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Turning the Barge, Pumping Bilge

According to several participants the recent reports from the OCA concerning the Metropolitan Council meeting held June 12-13 at Syosset are accurate in what they say - they just don't say enough to be fully accurate. As one Council member, trying to put the best face on events, stated to "The barge has not totally made the 180 degree turn it needs to make. On the other hand, it is not dead in the water. There is the predictable sputtering in the engine room, and a great deal of bilge still to be pumped out....."

In short, good things were accomplished at this Council meeting, but little was resolved.


For example, Syosset's first press release on the Council begins with a report on Audits. (Read it here) It seeks to give the impression of a clean audit, although the reality is that it is a very qualified audit. The press release mentions two such qualifications ("significant issues related to the use of restricted funds through December 31, 2005", "ownership of Alaskan properties"), but it fails to mention others: such as the inability to determine an accurate starting point given seven years of corruption (including the destruction/removal of documents), the pending criminal investigation into where the diverted monies went, or for example, the still-open question of what is owed, if anything, on the Kondratick Promissory Note. The 2006 audit was much better than not having anything in the past seven years, and it was all that could be reasonably expected given its limited scope and possibilities. There is still a great deal of bilge in those holds, though.

For example, the press release completely omits any mention of the Council's discussion of the scandalous lack of internal audits by the OCA Auditors during the past seven years. According to participants, Fr. Paul Suda, the chairman of the OCA Audit Committee since 1999, was asked whether the new quarterly review by the internal auditors was a change from past practice. He answered that it was. He was then asked how often the auditors met over the past 7 years. Fr. Suda replied with a nervous laugh: "You don't want to go there. We met maybe once or twice in that time."

Once or twice in 7 years? At the joint meeting of the Metropolitan Council and Synod of Bishops held in December 2006, a "No Confidence" motion in the current Audit Committee was put forward by Council members appalled by such dereliction of duty after hearing the reports of the independent external auditors. The Metropolitan stopped the motion. At this meeting the Metropolitan attempted to justify the Audit Committee's inattention by pointing out the Audit Committee had not "been invited to Syosset" during the years in question. What kind of leader thinks he has the authority to "invite" or not invite auditors to do their work? What kind of audit committee waits to be "invited" to look at the books? Given such past dereliction- and present justification - who could have any trust in anything such a committee would attest to? The OCA needs a new Audit Committee if trust is to be renewed.


The reorganization of the administration in Syosset continues, with two of the four new officers scheduled to take office this summer. A new Secretary of the OCA, a layman, was agreed upon, but the official announcement awaits his confirmation by the Synod. Based on a recommendation from the external auditors, the Reorganization Committee proposed to the Metropolitan Council that a full-time accountant be hired to handle most of the day-to-day duties of the Treasurer, with the Treasurer's job being readvertised as a part-time position. After much discussion, the proposal failed by a single vote, and the search for a full-time Treasurer will resume. The embarrassing difficulty in finding a Treasurer for the OCA means that Fr. Kucynda will remain "Acting Treasurer" for the foreseeable future.

Best Practices

The OCA reports: "Council members made substantial progress with regard to Best Practices Principles and Policies for Financial Accountability. Working together in full session, Council members reviewed the draft document in detail and, in approving final edits, adopted five of the document's major sections: 'Best Practices Principles,' 'Ethics Policy,' 'Conflict of Interest Policy,' 'Donor Bill of Rights,' and 'Document Retention Policy.'"

(Read the entire document here)

First presented to the Council more than a year ago, the passage of Best Practices was a central part of the Reorganization Plan proposed by the current administration. In subsequent Council meetings, though, it was not passed, as members found difficulties with section after section, while necessary sections were simply absent or weak - such as "whistle-blower" protection.

Members of the committee who were drafting Best Practices, which included only one Council member, had insisted for months that Best Praactices were ready to be approved as written, and repeatedly urged the MC members to do so. In the middle of a heated debate with Council members by e-mail last week, the spokesman for the Best Practices Committee, Protodeacon Peter Danilchick, suddenly resigned citing other responsibilities.  As one Council member stated: "It was rather like being told to buy an appliance at a scratch and dent sale, like it or not." The Council ended up approving Best Practices, but what the Council passed was not entirely what Syosset intended.

