Audit finds NAACP exercised little control over officers' expense accounts

July 17, 1995|By James Bock | James Bock,Sun Staff Writer

MINNEAPOLIS -- The NAACP's controls over its top officers' spending were so lax that the nonprofit civil rights group paid for then-Executive Director Benjamin F. Chavis Jr.'s purchases of toys, maternity clothing, electronic games and furniture with no questions asked, according to an internal audit presented to the board last week.

A summary of the audit, which focused on questionable expenses by Dr. Chavis and former Chairman William F. Gibson, was made public at the NAACP convention here.

But a review of the complete audit, which is as thick as the Baltimore White Pages and was made available to The Sun, gives a more detailed picture of the Baltimore-based National Association for the Advancement of Colored People's financial disarray.

Among the findings of Coopers & Lybrand LLP's audit of NAACP officers' spending from January 1989 through August 1994:

* The NAACP paid expenses charged to a corporate credit card by the chairman of the board and executive director "without obtaining and analyzing any detailed supporting documentation or backup." Expense records were "disorganized and in disarray."

* No NAACP employee had the authority to question charges by the chairman and executive director. In 1993 and 1994, the board of directors' travel costs "were seriously overrun by $80,000, yet no corrective actions were taken."

* NAACP officers did not take responsibility for personal charges to the corporate credit card.

* Cash advances of up to $12,000 were made to NAACP officers. In one case, a $10,000 cash advance was made in April for a July convention. (The audit does not say to whom.) In another instance, Dr. Gibson received a $10,000 "travel advance" that was actually a personal loan, later repaid with $300 "interest." The audit said loans to board members were prohibited in New York state, where the NAACP is incorporated.

The auditors recommended 29 ways to improve the NAACP's financial management. Chairwoman Myrlie B. Evers-Williams, who defeated Dr. Gibson by one vote in a February board election, said the controls were being put into effect. An employee of the Price Waterhouse accounting firm has been installed as the NAACP's acting chief financial officer.

The NAACP is $3.8 million in debt and desperately needs contributions from members, foundations and corporations to meet its payroll.

Mrs. Evers-Williams said in an interview that the NAACP's more than 400,000 members had "every right to feel angry and frustrated" about how the organization spent their donations and dues. Corporate credit cards have been revoked, and the 64-member board has been asked to pay its own way to meetings, she said.

"This is not a gravy train," she said.

While the audit did not cover the NAACP's deficit, it did note some excessive spending:

* Dr. Chavis racked up more than $120,000 in limousine rental charges during his tenure. Red Top limos transported Dr. Chavis, aides and non-NAACP employees around Washington and New York at a cost of hundreds of dollars a day.

* Dr. Gibson stayed in a $1,083-a-night suite (including tax) at a Beverly Hills hotel in the fall of 1994 and ran up a total bill of $4,827 for three nights -- while the NAACP faced a $3 million deficit.

* A 14-person NAACP delegation traveled to South Africa in the summer of 1993. Everyone traveled business class, and the NAACP paid $2,700 each at the last minute for three passengers to upgrade their seats from economy class. The auditors found the trip "unreasonable, given the organization's then current fiscal circumstances."

Dr. Gibson and Dr. Chavis, who was fired in August after secretly committing up to $332,400 to settle a sexual harassment claim, were the big spenders of NAACP funds, the report found.

In 16 months at the NAACP, Dr. Chavis, who was paid $200,000 a year in salary, charged $200,300 to his NAACP credit card -- $22,749 of which was for personal expenses, the report found.

The former executive director bought toys at Toys 'R' Us in Catonsville, shirts at Brooks Bros. in Washington and eyeglasses at Pearle Vision Center in Towson, among dozens of other personal expenses. Eight days before he was fired, he charged $113.15 in beauty supplies from Cosmetics Plus in New York to his NAACP card, the report showed.

Dr. Chavis' personal expenses totaled more than $32,000 overall, including a $2,600 personal lifetime membership for United Airlines airport lounges and $4,756 in airfares for his wife's relatives. He is negotiating repayment to the NAACP.

Dr. Gibson, who was chairman for almost a decade, charged $300,100 over the nearly five years examined. The auditors have questioned $93,908 in Dr. Gibson's charges, plus nearly $20,000 in other expenses. They haven't made a final determination about how much of Dr. Gibson's spending was unjustified because he did not respond fully to their questions.

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