Preliminary Report of the Ad Hoc Committee to review the proposed purchase of One Plymouth Road and review of Archdiocesan Finances
Jul 3, 1998
GREEK ORTHODOX ARCHDIOCESE OF AMERICA-----------------------------------------------------------------------------------------ARCHDIOCESE NEWS LISTSERVERhttp://www.goarch.org/goa/newsTo become a member, send an e-mail to:email@example.comIn the body of the e-mail type:subscribe archdiocese-----------------------------------------------------------------------------------------M E M O R A N D U MTO: The Executive Committee of the Archdiocesan CouncilFROM: Office of the ChancellorDepartment of FinanceOffice of the General CounselDATED: July 3, 1998RE: Preliminary Report of the Ad Hoc Committee to review the proposed purchase of One Plymouth Road and review of Archdiocesan Finances______________________________________________________________This first response to the Preliminary Report of the Ad Hoc Committee is designed to answer the substance of that report. While we acknowledge that the Preliminary Report did not specifically answer their charge, as directed by the memorandum of Mr. Spanos &qout;to make recommendations regarding the provision of housing by the Archdiocese to His Eminence Archbishop Spyridon,&qout; the Preliminary Report raises a host of other issues regarding financial policies, procedures and practices of the Archdiocese. We would note that the Preliminary Report was occasioned by the proposed purchase of One Plymouth Road and the breakdown in communication and procedure surrounding it. It should also be noted, that at no time was there any intention or consideration to diminish the important and necessary role of the Executive Committee of the Archdiocesan Council. Inasmuch as the Preliminary Report has been, regrettably, widely circulated in the Press, this first response will also be publicized in the interests of openness and full disclosure.The proposed purchase of One Plymouth Road in Rye was set into motion following the recommendation of the Finance Committee that was presented at the meeting of the Archdiocesan Council on March 7, 1998. Although the reasons for the purchase of a house for the Archbishop were warmly received, no motions were ever proposed or adopted on any of the Committee Reports, which would have the necessary authority and procedural underpinning to move forward on the acquisition.Subsequently the actions taken were consistent with the spirit of the recommendation of the Finance Committee of the Archdiocesan Council. The intent was simply to provide His Eminence Archbishop Spyridon with reasonable and appropriate housing consistent with and suitable to his position. The Archdiocesan Council had never addressed the issue of housing for the new Archbishop, who has lived in a rented home since his arrival. By way of background, the Archdiocese has paid in excess of $50,000 annually in rent since the arrival of the Archbishop in America. This rent is expected to substantially increase due to the strong real estate market when the lease of this home expires on September 14, 1998. The Executive Committee should know that realtors show the house on a regular basis. Prior to the election of Archbishop Spyridon, by a pre-arranged agreement with the Executive Committee of the Archdiocesan Council, the retired Archbishop was provided with the right to reside for life in the Archiepiscopal Residence at another location in Rye, New York which home is owned by the Archdiocese.The sequence of events that followed was based on a misinterpretation of the past will of the Archdiocesan Council, not a misrepresentation of any future proposals to the Executive Committee. Although the Executive Committee should have been called to vote up or down on the contract for the house first, the actions of the Chancellor in signing the contract, and the issuance of the deposit did not represent any attempt to perpetrate a fraud or in any way violate or circumvent any civil laws, or policy of the Archdiocese. The confusion in the approval process has been acknowledged by the Archdiocese, and in no way is this response intended to minimize the importance of these critical issues. The Ad Hoc Committee appointed by Alex Spanos, the President of the Archdiocesan Council was empanelled &qout;...to review the finances of the Archdiocese and, in the light of such review, to make a recommendation regarding the provision of housing by the Archdiocese to His Eminence Archbishop Spyridon.