Dateline: December 27, 2006, Chicago
Representative John Murtha is at it again. Washington Post reporter Jonathan Weisman recently reported on another relationship between the good congressman and the nonprofit community. See Jonathan Weisman, Nonprofit Connects Murtha, Lobbyists: Ties to Pa. Group Mutually Beneficial, Washington Post, December 25, 2006. This one looked like it might fall into Category II (New Patronage) or Category III (Soft Landings). As it turns out, the relationship falls squarely...
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into Category I (Buying Access).
According to Weisman, Murtha announced the creation of the Pennsylvania Association for Individuals with Disabilities (PAID) in 2001. The man behind this new charity was Carmen Scialabba, a longtime Murtha staff member who worked with Murtha in allocating billions of dollars of congressional appropriations. It is one thing to announce the formation of a charity. It is quite another to fund it. Murtha saw that it was funded, first securing half a million in federal funding for the organization in 2002. He worked on additional funding for the organization in 2003.
The organization helps disabled people find work. According to Weisman, it has succeeded in helping hundreds of people find work. It has, according to Weisman, also served as “a gathering point for defense contractors and lobbyists with business before Murtha’s defense appropriations subcommittee...”
Weisman reports that Scialabba believes that PAID is above reproach. If it had a board of directors and advisory council that consisted of members of the Johnstown, Pennsylvania community, he might be right. But this is a classic case of believing too much in the halo that comes with doing good. According to Weisman, PAID’s board consists of Scialabba and five government contractors who have received millions of federal dollars through Murtha. “Its advisory council includes three lobbyists from KSA Consulting, which employs Scialabba and employed Murtha’s brother, Kit. Its honorary board members include still more defense contractors.”
There is an element of Category II abuse here. One of Murtha’s defenders is a defense contractor who has hired a number of disabled individuals and is a member of PAID’s board. According to Weisman, this contractor received a $1.3 million earmark for chemical and biological weapons detection research this year. The federal government also picked up the $7 million cost of training the disabled hires. Weisman lists two other defense contractors who have received government contracts and who have relationships with PAID. Their employees have contributed heavily to Murtha’s campaigns.
Weisman has done his homework. He examined the campaign contributions made by insiders. They have contributed $125,000 to Murtha’s campaigns during the last three election cycles. They are also big buyers of services from three lobbying firms with close ties to Murtha, according to Weisman.
We are a little troubled by PAID’s Form 990. The 2005 version lists a treasurer, a president, a vice-president, and two executive directors. Yet Part V-A asks that each person who was an officer, director, trustee, or key employee be listed even if they received no compensation. The organization’s Web site lists 11 people as directors. Why aren’t these people listed as part of the Part V-A disclosure? It could be timing differences regarding the period covered. But we would like some clarification.
The big question: Once the Democrats take control of Congress next month will they continue to tolerate the cozy relationships that come packaged as “business as usual"?
For those who are unaware of our very own Jack Siegel's work in this area, you might want to review his article, entitled The Wild, the Innocent, and the K Street Shuffle: The Tax System's Role in Policing Interactions Between Charities and Politicians. The article first appeared in the November issue of the Exempt Organization Tax Review and then in Tax Notes Today.
Permission is granted for single downloads of the article. You may not copy or redistribute this article to anyone. You may provide them with a link to this blog entry, but not the link to the actual file. Click here for the article. If you like the article, you'll love Jack's book (see grey box). Buy a copy today and support Jack's efforts and this blog.
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THE FOREGOING IS NOT AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. IF LEGAL ADVICE IS REQUIRED, THE NON-PROFIT OR OTHER PARTY IN QUESTION SHOULD SEEK THE ADVICE OF QUALIFIED LEGAL COUNSEL. If you liked this post, please visit http://www.charitygovernance.com for a description of our training and consulting services. You will also want to acquire a copy of Jack Siegel's book, A Desktop Guide for Nonprofit Directors, Officers, and Advisors: Avoiding Trouble While Doing Good."
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