheme that permitted the Fuller Hospital Administrator to financially exploit the hospital?
FAMILY ENRICHMENT RESOURCES:
The Columbia Union had an existing literature evangelism program known as Home Health Education Service. A new "innovative company" was formed called Family Enrichment Resources (FER). This new company employed Harold Otis Jr. as president.
FER began operating in January 1992. During the first two years, "FER's operating losses totaled more than $1.4 million." In 1994 and 1995 FER reported profits, but it was subsequently learned that the General Conference auditors had erred and FER actually lost $1.6 million for that two-year period.
The FER board was anxious to produce Animated Bible Story videos. "Marketing consultants projected that the video sales would produce a revenue stream of up to $40 million." FER contracted with a marketing firm, the Blue Duck, to produce and market the videos. As of February 15, 1997, after paying more than $370,000 to this firm, FER had one video script, but no videos. At the January 5, 1996 meeting of the FER board, the Blue Duck (the marketing company) proposed a plan to raise funds. This plan was based on "placing $2.4-$2.6 million on a no risk hold" in a bank in Canada. It was expected that this money, through complex international banking investments, would "generate the $15 million needed for the videos."
Otis and Reg Frood, the FER treasurer, went to Toronto to visit the investor at the Bank of Nova Scotia. "Knowing that the FER board action did not allow the company to put money at risk, the FER officers asked the Columbia Union to place $2.4 million of union and association funds in an account controlled by FER and the union association.
"The union officers pulled out of the process." After the Columbia Union pulled back its money, the investor was very upset but said he believed in the project enough to put together a "private group of investors who would allow the profits from the investment to go to the video project." The Canadian investor told Otis that there would be expenses involved.
On April 24, 1996, Otis asked Don Russell, the Columbia Union treasurer, and Martin for an immediate advance on FER's subsidy to cover the payments the investor was requesting. The first payment of $50,000 was wired to Canada on April 24. Several days later, Harold Lee, union secretary, was brought into the discussion, and the three officers authorized a $300,000 advance from union operating funds. This was set up as an interest-bearing line of credit upon which FER could draw as necessary. The agreement was signed by Otis and Frood (two of the five member FER finance committee), but neither the FER finance committee nor the board approved this transaction. "Otis told the officers that any money sent to Canada would be returned by the end of June 1996 and would eventually result in millions of dollars of profits." Additionally, the Canadian "investor promised to give FER a donation of $25 million."
"Martin, Russell and Lee believed that if FER failed to repay any or part of the $300,000 (Which was equal to six months of the FER tithe subsidy), the union could simply withhold future subsidies until the debt was repaid. The repayment plan broke down when it was discovered that the conferences pay their subsides directly to FER rather than through the union."
"Otis asked the officers if these electronic transfers could be made through the union treasury department. That was authorized, and between April 24 and June 11, four payments totaling $264,500 were wired through the union to the investor." The funds were never recovered and FER was dissolved.
This fiasco raises a number of agonizing questions. For example, who would believe that private investors would donate their profits to the video project or that the primary investor would donate $25 million to the video project?
Robert Folkenberg’s business deals and his relationship with James Moore will never be fully revealed because the "business relationships were so complicated that even the lawyers have a hard time figuring them out."
Spectrum reported on a number of these business relationships. Interest in real estate shifted on various occasions between Moore and offshore, church-related corporations. The first of these was Southern Equipment Company, registered in the Grand Cayman Islands. In 1978, Moore conveyed Southern Equipment’s stock to the Inter-American Division. On March 1, 1979 Southern Equipment joined with Moore to create Kanaka Valley Investors, Ltd. Partnership. Southern Equipment capital contribution was $100,000 while Moore provided his expertise. On February 23, 1983 the Inter-American Division –via Southern Equipment- became a limited partner with 32.5% interest in another partnership called Kanaka Valley Associates. In 1987 Folkenberg left Central America to become president of the Carolina Conference. He became acquainted with Sharing International, a Tennessee nonprofit organization created by a group of Adventists to facilitate specific mission projects. Folkenberg became president of this organization. In December 1987 Sharing International acquired full ownership of stock in Southern Equipment.
Adventist Today reported on a computer sale. In the early ’80’s, when the Adventist Disaster and Relief Agency (ADRA) was in the market to purchase computers, Folkenberg informed ADRA that he could get computers at a 40% discount. Folkenberg recommended that they employ two specific "independent consultants" to determine ADRA’s computer requirements. An unusual aspect of the purchase was that the computers, which were purchased from a company in Florida, had to be shipped to Central America and then back to the ADRA offices in Washington, DC. The computers never worked properly, and they were never able to get adequate service from the company. After 18 months of struggling with the computers ADRA had to scrap them and buy new computers. It was discovered that the two "independent consultants" who did the initial evaluation and a blind trust owned the company that sold the computers. It was also discovered that the same computer equipment, plus a year’s service contract, could have been purchased for less than the 40% discounted price.