&qout; The preliminary report released by the Ad Hoc Committee does not address either of the two central issues it has been charged with reviewing. The report does not address the financial capacity of the Archdiocese to undertake such an obligation nor does it address alternative living arrangements for His Eminence. The report issued was not signed, and was not distributed to the entire Executive Committee, nor was His Eminence initially provided with a copy, putting him in the awkward position of responding to certain members of the Executive Committee with regard to the report without privilege to the contents.However, the report of the Ad Hoc Committee, however incomplete, must be commented upon and responded to due to the factual errors and misleading assertions, as follows:May 7th, 1998 MeetingThe notice to Mr. George Chelpon regarding the May 7th meeting was faxed from Ms. Liapakis office at 11:31 PM on May 6th, 1998, and was not received by Mr. Chelpon until shortly after 9:00 AM on May 7th. No notification was given to the Chairman of Finance, John M. Mavroudis, except by phone message the following morning immediately prior to the meeting. The letter initially requested three items:1. BDO Seidman, LLP Management Letter for 1996 2. A listing of &qout;any and all bank , brokerage, and investment accounts 3. Any and all resolutions filed with the bank(s) with regard to these accountsDespite the extreme short notice provided and the lack of notice to Mr. Mavroudis, Mr. Chelpon met with the Ad Hoc Committee from approximately 11:45 AM to 6:00 PM, and was forced to leave early from a previously scheduled Pension Committee meeting in order to accommodate the Ad Hoc Committee. Mr. Mavroudis was unable to attend the meeting because he was on a four hour long multiple party phone conference concerning Hellenic College that had been previously scheduled for at least three days. Furthermore, the Chancellor rearranged his schedule for the majority of the meeting. In addition, BDO Seidman was in the building in the midst of the audit. Document ProductionMr. Chelpon provided the Ad Hoc Committee with the listing of the bank accounts requested on the same day that they were requested. He also informed the Ad Hoc Committee that the requested bank resolutions were being obtained from the appropriate banks and would be forwarded as soon as they were received. Finally, with regard to the BDO Seidman Management Letter, the entire Executive Committee was informed at the March meeting that no such letter was issued by BDO Seidman. A list was developed during the meeting for production of documents by the Finance Department to the Committee, as follows:1. Inquiry to BDO Seidman as to the existence of and possible release of a draft of any management letter related to the 1996 audit. 2. Engagement letter regarding the current audit. 3. Summary binder of insurance coverage for the Archdiocese 4. Revised listing of bank accounts 5. Copies of signature cards and bank resolutions 6. Policy and procedure statement 7. Receipts and checks paid to John Mavroudis 8. Copies of full insurance binders to Ms. Liapakis only for purpose of reviewAll of the above documents were provided as requested with the exception of item one, which was not made available by BDO Seidman, which refused to release the draft of a document that was never issued. With regard to item 7, a listing of all payments including check numbers and dates issued were provided, with the original documents available for inspection at the Archdiocese. With regard to the document review, the Ad Hoc Committee had been informed in advance that due to a prior commitment, and due to the short notice of the meeting, that Mr. Chelpon would not be available after 5:30 on that day, although he did stay until nearly 6:00 PM. Every member of the Ad Hoc Committee was informed that the Finance Department would gladly accommodate any further requests for additional document review. As of the date of the Ad Hoc Committees report, not a single request for additional information or access to records by any member of the Ad Hoc Committee was received. Subsequent to the issuance of the report, Ms. Bender has on two occasions requested access to records, and was accommodated at her convenience on both occasions, once for approximately four hours and once for two and one half hours. Ms. Liapakis also made a subsequent request for copies of the insurance binders, which had admittedly not been provided to her by that time due to a miscommunication on the part of the Archdiocese. This miscommunication is documented in various letters and faxes. Finally, as to the assertion that the review was somehow supervised, the Ad Hoc Committee was left alone to conduct their document review, with Mr. Chelpon checking in from time to time and answering questions from the Ad Hoc Committee members. In fact, Mr. Chelpon was in a another meeting on an unrelated matter during part of the time the Ad Hoc Committee was reviewing documents. Document Release to Mr. AnagnosThe report alleges that there was reluctance to provide documents to anyone other than Alex Anagnos. No suggestion was made with regard to documents being &qout;given to Alex Anagnos, alone and not to the rest of the Ad Hoc Committee.