December 2015 – Page 9 – Warren Throckmorton

ECFA Report: Gospel for Asia Leaders Deny Discretion and Control of Funds Sent to Indian Organizations

In a prior post, I wondered if Gospel for Asia had discretion and control over funds sent to India. I was surprised to read in the ECFA investigation report (disclosed yesterday by Gayle Erwin) that GFA – US leaders claimed GFA’s Indian partners are independent of the American organization. From the ECFA report:

5. Lack of discretion and control over funds granted to foreign entities. During our review on June 3, ECFA staff raised questions regarding GFA’s oversight and control of funds sent to foreign field partners. GFA’s staff indicated that the foreign field partners are completely independent organizations and therefore GFA did not exercise any direct control over field partners. GFA staff also indicated that they did not have a foreign grant process in place to oversee the use of funds.
Given legal requirements on tax-exempt entities to have appropriate discretion and control over the use of funds sent to foreign entities, ECFA staff indicated that GFA’s lack of a grant process appears to violate ECFA Standard 4’s requirement to follow applicable laws. Subsequent to these conversations, on August 21, GFA staff indicated a new foreign grant process was developed with the assistance of its new audit firm and will be in effect as of September 1, 2015.
Our review of the board minutes did not indicate the GFA board had approved, or even been notified, of GFA’s minimal oversight of funds provided to field partners.

In my prior post, I cited IRS guidance on the subject of discretion and control. In short, it sounds like GFA had been operating as a conduit for funds to India (or at least was claiming to be). Read the following ECFA guidance based on a recent IRS ruling:

“American Friends of” organizations support the exempt purposes of foreign organizations by raising financial support for them in the United States. Donations to an “American Friends of” organization are generally deductible, but only if the organization can prove it exercises sufficient control and discretion over the donated funds to ensure that the funds are being used to further the exempt purposes of the organization. In other words, to maintain deductibility of donations, an “American Friends of” organization must be more than a conduit; rather, it must exercise full control and discretion over where its funds are distributed and how they are used.

While I don’t want to raise unnecessary alarm, if GFA’s claim is true, American donations to GFA may not be deductible. GFA claimed to ECFA that GFA did not exercise control over GFA India, Believers’ Church and other groups, and ECFA found fault with GFA for the lack of discretion and control. For donations going to foreign charities to be deductible, the American organization must exercise discretion and control. Since GFA claimed no control, it seems reasonable to wonder if the IRS will reconsider the status of those millions.
My guess is that if GFA’s discretion and control are questioned by the IRS, GFA will flip explanations and play up the degree of control K.P. Yohannan really has in India. It is simply not credible for GFA to claim Yohannan has no control when in fact, he is the ultimate authority in the Believers’ Church and sits on all trusts associated with the church.
In the final analysis, K.P. Yohannan exercises control and authority both in the U.S. and in the Indian affiliates. It is beyond belief that Yohannan and GFA would claim otherwise.

ECFA Report: Leaders of Gospel for Asia Claim Millions Went to Hong Kong Bank Instead of Indian Field Ministries

A question Gospel for Asia has steadfastly refused to address is the location of nearly $130 million in donor funds claimed in U.S. audits to have been sent to India. What shows up in Indian public records doesn’t match what is claimed on U.S. audits. The report of the Evangelical Council for Financial Accountability’s investigation into financial matters at GFA reveal a new claim by GFA about at least some of those dollars, but ultimately leaves the matter unanswered.
Previously, donors have told me that GFA leaders said I had missed funds sent to Indian states other than Kerala. Reviewing the FC-6 forms of all other Indian states, I came to a dead end. No other state records reported the receipt of any funds from the U.S. GFA office to any known GFA affiliate. I have also heard that GFA claims to send funds to two other unnamed charities in India. However, GFA has refused to provide any specifics.
In the GFA report, another claim is made:

15. Alleged missing funds according to Indian FC6 forms. ECFA received allegations that a significant amount of funds were missing based on attempts to reconcile GFA’s audited financial statements and field partner’s Indian FC6 forms. ECFA reviewed this matter to determine compliance with ECFA Standard 4. On July 20, GFA staff provided ECFA with a reconciliation of these amounts, which reflected a transfer of $29,300,000 to a GFA India account in Hong Kong. GFA staff reported that this transfer was not required to be reported on Indian FC6 forms and that this amount along with fiscal year timing differences led to the allegations of significant missing funds.

The way this paragraph is written gives me the impression that ECFA took GFA’s word that these funds did not have to be reported in India. This assumption is problematic and raises other troubling questions. GFA told the ECFA that just over $29 million which GFA claimed in their American audit was sent to GFA India actually went to a GFA India account in Hong Kong.
I do not know India law well enough to express an confident opinion on this claim. I don’t accept GFA’s claim at face value. While I intend to look into it, the claim raises additional questions. Since the funds were sent to GFA India for use in India, why would those funds be exempt from reporting? If GFA uses those funds in India as promised to donors and claimed in the American audit, eventually the money would have to be reported to the Indian government via the FC-6 forms. No matter where the money is parked once it leaves the donor, it will eventually need to be documented in India as a foreign contribution, if indeed it is ever sent to India. Over eight years, the best estimate I have seen is that $128 million is not accounted for. The ECFA investigation apparently only looked into the activities in one calendar year.
The claim about fiscal year timing differences is a distraction. Since the FC-6 forms requires a precise date of receipt to be reported, Jason Watkins and I have been able to take the timing of transfers into account.
That’s it. the ECFA investigators were not told stories about other Indian organizations receiving GFA funds. Apparently, there were no claims about sending money to other states in India. Staff and leaders who provided these spurious explanations to staff and donors did not provide the same reasons to the ECFA.
Just after being terminated from ECFA membership, GFA told the public that “no findings of money missing” came from the ECFA investigation. Having the ECFA report, it is clear that ECFA did not thoroughly examine multiple years of discrepancies between what GFA said they sent to India and what was reported in India to the government. Furthermore, the ECFA apparently took GFA’s word that funds deposited in Hong Kong satisfied GFA’s claim that those funds went to GFA India and did not require reporting to the Indian government. ECFA did not independently verify this claim.
In any case, I hope that staff and donors can now put to rest the false stories advanced by some within GFA (i.e., money sent to other states or other ministries) and concentrate on the big secret GFA has been protecting for months. I challenge GFA to produce chapter and verse in Indian law which exempts foreign contributions from disclosure if those funds are first deposited to banks outside of India. GFA will also need to provide documentation about the large and growing discrepancies over the past decade.