The Summary Statement of the Ad Hoc Group Report on Issues Relating to the Presidency of Robert S. Folkenberg noted the following: Elder Folkenberg attempted to influence ADRA to adopt a telecommunications venture that would provide some financial support of ADRA’s programs, without disclosing that a greater financial benefit would accrue to his friend and business associate, Mr. Moore. Elder Folkenberg secured financial support from generous supporters of the Church and its mission to help cover Mr. Moore’s personal business expenses. A total of one-quarter million dollars of personal and raised funds appear to have been forwarded to Mr. Moore to help cover his business expenses. Elder Folkenberg provided introductions to overseas Church and world leaders for the purpose of promoting private business ventures. Certain Church donors were solicited for funds to help satisfy personal business needs. A number of these activities were carried out with the assistance of General Conference legal counsel. This behavior represented "conflicts of interest, inappropriate business associations, and misuse of the presidential office for business advantages."
As important as external rules and policies of correct and ethical behavior are, it is not until one "internalizes" them to make them as natural as physiologic functions, that we will represent God correctly to our colleagues and the world around us.
SHADY GROVE HOSPITAL:
Adventist HealthCare Inc. owns Shady Grove Hospital, Washington Adventist Hospital, Hackensack Hospital, and seven nursing homes. Financially, the regional Adventist HealthCare corporations are independent of the Seventh-day Adventist Church, but representatives of the church dominate the boards.
Staff cuts at Shady Grove led to complaints from doctors, nurses and patients about the quality of care. Shady Grove once was considered by state regulators to be a top-notch acute-care facility, but regulators became concerned about a series of treatment mistakes and poor management of nurses and other employees.
According to federal tax returns filed by tax-exempt organizations, hospital executives gave themselves large raises and severance payouts. Bryan Breckenridge, received $4.74 million in compensation and lump sum pay in September 1997, when he left his position as president of Adventist HealthCare Inc. Edmund R. Peters, the chief financial officer, left with $3.1 million. The executive vice president, Cory Chambers, received $319,000 in total compensation in 1996, followed by $815,000 in 1997, and $842,000 in 1998. The compensation of the board chairman, Ronald M. Wisbey, went from $161,000 in 1996 to $447,000 in 1997 and $364,000 in 1998. Adventist officials said, "half of Wisbey¹s compensation - salary, benefits, deferred salary and expense accounts is reimbursed by another pair of Adventist hospitals in Ohio that also employ Wisbey as their board chairman."
A former chief executive officer in the Adventist Hospital System was quoted by the Washington Post: "it was Breckenridge’s idea to boost executive compensation------Breckenridge and Wisbey went too far in raising management salaries."
Adventist officials have commissioned several surveys of executive compensation in area hospital systems. Consultants found that in several cases, Adventist executives with relatively high salaries were receiving big raises anyway. For example, in 1996 Breckenridge was receiving $416,000 in total pay, equal to the highest pay in the surveys, but his compensation for that year was increased to $716,000.
Harry Weis joined Adventist HealthCare in March 1998 as chief financial officer. Weis collected $379,000 in compensation in 1998, including $200,000 in base pay, $25,000 in bonuses and $131,000 in company retirement contributions. In January 2000, with less than two years of service, he resigned to become the chief financial officer of a group of California Adventist hospitals.
Aside from the questions that arise from these compensation levels, there are additional issues. First, since "half of Wisbey’s compensation is reimbursed by another pair of hospitals in Ohio," did those hospitals reimburse Shady Grove? Second, with a base salary of $200,000 in the first year of employment, Weis received $131,000 in retirement funds, a stunning 65% of his base salary! Did the 5700 employees receive a similar percentage contribution to their retirement fund?
BOSTON REGIONAL MEDICAL CENTER:
Boston Regional Medical Center (Medical Center) had been owned and operated by the church for 100 years. Bankruptcy resulted in the loss of not only the Medical Center, but also the New England Memorial Church and Greater Boston Academy.
The Atlantic Union Conference controlled Atlantic Adventist Healthcare Corporation, which controlled Boston Regional Medical Center. The president and chief executive officer of the Medical Center, Charles S. Ricks, was a member of the Board of Trustees of the Medical Center and a member of the Board of Directors of Atlantic Adventist Healthcare Corporation.