&qout; This is contradicted by the fact that those documents requested that were immediately available were given to the entire Ad Hoc Committee as soon as they arrived and by the fact that other committee members were granted access when requested. In addition, at least one member of the Ad Hoc Committee requested additional documents and document review, with both requests being promptly complied with. What was suggested was that Mr. Anagnos be used as a point of contact and liaison to the Ad Hoc Committee. Further, the allegation made on page 4 of the report that &qout;...the proposal was reiterated to Treasurer Anagnos that he could obtain information if he agreed not to share it with the other above-named officers.&qout; is patently false. No such proposal was ever made nor therefore ever reiterated. The only discussion with Mr. Anagnos regarding distribution of material to the Ad Hoc Committee came after some correspondence from parties not associated with the Archdiocese came forth questioning the qualifications of certain members of the Ad Hoc Committee and their possible association with GOAL. Mr. Anagnos informed Mr. Chelpon that the status of the Ad Hoc Committee was in question, and asked Mr. Chelpon to hold off on distributing materials until after the Ad Hoc Committee had a meeting that evening. Not hearing back from Mr. Anagnos, Mr. Chelpon contacted Mr. Anagnos, who informed Mr. Chelpon that the Ad Hoc Committee would in fact continue as originally constituted. Mr. Chelpon and Mr. Anagnos concurred that given the confusion, the requested materials would be given to Mr. Anagnos and would be distributed at his discretion. No restrictions or conditions were made or implied. Prior to the Ad Hoc Committees establishment Mr. Chelpon, on March 5th , 1998, offered to the Treasurer, Mr. Anagnos, an open invitation to make available any and all financial records of the Archdiocese. No request has ever been received. Failure to Release Original Documents or Provide Photocopies from Archdiocese PremisesNo responsible organization or individual would allow the removal of original documents from the premises. Although full access to documents has been offered, copies have not been allowed to be removed from the premises. This decision was made based on the recent history of confidential documents finding their way into the print and Internet media outlets, despite limited circles of distribution. The contract regarding the Plymouth Road property, correspondence regarding the same matter, and even the report of this committee have all been distributed, and in the some cases, prior to its distribution to all of the entitled parties.Use of the term &qout;Forensic Audit&qout; and its meaningThe Ad Hoc Committee report states that Mr. Chelpon concurred that &qout;... His Eminences belief regarding a forensic audits implications were incorrect.&qout; Quite the contrary, Mr. Chelpon pointed out that His Eminence had every right to be &qout;upset&qout; at the characterization of the events. Mr. Chelpon pointed out that in Ms. Liapakiss letter, the term &qout;forensic audit,&qout; appeared, to which Ms. Bender responded that the letter was Ms. Liapakiss and not the Ad Hoc Committees. Ms. Liapakis stated that she did not know what the term meant. The Acting Director of Finance, Mr. Chelpon, with the help of BDO Seidman, did some additional research on forensic accounting. Forensic accounting, by industry definition, &qout;...provides an accounting analysis that is suitable to the court which will form the basis for discussion, debate and ultimately dispute resolution. It is often referred to as Investigative Accounting and is often associated with investigation of criminal matters. A typical forensic accounting assignment would be an investigation of employee theft.&qout; (See attachments). It should be clear that the term &qout;forensic audit&qout; carries a pejorative implication of criminal wrongdoing. It is certainly reasonable that His Eminence and the other parties involved in the matter be distressed by this type of language.Denial of Access to AuditorsThe issue of the 1996 Management Letter has been previously discussed. With regard to the request made to the Chancellor regarding a meeting with the auditors, the request was later approved after it was determined that the audit process ongoing in preparation for the Clergy Laity report would not be impeded. Ms. Bender met with Mr. Barbagallo at his office for nearly two and one half hours. In addition, Ms. Bender has had many other phone conversations with Mr. Barbagallo with regard to issues related to the audit both prior to and subsequent to this meeting.Recommendation for the involvement of BDO Seidman As pointed out in the report, Mr. Chelpon repeatedly asked the Ad Hoc Committee to await the report of the independent auditors, and if necessary, to engage the auditors to perform any &qout;agreed upon procedure&qout; that the Ad Hoc Committee felt necessary. An &qout;agreed upon procedure&qout; is a common practice where a party will engage the audit firm to look into specific questions or issues and then issue a report with their findings. This provides a professional and objective review by an independent, disinterested third party that will allow an impartial and unbiased evaluation of the facts and provide an opinion regarding the issues they were engaged to review. As the Ad Hoc Committee members themselves pointed out, they, the Ad Hoc Committee members, are &qout;not accountants.