The Lawyers And Accountants Bail Out

January 12, 1995|By CARL T. ROWAN

WASHINGTON — Washington. -- In a letter of December 2, 1994, and an attached ''confidential'' background paper, the prestigious Washington law firm of Wilmer, Cutler & Pickering warned NAACP Chairman William F. Gibson that his organization was $4.5 million in debt, its assets ''meager to nonexistent,'' and that ''forced bankruptcy hovers on the horizon.`

Dr. Gibson was told, by lawyers from Wilmer, Cutler and by accountants from the nationally respected accounting firm, Price Waterhouse, that it was critically imperative that the NAACP name ''an independent advisory committee'' to retire debt, raise funds and ''restructure both the governance and the staff of the organization.''

Three days later at a meeting in New York attended by Dr. Gibson, the chairman of the NAACP Special Contributions Fund, the NAACP senior staff and the afore-mentioned accountants, the hard truth was laid out about what the background paper called ''a desperate and dangerous financial situation:''

* The NAACP's financial obligations had risen beyond $4.5 million.

* The organization owed approximately $1 million to its pension fund.

* Outstanding bills from vendors exceeded $3.5 million. (This included more than $850,000 in unpaid bills from the NAACP's last two national conventions in Chicago and Indianapolis.)

* The association had ''borrowed'' $440,000 from restricted grant funds which had to be paid back by the end of December. (Most of the staff was furloughed so their salary money could be used to repay the grant money.)

* The NAACP headquarters building in Baltimore, which is valued at approximately $2 million, now has a $1.1 million lien placed

against it by the state of Maryland.

That stunned New York meeting broke up with almost everyone thinking they had an agreement to name an independent ''advisory committee.'' But on December 8, Dr. Gibson held a telephone meeting of the NAACP executive committee. Lawyer James E. Coleman Jr. of Wilmer, Cutler & Pickering joined in and was shocked to hear the chairman talk the committee, packed with his allies, into voting against an advisory committee.

The next day, December 9, Mr. Coleman wrote Dr. Gibson to say that his law firm was withdrawing ''effective immediately'' as advisory counsel for the NAACP. ''I left the meeting thinking that you would ask the executive committee to appoint an advisory committee, the course of action supported by everyone who attended the meeting,'' he wrote. ''You made no recommendation to the committee, but at the end of the discussion you noted the proposal had some unspecified 'problems.' . . . The executive committee clearly indicated a general unwillingness to consider our advice.''

Wilmer, Cutler lawyers, who were working pro bono, refused to talk to me about this episode, claiming lawyer-client privileges. But an absolutely reliable source has given me the letters and documents involved. These documents also reveal why Price Waterhouse refused to audit spending by Dr. Gibson and other NAACP officials. Price Waterhouse has found the NAACP finance department ''in a shambles.''

In fact, another recommendation made by the lawyers and accountants in the December 5 New York meeting was that the NAACP set up ''a formal mechanism whereby expenditures are reviewed regularly and systematically for cost containment and abuse.''

My charges in this column that Dr. Gibson has abused NAACP funds for a decade led to the board's October 15 demand for an independent audit. Incredibly, the special audit committee, chaired by Judge Fred Banks of the Mississippi Supreme Court, has reported its every move to Dr. Gibson. Last week Judge Banks suggested to Dr. Gibson that he recuse himself from audit affairs and give authority to the NAACP vice chairman. Dr. Gibson retains power to oversee the audit of his own spending. And no auditor has yet been selected.

The facts in the new documents cited here will be used today or tomorrow in a lawsuit asking the courts to enjoin Dr. Gibson from functioning as NAACP chairman until a thorough audit of his spending has been completed. The lawsuit is being filed by C. Delores Tucker, a member of the Special Contributions Fund board, and some members of the national NAACP board.

Meanwhile, the days dwindle down toward February 16 when, with no meaningful audit completed, and with the NAACP driven to economic, social and political ruin, Dr. Gibson is expected to ask a board stacked with his cronies to re-elect him as chairman.

But some judge may now decide what happens at that February 16 annual meeting of what once was the nation's premier civil-rights organization.

Carl T. Rowan is a syndicated columnist.

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