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Supporters, critics and community members are reacting to the attorney general’s investigation into Greg Mortenson and the Central Asia Institute with disappointment and concern, as well as optimism and happiness.

Supporters are disappointed because they believe the investigation was too harsh on the Bozeman philanthropist and the nonprofit he co-founded. Critics are disappointed because they feel it wasn’t harsh enough.

Others are optimistic that CAI will be able to move forward and carry out its mission. Nonprofit staff members say they have learned from the ordeal.

Attorney General Steve Bullock released a 31-page report Thursday that found Mortenson must pay more than $1 million in restitution for mismanaging CAI’s money.

Mortenson failed to fulfill his responsibilities as the executive director and as a board member for the nonprofit, which aims to empower communities of central Asia through literacy and education, particularly for girls, and to promote peace through education in the U.S. and abroad. Mortenson will still be allowed to be part of the group, but cannot have financial oversight or be a voting board member.

The investigation detailed financial missteps he and CAI have made and identified corrective actions that must be taken to remedy the problems. A new executive director and seven new board members will be hired to better manage CAI, and the attorney general’s office will monitor the group for three years.

Media reports and allegations spurred the investigation, which was launched nearly a year ago.

Since then, many have been awaiting the attorney general’s report. There are mixed reactions now that it’s here.

Nonprofit reactions

Charitable organization throughout the state and country can learn from the mistakes of CAI and Mortenson, the report stated in its conclusion.

“Hopefully this report can help them, and the advisors who work with them, to continually assess whether they are acting in a manner that satisfies their duties of care and loyalty,” the report said. “And for organizations that experience similar growth, it can serve as a warning that it is important to manage that growth.”

Carol Townsend, president and CEO of Greater Gallatin United Way, said nonprofits in the area have been making sure they’re doing everything correctly because of the problems CAI has had.

“I do think that yes, this has been an eye-opening moment,” she said. “I think board members of any organization probably had to stop and pause. It’s not a bad thing.”

The local United Way tries to be a model of transparency and accountability for other charities, she said. It has a 27-member board and puts its financial information online for at least the past three years.

“We invite complete transparency at all times. It’s our number one core value,” she said.

She said the community was sad when allegations against CAI came out last year, but that she has “joined all others who are now happy that CAI can continue on with their good work.”

Paula Beswick, director at the Bozeman Public Library Foundation, said its board spent a good deal of time discussing the CAI controversy when it broke last spring and then went through its own policies.

“We talked to accountants, lawyers and looked internally to make sure as a foundation board we’re doing everything we can,” she said.

The board was told it has very clean books and records. Still, Beswick said it was a good lesson and exercise.

“We addressed it in a very meaningful way,” she said. “Because of that, we feel really confident in what we do.”

She said some donors were more skeptical after the allegations came out, and there was a “definite lull” in giving. However, once she explained the board’s processes, donors’ worries were allayed.

Valorie Drake, director of finance and administration for the Greater Yellowstone Coalition, said she was saddened by the troubles CAI has had, but said she knows that nonprofits often get started with somebody’s passion, then lack needed management.

“I do not at all question Greg’s goals for CAI and the achievements he made in that part of the world,” she said. “Unfortunately they didn’t have good controls or systems in place, and they went through an incredible growth spurt…They were not set up for dealing with it.”

She hopes to see the organization survive and do more work. As far as the Greater Yellowstone Coalition, it takes its fiduciary responsibilities very seriously, she said.

“We’ve had internal conversations with our management team and paid attention to what’s happening. We know that this puts a spotlight on all nonprofit organizations,” she said. “We have excellent internal controls in place.”

Jeff Krauss, a city commissioner and the former mayor, is also the finance director for the Museum of the Rockies. When called this morning, Krauss said he had the investigation in hand and was reading it.

He said the report provides “cautionary tales of how easy it is to get swept over the falls. If you become wildly successful, it can be easy to get out of control…unless you take the time to pull over to shore and take a look at where you are.”

He said the Museum of the Rockies has been around for more than 50 years, and has more than 20 people on its board.

“We have people with fresh eyes coming constantly through, and there are term limits for board members,” he said.

If CAI implements the corrective actions required in the report, Krauss said he thinks that the organization can maintain some credibility and still do some good in the world.

“A lot of people in the community want to see that happen,” he said.

Critics

Author Jon Krakauer has been among Mortenson’s harshest critics. Last April, he released an online book, “Three Cups of Deceit,” that made damning allegations against Mortenson and CAI.

Thursday, in an online update posted after Bullock’s report was released, Krakauer wrote that the corrective actions are encouraging.