&qout; The associates of BDO Seidman are, which is precisely why their evaluation would have proven so valuable and meaningful.Contract and Down Payment on One Plymouth RoadThe reports discussion of the contract and down payment points out several times that Fr. Passias was told that Executive Committee approval was required for the transaction in question to be executed. There is no issue in this regard nor is it enlightening. It was not necessary for either Ms. Liapakis or the former Finance Director to bring this to light, inasmuch as Fr. Passias was well aware of this requirement, and in fact told the Ad Hoc Committee that he was aware of this fact. The report also alleges that Father Passias approached Ms. Liapakis for funds to purchase a home for His Eminence. At a private meeting requested by Mrs. Liapakis which took place at her office, the nature of which was to discuss the Theological School, the lack of appropriate housing of His Eminence was discussed. Although the responsibility and process of buying a residence for His Eminence was discussed there was no solicitation of funds made, nor was she asked to &qout;raise funds for the balance&qout;.Father Passias signed the purchase contract on March 30, 1998, with the only contingency being with regard to obtaining satisfactory mortgage financing. The decision to sign was made in consultation with and on the advice of counsel. As stated previously, the actions taken were consistent with the spirit of what was believed to be the tacit approval given by the Archdiocesan Counsel. The presence of three other bidders also contributed to the urgency to proceed. The contract was signed with paragraph 38 included based on anticipated approval of the Executive Committee. It was assumed that since the Archdiocesan Counsel had not objected to the recommendation of the Finance Committee, that final approval was expected. The intent was simply to address the issue of appropriate and reasonable housing. There was never any attempt to perpetrate a fraud or in any other way violate any civil laws or the policy of the Archdiocese. There was certainly in addition no design to thwart the role and authority of the Executive Committee.No request for the canceled check or check request with regard to the down payment had been received at the time of the issuance of the report. Subsequently, Ms. Bender did make such a request and was provided the entire file, including the contract, commitment letter, the check request, and the canceled check. The same information is available for inspection and review at the Archdiocese upon request from any committee member.With regard to the overdraft, the Ad Hoc Committee report correctly states that the information provided by Ms. Liapakis in her letter was incorrect as to the amount of the overdraft, and the nature of the overdraft and its origin are misrepresented. The Archdiocese has a working relationship with Chase, and as a result, the overdraft was arranged in advance, with provision that the same would be covered by a transfer from the Archdiocese Investment Money Market Account, where the unrestricted reserve funds are held. Mr. Chelpon felt it prudent that given the large amount of the check, and the uncertainty as to how quickly it would be delivered to the seller and subsequently deposited, that the funds continue to be held in an interest bearing account. There was no hesitancy with regard to drawing funds from the reserve account.Deposit of $140,500 in Replacement of the Down PaymentThe Ad Hoc Committee report discusses the deposit of the funds donated to replace the lost down payment. These funds were provided by a donor who wishes to remain anonymous. The report is unreasonable in its implication that it could not report that the Archdiocese had been made whole and not incurred any loss since it had&qout;... not been given any evidence that these funds were not given as general donations or as a loan to be paid back at a later date ( or even that they were not drawn from funds in other Archdiocese accounts).Furthermore, the identification of the source of these checks must be pursued (1) to ascertain whether these checks were obtained with the full knowledge and consent of the donors as to their purpose, (2) to clarify with the donors whether these payments can be treated as tax deductible contributions, (3) to rule out possible money laundering activity which would place the tax exempt status of the Archdiocese in jeopardy. The extraordinary lengths which were taken to prevent even the appropriate Finance Department staff member from seeing the checks (not the usual procedure for anonymous donations) itself raises concerns regarding impropriety.