Where does the buck stop?
The Ethiopian Sport Federation in North America, ESFNA, needs strengthening. In order to do so, the ESFNA board and its supports need to be informed of the situation at hand and act. This article’s intent is solely to inform the board, the public and establish a stronger ESFNA.
An effective board relies on the guidance of an Executive Committee’s (executives) experience, knowledge, and professional opinion. The executives have to recognize that within the boundaries of the law, including the bylaws guiding the board to achieve good governance is their responsibility.
I argue, the ESFNA does not have an effective board and executives because there is no sense of trust, openness, and respect among them. As a result, the ESFNA is in the hands of hostile leadership. I also argue, although the ESFNA board and executives are partial products of American universities and/or companies, their 31-year-old federation is suffering from some dishonest executives and bad governance. That has been a hallmark problem of Ethiopians in the last 40+ years. Furthermore, President Getachew Tesfaye sees his board’s weaknesses as a permit to do anything that he pleases such as lying to the IRS.
President Tesfaye’s String of Lies to the IRS
The IRS Effort: The IRS encouraged an exempt organization’s governing body to review the organization’s tax return prior to filing it as a means to indicate sound operations and compliance with regulations. As a result, Form 990 Part VI, Section B, Line 11a, asked; “Has the organization provided a complete copy of this Form 990 to all members of its governing body before filing the form?” In addition, Line 11b asked, “Describe in Schedule O (Supplemental information to Form 990 or Form 990 EZ) the process, if any, used by the organization to review this Form 990.”
Tesfaye Claimed: Stating that he provided the tax return, Form 990, to each board member before he filed the form with the IRS, he answered with a “Yes” in the federation’s 2012 Form 990 Part VI, Section B, Line 11a. Moreover, to Line 11b question, in Schedule O, he claimed, quote “The 990 is distributed to the finance committee for review and then forwarded to the board prior the return to being filed.” To verify Tesfay’s claims, see page 6 of Form 990 and Schedule O.
The Truth: Tesfaye filed the tax return without allowing the board to review it. In fact, after he filed the tax return, he kept it secret from the board. For perspective, according to inside sources, he filed the 2012 tax return privately in May 2013. In September 2013, about 130 days after he filed the tax return, he forwarded an email confirmation that he received from the IRS on May 2013 that stated “This email is to confirm your 2012 California State Exempt return has been successfully e-filed.” The e-filing confirmation email was forwarded to the board after a rumor spread as a wildfire among the board members that some members of the executives, including Tesfaye deposited the 2013 tournament revenue from College Park Maryland in their personal bank accounts. As of this article date, Tesfaye did not allow the board to see the tax return.
Laws Requires Document Retention: Exempt organizations are required by laws to retain documents such as corporate minutes, articles of incorporation, among others indefinitely. In Form 990, the IRS stated, “A document retention and destruction policy identifies the record retention responsibilities of staff, volunteers and board members for maintaining and documenting the storage and destruction of the organizations documents and records.” Then Form 990 Part VI, Section B, Line 14 asked, “Did the organization have a written document retention and destruction policy.”
Tesfaye Claimed: With a “Yes” in Form 990 Part VI, Section B, Line 14 indicating that the federation has a document retention and destruction policy. To verify Tesfaye’s Claim, see page 6 of Form 990.
The Truth: The federation did not have a document retention and destruction policy. It did not have a centralized archive, its records are disorganized, and they’re scattered across the United States and Canada in a variety of mediums (computer, paper-reams of it) among the home offices of its current and former executives. The federation, which has been in business for 31 years, did not even have accounting software that archived its financial records that could be transferred when a leadership changes.
Non-Transparent ESFNA: The IRS Form 990, Part VI, Section C, Disclosure Line 18 stated, “Section 6104 requires an organization to make its Form 990 available for public inspection. And it asked, “Indicate how you made these available. Check all that apply: (A) Own website (B) Another’s website (C) Upon request, (D) other (explain in Schedule O).”
