We resume our discussion of the Rasky Berlein/Ann Carter conflict of interest in the Archdiocese with additional information. As you may recall, Rasky Berlein is the long-time PR firm for the Archdiocese, and there are some aspects of their relationship with the archdiocese that appear to be inconsistent with good governance of any organization, whether it be Catholic or secular.
We mentioned in Conflicts of Interest: Part I that Ann Carter , CEO of PR firm Rasky Berlein, played a key role on the archdiocesan search committee that hired Chancellor Jim McDonough, and was previously on the Board of Abington Bank when Jim McDonough was the CEO. Ms. Carter joined the Abington Bank board in 2002 and her term expired in 2003. (She chaired their Audit Committee during the same time period when the bank was restating their 2001 earnings and revising 2002 financials due to an accounting error). According to Abing ton Bank’s 2003 annual report, Carter held 12,400 stock options (or .32% of the stock pool). Jim McDonough held 244,665 options or 6.28% of the stock. What that means is that when Abington Bank sold to Seacoast in June of 2004 for $139.4 million, it is fair to estimate that Ms. Carter collected .32% of $139 million or about $450,000. Mr. McDonough would have made about $8.7 million. Within months, even before that acquisition was even complete, Seacoast sold itself to Sovereign Bank for $1.1 billion. So, those options worth $450,000 in June of 2004 were worth even more in the subsequent sale months later, but we do not know how much more.
What is important for you to know is that in late 2004-mid 2005, Ms Carter made about a half-million dollars or more on the sale of Abington Bank by virtue of Jim McDonough having her serve on the Board, and then in December of 2005, Ms Carter (who is also a friend of Jack Connors) was put on the Archdiocesan search committee which then selected Jim McDonough as Chancellor. His appointment was announced on June 5, 2006. As we stated previously, she was also on the search committee that selected communications secretary, Terry Donilon. Both of these cabinet officials have decision-making authority over how much Carter (the person who helped select them) would be paid for work by the archdiocese. We have been told by several sources that staff members at the archdiocese objected to this conflict of interest, but were overruled, and we have learned that their concerns were overruled by current Secretary for Healthcare and Social Services, Fr. Bryan Hehir.
In addition, we know that Rasky Berlein PR services are used by four different groups in the Archdiocese corporation sole—the Communications secretary (Terry Donilon), the office that handles sexual abuse claims, Caritas Christi, and Catholic Charities. But they have a billing arrangement where they charge each entity separately and where the archdiocese does not aggregate those four separate charges to show the annual payments to Rasky Berlein as a vendor in the archdiocese’s annual report. That means if each entity were to pay Rasky $25,000/month for services, the Archdiocese is paying Rasky $100,000/month or $1.2 million annually, but it does not show up on the annual report as a “top vendor” because the charges are billed to four separate agencies. Even if that is an acceptable accounting practice, it would defeat a purpose of giving transparancy to top vendor charges when ones like this are excluded from the archdiocese’s annual report.
It is difficult to understand how the Communications Secretary and Chancellor–who owe their current jobs at least in part to Ms. Carter, who served on their search committee amidst a clear conflict of interest–could responsibly decide on how much to pay her and her firm today, or even on whether to continue using this firm vs other less expensive PR agencies. It is also difficult to understand how this arrangement benefits the archdiocese today, and it is also difficult to understand how failing to disclose the aggregate amount paid to Rasky by the various archdiocesan agencies is consistent with the stated goal and principle of financial transparency. Twenty one positions were recently eliminated at the archdiocese to save money. Healthcare benefits to priests have been cut. The clergy and employee retirement funds are underfunded by tens of millions of dollars. Parishes are being asked to give a mandatory 18% of their contributions to the archdiocese. Something does feel ethically right about this arrangement.
We will email all of the parties involved in this from the archdiocese and ask them to disclose why this conflict of interest was permitted, why the arrangement remains in place today where people even somewhat indebted to Ms. Carter decide on how much she is paid for services, and what steps are being taken to immediately address these conflicts for the common good of the archdiocese and to restore trust with priests, chancery workers, donors, and laity. If any readers would like to add more to this, we invite you to comment below or to send us confidential email at (email@example.com).