&qout;The Preliminary Report implies the possibility of either criminal activity or an outright attempt to defraud the anonymous donors, or jeopardize the tax exempt status of the Archdiocese. As the report indicates, the deposit of the funds had occurred the same day as the meeting with the Ad Hoc Committee. Had the Ad Hoc Committee made any subsequent inquiry into the matter, it would have found that subsequent to the meeting:1. That the identity of the donor was disclosed to the Acting Finance Director 2. The positive affirmation of the donor has been independently obtained, confirming that the contribution was made to the Archdiocese with full knowledge of the donor as to its intended use and without expectation of repayment.Notification of Insurance Carrier regarding possible claimFather Passiass comments regarding the possible insurance claim were nothing more than an acknowledgment of the fact that the Archdiocese had in fact not sustained a loss, and had been made whole as the result of private donors.Multiple roles of John Mavroudis and possible conflictMr. Mavroudis term as a member of the Archdiocesan Council, and consequently his term as Chairman of Finance and Chairman of the Legal Committee expires with all other members of the Archdiocesan Council upon the conclusion of Clergy-Laity Congress. This issue will be addressed in connection with the appointment of the members of the new Archdiocesan Council and designation of Chairman of its various committees in the customary fashion.Written Memorandums of the General Counsel John MavroudisAny written memorandum concerning this transaction is a privileged and confidential attorney work product which should not be released at this time as it may materially impact the ongoing litigation for the return of the deposit form the Seller and the Escrow Agent. This information has not been made available for this reason upon the advice of the outside counsel handling this litigation. In the spirit of openness and public disclosure, the Archdiocese will make this information available upon the conclusion of this litigation.Expense Payments to the General CounselThe Finance Director is in possession of statements of the General Counsel reflecting extraordinary expenses in connection with Archdiocesan matters. Payments to the General Counsel represent a small portion of the actual expenses incurred by the General Counsel in rendering the services to the Archdiocese, which does not provide any secretarial or other support necessary to perform the professional services rendered by the General Counsel, who has been a member of the New York, New Jersey and Florida bars for more than twenty-five years. Unavailability of current, reliable financial information and inadequate staffing of the Finance Department.The issue of the inadequacy of the financial reporting system of the Archdiocese are not a recent phenomenon, and in fact goes back several years. The Executive Committee and the Archdiocesan Council receive the same reports now with regard to content and detail that they have been receiving as far back as 1994. Mr. Chelpon, who took over as Senior Accountant in 1994, had been requesting a change in the current accounting program since that time and had suggested a solution be in place for the 1995 fiscal year. The data needs of the Archdiocese, and specifically the continued use of the AREV database compelled the use of a program compatible with that program, Accustom. No alternatives were found, and until a decision was made in the Fall of 1997 to change the data requirements, no acceptable solution was available. The result has been the reliance on an antiquated accounting system that is unreliable with regard to its performance, resulting in lost or misplaced data, long periods of downtime, and without the capacity to produce critical reports or to provide timely information.The committee report talks about the comment of Mr. Chelpon with regard to a &qout;closed box.