TheFinalSprint.com - Track & Field, Marathons, Racing News, Training Advice, Elite Athlete Blogs, Interviews, Podcasts, Videos and More! - TheFinalSprint.com is the Premier Destination for Track & Field, Marathon, Cross Country, Olympic and Road Racing Enthusiasts.

In memory of Adam Jacobs, support the Challenged Athletes Foundation

In memory of Adam Jacobs, founder of The Final Sprint, please donate so that someone with dreams as big as Adam can reach their goals too.

Dysfunction Run Amuck
Part IV: Cannon’s Allegations & Financial ‘Mismanagement’

Posted November 28th, 2008 at 8:00 PM by Adam Jacobs

Section: News & Results, Track & Field, Olympics

This is Part IV in TheFinalSprint.com’s seven-part series entitled “Dysfunction Run Amuck: USA Track & Field and the Need for Change”. To check out the first three parts and/or to view the publication timeline for remaining installments in the series, please scroll to the bottom of this article.

Lynn Cannon’s Allegations and The Call for Change

Regardless of lingering questions of USATF’s sovereignty amid USOC demands, few people in or outside the organization question that change is sorely needed.

USATF National Secretary Lynn Cannon has been one of the most vocal proponents of reform in recent months. At the USATF Associations workshop on August 23, 2008, in Indianapolis, Cannon made several serious allegations about members of the USATF Board of Directors. Most pointedly, Cannon accused three committee chairs, all board members, of what she called “financial mismanagement” without naming them.

According to a transcript of Cannon’s remarks circulated widely in private e-mail and posted on Masterstrack.com, there were “expenditures which in the professional opinion of the CFO should be brought to the attention of the Board.”

These expenditures included the following:

Thousands of dollars for hotel suites.
Thousands of dollars for hospitality passes.
Thousands of dollars for unnecessarily-expensive airfare and superfluous travel.
Child care charged to a committee budget.

Cannon added “the expectation was that the Board would act to curtail these excesses; however, this did not happen. You see, all of the expenditures highlighted were by Board members themselves.”

In an exclusive interview with TheFinalSprint.com, Cannon identified the three board members whom she had accused of financially related misdeeds. The committees and board members she called into question were all from the USATF High Performance Division: Men’s Track and Field Chair John Chaplin; Women’s Track and Field Chair Stephanie Hightower; and Athlete Advisory Committee Chair Sandra Farmer-Patrick.

When contacted by TheFinalSprint.com, all three board members denied any wrongdoing.

Financial Mismanagement and Oversight Issues

Cannon discussed at length with TheFinalSprint.com the reasons she raised these issues at the annual association in Indianapolis to make her accusations. Her motivation, she said, was to bring the members of those associations — USATF’S grassroots membership, the people who would be sending delegates to the national convention to vote on the proposed restructuring proposals and who would be voting for the new President — up to speed on the “inner workings” of a Board of Directors that she feels has not been functioning very well.

Two members of the Board, both supporters of Stephanie Hightower’s campaign for USATF president, voiced strong opposition to the accuracy of and motivation behind Cannon’s allegations. Long Distance Running Chair Glen Latimer labeled her accusations “ridiculous.” He went on to say that “some of what [Cannon is] saying has been investigated and found not to be true.”

Asked to elaborate — to provide specifics of who had investigated what and what they had found — Latimer would say no more.

The other Board member supporting Hightower, Youth Athletics Committee Chair Lionel Leach took a different tack, labeling the allegations as “borderline racist.”

[Note: The debate over whether or not racism played a role in Cannon’s comments, and the problem of racial tensions on the Board in general, will be discussed in detail within Part V of this series.]

Hightower, one of three candidates for USATF president, insisted — in a recent interview about allegations of her financial mismanagement, that she has never been cited for any violations by the Ethics Committee related to her budget.

However, USATF Treasurer Koch wrote that there is evidence to suggest otherwise. In a letter he sent to Ken Stone at Masterstrack.com, Koch asserts that, since his name was mentioned, he felt compelled to “set the record straight” about “at least one issue that directly involves Stephanie Hightower as the Women’s Track & Field Chair.”

