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Red cross turns documents over to congress.

Senate Finance Committee Chairman Charles Grassley has called for an in-depth review of the operations and practices at the American Red Cross (ARC) national headquarters, particularly its board of governors, after receiving thousands of pages of documents from the organization.

In addition to his recommendation that the ARC take note of how other organizations have completed similar reviews, Grassley, R-Iowa, pushed for more transparency and accountability by the human services charity.

The organization turned over thousands of pages of documents, minus "a significant portion" that was marked confidential by the ARC. The documents, including email correspondence between board members and, were made available on the Senate Finance Committee's Web site,

The documents show, among other items, the ARC paid $1.9 million in severance to Dr. Bernadine Healy, who was forced out of the president and chief executive position and another $780,000 to Marsha J. Evans, Healy's successor, who likewise was asked to resign. The organization also paid $500,000 to an image consultant.

In the letter to the chairman of ARC's board of governors, Grassley addressed the materials the organization provided in response to his Dec. 29, 2005, request for all information regarding the relief efforts following Hurricane Katrina and the resignation of Evans. Upon review of these materials, Grassley concluded in the letter that "business as usual" at the Red Cross cannot continue.

Grassley has also sought assurances that there are no further documents or records the ARC might have left out, particularly regarding the dismissal of Evans, to be received by the Senate Finance Committee within 30 days of Feb. 27.

In a statement, the Red Cross maintained a stance of full cooperation with the committee, noting its desire "to implement the best corporate governance practices found in the charitable and for-profit sectors."

The Senate Finance Committee was scheduled to hold a roundtable discussion of governance issues at American University in Washington, D.C., to further review the Red Cross materials. "Given the Red Cross' congressional charter, Congress, the administration and the Red Cross must all look at substantive changes in certain areas, including, but not limited to, governance, structure, the scope of work, and cultural problems of the Red Cross," wrote Grassley.

Governance. Grassley wrote that he is troubled by the number of governors who rarely attend board meetings, particularly government appointees. He addressed the conflicting roles of some government appointees, citing, for example, board member Michael O. Leavitt, the secretary of Health and Human Services, who oversees the Food and Drug Administration, with which the Red Cross blood services division is under a consent decree.

Of the December, 2005, resignation of Evans, wrote Grassley, "It appears that this most vital of all decisions--the removal of the president of a multi-billion dollar organization--was done with only a small number of board members and without a single piece of paper."

He noted the size of the board as a hindrance to the organization, preventing it from operating "as a modern, hands-on board."

The ARC is chartered by Congress, thus many of the governee issues of which Grassley complains are governed by the charter. For example, the charter sets board size.

Grassley addressed the intrusive participation by some board members, expressing concern about those members "who cross the line and get involved in day-to-day management of the Red Cross, which should be the responsibility of the CEO" He also had concerns about the board make-up, which is comprised largely of chapter representatives.

Core Responsibilities. Grassley said the charity needs to focus on its core responsibilities--particularly disaster relief and prevention. He warned that the ARC "cannot be all things in response to disaster. For the Red Cross to succeed in its mission of disaster relief, it must work in concert with the entire charitable community."

Culture. Grassley cited letters and telephone calls he received from volunteers and staff who said their concerns about possible money mismanagement, and suspected criminal activity, were ignored. "This type of culture, a culture that discourages people from coming forward, management that does not want to hear the bad news, and is more concerned about good press than good results, is a theme that I am hearing too often from Red Cross volunteers," he said.
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Title Annotation:American Red Cross
Author:Nobles, Marla E.
Publication:The Non-profit Times
Geographic Code:1USA
Date:Apr 1, 2006
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