ECFA Report: Gospel for Asia Has Yet to Answer the $259 Million Question

The report of the Evangelical Council for Financial Accountability’s investigation of Gospel for Asia contains some amazing facts. One fact contained in point 2 of the ECFA report is the disclosure of the massive amounts of donor money just sitting in foreign banks. The ECFA, apparently reading my May 22 blog post, wrote:

2. Excessive cash balances held in partner field accounts. Allegations were made that GFA had upwards of $150 million in partner field accounts, far more than necessary to provide appropriate operating reserves. During our visit on June 3, ECFA was informed that GFA field partner cash reserves were approximately $7 million. After ECFA requested detailed documentation of cash balances held by foreign field offices, on June 29, we discovered that GFA’s field partners had $259,437,098 on hand at March 31, 2014 and approximately $186 million in June 2015.
ECFA staff questioned the appropriateness of the high levels of cash being held in partner field accounts. We were told that GFA partners felt it was important to maintain the high balances in case the Indian government decided to block funds being transferred into the country.
The source of the balances was primarily from donor-restricted gifts to GFA, often raised in response to gift solicitations that communicated urgent field needs (see #4 below). ECFA staff expressed concern that the high reserves may not comply with ECFA Standards 4 and 7.1. Subsequent to our conversation on this matter on July 27, GFA provided ECFA with a plan to reduce partner field account reserves to $72 Million, and then amended the plan on August 27 to reduce reserves down to $11 Million. Again, GFA staff disclaimed that GFA exercises any control over field partners (see #10 below).
In our meeting on July 1, ECFA staff asked you what the GFA board would think if they knew of the high balances in partner field accounts. You indicated that neither the board nor you were aware of the magnitude of the balances. You responded, “They would be as surprised as I am.” Subsequently, the GFA board was notified, during their July 13 board meeting, of the balances held by field partners.

As of the end of the 2014 Indian fiscal year (March 31), GFA had a quarter of a billion dollars parked in Indian banks. Over that year, GFA had added $101 million to the $158 million I discovered. For years, GFA has been telling donors about the urgent needs of the homeless and hungry and they have been sitting on donor funds designated to meet those needs. This is scandalous.
If GFA in the United States really didn’t know, they should have fired Believers’ Church and GFA-India as partners. But then on second thought, that might have been awkward since K.P. Yohannan is the CEO of GFA and the Metropolitan and Managing Trustee for Believers’ Church and the related entities.
In his reply to the ECFA, Yohannan said plans have been made to deal with massive balances. However, there is reason to require proof. GFA initially told ECFA that the balance was $7 million. GFA told staff the same thing in a May 14 staff meeting. Here is what Yohannan said in reply to ECFA.
GFA reply excessive funds
Yohannan wants the public to believe that Believers’ Church, Gospel for Asia – India, Love India Ministries and Last Hour Ministry are completely independent and unrelated field partners. Yohannan told the ECFA he didn’t know how much money was in those accounts.
However, somehow, GFA convinced the field partners to completely shift their operating philosophy and commit to use nearly all of those funds, leaving only $11 million in reserve (what about the corpus fund?). Yohannan wants the public to believe that he exercised no authority in the matter.
Here’s the $259 million dollar question: Which K.P. Yohannan do we believe? Do we believe the Metropolitan Bishop who signed his name to the Believers’ Church Constitution, or the GFA CEO who told ECFA he didn’t know how much money his Indian organizations had squirreled away?
According to the Believers’ Church Constitution, Yohannan is the ultimate and final authority in all matters relating to Believers’ Church and their trusts. Assets cannot be moved without his approval.
This is a serious matter. For years, donors thought their funds were going to specific needs in India. Now we know much of the money wasn’t going to those needs but rather to interest bearing accounts. If I was a donor, I would want my money back.
Compounding the problem is the incredible claim from K.P. Yohannan that he didn’t know how those organizations were stewarding the funds. How could he not know? He runs those organizations. According to the church Constitution, he is the final authority. I don’t see how Yohannan can have it both ways. Instead of a vague apology, GFA needs to come up with a response that addresses the discrepancies delineated here.
MetropolitanPowersBC Cons
And then review what the Believers’ Church Constitution says about the Metropolitan’s role regarding property and funds. If Yohannan doesn’t know how much money Believers’ Church, Gospel for Asia – India and the other trusts have, then who does? He is the Managing Trustee and the one who nominates the other trustees.

Gospel for Asia Pulls More Endorsements from Website

Yesterday, Gospel for Asia linked to a list of ministry leaders who endorsed GFA’s work. Today, that link is missing and the endorsements have been pulled from the page.
The page yesterday looked like this:
Endorsements Before
Today, it looks like this:
Endorsements missing
All endorsements are missing and the link to the page is missing.
Recently George Verwer told me that he continued to support GFA and so this action may not reflect the feelings of all endorsers. For whatever reason, GFA has removed the information and a prominent link to the modified page
UPDATE: The page may have just been moved rather than deleted. It can be viewed here now. The church endorsements page contained mostly pastors at one time. See this 2014 page, and then this one in May, 2015. Note how many original endorsers are now missing.

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.
GFA NZ Board info
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.