Assume the Position

Saturday, April 26, 2003
 
You Want The UN, You Got It…In Afghanistan. Although Carlotta Gall, possibly with editorial assistance, does her best to put a blame America slant on this NYT article about the slow pace of reconstruction in Afghanistan, the real reasons seep through.

In the middle of the main road between Kabul and Kandahar lie two bombed-out, rusted fuel trucks, destroyed in American strikes in October 2001. That no one — not the Americans, nor international aid workers, nor Afghans themselves — has dragged them out of the way shows how little has been done to mend Afghanistan since the 2001 war, despite promises of copious foreign assistance.

Followed by seven paragraphs mostly about violence and American/coalition military operations.

Fixing the Kabul-Kandahar road, one of the main arteries of the country, has been a priority of the Karzai government. It is part of the American-led $180 million plan to repair main roads and provide hundreds of jobs. Yet now, in the second year of reconstruction, there is no sign of any work being done all along this 300 miles of ruts and holes.

Followed by twenty more paragraphs mostly about violence and American/coalition miliary operations and Afghan civilian feelings. Finally we get to here:

Already frustrated last year by the slowness of reconstruction and the failure of aid organizations to reach the more remote areas, the American military decided last fall to use military civil affairs teams to take reconstruction efforts to the turbulent regions.

The idea is to position civil affairs personnel backed up by Special Forces for security — groups of up to 60 or even 100 people — in as many as 10 places around Afghanistan. The teams have a total of $12 million for projects they oversee, and they hire local contractors to do the building.

In Kabul, foreign diplomats have welcomed the idea of a larger military presence in the regions, particularly because no country is prepared to expand the 5,000-member international peacekeeping force in the capital out to the border regions.

But the plan was immediately criticized by relief groups.The United Nations gently pointed out that it was responsible for coordinating aid, and the nongovernmental aid agencies expressed alarm about becoming associated with the military, suggesting that the soldiers stick to the bigger projects — roads, bridges, government buildings — that aid groups cannot manage.

In the end, some aid officials say, the teams will fail because they are neither one thing nor another.

Note that "coordinating aid" means reconstruction. But the story gets funnier from there.

Most aid agencies, and many Afghans around the country, would like foreign troops to disarm the private militias, reduce continuing robbery and extortion, and curb the power of the warlords, Mr. O'Brien said.

But the military teams are concentrating on small-scale projects — building schools, or even just providing desks and latrines for them — while the larger issues of disarmament and peacekeeping are left unfinished, he said.

Rafael Robillard, the director of a coordinating body of international aid agencies in Kabul, summed up the frustration of many aid workers. "I was talking to one civil affairs guy, and we were looking at a kindergarten the American military was building, and the soldier turned to me and said, `Why aren't you guys doing anything about disarmament?' I could not believe it. The military is building kindergartens, and they are asking me, a civilian aid worker, to do disarmament! The world is upside down."

Well, I can believe it and even explain it to you, M. Robillard. Reconstruction (including building a civil government) and peacekeeping (including disarmament) are UN projects in Afghanistan. The UN's method of disarmament is the same method it uses for everything: negotiation. That's right, the UN doesn't disarm anybody—they just ask them to voluntarily disarm. From an April 20, 2003, UN press briefing in Afghanistan:

Question: The UN would like to see disarmament through a political dialogue rather than by force. Now, there is this major political party Jamiat in Afghanistan, which is not really represented in the Government. How do you go about the relations between the Central Government and the local Commanders?

Answer: That is a very good question. First of all, we have been telling you since June that the disarmament in the north is a voluntary disarmament exercise. It does not come under the Central Government; it is not a national programme…

Those who want the UN and international community involved in reconstruction in Iraq may not really want to see it doomed to same fate as Afghanistan, but that's what will happen if they get their way.

Slip back in time to the Washington Post, August 7, 2002, "Projects to Rebuild Afghan Roads Going Nowhere, Despite Promises:"

For months, the Asian Development Bank had promised that it would take on one of the biggest headaches in postwar Afghanistan: the cratered, agonizingly slow highway connecting Kabul with Kandahar. The project to rehabilitate the major artery between the country's two largest cities was estimated to cost $150 million, the largest single investment in Afghanistan's infrastructure since the collapse of Taliban rule last November.

