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7.07.06

Minutes Revealed:

Proskauer Rose May Not Be

Minutes from the recent Metropolitan Council meeting, held June 13-14 in Syosset, reveal Syosset's current intention to share the results of the Proskauer Rose investigation only with the Synod of Bishops; and then let the Bishops decide if others are to have the same privilege. The Minutes read:

"The discussion continued relating to the investigation being conducted by Proskauer Rose, LLP. His Beatitude informed the members of the Council that the Holy Synod will be the first to receive the final report concerning the investigation and will then determine how to proceed with its findings."

This new statement contradicts Metropolitan Herman's promise to the Church made in his Archpastoral Letter of April 9, 2006 in which he stated:

"As Primate of the Church, I pledge to you that my office, the Holy Synod of Bishops, the Metropolitan Council and the Chancery staff will cooperate fully with the auditors and investigators until these issues are resolved. As the independent audits for 2004 and for the special appeals are completed, they will be made available on our OCA website in a manner similar to those of other government-regulated not-for-profit religious organizations. Additional audit reports as well as the results of the internal investigation will also become part of our public records when deemed appropriate to do so by the investigators. The Holy Synod of Bishops, the Metropolitan Council, and then all of you will be made aware of the findings in a timely fashion and with good order. "
(Read the whole letter here)

The Minutes on Proskauer Rose

The Metropolitan Council had been promised that Proskauer Rose would offer a preliminary report during its meeting. As late as the night before the meeting, an OCA press release was still reporting that this would be done:

"On Tuesday afternoon, an account representative from the firm of Lambrides, Lamos and Moulthrop will report on the status of the 2004 independent audit and the audit of the 2001 to 2005 annual and special appeals. A report will also be received from the Proskauer Rose law firm conducting the financial investigation on behalf of The Orthodox Church in America. A report from the Office of Development, comprising the Fellowship of Orthodox Stewards, special appeals, and planned giving, will also be presented." (Read the full press release here)

It is understandable, therefore, that the failure of Proskauer Rose to appear dominated the first day of the meeting. The Minutes on the topic, in full, read as follows:

"Discussion of Investigation by Proskauer Rose, LLP

The question was raised as to why an interim report was not being presented at this time by an attorney from the Proskauer Rose law firm to the Metropolitan Council. Father Kucynda noted that due to the fact that the investigation is active and ongoing, the firm will not share any information at this time with the Metropolitan Council or the Holy Synod.

Discussion followed concerning the cost, scope, nature, and participants in the investigation process. Metropolitan Herman informed the members of the Council that a retainer of $100,000 has been paid to Proskauer Rose and that the firm's current billing for services stood at approximately $80,000. There was also discussion concerning the loans that had been taken to pay Proskauer Rose's retainer's fee of $100,000. Father Kucynda noted that the documentation concerning the loan of $50,000 is on file. It is a zero-interest loan in the amount of $50,000. It will be repaid before the end of 2006.

Dr. Alice Woog made a request for the Acting Treasurer to produce the letter of engagement between The Orthodox Church in America and Proskauer Rose, LLP. Father Kucynda indicated that he would obtain a copy for the members of the Metropolitan Council if it was the pleasure of the Council to see the letter. Father Kucynda also reported that the law firm had been engaged by Metropolitan Herman approximately two weeks before the March 16 meeting of the Administrative Committee.

There was a discussion concerning the need to restore trust in the Church and its administration at all levels of Church life. It was noted, however, that full openness and transparency must be used properly so that it is not abused and used against the Church.

It was noted that the members of the Metropolitan Council are on the 'front line' of this matter with the faithful, both in their dioceses and parishes. It was further stated that since Proskauer Rose are the Church's attorneys, the Metropolitan Council is entitled to hear from them.

Dr. Faith Skordinski expressed her displeasure with the fact that Proskauer Rose is not reporting directly to the Metropolitan Council at this session. Dr. Skordinski made a motion that before the end of the two-day meeting, a report be given to the Council by Proskauer Rose. Metropolitan Herman declared the motion out of order.

The discussion continued relating to the investigation being conducted by Proskauer Rose, LLP. His Beatitude informed the members of the Council that the Holy Synod will be the first to receive the final report concerning the investigation and will then determine how to proceed with its findings. Further discussion ensued concerning the manner in which the report will be received."

The Proskauer Rose Timeline

The above passage contains much new and important information that answers some long-standing questions; but also raises new and important questions.

We know now when Proskauer Rose was hired: "Father Kucynda also reported that the law firm had been engaged by Metropolitan Herman approximately two weeks before the March 16 meeting of the Administrative Committee."

The "approximately", however, conceals a crucial detail.  In his June 13th report to the Council the Metropolitan stated:

"It is important to note that, after much prayer and reflection, I became convinced that an investigation of the Church's finances and financial practices was appropriate and necessary. Hence, a special session of the Holy Synod of Bishops was convened in the early days of March 2006 to address the issues that faced us at that time."

That meeting was held February 28-March 1, 2006. According to the Synodal press release that followed:

"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...