They include requirements that the three current board members be replaced with seven new board members, and that a new executive director be hired. But Krakauer wrote that he’s worried about how current board members – which include Mortenson – might have a say in some of those hirings.

“This should be cause for great concern,” Krakauer wrote.

The American Institute of Philanthropy cited similar concerns on its website.

“The very same three person board, which includes Greg Mortenson and is responsible for the mismanagement of CAI, is empowered with selecting its replacement board, according to the settlement reached with the Montana Attorney General,” the website said.

The institute began investigating CAI in 2009, according to its website, and was the first to publish concerns about the lack of segregation between the organization’s finances and Mortenson’s personal business interests.

Daniel Borochoff, president and founder of the institute, said he thought the measures taken against CAI and Mortenson were not strong enough and he’s worried that other people will see what happened in this situation and try it themselves.

“The consequences are too small,” he said.

Still, his biggest concern is over the way the new board will be selected.

“It doesn’t make sense,” he said. “Why reward the people that bungled this situation so severely that there had to be this whole controversy and scandal?”

Borochoff said it would be better if people who are independent of Mortenson and understand the complexities of nonprofit organizations chose the new board.

Overall, he said this controversy has embarrassed and shamed the nonprofit world.

“The positive side is it will lead to people being more questioning and to have a healthy skepticism,” he said.

John Doran, a communications officer with the attorney general’s office, responded Friday to the skepticism surrounding the selection of the new board members and executive director.

“It’s not the attorney general’s office’s role to manage the day-to-day operations of this or any other organization,” he said. “We have put in place policies and procedures to enable CAI to move forward with better oversight and more financial controls – that includes a seven member board.”

The board will likely create a stronger quorum against any one person’s influence, he said.

The seven new board members must assume their positions by July 1. Current board members, which include Karen McCown, Abdul Jabbar and Greg Mortenson – as well as their counsel – will help choose the new members, he said.

An outside consulting firm will help CAI find candidates for executive director. The seven new board members will then select the executive director.

Other safeguards are also in place to make sure past mistakes are not repeated, Doran said. For example, CAI will have to make periodic, in-depth reports to the attorney general’s office over the next three years. An independent representative, appointed by the attorney general, will also observe CAI and periodically report back.

“It’s not like we’re turning loose this organization to again repeat the same mistakes they’ve made in the past,” Doran said. “And in all respect to CAI, they’ve made pretty substantial changes in their organization.”

Supporters

Duane Bjelland is an investment broker at First Security Bank and a longtime friend and acquaintance of Mortenson’s. The two first met playing football at Concordia College, and then reconnected many years later in Bozeman. CAI is one of Bjelland’s clients; he oversees their investments.

He said he was surprised at the severity of Bullock’s report.

“It’s amazing how people lose sight of the big picture,” he said, noting CAI and Mortenson’s accomplishments. “We have a way in this country of beating down our heroes. There’s a lot of jealousy out there among his critics. They like to bring down winners.”

Bjelland touted Mortenson’s achievements and said he’s optimistic the group can recover.

Mary Jane DiSanti, former owner of the Country Bookshelf, said she doesn’t think Mortenson did anything wrong intentionally. DiSanti got to know Mortenson over the years when he came to her shop for book readings or signings.

She said she felt Mortenson was exonerated Thursday. DiSanti also said she wasn’t surprised that the report found Mortenson had mismanaged money, as that fit his scattered personality – but she believes he didn’t do it on purpose.

“Personally he is very disorganized, his mind is running a million miles an hour,” she said. “He is not a management sort of person, but he’s passionate about the work and the foundation.”

Sarah DeOpsomer is a friend of Mortenson’s and asked to comment in this article.

“The most important thing for me, as I know Greg personally, is that I don’t believe there’s any kind of devious or corrupt bone in his body,” she said. “I think he’s a sincere person and is well-meaning. I hope the public doesn’t see him as a villain, he just can’t do everything.”

Gordon Wiltsie, a Bozeman resident and adventure photographer, used to be on CAI’s board.

According to the report, he and two other board members were “ousted” after “essentially trying to perform the kinds of oversight functions expected of boards of directors for organizations such as CAI.”

Wiltsie said Friday he thought the settlement was “pretty fair.”

“I’m glad that the truth is acknowledged and that, at the same time…CAI can continue to do the great work they’ve done,” Wiltsie said. “It’s going to be a challenge to regain trust. That’s going to depend on who they get as an executive director and the makeup of the board.

“I’m just happy to see that this is resolved, sort of in a win-win way rather than everybody loses.”

Carly Flandro may be reached at 582-2638 or cflandro@dailychronicle.com.

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