Originally posted January 11, 2015
Berkeley-Pacifica’s rogue board majority voted on January 8th to retain conflicted law firm Siegel and Yee to represent the network in the correspondence audit by California’s Attorney General. Dan Siegel’s Oakland law firm specializes in employment law and has no practice in accountancy. The motion to retain the firm again was made by board member Jose-Luis Fuentes who has been employed as an associate attorney at Siegel and Yee since 2003. Fuentes replaced his boss, Dan Siegel, on Pacifica’s board of directors in January 2014. When board members contested Fuente’s motion and favorable vote as a conflict of interest, Fuentes replied that he had resigned from Siegel and Yee in September of 2014.
However, screenshots of the Oakland law firm’s website on January 9, 2015 show Fuentes listed as an attorney at the firm, Fuentes continues to utilize his Siegel and Yee email address months after his stated resignation and a call to the firm on the morning of January 9, 2015 (time-stamped recording here) has Fuentes listed at extension 224 with a message that he is out of the office and will call the caller right back.
Fuentes responded to the contradictions by stating he has been working with Siegel and Yee clients for no pay since his resignation four months ago.
California Corporations law requires nonprofit directors not to participate in self-dealing transactions and to recuse themselves from votes regarding vendors with whom they are affiliated. The law also asks a nonprofit to demonstrate that the affiliated organization is the best possible vendor for the work in question.
The Registry of Charitable Trusts, the division of the California AG that supervises California nonprofit organizations, has launched a comprehensive audit of Pacifica Radio’s accounting and compliance functions. The scope of the initial document request is broad and encompasses most financial records from the past five years of operations. Pacifica has received a 30-day extension and will have to submit the requested documents by February 17th.
The reckless and foolhardy actions of the board majority, who threw out an executive director with a 3 year contract and rehired a CFO who had been removed for poor performance, were followed by 10 months of aggressive non-compliance with legal reporting requirements including the failure to produce an audit 15 months after the close of the fiscal year (in violation of the Nonprofit Integrity Act), failing to amend erroneous tax returns, and the issuance of only one incomplete profit and loss statement.
While Pacifica unelected board chair and current executive director Margy Wilkinson (after interim appointee Bernard Duncan left the country less than 90 days after his appointment) has been busy blaming the Pacifica’s 2014 noncompliance on her predecessors in the newspaper, and director Hank Lamb blames “snitches” for the California AG’s investigation, an email from interim controller Maria Gaite (who left Pacifica after the CFO Salvador’s reinstatement) to auditing firm Armanino LLC lays out precisely the status of the still incomplete financial audit in March of 2014. Gaite’s email describes a year’s worth of undone bank reconciliations at KPFA and journal entries by Salvador that needed to be reversed and says the necessary work can be completed within 30 days or by April 28th, 2014. Pacifica did not resume the audit work until January of 2015, seven months after the audit was required to be submitted to the State of California and to the Corporation for Public Broadcasting for funding eligibility.
Pacifica continues to attempt to hire a new executive director to replace the ad-hoc board chair. The outgoing board intends to decide on a successor exactly 4 days before their terms of office expire on January 29th, saddling the new board of directors with an executive they played no role in hiring, and leaving the new director plopped into the middle of a state investigation. Board member Richard Uzzell resigned from the board’s search committee calling the process corrupt, deeply flawed and questionable. The hiring process to date has only included 20 minute telephone interviews. The board apparently plans to “vote” on new organizational leadership without ever meeting the candidates and after conducting a final round of interviews by telephone conference call on the weekend at times several board members have already said they cannot attend.
The board’s conversations about finances have grown increasingly byzantine with still no year-end financial report for the fiscal year completed 9-30-2014 and no approved budgets for 5 of the network’s 7 divisions. Board chair/IED Wilkinson posed an objection to a motion that a strategic planning session be preceded by the presentation of year-end accurate financial statements. Board member Kim Kaufman made several references to “voodoo accounting” during the board’s long deliberations on January 8th. Houston rep Hank Lamb, a member of the rogue majority who has been questioning some of their actions, said some of his unnamed colleagues “support going into bankruptcy“, presumably to dissolve the network and sell off some stations to endow the others, a process the board majority’s lawyer of choice Dan Siegel has referred to as “organizational Darwinism”. PNB treasurer Brian Edwards-Tiekert has expressed similar sentiments about winding down operations at Pacifica’s New York outlet.