&qout; The implication here is not with regard to the change or alteration of data, as is stated in the report, but refers to the inability to alter programming language, which has been a problem with regard to the program Accustom. The program alluded to in the report, Blackbaud, does fill this need, and would be appropriate with regard to the Accounting requirements, as do a number of other programs. However, Blackbaud has serious limitations with regard to database interface. Mr. Chelpons recommendation was that one of these programs be implemented, not Blackbaud specifically. Subsequently, the Finance Department, in conjunction with the Management Information Systems, has developed an alternative that meets (1) the fund accounting requirement, (2) the result achieving the desired &qout;closed box&qout; accounting package and (3) the data requirements of the Archdiocese. A presentation of the selected software is planned for the Orlando conference.The staffing issue is also being addressed, and will be presented as part of a comprehensive Organization Plan to be presented at the Executive Committee meeting scheduled for July 3 in Orlando.Reorganization of the Finance DepartmentThe Ad Hoc Committee report implies that the &qout;contemplated organization of the Finance Department appears to make the Chancellor Chief Financial Officer.&qout; The report also states that the Chancellor &qout;...does not expect that a Finance Director with the Education, skills, and experience of the former Finance Director will be hired to function as a Chief Financial Officer.&qout; The traditional structure of the Finance Director in the role of Chief Financial Officer will continue. The Finance Director reporting to the Chancellor, is analogous to a Chief Financial Officer reporting to the Chief Operating Office (Chancellor), who in turn reports to the Chief Executive Officer (Archbishop). Finally, the qualifications of the Acting Finance Director are not only comparable, but in some instances exceed those of any other former Finance Director. Mr. Chelpon has a Masters of Business Administration (MBA) from the Stern School of Business Administration at New York University. He brings twelve years experience with non-profit organizations to the job, including four years as the senior accountant for the Archdiocese and has an intimate knowledge of the organization and its operations, having worked closely with the former Finance Director since 1994. Bank Resolutions and related issuesThe committee report spends a great deal of time discussing the change of signatories and filing of bank resolutions. One single fact remains, and cannot be disputed - ALL changed signature cards were signed and authorized by either by the Treasurer, Mr. Anagnos, or the Secretary, Mr. Argeros, both of whom are members of the Ad Hoc Committee. It is stated in the report that Mr. Argeros has &qout;no recollection&qout; of signing the resolutions, including those for the Archbishop Iakovos Library Fund and the Ecumenical Patriarchate Fund. The Library Fund account was inadvertently changed, and it should be pointed out that this condition was remedied immediately and that there were no transactions of any kind with that account. The report also indicates that Mr. Anagnos &qout;... did sign new signature cards in which it was falsely represented that the signatories had been authorized.&qout; Craig Clausen of Chase Manhattan Bank stated that new resolutions were not necessary, and he reiterated the same statement to Ms. Bender at a meeting with Mr. Chelpon. The misunderstanding was that although resolutions would not be required to change names of signatories, Mr. Clausen was not clear to Mr. Chelpon in their initial conversation that a change in the type of signatory (i.e., Chancellor) would require a new resolution. This resolution was executed or passed by the Executive Committee five days after Mr. Anagnos signature. The Chancellor did not sign any checks prior to the passage of the Executive Committees resolution.As with many of the assertions and allegations raised in the report, many of these problems go back a number of years. According to the Archdiocese primary banking service provider , Chase, its records, as provided to the Finance Department and to the Ad Hoc Committee, indicate that the last Corporate Resolution filed by the Archdiocese for its main Operating Account was on March 24, 1995. This resolution listed the following individuals as officers:Archbishop Iakovos Chairman Demetrios Moschos President Anthony Stefanis Vice President Peter Kourides SecretaryThe following individuals and titles were designated as authorized signersArchbishop Iakovos President Helen Hadjiyiannakis Bender Treasurer Steven Kyriakos Asst. Treasurer Michael Jaharis Advisor Jerry Dimitriou Director of FinanceThe document is marked as having been superceded on March 1, 1998. The Investment Money Market Account is used to hold the Cash reserves of the Archdiocese, and at times has carried a balance in excess of $ 1,000,000. The resolution for the Investment Money Market Account, filed on February 1, 1993 indicates the only authorized signer as the Director of Finance and the only corporate officer as the Director of Finance. Three signature cards exist on the account. The first, filed June 10, 1990, lists Jerry Dimitriou and Chris Demetriades, and requires only a single signatory on the account. It is marked superceded, but with no date. The next card lists Jerry Dimitriou and His Eminence Archbishop Spyridon as signatories, with no