Authors: By MATT VOLZ
HELENA, Mont. (AP) -- "Three Cups of Tea" author Greg Mortenson will remain the face of the charity he co-founded, despite his having to repay $1 million after an investigative report released Thursday concluded he mismanaged the organization and misspent its money.
Central Asia Institute Interim Executive Director Anne Beyersdorfer said Mortenson will continue to draw a salary from the charity. But it won't be as executive director and he is barred from being a voting member of the board of directors as long as he is still employed by the organization.
A new title has not been created for the mountaineer and humanitarian, but he will continue to represent the organization in speaking engagements and work to build relationships in Pakistan and Afghanitan, where the charity builds schools and promotes education, she said.
"He's the heart and soul of the organization," Beyersdorfer said. "He's the co-founder and I think we all think of him as our chief inspiration officer."
A yearlong investigation by the Montana attorney general, which oversees charity organizations operating in the state, found that Mortenson exerted tremendous control over the charity as tens of millions in donations poured in after the 2006 release of "Three Cups of Tea."
The best-seller and a later book by Mortenson, "Stones Into Schools," came under scrutiny last year when reports by "60 Minutes" and author Jon Krakauer alleged the CAI co-founder fabricated parts of both and that he benefited financially from the charity. The attorney general's probe focused only on the charity's finances and operations, and did not examine the books' contents.
The investigation found Mortenson had little aptitude for record keeping or personnel management, resulting in still-unknown amounts of cash earmarked management costs or wired overseas for projects without receipts or documentation on how that money was actually spent, the report said. The two other board members were Mortenson loyalists who generally did not challenge Mortenson, and he resisted or ignored CAI employees who questioned his practices, it said.
"Mr. Mortenson may not have intentionally deceived the board or his employees, but his disregard for and attitude about basic record keeping and accounting for his activities essentially had the same effect," Attorney General Steve Bullock said.
The charity's mission is good and its financial situation is strong, Bullock said. CAI took in $72 million in donations from 2003-2011 and still has more than $23 million in reserves.
But though no criminal wrongdoing was found, CAI needs better oversight so that too much control is not in one person's hands, the report concluded.
Mortenson declined comment through Beyersdorfer because of a separate civil lawsuit challenging the content of his books that is still pending. Penguin spokeswoman Carolyn Coleburn said the publisher had no comment on the report.
"Three Cups of Tea" details how Mortenson resolved to build schools in Central Asia after he became lost and wandered into a poor Pakistani village, then follows him as he expands his school-building efforts there. The book was originally conceived as a way to raise money and tell the story of the Central Asia Institute, which Mortenson founded in 1996 with a $1 million donation from Dr. Jean Hoerni, a Swiss physicist and mountaineer
The book released in 2006 and Mortenson's tireless promotion of the charity, which included more than 500 speaking engagements in four years, resulted in tens of millions of dollars in donations.
Mortenson reaped financial benefits at the charity's expense, including the free promotion of his books, and the royalties from thousands of copies the organization bought to donate to libraries, schools, churches and military personnel, the report said.
Mortenson and CAI in 2008 agreed to split book promotion costs, and he agreed to contribute the amount he received in royalties from the books bought by CAI, but he did not followed through on either agreement, the attorney general found.
The organization spent more than $2 million on Mortenson's charter flights to speaking engagements, even when the event host paid his travel fees or gave him an honorarium.
Mortenson and his family also charged personal items to CAI in 2009-2010 amounting to $75,276 that included "LL Bean clothing, iTunes, luggage, luxurious accommodations and even vacations," according to the report.
The organization disputes some of the report's findings. The items Mortenson charged were not personal items but legitimate expenses that included clothing for overseas managers and music for presentations, Beyersdorfer said.
Mortenson also was not a good financial manager and was notoriously late in keeping up with payments in line with the royalty agreement, she said.
"He was always committed to an equitable split and just fell behind," Beyersdorfer said.
The settlement agreement calls for Mortenson to reimburse CAI $980,000 for the royalties, book promotions and charter flights where he received separate travel fees from the speaking events. He also was ordered to repay the $75,276 he charged, and any other charges uncovered by an accountant's review of past credit card statements since 2006.
Mortenson still has $560,000 to repay after giving the charity $420,000 last year and a separate check for the charged items. He has three years to repay the balance because he has "insufficient financial resources" to pay it all back at once.
Bullock and Beyersdorfer declined to answer questions about Mortenson's personal finances.
The charity also must expand its board from three to seven members. Two current board members, Karen McCown and Abdul Jabbar, must step down after a year.
Krakauer wrote in his blog on Byliner.com that the corrective actions are encouraging but pointed out that the new executive director and board members will be appointed by McCown and Jabbar with input from Mortenson.
"Neither the Attorney General nor any other outside entity has the legal authority to veto or contest any of the individuals appointed. Given the track record of McCown, Jabbar, and Mortenson over the past decade, this should be cause for great concern," Krakauer wrote.