Former Gospel for Asia Board Member Gayle Erwin Speaks Out, Discloses ECFA Report on GFA’s Violations of Membership Standards

In response to ongoing claims from Gospel for Asia about the investigation conducted by the Evangelical Council for Financial Accountability, former GFA board member Gayle Erwin has released a series of documents, including the report of the ECFA investigation as well as the GFA response. As is now widely known, the result of that investigation was a vote of the ECFA board to terminate GFA’s membership. I believe it is important to note that Erwin put in over 30 years of service as a board member and was cited in the original edition of K.P. Yohannan’s first book (ghostwritten by Bill Bray) as an influence.

Erwin also released correspondence which documents his efforts to bring change to GFA before he resigned. Given the lack of public accountability by GFA, these documents provide some answers to remaining questions raised by the public, GFA donors and former donors, former and current staff, and current recipients of GFA’s services.

In this post, I intend to provide links with a short description of each document. A fuller response to the ECFA investigation and GFA’s response to it will follow.

ECFA’s Report To Gospel for Asia – This report covers the results of the ECFA’s investigation into a variety of allegations. The contents provide much needed context which help make some sense of the simplistic descriptions given by GFA. Furthermore, the contents vindicate much of my reporting here.

GFA’s Response to ECFA’s Report – GFA replied to the ECFA report with additional information and promises to make changes. From my vantage point, the promised changes were small compared to the magnitude of the problems. Apparently, the ECFA agreed because the board voted to remove membership on October 2.

March 17, 2015 Letter from Gayle Erwin to K.P. Yohannan – In this letter, former GFA board member Gayle Erwin discusses his investigation of the charges brought by the GFA Diaspora. Erwin felt some of the Diaspora claims were true which upset Yohannan.

Letters of Concern from Gayle Erwin to K.P. Yohannan – It is clear in these letters that Erwin is hoping to provoke transparency and change at GFA.

Gayle Erwin’s report to GFA as assigned – This is the GFA board investigation report Erwin originally filed with the board. According to Erwin, it was significantly rewritten by K.P. Yohannan before being given to the former staff group, GFA Diaspora. In contrast to the report which GFA’s former staff members received, Erwin actually found evidence for nearly all of the claims made on this website by the former staff (GFA Diaspora). Erwin now believes that financial mismanagement claims are also true.

The report of former staff concerns actually presented to the board – According to Erwin, K.P. Yohannan rewrote this report to appear in this format. Comparing the two, one can see significant whitewashing of staff concerns.

Gayle Erwin’s Resignation Letter – How and why Erwin left the board.

Gayle Erwin’s Letter of Apology to GFA Diaspora Spokesperson J.D. Smith – Erwin’s apology to the former staff members of GFA.

There is a wealth of information here which will take several days if not weeks to unpack.

See additional information about Gayle Erwin’s communications with former staff at the GFA Diaspora site.

Update on the Shut Down of Gospel for Asia New Zealand

The story coming out of Gospel for Asia in Wills Point, TX is that the GFA affiliate in New Zealand isn’t closing, just moving.
Multiple sources have confirmed that long time GFA staff members Chris and Cindy Brewer have been deployed to NZ to salvage the office. However, it might not be that easy or clear cut.
GFA NZ Trust lists three board members on the NZ charities registry.

K.P. Yohannan is listed as a trustee and has a vote in what happens with GFA NZ. Brian Hughes is the pastor of Calvary Chapel Auckland. His views are known via the letter he sent to his church — GFA NZ is closing and nothing Yohannan does will change that. If a vote of trustees happens, it appears to come down to accountant Murray Bell. I have been unable to contact him. According to the rules of the trust, two of the three trustees can take action to oust the other trustee. Theoretically, Bell and Hughes could vote Yohannan off the GFA NZ island.
However, if Hughes has stepped down and fails to exercise his authority as a board member, then it becomes unclear how Bell and Yohannan proceed if they disagree about the direction of the trust.
If this trust closes, then GFA in the U.S. will need to find another New Zealander to initiate a new trust.
Given the materials filed on the NZ government website, there is reason to question the story from GFA that the NZ affiliate is simply moving. If Hughes and Bell have voted to close the charity, I can’t see how Yohannan can stop them.

Ministry Watch Donor Alert: Still No Explanation from Gospel for Asia about Possible Fraud and Termination from ECFA

This just came out last night from Ministry Watch:

The alert is concise and raises questions about GFA’s silence. The alert also raises concern about efforts to cover up important information for donors about GFA’s explanations of cash smuggling.