09.28.06 Latest News
The Battle Over “Best Practices”
In the secular world “Best Practices” are basically understood as guidelines designed to encourage honesty and openess, to protect an institution from even the appearance of wrongdoing in the conduct of its financial dealings. In the OCA they have become the stuff of battle, a battle which is being fought in and around the Metropolitan Council which meets Thursday and Friday, September 28-29 in Syosset.
How It Began
The first mention of “Best Practices” came in a November 2005 press release in which Metropolitan Herman stated that all financial issues facing the Church would be “addressed forthrightly and accountably”. Specific mention was also made that “all contributions (to the OCA) were used as specified by the donors”; and that the 2004-5 audits “would be made available to the Church at large”. And at the end of the Metropolitan's statement there appeared this coda: “Also, beginning January 1, 2006 the Chancery of The Orthodox Church in America will employ “Best Practices’ for non-profit organizations. I believe that this decision will serve us well in both the present and the future.”(Read the press release here).
According to a June 2006 E-Mail to the Metropolitan Council by Fr. Paul Kucynda, the Metropolitan’s decision to embrace “Best Practices” was a quick one.
Fr. Kucynda writes:
“The 'Best Practices' project came into being primarily because of our indebtedness and allegations of financial mismanagement that surfaced last fall. Father Matthew Tate suggested the use of 'Best Practices' when we met in November.”
Not only was it quick (adopted and announced in the course of the same meeting), but apparently neither the Metropolitan, Fr. Kucynda nor anybody else on the Metropolitan Council, except Fr. Tate, had a clue what “Best Practices” were. As Protodeacon Peter Danilchick explained in an August 2006 E-mail to the Council:
“I was told by the member in question that one of the MC (not the person who called me) raised the subject of “Best Practices” in your November 2005 meeting. Fr Paul Kucynda (it was related to me) said: “Say what? What are 'Best Practices'?” I guess no one at the MC meeting volunteered to develop these “Best Practices” -- is that right? And thus the phone call to me by this concerned MC member who asked if I could help out and develop these.“
So, having announced the policy, and its implementation date as a response to the allegations of financial mismanagement, it was necessary to determine what the policy would be. Fr. Paul Kucynda continues the story in his June E-mail to the Council:
“When the Metropolitan appointed me to manage the “Best Practices” project, my first objective was to find a balanced team of people who know the Church and society well enough to apply “Best Practices” to our work.
As a faithful member of the Church, God first inspired Protodeacon Peter Danilchick to offer his expertise almost immediately after our meeting of last fall...”
God-inspired perhaps, but one can reasonably assume a call from former Metropolitan Council member Fr. John Erickson of St. Vladimir's Seminary had something to do with it. At least that is what Metropolitan Council member Dr. Faith Skordinski suggests, citing an earlier email from Protodeacon Danilchick. Protodeacon Danilchick, however, will not confirm that Fr. Erickson made the call. When asked specifically by Dr. Skordinski who it was that called to enlist his help with “Best Practices”, the Protodeacon refused to answer. He wrote in a July E-mail copied to the Council:
“Bottom line -- I will not reveal to you the name of the MC member who contacted me and I will not ask that person for permission to reveal it. To do so would be an offense against friendship and common courtesy.
I also think that it would be an insult to all of your colleagues on the Council.”
And so, the process to bring accountability and transparency to the Church began without either. Things could only get worse.
Danilchick, who, according to a biography published on the OCA website, has served on various non-profit boards, including as a Trustee of St. Vladimir’s Seminary. He is a retired Exxon executive, having been the President of Exxon China Petroleum and Petrochemical Company. More importantly, he was efficient. Within ten days a small group of Council members had a working draft of “Best Practices”.
Not that it mattered. Danilchick later lamented that no one member on the Council made any comments about his draft. In fact, no one responded because he did not ask for comments. In a letter copied to the Council this past week, Dr. Skordinski objected to the Protodeacon's implied criticisms. She wrote:
"For the record, after a lengthy search, I found the Best Practices (BP) e-mail you sent to Father Paul on November 14, 2005. You did copy me on it. In that same e-mail, you wrote: “I have taken the liberty of copying this note to the AAC-elected members of the Metropolitan Council for their information and use.”
I took you at your word that it was for my
“... information and use."
I saw no reason at that time to respond to the BP e-mail until it was a subject for a Metropolitan Council (MC) meeting. The BP document subsequently was sent to the MC members on May 19, 2006 by Father Paul in preparation for the June 13-14, 2006 MC meeting."