indication of the number of signatories required. These are then superceded on February 28, 1998 with the current set of signatories.The resolution for the Money Market #2 , filed on December 30, 1994, indicates the only authorized signer as the Director of Finance and the only corporate officer as the Director of Finance. Three signature cards exist on the account. The first, filed September 4, 1986, lists only Chris Demetriades, with only a single signature required. It is marked superceded on December 30, 1994. The next card lists only Jerry Dimitriou as a signatory, again with only a single signature required. which was superceded, though no date is indicated. The next card lists his Eminence Archbishop Spyridon and Jerry Dimitriou, which was superceded by the current signatories.The Archdiocese has changed the method of disbursement for the issuance of payroll to Direct Deposit. On occasion, a paper check is required to be issued by ADP , the payroll service company, which have automated signatures applied to the check. The Clergy Payroll account, used to compensate clergy assigned to parishes that the community reimburses the Archdiocese for, still bears the automated, authorized signature of Helen Bender as Treasurer. Ms. Benders term as Treasurer ended no later than March, 1997.At the request of the Acting Finance Director, the bank undertook an additional search to see if any additional or subsequent filings were made. None were found.Distribution of the ReportThe committee report was not distributed to the entire Executive Committee, nor was His Eminence initially provided with a copy, putting him in the awkward position of responding to certain members of the Executive Committee with regard to the report without any idea what it contained. It was only at the insistence of Tony Kireopoulos that His Eminence was finally provided with the courtesy of a copy.Conclusions and Recommendations1. The Ad Hoc Committee report is incomplete and does not address the two central issues that the Ad Hoc Committee was charged with reviewing, namely the financial viability of the Archdiocese to pursue such an acquisition, as well as the issue of the lack of appropriate housing for His Eminence Archbishop Spyridon. To date, the Archdiocese continues the rental expenditure without the potential to build an equity position for the Archdiocese.2. A number of issues commented on in the report are incomplete, inaccurate and misrepresented. There have been a number of instances and circumstances where similar situations are discovered to exist under many previous administrations and under the oversight of many different Boards, and are indicative of problems that have existed for some time. The Ad Hoc Committee report selectively focuses only on recent events and ignores other similar instances.3. The Ad Hoc Committees contention that there was an effort to thwart the efforts of the Ad Hoc Committee are contradicted by the facts. The Ad Hoc Committee was provided with the documents requested as well as being provided the opportunity to further review records and documents. They themselves chose not to do so. It should be noted that these requests were not filled as quickly as some may have liked, but the Ad Hoc Committees report acknowledges the critical staff shortage as well as the heavy workload of the Finance Department with regard to the audit and preparations for the Clergy Laity Congress.4. Regrettably, the report focuses on certain issues and functional insufficiencies of the Finance Department as if they were recently created directly by those who have only recently assumed their roles. In reality, these problems have existed for many years and administrations only to remain unresolved, and have only recently begun to be addressed to some extent. The financial status of the Archdiocese has never been reported on a monthly basis and deficits were reaching all time highs. It should be noted that deficit in 1997 was the lowest in many years. New software will be in place by October that will greatly increase the ability of the Finance Department to provide timely, meaningful, and complete information. Technology is only one piece of the solution. Staffing has been and continues to be addressed, as are the policy and procedures of the Archdiocese.The next Archdiocesan Council must address these and other situations that have yet top be resolved or even addressed by this Ad Hoc Committee and its report. Only with a unified and working Executive Committee can these problems and issues become opportunities for growth and development for our Church, our Family, and our Future. OFFICE OF THE CHANCELLOR_______________________________V. Rev. George G. Passias, ChancellorDEPARTMENT OF FINANCE______________________________George Chelpon, Acting Director OFFICE OF THE GENERAL COUNSEL______________________________John M. 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