Over five fiscal years ending September 30, 1998 the Medical Center accumulated a debt of $21,773,526 but nevertheless transferred $14,129,778 to Atlantic Adventist Healthcare Corporation or directly to Boston Regional Medical Associates.
The Medical Center made "Officer Loans" of $100,000 each to Charles S. Ricks and Frances Crunk, to assist in the purchase of their residences. The loans were to be repaid upon sale of the residences. Both Ricks and Crunk sold their residences but failed to repay the loans.
In early 1997, the Medical Center Board, prompted by uncontrolled debt, retained Cain Brothers to assist in locating a financial partner. Ricks engaged in discussions with officials of Mid-Atlantic Adventist Healthcare, including Bryan Breckenridge.
On July 21, 1997, Tenet Health Systems offered $30,000,000. Although Mid-Atlantic Adventist did not submit a proposal, Ricks continued his discussions with Breckenridge.
Doctors Community Healthcare Corporation was in the business of acquiring and operating hospitals. In August of 1997, Breckenridge told Ricks that he had left Mid-Atlantic Adventist and accepted the position of President of Doctors Community Healthcare Corporation. Breckenridge claimed that his company was interested in making a proposal. You may recall that Breckenridge retired as the president of Adventist HealthCare Inc. with a $4,700,000 package.
On August 20, 1997, Doctors Community Healthcare Corporation proposed that a new corporation be formed, owned 20% by Boston Regional Medical Center and 80% by Doctors Community Healthcare Corporation. Both Cain Brothers and the law firm representing the Medical Center advised Ricks to reject the proposal and pursue the Tenet proposal.
Contrary to these recommendations, Ricks accepted Doctors Community Healthcare Corporation’s proposal. On September 8, 1997, Ricks executed, on behalf of Atlantic Adventist Healthcare Corporation and Boston Regional Medical Center, a formal letter of intent with Doctors Community Healthcare Corporation without review or approval by the Board of Trustees.
Ricks proceeded to negotiate a number of agreements and lucrative employment packages for him and Frances Crunk. Despite the Medical Center’s dire financial condition, the Management Agreement provided that Doctors Community Healthcare Corporation would be paid $50,000 per month for "management services." The Medical Center Board of trustees thus ceded control of the Medical Center’s operations to Doctors Community Healthcare Corporation, an organization it had no ability to review or control.
Doctors Community Healthcare Corporation grossly mismanaged the Medical Center’s operations for over seventeen months without the Medical Center Board terminating the agreement that was violated at the outset by Doctors Community Healthcare Corporation. This company under Bryan Breckenridge never consummated the purchase and the Medical Center filed for bankruptcy on February 4, 1999.
How did this disaster evolve and what factors played a major role? Four major factors are readily apparent: the organizational structure, self-serving conflict of interest, incompetence, and heavy debt.
Finally, it is curious that on January 30, 2001 Boston Regional Medical Center filed a lawsuit against the General Conference Corporation of Seventh-day Adventist, Trustee of the Seventh-day Adventist Hospital Retirement Fund.
As we have reviewed some of the financial misadventures this afternoon, it is readily appreciated that the Davenport and Family Enrichment Resources (FER) stories carry a common thread. That common thread is the promise of breathtaking returns on investments. Again in the late 1990’s we learned of church officials committing, not only personal funds, but also church funds into investments that carried tremendous financial risk. These same church officials have recommended similar investments to church members. The following condensed versions of two letters attest to this recurrent pattern of behavior:
Letter #1 dated September 26, 2000: "Between October 3, 1997 and February 10, 1998 we made five deposits totaling $151,500.00------ We gained the confidence to make these investments through the input of Pastor Ramos and Pastor Ruiz. They both independently indicated that they were getting double return on their investments in six to nine months. They were very assertive in their recommendations to invest money with this bank. Pastor Ramos was so confident in this that he told us he had taken moneys donated for the Spanish NET 98 evangelistic series and had invested these in Worldwide International Bank, Ltd. to earn funds to help cover expenses for these meetings. When things began to unravel with Worldwide International Bank Ltd., Pastor Ramos told us of another high return investment that would double within three months. We naively invested another $40,000.00. This has also gone sour------ Part of our inclination to invest came from a sense that since church money was being invested here this must be a sure thing."