Since only a handful of people had seen the document, implementation day, January 1, 2006, came and went with little fanfare.
Nevertheless, three weeks later, on January 20, 2006, the Lesser Synod trotted out “Best Practices” once again; this time in response to growing even more unrest in the OCA. In their statement the Lesser Synod wrote:
“The Lesser Synod recognized that mistakes have been made in the past. In the context of accountability, and repentance, it was deemed important to implement procedures, which would prevent future mistakes...
His Beatitude has further initiated the process of adopting ‘Best Practices’ procedures in administration, and administrative practices established by other similar not-for-profit religious institutions, and the Lesser Synod fully endorsed these measures. Further, the Lesser Synod strongly encourages all levels of the Church’s administration to adopt such practices."
(Read the whole statement here)
Rather than being implemented, the “process of adopting "Best Practices” was now being “initiated”.
In fact no one even knew what they were – apart from Protodeacon Danilchick, Father Kucynda and the six members of the Metropolitan Council who had actually received Danilchick’s draft proposal the previous November.
Nevertheless, six weeks later, on March 1, “Best Practices“ were again out in the face of the crisis, this time by the entire Synod of Bishops. This synodal statement reads, in part:
“The Holy Synod has decided upon the following course of action, continuing to encourage financial accountability, and trust within The Orthodox Church in America.
1. Implement “Best Practices” for Non-Profit Financial Accountability.
Following are the six best practice principles for financial accountability considered applicable to The Orthodox Church in America:
1. Ensure clear and decisive financial governance
2. Adopt ethics and conflict of interest policies
3. Implement appropriate financial controls
4. Conduct annual independent financial audits
5. Ensure transparency of financial data and performance
6. Maintain knowledge on emerging non-profit issues”
For the first time, “Best Practices” were given some public content beyond a mere name.
But who decided this content? Who decided only six principles, selected from a more comprehensive list of standard best practices were “applicable”? Not the Metropolitan Council, which is entrusted with all legal and financial matters by Statute. It had not met since November. Not any Committee appointed by the Council, nor even the standing Financial Committee of the Church. Not the Lesser Synod, nor even the full Synod.
Apparently, Fr. Kucynda and Protodeacon Danilchick, with the blessing of Metropolitan Herman, decided on their own what rules would now govern the OCA. To some members of the Metropolitan Council, it was a dangerous precedent.
Afterwards, A Committee Is Formed
That this was indeed the case was confirmed two weeks later, on March 16th, in a statement to the Administrative Committee released by the Metropolitan, following the dismissal of Fr. Robert Kondratick as Chancellor of the OCA. The Metropolitan wrote:
“At the fall meeting of the Metropolitan Council, .... I also announced that we would subscribe to “Best Practices” Principles for Non-Profit Financial Accountability,” as the standard to which the financial activities of the Church would be subject. This project is moving forward under the direction of our Acting Treasurer, Father Paul Kucynda, in consultation with Protodeacon Peter Danilchick.”
Having created a draft and decided on which parts were applicable, “moving forward” apparently meant that more people should now be included in the process.
As Fr. Kucynda stated in his June 7th E-mail to the Council:
“A few weeks later, I became aware of the particular talents of Robert Kornafel, a member of our Metropolitan Council and Administrative Committee, whose professional career includes extensive experience with various financial and organizational issues."
Mr. Kornafel, according to the OCA website, is a “retired corporate executive and current business consultant with significant experience in the development and implementation of personnel and ethical policies and practices for the Steel Division of D. A. Stewart Company.” He currently serves as a member of the OCA’s Administrative Committee. He has served on two parish councils and the diocesan councils of both the former New York and New Jersey Diocese and the current Diocese of Washington & New York.
It clearly didn't hurt that Mr. Kornafel was the only other person in the room besides Fr. Kucynda and Metropolitan Herman when Fr. Kondratick was dismissed on March 16, 2006. As the minutes of the Administrative Commitee meeting of March 16th explain:
“The Metropolitan’s response to Mr. Kutner’s letter was offered in the morning of March 16, 2006, when he presented a letter of termination to Father Kondratick in the presence of Archpriest Paul Kucynda and Mr. Robert Kornafel.
Metropolitan Herman asked Mr. Kornafel to be present when he presented Father Kondratick with his letter of termination because of Mr. Kornafel’s business experience particularly in relationship to personnel issues.”