The Council divided the Best Practices document by sections for review, but worked as a "committee of the whole" on the entire document to make actual revisions. A number of inconsistencies and omissions, chiefly centered on the whistle-blower's policy, were corrected. For example, the original version encouraged whistle-blowers to complain to management (about management). The revised version offers a different pathway, through a newly-established Ethics Committee of the Metropolitan Council.

In the adopted Best Practices document suspected fraud must now be reported to the Chairperson of the Ethics Committee. The Council can then fire employees who are found guilty. The Council itself will make that determination - once the Ethics Committee has investigated. The Ethics Committee is elected by, and accountable to, the Metropolitan Council - not management as Syosset originally intended. Moreover, failure to report suspected fraud is now grounds for termination of employment - as failing to report is itself now a violation of the policy. Most importantly the Council applied the policy to all staff, employees and volunteers - meaning the Synod, the Administration, and the Council itself are all subject to Best Practices.

It is important to note that before the meeting began no proposal had included the Synod itself in Best Practices.

In another significant change from the original proposals, the new Best Practices contains no worrisome "confidentiality agreement" that could be used against Council members. It does, however, include a "Disclosure of Conflict of Interest" policy. Failure to disclose potential conflicts of interest can now result in appropriate discipline, including firing/removal of the offender. Once again. the revised policy applies to the Synod, the Administration and the Council itself.

Best Practices must now be approved by the Synod before full implementation. So, good work was done - but little has been resolved.

The Special Commission

The second, longer press release posted by the OCA the day following the Metropolitan Council meeting stated:

"INVESTIGATION COMMITTEE: Council members (Editor's note: unanimously, and for the second time) adopted a resolution calling for the continuation of the special committee established to investigate financial malfeasance affecting the Church, including IRS implications. In approving the resolution, Council members cited the need to discern how the malfeasance occurred and how it can be prevented in the future. While acknowledging their Primate's authority to take action for the good of the Church, they spoke of the need for the faithful of the Church to know as much as possible about what went wrong systemically. Metropolitan Herman agreed with the need for further investigation, but cited confidential reasons for temporarily suspending the committee's operations. The Council requested that Metropolitan Herman release to the public the preliminary report of the Special Investigative Committee. However, he determined that the dissemination of any documents that relate to the pending ecclesiastical court trial against the former chancellor, Protopresbyter Robert S. Kondratick, would be inappropriate at this time and could be construed by some as an attempt to compromise the independence of the Court."

Although there was substantial discussion about the Commission, the suspension of the investigation and the Commission's report, there was no resolution of the central issues involving any of the three.

Some interesting details and exchanges took place however, none mentioned by the press release:

• The Metropolitan confirmed that the Synod of Bishops had indeed accepted the Council's motion to permit the Commission to continue its work at their March meeting, as it was passed by the Council at its March meeting a week earlier.

• That motion, of course, included the language about "no interference from anyone outside the Commission." At one point a Council member pointed out to +Herman that by suspending the Commission and informing its members in a recent letter they would report only to him once they were reactivated, that these two unilateral decision appeared to directly contradict the decisions of both the Synod and the Council. Moreover, his continued involvement with the Commission as a former Treasurer was contrary to the "conflict of interest" policy the Council had just passed. The Metropolitan did not answer.

• +Herman did answer Alice Woog, though, when she asked why Council member Gregg Nescott was present, since he had suspended Nescott. She asked what did it say about the state of the Church if the Metropolitan's rulings could be so ignored? +Herman replied that Nescott's suspension from the Council was all "a big misunderstanding", and that it was Archbishop Kyrill's doing to suspend Nescott, not his.

On This Barge, All Herrings Are Red

If the press release did not mention the above, much of what it stated in the Special Commission paragraph are simply red herrings. Consider the phrase "including IRS implications" in the opening sentence. One might assume Syosset was suggesting this might be a problem. In fact, the Council at previous meetings has been advised by various attorneys that the loss of tax-exempt status churchwide was unlikely, in view of the circumstances, and in view of the steps the OCA was undertaking to pump the bilge and turn the barge.