Letter #2 dated September 18, 2000: "My interest in this possibility led me to check it out thoroughly and talk to some of the key people with whom he was working. One of these individuals was Francisco Ramos. Francisco was a Vice-President at the Atlantic Union of Seventh-day Adventists at the time and an individual who had a long history working as a treasurer for large Adventist institutions------ I called Francisco at the Atlantic Union to talk with him about the investment. He testified to its safety and guaranteed its security, offering to meet with me personally during a future trip to the west coast. I agreed to meet him and did so at the------ Conference of Seventh-day Adventists a few weeks later. During this meeting at the conference office, Francisco again assured me that my money would be absolutely safe------and gave me his personal guarantee that I would lose nothing. ------I would have never made such an investment without the recommendations of Ramos------The denomination is now trying to argue that Ramos was not acting or functioning in any official capacity with regard to these transactions. My conversations with him involved money that was to be used for denominational ministry, took place when he was functioning in his denominational capacity------and was donated in confidence based on his denominational record and performance."
It is difficult to read these accounts without being struck with the feeling of Déjà vu.
WHY SUCH EVENTS CONTINUE TO PLAGUE THE CHURCH:
With some exceptions-some quite public exceptions-the financial upheavals within the Seventh-day Adventist church have not been caused by wicked people who plotted to embezzle. Rather, the roots of our recurring financial ills can be traced mainly to a problematic board system. Several dominant issues prevail.
First, the corporate church has always maintained the passion of making certain that the administrative ministerial personnel in the Adventist church make the heavy and ultimately final decisions relating to all major matters, including finance. This position has been unshakable because Ellen White counseled accordingly during her lifetime; and the church has never been inclined to accept the possibility that her counsels could ever be modified through the centuries. This Torah mentality seems destined to prevail.
Underlying this problem is our disinclination to differentiate among the gifts of the Spirit. We assume the ones who are gifted, as pastors, evangelists, and prophets are also gifted business and organizational people. Hence we assume that those gifted as spiritual leaders must be in charge and make decisions pertaining to the church.
The foregoing problem is tangential to a third one-the multiplicity of our boards. To make sure that the key people on our boards be the proper ones, we have a confusing labyrinth of boards: executive boards, boards within boards, boards to control boards, boards reflecting two or three separate local or union conferences. This maze of boards produces questions relative to the prerogatives of individual boards, and this confusion has at times resulted in disastrous decisions, including those pertaining to the totally avoidable demise of our hospital near Boston.
The multiplicity of boards demands a heavy membership of "safe" ministerial leaders in order to properly hold the church reins; and accordingly a host of church leaders are turned into board robots.All of this has produced many board members who, on all levels, are virtually incapable of making cogent financial decisions because they hardly know what a financial statement is all about. Board members not directly involved with financial matters are often at a loss to read a financial statement, much less understand it. Those who are board members because of hierarchical positions have very limited personal knowledge about what any specific institution is all about. It is only natural that when it comes to specific issues, they often draw a blank, and they do not understand the principles that ought to guide their decisions. The additional problem of ex-officio board members further aggravates the issue, because these representatives tend to be members of the flesh more than the Spirit - they often have primary interests elsewhere and tend to relate any problems being discussed in a board meeting to their concerns elsewhere.
Together with this is a further major concern - conflicts of interest. It is axiomatic that, with few exceptions, no person should serve on two or more like entities of the church. Three of our union conferences in the United States have more than one Adventist college campus. No person should serve on a board of more than one of these schools. Moreover, no two or more people having a staff line relationship should ever serve on the same boards.
Fiscal decisions should be made by successful, proven financial architects within our church at large who are totally independent of church politics. These people do exist. Unfortunately they frighten a host of church administrators - and for good cause. They tend to insist that we run our church business affairs as a business, because it is big business---one of the largest business enterprises in America. These financially perceptive members would insist upon a total overhaul of our organizational pattern. They would study the startling report recently given by a current conference treasurer whose research revealed that for every one-hundred pastors employed in North America, eighty other church employees were on the church payroll some where in the nation.
A current issue, which may well bode a financial catastrophe, is the possibility of creating an ethnic division in the North American Division. The people who study this should mostly be educated, experienced financial planners. The final decisions must be based upon financial considerations rather than religious ones. The issues are organizational, not creedal.
A RECIEPE FOR EFFECTIVE CHANGE:
"Trust the Brethren, Don’t Upset the Apple Cart" are two clichés often used to emphasize the existing practices of usurped power in the Adventist church. It is this usurped power that needs to be identified and changed.
Principles of good government apply to church government as well as civil government. A fact of government is that "No one can govern without the consent of the governed!" This places the responsibility on the people in any government. In a church it places it squarely on the church members. If they permit their officers to usurp control of the government, excluding the members from governing, the members are responsible for the government they permit! Without question this has happened in the SDA government.