Shortly thereafter the “Committee of Two” became a “Committee of Three”.
Fr. Kucynda continues:
“Then, to add Matushka Mary Buletza Breton to the team was a distinct pleasure. As the Daughter of an Orthodox priest and as a very positive, committed and active Matushka, in addition to honor and distinction of service to the Church, she is a CPA whose career and clientele testify to her talents, skills and integrity.”
It clearly didn't hurt she had also just loaned $50,000 to the OCA to fund the new Proskauer Rose investigation.
And shortly thereafter the “Committee of Three” became a “Committee of Four".
While Matushka Bulteza-Breton's generosity is not in question, her membership on the “Best Practices” Committee is. According to “Best Practices” itself, it is questionable whether people to whom the Church owes money should sit on the committee governing policies concerning people to whom the Church owes money. This is not to say that an “interested person”, as such persons are known, cannot serve; but there is a procedure to follow under “Best Practices” for that contingency - a procedure which appears to have been ignored.
However, the Committee was not yet complete. Fr. Kucynda:
“Finally, Matushka Mary’s gracious offer at our June 13-14th meeting, proposing the addition of Nancy Dormanski, MBA, a dedicated professional in her employ, whose expertise in organizational and financial management spans two decades, was publicly accepted by Metropolitan Herman with all of us present. All of these people including Nancy are offering their services without compensation because they love the Church and Her mission.”
Several Council members openly dispute Kucynda’s version of how Nancy Dormanski came to be on the Committee. As the Minutes reflect, there was no mention of Nancy Dormanski at the Council meeting, where the others were indeed mentioned. She was, in fact, added to the “Best Practices” Team after the meeting without the Council's knowledge or concurrence. (Read the Minutes here)
Once again, no one questions Ms. Dormanski’s abilities or integrity; only how she, like Bulteza-Breton, like Kornafel, indeed like Danilchick himself, came to be on a committee ostensibly reporting to the Metropolitan Council, without having been appointed to it by the Metropolitan Council.
The Committee was now complete; the controversy growing; and battle lines forming.
The June 13-14 Metropolitan Council Meeting
At the June 13-14 Metropolitan Council meeting referred to above, Fr. Kucynda announced that:
“With the blessing of Metropolitan Herman, Protodeacon Peter Danilchick prepared a draft of a basic document and a number of amendments for consideration. We will receive the document and discuss it tomorrow as part of our morning session...”
The discussion took place, but what happened is the topic of some debate. Here is Dr. Skordinski’s E-mail to Matushka Buletza-Breton immediately following the meeting:
“Dear Mary ~~
It was with interest that I read yesterday’s OCA web page article concerning the “Best Practices” Committee (BPC). Although this committee currently has no standing with the Metropolitan Council (MC) or the Statute, this article anticipates the committee will assume the prerogatives of the MC and the Statute. In particular, the establishment of an audit committee, the unilateral ability to implement “Best Practices” without consulting the MC or its appointed representatives, and the BPC being the agent of implementation for all these anticipated “Best Practices”.
This committee - however well intentioned and without standing - needs as its first order of business to use the Statute as its beginning instead of “reinventing the wheel.” The OCA got itself into trouble because it ignored the Statute! If the MC had been consulted on a routine basis and been treated as an equal partner in the work of the OCA, I doubt we would be where we are today. To lament the errors for past years is a waste of time, but we must not repeat the same errors again!
If you begin with the Statute, you will understand well-intentioned actions do not automatically lead to success or trust. The OCA has an audit committee, a BPC should be appointed by the MC and not by executive action, and proposed “Best Practices” are the responsibility of the MC, not the Metropolitan or the treasurer.
Dr. Skordinski’s’ objections were echoed by a second Council member:
“While not questioning the integrity of the people on the “Best Practices” Committee, I second that.
The accusation that in the recent past some overstepped their authority is now being repeated by a new administration.
To which Protodeacon Danilchick replied:
“....I was not present at the most recent Metropolitan Council meeting. However, judging from the minutes of that meeting posted on the OCA website, I’d have to believe that the BPC was charged with the responsibility of “implementing the standard protocol of ‘“Best Practices”’ for financial management for non-profits, which is posted on the OCA web site.”
According to Dr. Skordinski, both the website and the minutes are problematic. Take for example, the Metropolitan Council’s “Member’s Statement” posted on the OCA website following the meeting. No such statement was ever voted upon by the Metropolitan Council - yet it is posted as if it were.
