APNewsBreak: 'Three Cups' author mismanaged group

By Matt Volz

Associated Press

Published: Thursday, April 5 2012 1:00 p.m. MDT

HELENA, Mont. — "Three Cups of Tea" author Greg Mortenson mismanaged the nonprofit organization he co-founded to build schools in Pakistan and Afghanistan and spent charity money on personal items, family vacations and millions on charter flights, according to an investigative report released Thursday.

Mortenson's control of the Central Asia Institute went largely unchallenged by its board of directors, which consisted of himself and two people loyal to him, the report prepared by the Montana Attorney General's office said. When an employee would question his practices, Mortenson either resisted or ignored the person, the report found.

The result was a lack of financial accountability in which large amounts of cash sent overseas were never accounted for. Itemized expenses listed as program-related were missing supporting receipts and documentation. Employees and family members charged items such as health club dues and gifts to CAI credit cards.

Mortenson himself reaped financial benefits at the expense of the Central Asia Institute, including the free promotion of "Three Cups of Tea" and his later book, "Stones Into Schools," and the royalties from thousands of copies CAI bought to donate to libraries, schools, churches and military personnel, the report said.

Mortenson must reimburse the charity more than $1 million under a settlement agreement. Nearly half has already been repaid.

The books came under scrutiny last year when reports by "60 Minutes" and author Jon Krakauer alleged that Mortenson fabricated parts of both and that he benefited financially from the charity. The attorney general's probe focused only on the charity's finances and operations, and did not examine the books' contents.

The yearlong investigation concluded that the Central Asia Institute took in far more donations than it spent, and with $23 million in reserves, it still has a strong financial outlook. But the charity needs better oversight so that too much control is not in one person's hands, the audit found.

"Mortenson's pursuits are noble and his achievements are important. However, serious internal problems in the management of CAI surfaced," Attorney General Steve Bullock said in the report. "Despite the severity of their errors, CAI is worth saving."

Mortenson was permanently removed as CAI's executive director in November. Central Asia Institute Interim Executive Director Anne Beyersdorfer told The Associated Press that Mortenson will continue to work as a paid employee of the charity, but he will no longer serve on its board of directors.

Mortenson, who had heart surgery last year, will not continue his former breakneck pace in promoting the books and CAI projects at home and abroad, but he will still be the charity's public face and work to build relationships overseas, she said.

"He's the heart and soul of the organization," Beyersdorfer said. "He's the co-founder and I think we all think of him as our chief inspiration officer."

Mortenson declined to comment because of a still-pending civil lawsuit filed in Montana challenging the claims in his books, she said.

A settlement agreement signed by Mortenson, CAI and the attorney general's office said Mortenson will be barred from being a voting member of the board and from holding any position of financial oversight as long as he is employed by the charity. The charity must expand its board from three to at least seven members, and the other two current board members must step down within a year, according to the deal.

The agreement also calls for an overhaul of the charity's operations and board.

Beyersdorfer said the organization disagrees with some of the report's conclusions and analysis, particularly that Mortenson spent charity money on personal items, but signing the settlement agreement "was the right thing to do and we're all going to move forward together."

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