One recipe for effective change occurred in 1979. I was leaving a conference where the members were greatly upset with the incompetence and corruption of their leaders. I provided them with written detailed instructions on what the members could do. A copy of this paper is in my book "And the People Said, We Will Serve the Lord." Members of church met together to decide on a course of action. Then, by networking among the churches a consensus was reached and plans were agreed upon. They had a lawyer join them who advised them on how to organize. As a result, at the constituency meeting, the president, treasurer, secretary, education director, and trust director were removed from office. All new officers and leaders who had the confidence of the laity were elected. This was one group of church members who were elated with God’s blessings.
Another recipe that worked remarkably well occurred in the North Pacific Union. Sometime before 1984 laypersons appointed a union constitution and by-laws committee to research good constitutional laws. Then two years before the regular session they met in a called union session of laypersons and adopted their constitution as the union constitution. Subsequently when they assembled for the regular session they operated under their new constitution. The General Conference (GC) leaders strongly opposed the new constitution, but the members were confident in their position and held to their constitution. The General Conference brethren finally conceded. The new constitution required the union executive committee to serve as the nominating committee at the regular session. This eliminated the union president from the nominating committee because of conflict of interest. The new constitution authorized the executive committee to evaluate the union officers at mid-term as well as at regular sessions. The committee had the right to remove or discipline officers for cause, at any time, by a majority of those present. This established the accountability of officers by lay church members! It has worked and is still in effect. May I add the Biblical admonition, "Go thou, and do likewise."
By comparing the policies voted by the General Conference in 1901 and its contradicting vote in 1903 (see my book, chapter 13) it is clearly revealed that the church officially deviated from the biblical blue print. Accountability is lost when leaders are allowed to control.
W. Arden Clarke
A PRESCRIPTION FOR MEANINGFUL CHURCH ACCOUNTABILITY:
Accountability is a fact of life both in our secular life as well as in our spiritual life. We are accountable for our actions or lack of action. God has made us free moral agents with the right to choose. However, he expects our choices to be well thought out, based on knowledge and information. We do not have to be prophets to recognize when wrongs are being committed within the church. Who is the church? The church is you and me and we have a responsibility to make this church, that we all love, a beautiful, perfect work of art through which God's love can shine out to all the world. It is our responsibility to make sure that those in charge of our church are accountable. They are accountable, not only to God, but also to every shareholder - you and me.
How do we deal with critics and criticism? Do we ignore, rebuke, chastise, and isolate those who present constructive criticism? Is this why so few in the church are willing to speak out and take a stand on problems that they see and know exist within the church? Obviously the check and balance system of the church to prevent these catastrophes from happening is either inadequate or is not being enforced by the church.
We propose that, at every level of the church organization, a system of lay special investigative commissions be developed and run by the laity of the church. This group would have the right to investigate any financial concern, raised by leaders or laity, in any area of church operation, including acquisition, merger, investing, or sale of any properties of the church. They would have the right to put on hold any financial activity that they believed was not in the best interest of the church until the issue could be brought before a proper body for resolution. A new lay special investigative commission would be chosen for each incident and would consist of individuals with expertise in the area of concern. To illustrate, if it were a business issue the commission would be made up of lay people with business expertise. If it were a legal issue the commission would have representation from the legal community. The commission members would serve at their own expense.
Commission members would be elected from the local churches. At the local conference level, members of each church would maintain a pool of volunteers that would be screened by the church board to eliminate members who are on the church payroll and members who have conflicts of interest. The church membership at large would vote for one individual from the pool to represent that church on the local conference special investigative commission.
At the union conference level, members of the local conference special investigative commission would vote to select three of their members to serve on the union conference special investigative commission.
At the division level, members of the union conference special investigative commission would vote to select two of their members to serve on the division special investigative commission.
We believe that special investigative commissions would provide the following benefits:
Increase accountability of the church at all levels.
Increase involvement of the laity in church structure and activity.
Increase interest on the part of all church members in the church.
Produce a stronger sense of ownership by church members.
Increase tithe and gifts to the church.
In closing I would like to quote a bumper sticker I saw a few days ago. "I Think, Therefore I Am Dangerous." I hope the church will value and use all church members who dare to think and cherish them as an asset rather than a liability.
We include the following blank for use in recruiting new members.
MEMBERS for CHURCH ACCOUNTABILITY, INC. (MCA) APPLICATION (nl1Q01)
/__/ I wish to be a member of the General Conference Reform Group
You will receive the MCA newsletter.
Send to: Members for Church Accountability, Inc.
PO Box 1072
Morrison, CO 80465