Dr. Skordinski sent two emails to Fr. Kucynda, with copies to the Council, asking for that statement to be rescinded – because she never assented to it, nor was it voted on by the Council. Fr. Kucynda’s only response has been that Fr. Tate wrote that statement.
The Council's decisions are even less clear concerning "Best Practices". The Minutes from the June meeting are very confusing. The Minutes state: “Matushka Breton offered a review of the ‘Best Practice Principles for Nonprofit Financial Accountability’ prepared by Protodeacon Peter Danilchick. . . . Father Matthew Tate moved that the MC adopt the presented draft practices/policy documents as ‘working documents’ and that they enter into effect immediately. These include the ‘“Best Practices” for Financial Accountability,’ ‘Ethics Policy,’ ‘Conflict-of-interest Policy,’ ‘Whistleblower policy,’ and ‘Retention policy.’” From this it would seem that the Council adopted what it was presented and these policies are now in place to be followed. But then the Minutes continue: “....the implementation of the draft documents will be reviewed by the MC at is 2006 fall meeting, at which the Council will also examine, revise, and adopt the final documents.”
How does one adopt and put into effect immediately a draft policy – and then decide to discuss the implementation at the next meeting four months later? Are they in force or not?
Despite a meeting of the "Best Practices" Committee on June 30th, (read about that meeting here) Dr. Skordinski’s questions arising from the June 14th Council meeting remain open: Is it important how something is done, or just that it is done? Can a Church be returned to the rule of law by ignoring the Statute it is to be governed by? Can a return to conciliarity be fostered by fiat?
The Battle Widens: The Content of “Best Practices”
In late August 2006 Protodeacon Danilchick asked for comments, suggestions and volunteers in a widely-read Reflection posted on this website. (Read that Reflection here) Among the responses he received is the following from a lawyer, a member of the OCA, who had written the Council earlier:
I am writing at the request for input in your Reflection posted yesterday on OCAnews.org. While I may indeed have additional comments or suggestions in the coming days, I wanted to send to you a copy of the Conflict of Interest Policy I drafted and had implemented.....This Conflict of Interest Policy is a more detailed version than the one you have suggested and is based on my law firm’s extensive experience with nonprofit work and review of recent IRS decisions. It also may address the interesting issue of whether Matushka Mary Buletza Breton has a “financial interest” but not a “conflict of interest” in her new position as chair of the “Best Practices” Committee.” As you may know, the Conflict of Interest Policy is a document that the IRS is reviewing with greater scrutiny for 501(c)(3) organizations and indeed are expecting to find in the corporate files. Moreover, the IRS is expecting that the document not be approved, signed, and filed, but that it actually be implemented and enforced.
While I am sure that your efforts are appreciated and the “Best Practices” that you have articulated appear to be common sense and noncontroversial, it remains unknown whether the adoption of any of these “Best Practices” in form will resolve any of the current issues facing us administratively and financially. The OCA Statute provides express competencies for our Metropolitan Council, yet the Statute continues to be ignored. It appears that we do not have enough people sitting on the Metropolitan Council who are either willing or capable of speaking out and nipping problems in the bud before they fester out of control. Those who do speak out are considered to be troublemakers and ignored. If the Statute is unable to provide guidance and authority to the Metropolitan Council and its members, how will these “Best Practices” provide any more support to this group to get the job done? Simply put, where are the teeth? I hate to see you and others spending your time to have a policy adopted that will provide no legally binding requirements...
While these criticisms were general, others foresaw real practical problems with the proposed “Best Practices” as well as with the document the Best Practices Committee released on August 24 to the Metropolitan Council, entitled "Outline of Recommendations For Detailed Implementation of the Best Practices." In that outline, Protodeacon Danilchick's committee recommended that the Council establish three new internal committees, (Finance, Audit, and Investment) and said that members of those committees "should have expertise in financial matters, education or experience in business, and time to dedicate to the committee." In a letter to OCANews.org yet another attorney wrote:
“The committee’s recommendations here are a pipedream. Why?
Work the numbers. 20 members from the 9 dioceses and the sole ethnic diocese (Albanian) that sends representatives. 6 members elected by the AACs. That’s it, 26, (13 priests, 13 lay) because under the conflicts of ethics policies, no one on the MC from Syosset can (or should) sit.