Immediately following the announcement of the Attorney General’s investigation, announcements came of $500,000 in staffing reductions at the two California stations, KPFA and KPFK. The two California units account for 60% of the total payroll expenses at the network’s 7 units. The two stations had troubled budgetary processes this year, with KPFK betting on a 10% increase in its pledge fulfillment rate above the historic average and KPFA budgeting for $200,000 in will bequests that it had not been notified it would receive. Both stations lost their bets.
Berkeley’s KPFA has received the majority of the attention of the National Finance Commitee and national board so far, unsurprisingly since it is IED Wilkinson and board treasurer Brian Edwards-Tiekert’s home turf. Edwards-Tiekert let slip on January 5th that KPFA’s union had already received a 30-day notice of upcoming layoffs, although neither Pacifica nor the union notified the station’s rank and file. The reaction at the station was one of surprise, since the station had made, or almost made, both of its pledge drive goals and the station’s LSB treasurer Barbara Whipperman had reported only 3 weeks earlier at the local board meeting that KPFA was “not in a hole”.
At the national board discussion on KPFA’s budget document, a confusing discussion ensued that ended with a board resolution that the upcoming staff reductions include a formula for management cuts to accompany any cuts to rank and file staffing. KPFA hired a program director in October of 2014, upping management staffing costs by 25%. It also came to light that the new KPFA general manager had received a $10,000/year salary increase over the salary paid to his predecessor. McCoy “gave back” $5,000 of that increase during KPFA’s budgetary process to much fanfare. KPFA’s salary numbers also include three part-timers whose monthly family health benefit packages exceed their monthly wages. KPFA’s employees contribute $0 to their health benefit costs for themselves and and their dependents if they work at least 18 hours a week, and annual health benefit costs per employee can be as high as $33,000 a year for family coverage.
In the confusing conversation that ensued, board member Jose-Luis Fuentes suggested the all the real estate in the network including the buildings owned in Berkeley, Los Angeles and Houston be sold. Treasurer Edwards-Tiekert’s explanations for the sudden fiscal crisis included the failure of KPFA’s elderly membership to die and leave the station money in the last few months, as the budget had planned for, and also mentioned a $50,000 donation that had “fallen through”, although KPFA’s business manager had already stated the donation solicited by station manager McCoy had been “turned down” by Pacifica’s national office on the basis that the donor was “someone we don’t want Pacifica associated with”. The national board of directors, who would nominally make such a decision, were not informed of the rejection of the donation or the criteria used to reject the gift. Edwards-Tiekert’s compromised position as a rank and file union member participating in lay-off decisions was addressed in his statement “If I knew what the union’s bargaining strategy was, it wouldn’t be appropriate for me to talk about it here”. A bylaws amendment proposal to prevent paid staffers from serving as the national board treasurer was voted down by the board earlier this year.
A clip from the board discussion can be heard here. The full meeting audio is available at www.kpftx.org.
Berkeleyans who witnessed and often participated in the daily Black Lives Matter protests that shook the small university town in early December may enjoy this Twit Wit Radio satire which riffs on the protests, Russell Brand and KPFA’s fund drive room.
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Started in 1946 by conscientious objector Lew Hill, Pacifica’s storied history includes impounded program tapes for a 1954 on-air discussion of marijuana, broadcasting the Seymour Hersh revelations of the My Lai massacre, bombings by the Ku Klux Klan, going to jail rather than turning over the Patty Hearst tapes to the FBI, and Supreme Court cases including the 1984 decision that noncommercial broadcasters have the constitutional right to editorialize, and the Seven Dirty Words ruling following George Carlin’s incendiary performances on WBAI. Pacifica Foundation Radio operates noncommercial radio stations in New York, Washington, Houston, Los Angeles, and the San Francisco Bay Area, and syndicates content to over 180 affiliates. It invented listener-supported radio.