Instead, the deal fell apart.

If the US had just given a contract to a company like Halliburton and then that happened, you could blame the US. But hey, when the Asian Development Bank does it, just blame the US for abandoning Afghanistan, no one will know the difference.

Back to the Washinton Post:

The European Community says it plans to commit between $60 million and $80 million to overhauling the Kabul-Jalalabad road, a rutted track over which hundreds of thousands of refugees have returned this year from Pakistan. But no one yet knows who will do the work or when it will begin. Several European countries have talked about adopting the Kabul-Jalalabad project and backed away. "Which is it now?" asked one international engineer working in Kabul. "I can't keep track."

If the US had just given a contract to a company like Bechtel and then that happened, you could blame the US. But hey, when several European countries step forward and then back away from the project, just blame the US for forgetting about Afghanistan, no one will know the difference.

Let's see, while the Asian Developement Bank was bailing on a $150 million project and the EU couldn't get their act together over a $60-80 million project, what was the US doing? Getting the blame:

The U.S. aid program here is an example of what Karzai is up against. American officials say they have already spent their first $280 million in Afghan assistance -- a program that included no major roads component.

Gee, I wonder why the US didn't have a major road component. Could it be that the vaunted UN and international community had already pledged to do the major road projects? Do you think that if the US had claimed those projects first, that the international community wouldn't have thrown a fit about being shut out of major contracts? That $280 million the US spent was enough to do both road projects and then some, if those $150 and $60-80 million estimates were correct.

In the meantime, the U.S. assistance program here has concentrated on large donations to such U.N. operations as the World Food Program, combined with smaller-scale work being done by civil affairs teams of the U.S. military.

In the western city of Herat, work has begun on one project to improve road access to the nearby Iranian border at Islam Qala. But that project is being funded by the Iranian government. A U.S. Special Forces team based in the city said it did not have the mandate to do such work.

Because the mandates are handed out by the international community via the Afghan Reconstruction Steering Group and the UN.

Overall, the U.S. military gave its humanitarian team in Herat $700,000 to spend; half of it went to a canal-desilting project. "We spent all our money," one Special Forces soldier said, but none was spent on roads.

A few people understand the slow pace.

Several Afghan officials said the delays have been entirely predictable. "People have unrealistic expectations," said Vice President Hedayat Amin Arsala, who served as finance minister during the first half of the year. "They think if people promise something, the funds will flow right away. Of course that's not possible."

Arsala said that at the World Bank, where he used to work, it could take two years to get a project going, no matter how worthy. "The problem is that ordinary Afghans do not understand this process," he said.

And neither do most Americans—especially those suggesting a major role for the UN in Iraq.


Tuesday, April 22, 2003
 
Clueless Or Lying? For months, Democrats and the left (and at least one opportunistic Republican politician) have been pushing a fiction that is either a grossly misleading distortion or a baldfaced lie. It's more trouble than it's worth trying to identify those who are mistakenly repeating the fiction, those who maintain willful ignorance of the facts, and those who are intentionally lying. At a guess, a quick breakdown of the percentages would probably be 60/30/10—your division might differ depending on where you separate the venal from the vacuous.

The fiction is well captured in this paragraph in the Talking Dog's post on April 20, 2003 (bold added):

If we do the reconstruction as well as we did the deconstruction, we will have accomplished something monumentally great and wonderful, and may well "transform the Middle East". If we DO NOT (and the President has, thus far, asked Congress for virtually NOTHING to rebuild Iraq, shades of Afghanistan), then we can think of this as job security for future American construction workers, rebuilding American cities destroyed by future terrorists, that is. It really IS that stark and simple.

March 25, 2003 - The President submited a $74.7 billion supplemental budget request (320k PDF) which contained a request for $2.4 billion for "relief and reconstruction in Iraq" under the Executive Office of the President (EXOP).