Or this red herring: "...but cited confidential reasons for temporarily suspending the committee's operations." In the same breath the Metropolitan publicly agrees with the Commission continuing, and then cites private reasons for ending it. If something about the OCA is too "confidential" for even the Synod of Bishops, we have more serious problems than anyone could imagine; or, perhaps, the reasons are not really so confidential at all....

Or this red herring: "...he determined that the dissemination of any documents that relate to the pending ecclesiastical court trial against the former chancellor, Protopresbyter Robert S. Kondratick, would be inappropriate at this time and could be construed by some as an attempt to compromise the independence of the Court." By some? Who? Of all the reasons given to not release the report, that is the most novel yet. How could releasing the evidence already presented in court compromise the independence of the court? Depending on the strength of the evidence, questions might be raised about the validity or fairness of the court's verdict, but certainly not its independence.


Syosset's statement continues:

"CHARITY DISBURSEMENTS: Council members unanimously authorized distribution of $157,000.00 in charity funds. These funds had been collected or granted for specific purposes -- for 9/11 victims and for Bibles to be distributed in Russia. Today's decision continues the process of correcting the effects of financial violations in which funds with specific purposes were diverted for unauthorized uses and for which a major portion of the $1.7 million loan was needed."

At its March 2007 meeting, the Council heard from the OCA's auditors that the $67,000 originally donated by the Chaplain's Department of the Department of Defense for "Bibles for Russia" should be repaid from the Operations budget, since it was not included in the Honesdale loan monies. Syosset resisted the additional expense, but the Council would have none of it. The monies are now to be sent, in full, to the International Bible Societies' Moscow office. Some $67,000 worth of Bibles are to be distributed free of charge to Orthodox and other institutions in Russia.

Approximately $292,000 in designated funds were donated to the OCA through the 9-11 Special Appeal. Only $25,000 can be ascertained to have been distributed. (This was a check to Pentagon survivors presented at St Mark's Church, Bethesda in 2002.) Of the remaining $267,000 the Council decided that $90,000 (being the amount designated for 9-11 reimbursement in the Honesdale Loan) will now go to the New York Disaster Interfaith Service (NYDIS). NYDIS was formed in response to the need generated by the 9-11 Attacks for coordination of disaster relief by NY City's various faith communities. In particular, continuing assistance to victims of the 9-11 Attacks is provided by NYDIS's Unmet Needs Roundtable. According to the NYDIS mission statement: "The mission of Unmet Needs Roundtable is to bring together donors and case work agencies to financially assist those impacted by a disaster, provide emergency assistance, and ensure victims' long-term recovery in cases when all other means of assistance are no longer available." (

And what of the rest of the money?

Fr. Kondratick claims he disbursed the remaining $170,000 without keeping records. Syosset has suggested since there is no evidence he did not, since there is no evidence, the Church may not be legally required to reimburse these monies further. But Fr. John Reeves, Chairman of the Metropolitan Council's Charity Committee, and a member of the Special Investigative Commission, would have none of this. He argued forcefully that this entire sum had to be restored, from 2008 and 2009 operation budgets, if need be, to spread the repayment over a reasonable period of time. No decision was finalized.

Once again, good work was done, but little was resolved.


Given a past where nothing was reported from the Metropolitan Council meetings, Syosset's timely publication of summary reports may not be "all the news that is fit to print", and more like "all the news that fits", but it is a step in the right direction. Here is the some of the news that was not included:

• The Council agreed there was a need to have a new General Counsel for the OCA. The Council passed a motion to have the new Administration pursue five bids for General Counsel services. Also, it was agreed that Proskauer Rose LLP should not be used for routine legal matters.

• The Council amended the budget to allow for more money for Metropolitan Council meeting expenses, and to pay attorney fees, including Proskauer Rose LLP.

• At the present rate of income/expense, the OCA is expected to end the year with a slight deficit in a $3.3 million budget.

All in all, good work was done in turning the barge, and some bilge was pumped - but little was resolved.

- Mark Stokoe


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