United Way’s Chief Quits in Funds Dispute

The president of the United Way of America stepped down Thursday after allegations that he misused funds at the nation’s largest charity.

In a teleconference received on audio and video hookups at many United Way offices around the country, William Aramony, 64, apologized for a “lack of sensitivity to perceptions” and conceded making some mistakes. But he gave no detailed response to allegations that he used some of the charity’s money to fuel a lavish lifestyle.

Aramony, who announced that he would move up his planned July, 1993, retirement in view of the controversy, said he was hurt by what he termed “unfair criticism of a system that has done so much for this country.”

“I’ve never been through something like this in my life,” he said.

In Ventura County, where United Way officials had supported the boycott, Aramony’s departure was welcomed.

“Under the circumstances, it was the appropriate action for him to take,” said Mario J. de los Cobos, president of United Way of Ventura County.

Executive Director Colleen M. Hunter agreed: “The general public has lost confidence in his leadership.”

Aramony’s announcement was also welcomed by other United Way affiliates nationwide that have withheld their dues pending an investigation. But it seemed unlikely to bring a quick end to the dispute that has shaken the organization.

Several affiliates said they would continue to withhold funds until questions about Aramony’s spending habits and the organization’s financial controls were answered to their satisfaction.

“We’re still very much concerned about getting an appropriate answer” and, so far, “what we have received is very limited and generalized,” said Jean Ross, vice chairwoman of the National Capitol Area United Way.

Others worried about the impact of the controversy on contributions.

“In this day and year, when we are being affected by the recession, we need this kind of negative publicity like we need a hole in the head,” said Stephen D. Gavin, vice chairman of the board of directors of the United Way of Greater Los Angeles.

United Way of America spokesman Tony De Cristofaro said Aramony had been asked to remain in his $463,000-a-year job until a replacement is found, a process that could take months.

As president of the national United Way, Aramony won credit during his 22-year tenure for his efforts to unify many different community chest groups into a national organization and for the high profile he attained for the charitable group.

But the stormy end to his career began this month after the Washington Post reported that he had used charitable donations to finance a free-spending lifestyle of limousine service, overseas trips on the Concorde and an expensive condominium on New York City’s fashionable Upper East Side.

The Post also reported that Aramony had hired a longtime friend with legal and financial problems to serve as the organization’s chief financial officer and that three independent corporations, set up in part with seed money from United Way, had employed Aramony’s son, Robert.

During the teleconference, Aramony conceded that he had traveled first class on some United Way trips, including two or three trips on the Concorde. He pointed out that he had made more than 10,000 trips on United Way business.

“I probably never should have done it in the beginning, in retrospect,” he said of his first-class travel.

Afterward, De Cristofaro released a letter from Aramony offering to retire “for the greater good of the organization.”

A letter in response from LaSalle D. Leffall Jr., chairman of the executive committee of the United Way’s Board of Governors, asked Aramony to stay on until a successor could be named because of the “need to maintain . . . stability.”

Leffall also released a statement noting that the United Way of America hired “an outside investigative firm” to look into the allegations against Aramony after receiving “media inquiries” in December.

The “preliminary investigation” done by that firm “revealed no wrongdoing on the part of Bill Aramony,” the statement said.

But, after the public controversy began, the organization authorized a Washington law firm to conduct a second investigation, the results of which are due April 2, De Cristofaro said.

The United Way of America also announced Thursday that in the future employees will not be allowed to fly first class, will be required to use regular taxicabs or rental cars, rather than limousines, and will have to use “the most economical booking” for international travel. “No more supersonic transport,” De Cristofaro said.

Officials of local United Way affiliates said, however, that they still want information they have requested about United Way of America’s financial controls and its use of charitable funds for lavish spending on items such as limousines and first-class travel.

The national United Way “owes us and all the independent United Way organizations a very clear accountability of the use of those funds,” said Ross, of the National Capitol affiliate.

The Washington-based affiliate, one of the nation’s largest United Way groups, was one of the first to announce that it would suspend dues payments to the national organization.

In addition, local United Ways in Ventura and Orange counties and in San Francisco, New York City, Philadelphia, Denver, Seattle, Cleveland, Las Vegas and several other cities decided in recent days to withhold dues.

Gavin said the board of the United Way of Greater Los Angeles will meet Monday to consider several options, including whether to withhold dues. He said the group “will concentrate on our own campaign and do our best to make people understand that the chapter is independent and that we don’t give United Way of America any money except the dues.”

United Way of America authorizes about 2,200 regional organizations to use its logo and name for fund raising. The national group provides training sessions, publicity materials and other services to local charitable affiliates. In exchange, the affiliates pay dues of up to 1% of their total donations.

Staff writers Kenneth J. Garcia in Los Angeles and Sherry Joe in Ventura contributed to this story.