$2.4 billion is requested for EXOP for Relief and Reconstruction in Iraq. This request would fund a new flexible account focused on Iraq relief and reconstruction.$1.7 billion is requested to support reconstruction in the areas of health, water/sanitation, education, electricity, transportation, telecommunications, rule of law/governance, economic and financial policy, and agriculture. $543 million is requested for humanitarian assistance to refugees, internally displaced persons, and vulnerable individuals, including humanitarian demining in and around Iraq. In addition, up to $200 million will be available to replenish accounts drawn down to buy emergency food stocks for the Iraqi people. Flexible authorities for this account will allow quick transfer of funds to all agencies involved in relief and reconstruction as requirements are defined. These funds are in addition to reimbursements for costs already incurred to preposition relief supplies. The total commitment of resources for Iraq relief and reconstruction is approximately $3.5 billion. This includes funds made available under the DoD heading for oil field repair, contingency accounts, and reimbursement for pre-positioning supplies.

April 12, 2003 - Congress passes the supplemental, it is now $79 billion, of which $2.48 billion is for Iraq relief and reconstruction.

The Conference agreement provides $2.48 billion for a new Iraq Relief and Reconstruction Fund, but it is not placed within the Executive Office of the President as requested. The President is given unprecedented flexibility in allocating these funds, and Congress retains accountability for the use of the funds. All Iraqi reconstruction funds must flow under authorities created in the Foreign Assistance Act of 1961 but the President is able to make direct apportionments to several domestic agencies and the Department of Defense.

April 16, 2003 - The President signs the bill and it becomes Public Law 108-111.

So, when the Talking Dog wrote "the President has, thus far, asked Congress for virtually NOTHING to rebuild Iraq" pops up on April 20, 2003, was he merely mistaken or is it a lie? You decide.

As for the "shades of Afghanistan;" indeed, it is, because the same thing is going to happen when Congress gets around to passing the FY 2004 appropriations (months late if they stick to form). The President submitted his FY 2004 budget request to congress on February 3, 2003. It did not contain any funds specifically for post-war reconstruction in Iraq because it was submitted a month and a half before the war. To make matters worse, Congress did not pass the FY 2003 omnibus appropriations containing the Foreign Operations account until February 13, 2003, some 4 and half months late (FY 2003 started October 1, 2002) and ten days after the President had submitted the administration's FY 2004 budget request. When Congress finally passes the FY 2004 appropriations bill for Foreign Operations, the clueless and the liars will latch onto the President's February request, ignore the supplemental, and push the same fiction about Iraq reconstruction that they've been pushing about Afghanistan.

The fiction about the President not requesting funds for Afghanistan has been debunked in numerous places, including Jay Caruso's post, "Does Anybody Do Research?" I'll just repeat, extend, and reformat my February 24, 2003, comments on that post:

No, they don't do any research, they have no clue how budgets are formed, and they can't read a calendar.

The FY 2003 budget was submitted in Feb 2002, it made $140 million available for Afghanistan. In hearings before the House Budget Committee about the International Affairs Budget in March 2002, Powell indicated the same and said the Administration would also be requesting supplemental funds later as the actual scope of the needs were figured out.

"And Mr. Chairman, in the 2003 budget request, there is approximately $140 million available for Afghanistan, including repatriation of refugees, food aid, demining and transition assistance. We will certainly have to add to that number in the course of our discussions in the rest of the year. I know that President Bush, the Congress and the American people recognize that rebuilding that country will require a lot more than initially identified in that request."

FY 2003 started Oct 2002, but Congress didn't actually get around to passing the FY 2003 Omnibus appropriations until now, almost half a year late.

Meanwhile, in August 2002, only two months before the start of FY 2003, an FY 2002 supplemental appropriation requested by the Administration was passed by Congress and signed by the President. The funds specified for Afghanistan were made specifically obligatable through the end of FY 2003.

In September 2002, Powell spoke to the Afghan Reconstruction Steering Group.