2. Review the Disposition of all Monies Collected Through All OCA Appeals from 2001.
Our objective is to have a report from the external CPA firm of Lambrides, Lamos, Moulthrop, LLP for presentation to the Holy Synod by the time of the Spring 2006 meeting.

3. Conduct Independent Financial Audits from 2004
In conformity with past practice, the external CPA firm of Lambrides, Lamos, Moulthrop, LLP will conduct independent audits for all 2004 and 2005 accounts. We have instructed them to give us fair and impartial assessments of our financial controls, and accounting results, providing us with recommendations on how the process can be improved, and made more transparent, disciplined, and accountable.

4. Review of reports at the Spring Session of the Holy Synod
The bishops will review the independently audited reports of 2004 and 2005, and the report on the appeals, when they meet for their Spring 2006 Session, and take such action as may be appropriate (such as establishing a special committee of review). "

While at the time these initiatives were trumpeted as steps in the right direction, Metropolitan Herman has now told the Metropolitan Council a different story. In describing the Synodal meeting the Metropolitan said on June 13th : "Unfortunately, our deliberations were inconclusive." (Read the Metropolitan's report here)

On March 3, the Washington Post, the Associated Press (AP) and the Religious News Service (RNS) all carried stories about the failure of the Bishop's to address the underlying allegations. (Read their stories here)

On March 11, Fr. Paul Kucynda signed a formal letter of agreement on behalf of the OCA with Proskauer Rose to begin an investigation into the finances of the OCA.

The question is: Did the Metropolitan engage Proskauer Rose before or after the public outcry? Was the "approximately two weeks" before March 16th really March 2nd, the morning after the "inconclusive" Synodal meeting; or later, after March 3rd, with the increasing unfavorable publicity that was sure to draw governmental attention? The Metropolitan himself said on March 16th:


"After much prayer and pastoral concern for the well-being of the Church, as the Primate of the Orthodox Church in America, and according to our Statute, Article IV, Section 2-i, I retained the law firm of Proskauer Rose LLP to undertake an internal investigation of allegations relating to the finances of the Church."

This would suggest a later, rather than earlier date for the engagement. Knowing which would go far in explaining whether Metropolitan Herman has a fundamental commitment to uncovering the truth, or is simply reacting to events as part of a continuing attempt to keep the facts hidden...

The Letter of Agreement

The answer to that question and the heart of the current Proskauer Rose debate lies in the Letter of Agreement; so much so, it was the occasion of a pointed, public exchange of emails between Dr. Woog* and Fr. Kucynda on July 3rd. Upon receiving the Minutes, Dr. Woog was quick to offer a correction about the Letter of Agreement. She writes:

"Subject: Re: Metropolitan Council Minutes

Good Afternoon Fr. Paul:

Below is a paragraph of the MC Minutes that does not reflect the actual discussion and explanation of the letter of engagement between the OCA the Proskauer Rose LLP.

'Dr. Alice Woog made a request for the Acting Treasurer to produce the letter of engagement between The Orthodox Church in America and Proskauer Rose, LLP. Father Kucynda indicated that he would obtain a
copy for the members of the Metropolitan Council if it was the pleasure of the Council to see the letter. .....'

The accurate reporting of this request to produce the letter of engagement between The Orthodox Church in America and Proskauer Rose, LLP was that Acting Treasurer Fr. Paul Kucynda was unable to identify
the location of the letter because of his lack of office space and that he was unsure of its whereabouts but that he would produce it as soon as he could, perhaps as early as Wednesday, June 14. There were 4-6 other
Metropolitan Council members that requested that a copy of the letter of engagement be produced for our information.

I request that this correct be made in the minutes.

Thank you.

Alice Woog"

Fr. Kucynda replied that same day, appending the Letter of Agreement.

"Dear Alice,

Though I did not take the minutes, as the Secretary,

I will note your comments when the minutes are reviewed in September at our next meeting.

Since you and one or two other members of the Metropolitan Council assume that I owe you detailed answers to questions--some of which were answered in the minutes themselves--I will ask a question on be half of many members who have approached me about you last email before our meeting.

I believe that it appropriate for you to share with all of us just how you obtained information from the chancery office concerning your "Question #5."

As a member of the Metropolitan Council and as a member of the Administrative Committee, I believe that my requests of you--on behalf of others--as well should be answered? Isn't this fair?

Since you've chosen to circulate all information concerning the Metropolitan Council to all members,

I have decided to respond in kind. I hope you receive this message in the spirit in which it was intended.

With gratitude,

Father Paul"

More on "Question #5" next week. But first, the Letter of Agreement, which Fr. Kucynda provided to all members of the Synod of Bishops and Council members. The three page letter begins:

"Dear Metropolitan Herman:

Thank you very much for asking us to represent The Orthodox Church in America (the 'Church') in connection with an internal investigation of allegations relating to the finances of the Church (the 'Project') ..."

The letter proceeds to explain how, and in what manner, the Church will be billed, and how the relationship may be ended if either is dissatisfied with the services or representation. The billing rate is quoted at $695 a hour; and as the Minutes reflect, an initial retainer of $100,000 was paid.

(Editor's Note: The whole document will be posted on our Documents section early next week.)