The matter of contention surrounds the budgets of both the Men’s and Women’s Track & Field Committees. According to Koch, in 2004, “[Both Hightower and Chaplin] vastly exceeded their budgets. Each of the two committees had a budget of $28,000. The Men’s Committee spent $74,536 - double their budget. The Women’s Committee [were] also spendthrifts, expending $54,497 - nearly double their budget.”

These excesses, largely the result of travel, prompted Koch to ask the Board for a tightening of the budget rules, which they agreed to do. Koch wrote that their committees “did a better job of staying within their budgets for 2005 and 2006 after the rules were tightened.”

“In 2007, however, several committees, including the Men’s & Women’s Track & Field Committees submitted reimbursement requests after the Hawaii convention that would put them over budget. A reason commonly given was that travel costs to Hawaii exceeded expectations. In most cases, the committees were within $2,500 of their budgets.”

“Bill Roe, Budget Chair Larry James, and I reviewed the 2007 budget variances for each committee. In the cases of the Men’s & Women’s Track & Field Committees, we granted each of them a waiver of $1,000 for the variance in recognition of the travel cost hikes, and “penalized” the committees for the rest of the overspending by reducing their 2008 budgets: $1,105 for the Men’s Committee, and $293 for the Women’s Committee.”

Another problem raised by Cannon is that several board members, including Hightower as revealed in her past committee ledgers, have accepted or at times even demanded hotel suites instead of standard rooms while traveling on USATF business. Although occasionally hotels offer USATF complimentary suites when they book large blocks of rooms, that has not always been the case. In these instances, the board members in question have tried to justify the suites by saying that they are necessary in order to have private business meetings that would not be appropriate for a crowded hotel lobby or bar, for example.

An executive-level USATF staff member said that such practices are not as trivial as some on the Board would lead others to believe. “When someone demands a hotel suite or other things that cost more money… these are things that would probably concern most people” and members of USA Track & Field viewing the issues from an objective and fiscally-responsible perspective.

However, when expenditure like these have been questioned by staff members in the National Office, the board members have responded with scathing criticisms, and even, according to multiple sources, tried to have those staffers fired.

For example, presidential candidate Bob Bowman reported that those board members whose expenses had been highlighted by former CFO and current consultant Jim Elias as examples of potential overspending and mismanagement of USATF funds, those board members tried to have him fired. Moreover, Bowman accused some of these same board members of intentionally giving then-CEO Craig Masback a negative performance review because he had come to the defense of Elias, one of his closest advisers in the organization. Once again, the board members have denied these allegations.

An insider in the USATF National Office in Indianapolis claims, “The board for years has been going after Jim, trying to [have] him fired. When they call our travel department a day before they’re going to travel and insist on traveling on a specific airline, and having an $1,100.00 ticket instead of a $300.00 ticket, and Jim says, ‘No,’ they reply by saying, ‘You are not the person who is can tell us how to spend our money. It is our committee.’ And, trust me, this is something that is going to be scrutinized extremely closely, and it’s basically going to be [stopped] by Doug [Logan].”

To put these financial issues and alleged mismanagement into perspective, the USATF executive emphasizes that, “No one’s turning in a receipt for $100 meal or no one’s turning in a bar tab for $200 because they entertained people. Nobody. Not Craig Masback when he was here, not the staff, not Bill Roe, not the board.”

However, this executive continues to be extremely bothered by the apparent lack of concern expressed by several board members about wasting money, saying, “Every time someone wastes money because they’re buying a ticket at the last minute or occasionally do something I think is really discreditable like demanding a hotel suite because they need to conduct business, it does bother me, but I need to keep it in perspective.”

The bigger issue, said the executive, is what these actions say about the judgment of our leaders. As a result, these behaviors raise a number of critical questions:

“What is the decision-making power that people have? Do they really have that authority? And are they using the same poor judgment when they’re making other decisions?”

The Board’s Struggle Within An Inherently Flawed System of Governance

There are two contrasting instances in which the board was forced to make decisions on how to use their powers of financial oversight that illustrate the board’s consistent struggle to live up to their responsibility of financial accountability while operating in a system that is filled with unavoidable conflicts of interest. These conflicts are caused by the current by-laws which allow for committee chairs, which are in direct control of their committee budgets, to also serve on the USATF Board of Directors, the body charged with final authority over those same committees.