"I am pleased to report that President Bush has just signed into law a supplemental appropriation which includes close to $280 million in new money for Afghanistan; and of that, $33 million would go to finance the daily operations of the transitional administration, which is running a more than $150 million deficit, a deficit that we must close. The rest of the funding would be used for humanitarian and technical and material assistance, road building and other infrastructure projects, law enforcement and counternarcotics support, demobilization and reintegration of combatants, and training and equipping the Afghan National Army. I hope that this meeting will lead to additional pledges from other donors."

Certainly seems a far cry from forgetting about Afghanistan.

This fairy tale started with the opportunistic Republican, Arizona Representative Jim Kolbe, Chairman of the Foreign Operations Appropriations subcommittee, whose February 13, 2003, press release contained the following line: "Despite the lack of a budget request from the Administration, the Conference Report provides $295 million in humanitarian and reconstruction assistance for Afghanistan."

You'll also note that Kolbe didn't say they "added" $295 million for Afghanistan. All Kolbe did was identify the $295 million with specific earmarks under various categories used for humanitarian and reconstruction assistance. But the $295 million was there to be earmarked because the Administration had requested it for Afghanistan in the first place. At most, Congress added $15 million to the $280 that was already appropriated by the supplemental. Generally, appropriations for broad areas, such as the International Affairs budget, are created by marking up or down against the baseline from the prior year, and any approved supplemental appropriations during the course of a fiscal year are automatically rolled into the next year's baseline. When congress passed the President's FY 2002 supplemental request containing $280 million for Afghanistan, $280 million also became part of the FY 2003 budget baseline.

The Administration's recently (February 3, 2003) submitted FY 2004 budget request carried forward the FY 2003 total of aid funds for Afghanistan, again ~$290 million. But this time, the Administration had a better handle on which programs the funds needed to go into, so they are more plainly earmarked in the budget request.

What somebody might ask Kolbe is where he got the info to earmark the FY 2003 appropriations, especially since the Administration's FY 2004 budget with earmarks was submitted before Congress passed the FY 2003 Ominbus appropriations bill. Who cribbed the earmarks from the other, the subcommittee or the Administration?

That's what I put in those comments, with some minor additions. Now, here is what Kolbe is taking credit for in H.J.Res 2 that became, "Public Law 108-7 when the President signed it on February 20, 2003.

Sec. 523. Of the funds appropriated by title II of this Act, not less than $295,500,000 shall be made available for humanitarian, reconstruction, and related assistance for Afghanistan: Provided, That of the funds made available pursuant to this section, not less than $50,000,000 should be from funds appropriated under the heading ``Economic Support Fund'' for rehabilitation of primary roads, implementation of the Bonn Agreement and women's development, of which not less than $5,000,000 is to support activities coordinated by the Afghan Ministry of Women's Affairs, including the establishment and support of multi-service women's centers in Afghanistan: Provided further, That of the funds made available pursuant to this section from ``Development Assistance'', ``International Disaster Assistance'' and ``Transition Initiatives'', high priority should be placed on girls' and women's education, health, legal and social rights, economic opportunities, and political participation by women: Provided further, That assistance should be made available to communities and families that were adversely affected by the military operations: Provided further, That of the funds made available pursuant to this section, up to $9,850,000 may be transferred to and merged with funds appropriated by this Act under the headings ``Operating Expenses of the United States Agency for International Development'' and ``Operating Expenses of the United States Agency for International Development Inspector General''.

Compare that with these snips from the President's FY 2004 budget request, submitted before Congress had finished the above (emphasis added).

The 2004 Budget for International Affairs provides approximately $2.3 billion for assistance to countries around the world… The President’s Budget proposes $800 million in the Economic Support Fund (ESF)… $150 million for Afghanistan. In Afghanistan, $70 million will be used to fulfill our commitment to rebuild the Kabul-Kandahar-Herat Highway, as well as provide for other infrastructure such as secondary roads, water and sewer projects, and electrification. The remaining amount will provide budget support and further democracy and governance programs.

