Nancy Koonce, left, and Tess Judge present the report of the Joint Standing Committee on Finances for Mission. • G. Jeffrey MacDonald

By G. Jeffrey MacDonald

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Policies for bringing wrongdoing to light at the Episcopal Church Center are out of date and require revision for the protection of employees, according to an audit committee report delivered June 9.

The report, presented during a meeting of Executive Council’s Joint Standing Committee on Finances for Mission, marks the first time since a misconduct scandal broke in December that the church has publicly acknowledged a problem in its systems for uncovering misconduct.

“There needs to be an update to the whistleblower policy and a procedure put in place,” committee member Nancy Koonce said as she presented a report of the audit committee, which met last week in New York City.

A three-month investigation found that two senior administrators had engaged in misconduct, which began before Presiding Bishop Michael Curry took office on Nov. 1, 2015. In April, Curry fired these administrators, Deputy Chief Operating Officer Sam McDonald and Director of Community Engagement Alex Baumgarten, without saying what misconduct took place. A third administrator, Chief Operating Officer Stacy Sauls, was exonerated and has left the presiding bishop’s staff.

Whistleblower policies generally inform employees of their rights and available avenues for reporting misconduct. In New York, where the church is headquartered, state law prohibits retaliation against an employee for disclosing or threatening to disclose unlawful or dangerous behavior.

The audit committee’s admission of deficiencies came as Executive Council began to digest implications from a Philadelphia law firm’s investigation that led to the April firings. Two sessions, one in plenary and one in committee,  discussed the issues at Executive Council’s spring meeting last week in Chaska, Minnesota. Both sessions were closed to the press and public.

Legal experts say Executive Council members could be held liable in two scenarios: (1) if they failed to care, be informed, or inquire enough to establish and oversee prudent safeguards during the misconduct period; or (2) if they now fail to buttress safeguards after receiving a thorough report about what went wrong. The audit committee’s concern about whistleblowing protocol raises questions about the reporting mechanisms in place while misconduct occurred.

“There’s going to be one set of allegations and set of considerations that apply with respect to what happened when the misconduct took place,” said Kevin LaCroix, an Ohio attorney who consults with companies on director and officer liability issues. “What were the responsibilities and potential liabilities of staff members, officers, or the board?”

Now the board has a new set of responsibilities to act upon, he said, and shoring up policies and procedures can sometimes be necessary.

“There’s a separate set of considerations that arises once the new bishop has identified these circumstances and brought them to the attention of the board,” LaCroix said.

During a break in Executive Council proceedings last week, Presiding Bishop Michael Curry acknowledged systemic shortcomings.

“We need to improve our systems of support for staff; when there are issues for staff, easier ways of access,” Curry said. When asked to explain, he said: “Just easier procedures for people to interact with each other when there are problems; easy mechanisms for adjudicating those problems, and that kind of thing. Those are not major things. Those are just technical fixes.”

Executive Council adopted a whistleblower policy in 2010 with an emphasis on business-related wrongdoing, such as fiscal self-dealing or conflicts of interest. In an April statement, Curry did not name the nature of misconduct that occurred, but instead referred broadly to violations that could have been unrelated to financial matters. He said the two fired administrators had “violated established workplace policies” and “failed to live up to the Church’s standards of personal conduct in their relationships with employees.”

Under the policy adopted in 2010, employees may bring misconduct concerns to four parties: a supervisor, senior management, a compliance officer, or an EthicsPoint hotline. Reports to the hotline are passed along to designated parties at the church. In this recent scandal, members of senior management were the ones guilty of misconduct, according to the church. Baumgarten and McDonald have not responded to requests for comment.

According to nonprofit governance expert Brent Never, an organization should go farther and make sure the chief executive — in this case, the presiding bishop — is both notified and kept abreast of responses as soon as misconduct allegations surface. Whether former Presiding Bishop Katharine Jefferts Schori was ever notified of the allegations is not known. She was exempt from the investigation and declined to comment on the church’s misconduct policies and procedures during her tenure.

“There needs to be a policy about how information flows, and ultimately the executive should know” when misconduct is alleged, said Never, an associate professor of nonprofit governance at the University of Missouri-Kansas City. “The bishop should know.”

Curry expressed interest in making sure misconduct does not fester unaddressed in the future.

“We need simpler means of intervention when things are not going as well as they should be,” Curry said. “If there’s a problem, let’s deal with it when it’s going on and at the lowest level possible.”

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