Originally posted September 27, 2014

Berkeley-The financial shenanigans at Pacifica Radio, which former ED Summer Reese referred to in this April 1 interview, have impacted one of the foundation’s two employee retirement plans as $92,415 has potentially flown the coop. An outside audit by Helin Donovan, required by the pension plan’s 3rd party administrator, revealed 2012 deposits (due 9-30-2012)  were never made, despite an affirmation by Pacifica’s auditor Armanino that the 2012 payments *were* made. The $200,101 amount Armanino states was paid into the network’s two retirement plans matches the records in the CFO’s financial statements (Lines K112-113) exactly.

When confronted with the dueling audit results, CFO Raul Salvador, IED Margy Wilkinson and PNB treasurer Brian Edwards-Tiekert obfuscated and promptly turned around and billed the network’s five stations for the missing funds. However, the network’s 3rd party administrator confirmed that CFO Salvador discussed the pension fund payment in the summer of 2013, was aware it had not been paid, and misinformed auditor Armanino in August of 2013, leading to the falsity in the audited financial statements. The administrator’s account can be found here. He states:

In the summer 2013, Byron Hancock visited with Tamika Miller and Raul Salvador at the Pacifica offices to touch base. Due to a cash flow crunch, Tamika inquired if the 2012 pension contribution was mandatory. Byron Hancock said it was; a telephone conversation with Arienn Tvo, the pension administrator ensued, and Arienn said it was in fact not required by the pension plan document. Byron asked Tamika and Raul to check on this as his understanding was union contracts did require this even if the pension plan document did not. Tamika and Raul appear not to have circled back on this; and failed to advise the Trustees of their decision not to fund the 2012 contribution. The 2012 retirement plan contribution was not deposited.

The co-trustees who were not told were then-PNB treasurer Tracy Rosenberg and attorney Dan Siegel. Rosenberg commented that she found Salvador’s actions “not only unprofessional but deeply dishonest”. The startling statement in the Armanino audit that the payments *had* been made indicates a false presentation of data to the auditing firm by the CFO, or worse that a payment was in fact made, but to a recipient other than the pension fund. Members of the board of directors will have to do a director’s inspection to ascertain if the audit statements are false or if the funds were removed to another location.

A pending complaint to the CA Attorney General Registry of Charitable Trusts by 8 former board members can be found here (in a slightly updated version). The AG is responsible for California charitable compliance. Pacifica members can send a note to the AG here. 

Members objecting to the board majority’s actions over the past nine months can sign a petition here.

The network’s local boards continue to occupy themselves mostly with witch hunts, having attempted and failed to remove a board member in Houston last month and going forward with a similar board “trial” in Los Angeles next month. KPFA’s board member removal activities in 2012 cost the station more than $35,000 after the Alameda Superior Court issued an injunction. The foundation has reached the point where the inability of the Siegel/Brazon faction to tolerate dissent has made the governance system fracture.

A lawsuit filed by PNB majority member Benito Diaz, former WPFW program manager Bob Daughtry and several members of the WPFW local station board is demanding $10 million dollars from their own nonprofit and the removal of the current vice-chair of the board Tony Norman, (Ball vs. Hughes). The plaintiffs are trying to compel discovery. The suit was originally filed in 2013 to prevent the station’s move to the DC suburb of Silver Spring, MD and was amended after the move did not occur to demand the $10 million dollars. Legal bills assessed to Pacifica through January of 2014 topped $30,000 and have probably increased significantly in the last 9 months, although Pacifica has not recorded them since January.

The network’s divisional budgets are being diverted around local station boards, with the national finance committee addressing station budget drafts that local station boards have never seen, much less voted upon. KPFA, KPFK, WBAI and WPFW’s local station boards have not approved divisional budgets 3 days prior to the end of the current fiscal year and the national board has received none of the network’s 7 divisional budgets. In December of 2010, the KPFA local station board declared its intention to sue Pacifica to “vindicate its rights to approve the station’s budget”. A concern apparently irrelevant in 2014.

In Los Angeles, the working draft proposes an increase of $350,000 in listener support, along with a decline in premium costs of 67%, and an increase in staffing costs of $150,000. The budget draft also does not include the costs for the corporate call center (estimated at $60-75K annually) and mis-states the station’s fulfillment rate (the amount of pledges that are actually paid) as 89% when the historical data is at about 79%.

In Berkeley, revenues are predicted to increase with major donations doubling from last year. Staffing numbers are creeping back to the $2.2 million dollar level that triggered layoffs in 2010 after two consecutive years of more than half a million dollar operating deficits, and an attempt to offload $75,000 in new KPFA staffing onto the other 4 stations in the network was rejected by those stations. Despite the projected income and staffing increases, the draft document targets the 5pm daily show Flashpoints with severe personnel reductions not applied to any other station program group or to general staffing levels. The budget draft “repairs” an operational deficit by double writing-off the annual depreciation of the station’s equipment and furniture by recapitalizing expenses already capitalized at the time of purchase.

No draft budget has surfaced from Washington station WPFW and at New York’s WBAI treasurer R. Paul Martin is struggling to put together a budget draft with little ability to forecast expenses given the station’s unsettled tower location and the outstanding loan from LA real estate investor Aris Anagnos.

 

 

 

 

 

At the finance committee, KPFT GM Duane Bradley snapped ” I’m not sure what you’re asking Raul. That’s a reflection of the reality of the world. We’re trying to create a budget that works, not a budget that is pie in the sky and creates problems for everyone else in the network”.

At Pacifica’s Berkeley radio station KPFA, as reported at a finance committee meeting, the first major donor solicitation by new manager Quincy McCoy was rejected on the basis of the unknown donor being an undesirable source of money. The proposed $50,000 donation was rejected last Monday. McCoy, whose projected fundraising prowess has been cited as a reason behind his hire in June of 2014, is expected by KPFA to double major gifts in his first year of employment. McCoy hasn’t spoken to the nature of the rejection of the gift, which was described by bookkeeper Maria Negret on the streamed finance committee call. The decision to reject the $50,000 gift was not discussed with the foundation’s board of directors, who would normally expect to make such a decison as the nonprofit fiduciaries.

The foundation has had problems lately with recordkeeping of major donor gifts, with a $105,000 bequest of Chevron stock to KPFA and 5 gifts to WBAI totaling $85,000 not recorded as donor gifts in the accounting statements released by CFO Raul Salvador.

Internal dissension continues to wrack the Wellstone Democratic Renewal Club in Berkeley, the political home of the “Save KPFA” movement, where members are decrying the club’s coordinating committee (which includes current KPFA LSB members Jack Kurzweil and Mal Burnstein and former members Pamela Drake and Matthew Hallinan) as “heavy-handed and manipulative” and “no matter how you rationalize it, undemocratic”.