The Foreign Military Financing program will provide equipment, training, and defense services to countries for programs that counter terrorism and develop institutions to prevent the emergence of terrorism. For example, the President is requesting $150 million in Foreign Military Financing as well as $20 million in the Peacekeeping Operations account as part of the ongoing efforts to train the Afghan National Army, to maintain internal security and prevent the country from again becoming a terrorist haven.

Right there, $300 million is requested for the State Department accounts for Afghanistan. And although they weren't sure where to earmark funds when the FY 2003 budget request was submitted in February 2002, the President's FY 2003 budget request did contain this:

Afghanistan assistance: The United States worked with our allies and the anti-Taliban Afghan groups to establish a broad-based interim government in Afghanistan. The United States remains committed to helping the people of Afghanistan rebuild and enjoy long-term stability. We will continue to provide food and development assistance. At the January pledging conference in Tokyo, the U.S. committed $296 million to support these efforts.

With the supplemental and prior funds, the US met that commitment.

So, when Paul Krugman wrote "So how much money for Afghan reconstruction did the administration put in its 2004 budget? None. The Bush team forgot about it. Embarrassed Congressional staff members had to write in $300 million to cover the lapse" on February 21, 2003, was he merely clueless or was it a lie? You decide. (Note that Krugman didn't even get the year right.)

That entire fantasy is now being compounded by those who incessantly whine about the slow pace of Afghanistan's reconstruction while simultaneously complaining about non-competitive contracting, or Anglosphere-only competitive contracting, and the UN being shut out of Iraq's reconstruction. They conveniently ignore that Afghanistan is being handled as an international program with open competitive contracting. They ignore the fact that multi-million dollar open-competition contracts generally take six months to a year from the call to bidders to final source selection and contract signing. That's six months to a year before a hole is dug, a nail is driven, or a slab of concrete is poured. They ignore that the Afghan Reconstruction Steering Group is made up of representatives the G-8, EU, UN and World Bank, dozens of other countries, and various NGOs. They also tend to seriously downplay the actual funds expended and progress made in Afghanistan, especially by the US, in spite of the above.

And now they demand the same for Iraq. In many cases, it doesn't seem to be because they give a damn about rebuilding Iraq, they're apparently just tossing out roadblocks to score political points. And it looks like some of their demands may have been met; we'll see whether Congress, by forcing the Iraqi reconstruction funds to be controlled under the Foreign Assistance Act of 1961 instead of from the Executive Office of the President, has managed to introduce significant delays in reconstruction. Delays that they'll be quick to blame on the Administration.



Sunday, April 20, 2003
 
Compensation For Deferred Bias. Journalism's 5Ws are who, what, when, where, and why (and sometimes include how). The first four are the facts of a story; the why is the place to explain to the reader what those facts mean. That's where bias often jumps out in a story, either directly, or, more often, by getting a spokesperson for a special interest group to provide a quote.

There is another way to slant a story. When the facts line up the way you want them, completely skip the important why if it interferes with the image you are trying to create. Both routes are taken by Andrew Mollison in The Atlanta Journal-Constitution. The story is linked on the website front page as "Red Cross chief got $1.9m on her way out", and the hed on the story page itself is "Red Cross: Nonprofit reviews execs' pay, perks." Here's the lede:

The American Red Cross is reviewing compensation of its senior employees after discovering that Bernadine Healy was awarded $1.9 million during her tumultuous last six months as president of the nonprofit agency.

Healy wept in public frustration when she was forced out of her job in the tense and confusing aftermath of the Sept. 11, 2001, terror attacks. After a dispute with some board members over how to handle donations, she was stripped of her title as chief executive officer on Oct. 26 but allowed to retain the title of president until the end of 2001.

Here's the caption under Healy's picture:

Bernadine Healy got $1.9 million in the last six months of 2001, more than twice the $912,373 of her first 22 months at the Red Cross.

And here is the meat:

Tax documents disclosed by the congressionally chartered organization show that between July and December 2001, the Red Cross awarded Healey:
• $1,340,701 in deferred compensation.
• $296,661 in salary.
• $228,929 in severance pay.
• $50,000 in expense allowances.
• $5,622 in benefits.