It should be noted that this inherent problem is the reason behind some of the proposed restructuring of the USATF by-laws. These changes are aimed at preventing the organization’s leaders from wearing multiple hats that will lead to these conflicts of interest. Furthermore, under the proposed restructuring, the CEO will be given increased oversight powers on financial operations, allowing the Board to focus on setting policy.

Both instances are examples of the types of consistent requests by Board Members for exceptions to the standing USATF travel and reimbursement policies. USATF Treasurer Ed Koch reported that such requests have required an inordinate amount time from President Bill Roe, Budget Committee Chair Larry James and his own time. In an email to the USATF listserv in the aftermath of Cannon’s allegations, Koch explained:

“Most often, the travel exceptions sought are because an individual wants a more expensive air fare for a more conveniently scheduled flight, or a non-stop instead of a one-stop, or a preferred airline. The three of us look at these on a case-by case basis and usually resolve them informally. Sometimes, we find a compromise flight that isn’t the cheapest but still reasonable in cost. Other times, we have avoided an expensive airfare by using airline mile, points, or VIK tickets.”

The first instance involves John Chaplin and his request to purchase a flight that cost $700 more than an acceptable-but-less-convenient alternative flight. This led to, according to Koch, the one time in recent years “which a specific travel matter went up to the Board” for a decision.

The board, to Koch’s disappointment, ultimately voted to approve Chaplin’s request for an exception to the USATF’s travel policy. Several other board members have since reported that this decision set a poor precedent and has created a sentiment held by some board members that official policies are never really set in stone and can be bypassed. It also created an unofficial policy directive that the board would stay out of each others’ affairs when it came to the ways in which they spent their respective committee budgets.

The second instance, which was included within Cannon’s speech at the USATF workshop, involves AAC Sandra Farmer-Patrick’s unprecedented request in 2005 to have $697.00 in childcare expenses that were incurred in 2004 reimbursed to her out of her committee budget.

After Farmer-Patrick’s request was brought to Koch by the National Office’s financial staff, he conducted independent research, along with Roe and James, and determined that the IRS considers child care to be a personal, and not a business, expense.

Koch explained, “Since the Board had never established a USATF policy on child care, I informed the Board about the issue and presented them with three options: (1) contest the IRS position which would result in costly litigation (I recommended against this option); (2) reimburse child care expenses but treating it as income to the recipient like a stipend - with a 1099 if over $600; or (3) treating all future child care expenses as non-reimbursable.”

Rather than falling prey to the inherent conflict of interest involved with having to judge and possibly deny a request by one of its own members, the Board, as Koch said, “to its credit chose the third option and deemed such expenses to be non-reimbursable.”

The next installment, Part V, of TheFinalSprint.com’s seven-part series, “Dysfuncton Run Amuck,” will be published on Saturday, November 29, 2008.

The topics that have already or will be covered and the publication dates for each segment are as follows:

11/20 - Introduction

11/21 - How Did We Get Here?

11/25 - USOC Mandates / A Question of Authority

11/28 - Cannon’s Allegations / Financial Mismanagement

11/29 - ‘Jets vs. Sharks’ Dynamic / Racial Tensions

12/02 - Overstepping / Conflicts of Interest

12/03 - Pres. Election / Logan / Restructuring

— — —

CREDITS:

Segment Title:
“Part IV: Cannon’s Allegations and Financial ‘Mismanagement’”

Series Title:
Dysfunction Run Amuck:
USA Track & Field and the Need for Change

Author:
Adam Jacobs, Editor-in-Chief of TheFinalSprint.com and CEO/President of the TFS Media Network. Jacobs also serves on the Board of Advisers for Giving Athletics, Inc and is a co-founder and the current Executive Producer of the Running Film Festival (RFF).

Additional reporting by:
Jimmie R. Markham, associate editor and podcast co-host at TheFinalSprint.com. Markham is also the founder of 400meteroval.com.

Special Thanks To:
James Dunaway: A senior editor at Track & Field News for four decades, Dunaway writes for the International Association of Athletics Federation (IAAF) and is the editor of American Track & Field and Athletes Only! He has covered fourteen consecutive Summer Olympic Games, twice served as president of the Track and Field Writers of America (TAFWA), and written stories for newspapers around the country, including The New York Times and Austin American-Statesman.

— — —

Please direct all inquiries, including requests to reproduce or republish this article, to Adam Jacobs: adam(at)thefinalsprint(dot)com