If you name just three people to each of the three committees --- which might be a low number for all the work that the Audit Committee will be charged with doing --- and add 2 more members to be named to the Administrative Committee (2 by Statute; 4 by recent practice), then you’re looking at least 11 qualified business/financial people that will have to be found, out of the 26, to serve. (And remember, as the proposed policies point out, MC members really shouldn’t serve on more than one of these committees....) So, although I like the idea of such committees, it’s a pipedream. There aren’t anywhere near that number of qualified people on the Metropolitan Council..."
Still others have real problems with the content of “Best Practices” as currently proposed. In answers on the OCA website Protodeacon Danilchick stated on September 26th:
“QUESTION 4: “Will both the Finance and the Audit Committees be able to tell anyone anything about our finances without exception and free from any coercion?”
ANSWER 4: The Finance and Audit Committees are proposed as Committees of the Metropolitan Council and report to it. It is within the province of the overall Council to decide upon disclosure outside of its own confines.
However, the “Best Practices” certainly call for open disclosure as follows: ”the administration provides accurate, comprehensive and timely information to the OCA constituency.....”
In short, as the Protodeacon explains it, the new rules will allow a simple majority of the Metropolitan Council to block disclosure of any business of the Council to anyone else. Anyone violating that could presumably be removed from the Metropolitan Council for violating “Best Practices”. This is a step forward towards accountability and transparency?
Or the following:
“QUESTION 6: “The proposed “Best Practices” are I believe a step in the right direction. If the Metropolitan Council should comply and our Seminary Boards were to comply then would this also be the case for all church governing bodies including individual Church councils?”
ANSWER 6: The “Best Practices” of good financial reporting and accountability are applicable with varying degrees of emphasis and detail to all non-profit and church organizations. “
Notice how Protodeacon Danilchick dodged the direct question on transparency for seminaries and other organizations and departments of the OCA. Can the “varying degree of emphasis and detail” mean little to zero transparency, as is now the case with many of our Church-affiliated and Church-owned entities? What happened to the Lesser Synod’s statement of January 2006 that it “strongly encourages all levels of the Church’s administration to adopt such practices“ ? Did somebody actually read ““Best Practices”” and begin to worry?
Then there is the question of a review of the proposed "Best Practices" by attorneys before they are put up for a vote by the Council. It must be determined whether or not any of the proposals run afoul of New York state laws governing the conduct of non-profits and churches, and legal opinions should be rendered as to whether or not the proposed "Best Practices" are otherwise complete and applicable to the OCA. Although Metropolitan Council members have asked that church attorneys review the draft proposals, and appear before the Council to render an opinion and answer questions, those requests, to date, have been rejected by Fr. Kucynda and the Metropolitan.
Industry analysts point out that “Best Practices” are predicated on four key elements. They are:
• Honest people
• They must apply to everyone - without exception
• Both the Finance Committee and the Audit Committee must be absolutely unencumbered
• Both the Finance Committee and the Audit Committee must be able to tell anyone anything without exception and free of any coercion.
In practical terms this means the Metropolitan and Bishops should be as bound by these practices as are all “employees” at Syosset. It means the Finance and Audit Committees must be able individually, or as a group, to access any financial information they want, any time they want, at any level of the OCA. There can be no “privileged information” unavailable to them at any level.
“Good people - Total access - Ask anyone - Tell anyone” are accepted as the foundation to effective “Best Practices” in any organization, not just the OCA. Without those stipulations they’re just words. The best written practices in the world would not have prevented the problems we now have in the OCA. We have a pretty specific Statute, but its articles were --- and still are -- being ignored. Adding more words won’t solve that problem; only distract from it.
“Best Practices” should never have been used as a fig leaf to be trotted out to fool people into thinking real progress is being made when it is not. That is even more true now as the crisis has deepened. They are too important to be imposed by fiat, or to be adopted without debate, no matter how well-intentioned or well-meaning the effort. Moreover, as this document is to have a cascading effecting throughout our church institutions, dioceses and parishes, would not adoption be better suited to discussion at an All American Council?
Battle lines have been drawn. Battle has been joined. But asking the Metropolitan Council for a simple up or down vote as is presently planned, with no attorney review, with no additional opportunity to amend, with no attempt to initiate a church-wide discussion on a church-wide issue is hardly the way to engender dialogue, transparency or accountability. And wasn’t this the point in the first place?
Unless "Best Practices" can be embraced by all sides, there will be no winner in this battle, no matter the outcome. There will be only losers. And the biggest loser of all will be the Orthodox Church in America.