‘3 Cups of Tea’ author to repay charity $1m

A US author nominated for a Nobel Peace Prize for his work building schools in Afghanistan and Pakistan has agreed to repay $1 million to his charity after a probe into financial misdealing.
Greg Mortenson, who wrote the best-selling book “Three Cups of Tea” about his work, has also agreed to resign from his charity’s board for “financial transgressions” in a settlement reached with the Montana attorney general.
A year-long investigation by the attorney general’s office found Mortenson had “failed to fulfill his responsibilities” to his Central Asia Institute (CAI), but that the charity was worth saving.
The probe by Montana Attorney General Steve Bullock followed a CBS television expose last year alleging that some of the most dramatic episodes in Mortenson’s best-selling memoir and its popular sequel “Stones into Schools” were fabricated and largely served as a conduit to self-enrichment. In “Three Cups of Tea,” which has sold more than four million copies since its 2006 release, Mortenson tells the stirring story of how he was rescued and nursed to health in the remote Pakistani village of Korphe after a failed climb in 1993 of the mountain K2. He writes that as he recovered, he promised villagers to come back and build a school, a decision that gave birth to his now famous campaign.
But the 2009 Nobel nominee “had significant lapses in judgment” that caused millions of dollars of donations to CAI to be spent on family vacations and personal items, Bullock said in a statement.
He said Mortenson would be removed “from any position of financial oversight” and as a voting member of CAI’s board of directors, though the author will be allowed to keep a non-executive role. “Despite the severity of their errors, CAI is worth saving,” Bullock added. Mortenson, who resigned as executive director last year, has repaid $495,000 of $1.05 million owed to CAI, leaving him with $560,000 to repay over three years because he has “insufficient financial resources” to pay it all at once, according to the attorney general’s report.
The investigation pointed to a significant lack of financial accountability, with vast amounts of cash spent overseas without supporting receipts and other documentation as Mortenson’s expenses went largely unchallenged by CAI’s board.
In one of the most egregious cases, CAI spent about $3.96 million buying Mortenson’s books — largely at full price from online retailers — to donate them without using his publisher’s discount.
Mortenson never abided by a CAI agreement requiring him to donate the equivalent of the royalties he made from the purchases — and never split, as had been agreed, the $4.93 million CAI paid to promote and advertise the books. The charity spent nearly $2 million on charter flights to maintain Mortenson’s busy speaking schedule until he started paying for his own travel in the months leading to the April 2011 media investigations into his activities. The report said Mortenson was “double-dipping” prior to the investigation, as he had not reimbursed CAI for travel expenses despite receiving an honorarium from event sponsors.
And he pocketed nearly all of his speaking fees. At one point when his engagement fees ranged between $25,000 to $30,000, all but $7,500 went to Mortenson. Among the “substantial” expenses Mortenson charged to the charity he co-founded were “LL Bean clothing, iTunes, luggage, luxurious accommodations, and even vacations”, according to the report.
Yet Mortenson was not alone in making unaccounted charges to CAI’s accounts.
The charity’s credit card statements showed “questionable charges” by other employees at restaurants, bars and spas, as well as on health club dues and gifts, the attorney general’s office said.
But the charity had good financial standing, with $23 million in reserves as it had cashed a lot more donations than it spent.
In 2009, CAI said it ran 54 schools in Afghanistan, with 28,475 pupils, most of them girls.
But CBS television’s “60 Minutes” program last year said many of the schools supposedly run by Mortenson’s charity had never opened, and it had visited many of the schools only to find them deserted or operating without links to Mortenson. The Montana probe did not delve into those issues.