County Will Probe Loans to Officials of United Way
The Los Angeles County Board of Supervisors ordered the county counsel Tuesday to investigate loans of more than $300,000 of donated money by the Los Angeles-area United Way to five executives of the charity.
State Atty. Gen. John Van de Kamp, who is guardian of charitable trusts, asked the supervisors to take over the investigation because his wife, Andrea, was a director of the Los Angeles-area United Way until Tuesday.
County Counsel DeWitt Clinton said through a spokesman that he has not determined the scope of his inquiry, but that it will probably begin with independent auditors examining the charity’s books. The cost of the investigation will be billed to Van de Kamp’s office.
Because of the inquiry the supervisors also asked the county Business License Commission to conditionally or temporarily renew United Way’s solicitation permit, which expires June 30.
Last week the commission, which had approved the permit pro forma for 23 years, ordered a formal inquiry and a hearing, which is expected to proceed today.
The supervisors acted after Roy Anderson, the unpaid acting United Way president, appeared before them to explain the agency’s own efforts to examine its financial practices.
Anderson described the loans of more than $300,000 of donated money as “not proper.”
“However,” he added, “I really believe there was no intent of wrongdoing.”
Neither the charity’s board nor its executive committee knew about the loans because of “short cuts” in procedure, which Anderson also characterized as improper. Anderson also said that the charity’s board must become “more inquisitive.”
The loans, most of which were interest free, unsecured and have not been repaid, were arranged by Francis X. McNamara Jr., the charity’s president for the last 19 years, and were approved by a few key directors. Three of the loans were to help executives relocate, one went to an executive already living in Southern California to obtain housing and the fifth was to help an executive facing extraordinary medical expenses.
Anderson said he hoped that no future loans would be made to United Way executives. He pledged that if any loans are made they will be approved by the charity’s full board, with details disclosed in its annual report.
At United Way’s annual meeting Tuesday, Anderson, 65, retired chairman of Lockheed Corp., was succeeded as United Way chairman by William F. Kieschnick, 63, retired president of Atlantic Richfield.
McNamara, who said last week that he would temporarily step down as part of his plan to have an independent citizens committee examine his financial management practices, sat with Anderson and Kieschnick at Tuesday’s luncheon. Anderson told the audience that he had asked McNamara to delay the start of his leave of absence until today.
At the supervisors meeting, Supervisor Kenneth Hahn said United Way should question its outside auditors about why they did not advise the United Way board about the loans and lack of repayments.
“I think, really and truly, our CPA firm should have set this forth in a management letter,” replied Anderson, an accountant by training. He said he will ask Deloitte Haskins & Sells why such a letter was not written.
“The United Way has to be pure as the driven snow as far as I’m concerned,” Supervisor Mike Antonovich said.