By Right, Not Concession

Dr. Woog's insistence in viewing the retainer letter is understandable. The Letter of Agreement is a crucial piece of evidence in that it confirms that Proskauer Rose's client is the OCA; not the Metropolitan personally, nor the Synod of Bishops alone. The client of Proskauer Rose is the Church - the representative body of which in matters legal is defined by the OCA Statute as the Metropolitan Council, not the Synod of Bishops, nor the Metropolitan alone. According to Article V, Section I of the Statute, it is the Metropolitan Council which "Initiates, prosecutes, and defends all legal matters affecting the interest of the Church".

According to a fair reading of the Statute the Proskauer Rose report should go to the Metropolitan Council; and this by duty, responsibility and obligation, not by concession. Moreover, it is not the Metropolitan, nor the Synod of Bishops, which is paying for Proskauer Rose - but the entire Church, whose representative in legal and financial matters is the elected Metropolitan Council. Thus the insistence of at least three Metropolitan Council members (Woog, Skordinski and Popovich) that the Council too should receive the Proskauer Rose report at the same time as the Metropolitan and Synod of Bishops; and in full, without redaction.

Others, however, seemed more concerned about personal liability. The Minutes continue:

"Other Discussion
Daniel Crosby moved that the Metropolitan Council seek legal counsel relating to its responsibility concerning the investigation being conducted by Proskauer Rose, that this expenditure be provided for through the Church's budget, and that the Administrative Committee be authorized to contact attorneys who have volunteered their legal services. The motion was seconded by Dr. Faith Skordinski. The motion carried.

Father Boback inquired about the status of Proskauer Rose, LLP, vis-a-vis the Church and whether or not this firm is to be considered as legal counsel for the Metropolitan Council. It was noted that the firm is the Church's legal counsel and thus that of the Metropolitan Council. Father Tate suggested that for the sake of expediency, and given the immediacy of the matter at hand, that the law firm's advice to the Metropolitan Council be given tomorrow. Father Kucynda stated that he would contact Proskauer Rose concerning their advice being given before adjournment.

Father Kucynda informed the Council that he had spoken with Proskauer Rose, LLP, and reviewed their opinion relating to the responsibilities of the Metropolitan Council. The law firm has advised that it is preferable that Metropolitan Council members not attempt to answer any questions about the investigation until it is completed. The attorneys also noted that the Metropolitan Council members can respond to inquiries by explaining what they have been made privy to concerning the release of the former Chancellor.

Father Kucynda also reported that the attorneys affirmed that the investigation is still very active and ongoing. Because of this, no date has been set for its completion at this time."

Fr. Kucynda then repeats the Metropolitan's earlier statement:

"When the investigation is completed the law firm's report will be given directly to the Holy Synod, which will make the final determination regarding disposition of the results."

Further Details

We know that Proskauer Rose began its investigation on or about March 12, 2006; although the exact date of their engagement remains unclear. It has been confirmed that the OCA as a whole is the client; and the whole OCA is paying for the investigation, through a loan taken out in the name of the whole OCA. But as of now, only the Metropolitan, and then the Synod of Bishops, will see the results. After three months the investigation is still "active and ongoing". OCANews has received several reports from people who have been interviewed, but while all confirm they have indeed been interviewed, all declined further comment. No date has been set for completion of the investigation.

The Question

Will the OCA stand for paying for a report neither they nor their representatives may ever be allowed to see? Can trust and integrity be restored without such a disclosure? Can the Church "move forward" without ever knowing the facts or seeing the evidence? Fr. Kucynda argues in the Minutes "that full openness and transparency must be used properly so that it is not abused and used against the Church." Is telling the truth to the Church "abuse"?

And some indeed may see it that way, if some of the assumptions dominating Syosset at the moment are accepted. In his March 16th announcement dismissing Fr. Kondratick following receipt of Mr. Kutner's letter, the Metropolitan explicitly identified himself as the Church. He wrote:


"I.. interpret his attack on me as Primate as an attack on the whole Church. It is with sadness that I report this to you."

Sad or not, the point is debatable as regards the accusations by Mr. Kutner, whatever they may have been. What is not debatable is that such hyperbole is not sufficient in the matter of Proskauer Rose. The issue here is not the Primate himself, but the Church itself - and in this instance their bests interests may not be one and the same. It does not take a legal scholar to know that in any normal investigation both the Metropolitan and Fr. Kucynda would be recused from any role in the investigation as they were participants in the events under investigation. The fact is that they have chosen not to recuse themselves. Somewhat surprisingly, neither the Bishops nor the Metropolitan Council have questioned these patent conflicts of interest. And now they are suggesting they may not even share that report with the Metropolitan Council or the people? Can the Holy Synod be far behind?

The Metropolitan may feel he alone embodies "the Church" - but if he continues to follow the present course he may indeed find himself alone; with the bishops, clergy and faithful of the OCA going in a different direction, along with their time, talents and money.

-Mark Stokoe

 

(* In an earlier article OCANews mistakenly referred to "Ms. Woog" and "Ms. Skordinski". Both women have earned doctorates and should be recognized as having done so. We apologize for the error.)

 

 

 

 

 

 

 

 

 

 
     
 

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