"Based on the organization's agreement with Dr. Healy, we are unable to provide any further information on her compensation and severance," senior American Red Cross spokesman Phil Zepeda said Friday.

Here is the interest group quote, it follows a repeat of the picture caption (emphasis added):

Healy's $1.9 million in compensation during the last six months of 2001 was more than twice the $912,373 in pay and benefits that she received during her first 22 months at the Red Cross, which began in September 1999.

The compensation figure "is certainly high for the nonprofit world," said H. Art Taylor, who is president and chief executive officer of the BBB Wise Giving Alliance, which monitors charitable groups. "But the Red Cross is a big organization."

The Chronicle of Philanthropy reported in October that 34 of 282 large nonprofits that the magazine surveyed paid their chief executives more than $500,000. The highest salary listed was $690,000 for University of Pennsylvania President Judith Rodin. Healy's salary, bonuses and benefits were listed as $519,000. [1]

"The Red Cross board has done what it should have -- full disclosure of its decision," Taylor said. "Now the public can decide if it was equitable and fair and appropriate."

No, the public can't, because Mollison skips any explanation of the most important why since it would take the sting out of the primary thrust of the story: "Healy's … compensation during the last six months of 2001 was more than twice the… [compensation] …she received during her first 22 months." (Mollison does indicate he tried to contact Dr. Healy [2] at US News and World Report where she has a monthly column. "Messages left on her voice mail Friday were not returned. Richard Folders, who arranges interviews with employees of the magazine, said he knew of no other way of reaching her.")

The missing why is any discussion of what "deferred compensation" is. Basically, it is exactly what it sounds like: instead of being paid their full salary, benefits and/or bonuses; executives with such deferred compensation retirement plans can defer any percentage, including the entire amount; they don't owe tax on income they haven't received. Additionally, the deferred compensation doesn't show up as a salary expense, it's carried as a liability under the company's benefit programs.

A description of deferred compensation plans from Sentinel Benefits (emphasis added):

Voluntary Deferred Compensation Plan
These plans offer the option of reduced current salary in exchange for benefits to be paid at a future date, or deferred benefits in lieu of salary increases or bonuses. In the case of a Voluntary Deferred Compensation Plan, the financial stability of the corporation plays an important and understandable role in the minds of employees. And, generally these plans include an agreement that allows the employee to receive benefits even if terminated -- for any reason.

Additionally, under these plans the benefits may be paid upon termination or postponed until retirement. The employer retains the right to invest the deferred amounts in any way it sees fit.

Non-Qualified Deferred Compensation Plans
These plans combine the features of both SERPs [Supplement Executive Retirement Plan -lp] and voluntary deferred compensation plans because highly-paid key executives sometimes want to defer more income than the maximum allowed by law. These non-qualified plans may be designed in coordination with a qualified plan. There is considerable flexibility in these plans, and administration must be carefully monitored.

The AFL-CIO doesn't like Non-Qualified Deferred Compensation Plans and calls them "The Executive 401(k)," but their core description is the same:

Unlike 401(k) plans that limit worker contributions to $12,000 per employee, these plans often let executives defer up to 100 percent of their salary, bonus and other compensation such as restricted stock.

Additionally, a departing executive can generally either take the entire deferred amount in a lump sum, or receive it in installments over any number of years like a pension.

We don't know the details of Dr. Healy's contract, but we don't need them. (You can download the current Red Cross Form 990 tax returns here and older ones here, but they won't tell you much more than Mollison's story except that the Red Cross runs a July 1-June 30 fiscal year.) Let's say Healy negotiated a flat million dollars a year salary to be President and CEO of the American National Red Cross and ignore any bonuses or benefits[3]. She worked there for 28 months, 9/1/99-12/31/01. Her total salary over 28 months would be $2,333,333.

    No deferred compensation:
    Healy receives $83,333 a month. That comes to $1,833,333 for the first 22 months and $500,000 for the last 6 months.