Tesfaye Claimed: Pretending that Form 990 was available to the public upon request, he checked on answer (D), “upon request” Also in Schedule O he stated, “Upon request, these documents are provided electronically or via hard copy.” To verify Tesfaye’s claims, see page 6 of Form 990 and Schedule O.
The Truth: I sent an email to Tesfaye and some members of the executives on September 7, 2013 and politely requested a copy of the federation’s 2012 Form 990 to be emailed to me. As of this article writing, more than 190 days after I requested the 2012 Form 990, neither Tesfaye nor his colleagues responded. According to inside sources, obtaining copies of the federation’s tax returns, financial records and minutes among others from Tesfaye is impossible for the board members, let alone to the public. As an example, Tesfaye refused to email a copy of, tax return, minutes, bank statements and recorded annual board meeting video to the board members. While keeping the tax return secret, he only allowed the board members to view the bank statements at the annual board meeting. And he was merely willing to share clips of the recorded annual board meeting video with the clubs.
Why did President Tesfaye decide to deceive his board, the IRS and the public?
Not sure, why Tesfaye needed to deceive his board, but his leadership is rumored to be autocratic and corrupt. Certainly, Tesfaye lied to the IRS and the public to imply that he practiced good leadership so that he might reduce his leadership’s IRS audit risk and lessen the public scrutiny.
- Sitting on the seemingly voluntary board and overlooking Tesfaye’s bold-faced lies to governmental authority might not be worth the risk of failing the fiduciary responsibilities of the board. Although President Tesfaye told lies on the federation’s tax return, each board member is legally responsible for the dishonest statements that he gave to the IRS; therefore, the buck stops at the board members. To reduce the board potential legal risks, amending the field return would be a wise move. If Tesfaye refuses to amend the field return, a concerned board member could individually disclaim it by writing a letter to the IRS to reduce his/her potential legal risk.
- The questions in the IRS Form 990 encouraged exempt organization such as the ESFNA to follow sound practice. Lying in the tax return is contrary to the IRS effort to make nonprofit organization implement better practices. It is also contrary to current business trend of adopting good governance and sound operations. Instead of recklessly providing fictitious answers to governmental authorities, the board and the public, Tesfaye should have adopted and adhered to sound practices. Adoption of sound practices would reduce risk of a potential challenge by the IRS and the public. Best practices would deter the rumored corruption charge against his leadership. And it might attract more sponsors/donors to the federation, and so on.
- Nonprofit organizations such as the ESFNA’s records are in the limelight. To illustrate, approximately 60 days after an exempt organization files its tax return, the IRS releases the tax returns for all to see via an organization such as GuideStar, and besides, the federation has a legal obligation to let anyone interested see its records. Therefore, it is not necessary to attempt to keep the federation records secret; it only sprouts the rumored corruption charges that have enveloped Tesfaye’s leadership that it skimmed the federation’s revenue. This only contributes to making the rumored accusations seem true, and attracts a barrage of negative attention such as this article.
- Voluntarily serving on a community based nonprofit organization’s board is an honor and a responsibility, which should not be taken lightly because board members have a legal obligation to be informed, to participate actively, to rein in untamed executives and to be transparent. The executives have a responsibility that to guide their board to achieve good governance. For example, showing the board how to read the organization’s tax return and what to look for is the responsibility of the executives. Another duty that belongs to the executives is to assist the federation in writing and implementing sound policies and procedures such as a document retention and destruction policy.
A sequel to this article will discuss a pattern of lies of those who sit in the musical chair of board to executive membership and vice versa or more corruption signs in the President Getachew Tesfaye’s corrupt leadership.
For the below listed articles, it feels I have been waiting eons of time for a response from the federation. In the absence of a response from the executives and/or board, I see a pattern of overlooking public concerns in order to keep the status quo that is rumored corrupt beyond redemption.
- Non-Transparent ESFNA, December 10, 2010
- Should the ESFNA Solicit Leadership from the Community?, August 29, 2013
- Open Letter to the ESFNA Board, October 13, 2013
The writer can be reached at LJDemissie@yahoo.com