    She defers 90% of her salary:
    Healy receives $8,333 a month. That comes to $183,333 for the first 22 months and $50,000 for the last six months, plus $2,100,000 in deferred salary on her final day. That total of $2,150,000 she receives in the last six months is more than 10 times what she was paid in the first 22 months.

    She defers 55% of her salary:
    Healy receives $37,500 a month. That comes to $825,000 for the first 22 months and $225,000 for the last six months, plus $1,283,333 in deferred salary on her final day. And that seems pretty close to what happened.

It doesn't matter if she walked out the door to trumpets and praise, resigned under a cloud, or was fired—she is owed the deferred compensation that was negotiated when she was hired. Healy was NOT "awarded $1.9 million" in her last six months; at most she was "awarded" the $228,929 severance pay because the $1.34 million was already owed to her.

Now, you can at least try to "decide if it was equitable and fair and appropriate" without being intentionally misled by the slant that Healy was somehow rewarded with over a million dollar bonus for leaving after Sep 11.

My call:

  • Executive deferred compensation plans almost always look bad when the executive leaves and collects a bundle that is essentially back-pay plus interest. It's just too easy to spin them like Mollison did to make it look like a reward or payoff. But they are a creature of the tax code. As the AFL-CIO says:

    Nonqualified Deferred Compensation Plans also offer tax breaks to companies. Section §162(m) of the Internal Revenue Code limits the tax deductibility of executive compensation in excess of $1 million that is not performance-based. This tax deduction limit was established in 1993 after concern that CEO pay practices were not linked to company performance. Executives have gotten around this limitation by deferring the portion of their salaries that exceeds $1 million per year.

    Once the door was opened, even executives making less than a million a year could still defer large portions of their compensation to avoid taxes.

  • A base salary of around a million dollars a year for the American National Red Cross President and CEO seems excessive, even if it is probably the worlds largest such organization. This seems especially true considering the compensation of the two prior Presidents (Elizabeth Dole and then Steven Bullock as Acting President for about nine months between Dole's departure and Healy's arrival).

  • I remain undecided as to whether Dr. Healy was a scapegoat or not because I'm not sure that her decisions were actually wrong and that the Board of Governors and Senator Mitchell's were right. I'm not sure that there is any "right" decision that balances donor restricted funds and equitable relief to disaster victims. However, if she was unable to persuade the Board of Governors (and the public) and then wouldn't get with the program after being overruled by the Board, then she had to go. If she was willing to say, "Ok, we'll do it your way," and was still forced to resign, then she was a scapegoat.
Finally, it's rather funny that the Red Cross is supposedly just now "discovering" how much Healy got paid, considering Healy left in December 2001. (The Red Cross always requests an extension to file their return, so the return for their July 2001 - June 2002 fiscal year was filed in January 2003.) The only people actually making such a discovery are those who now have access to the Red Cross' publicly posted Form 990; people like you, me, and Mollison. The Red Cross certainly knew how much she received when she left over a year ago. So, while I'm willing to be shown that the $1.34 million was not owed to her from a deferred compensation plan, but was something the Board of Governors came up with after Sep 11, 2001, to convince her to resign, I really don't think that's the case.


[1] You can download The Chronicle of Philanthropy article in PDF format here. The $519,000 in the article exactly matches the Red Cross' Form 990, which means The Chronicle of Philanthropy did not have any inside information about Dr. Healy's actual contracted salary because the Form 990 doesn't show how much was being deferred.

[2] Mollison never uses Dr. Healy's title. It only shows up in the direct quote from the Red Cross spokesman. The end of the article does indicate that she is "a physician and researcher." That may be AJC's style or an additional slight.

[3] The Form 990 for the fiscal year ending June 30, 2001, shows Healy received a bonus of $82,576; however it could have been larger with the rest deferred. The 2002 Form 990 shows Healy did not receive a bonus in her last six months. The Red Cross' contribution to her benefit plan was $9,635 for the full year and $5,622 for the last six months. Whether that was a defined benefit plan, health plan, or combination isn't shown.




Original content copyright © 2002-2005 Lynxx Pherrett. All rights reserved.