Red Cross Warned On Internal Disputes

U.S. Senator Charles Grassley of Iowa, 2001/5/3
The American Red Cross was warned years before Katrina hit to resolve its internal disputes or risk a repeat of snafus that plagued the Sept. 11, 2001 relief effort, according to internal documents made public by a Senate panel Monday.

Thousands of pages of Red Cross e-mail, corporate documents and whistleblower complaints paint a picture of an organization whose mammoth structure contributed to the charity's uneven response to Hurricane Katrina, CBS News correspondent Sharyl Attkisson reports.

In an Oct. 29, 2001 e-mail, board member Bill George warned Red Cross chairman David McLaughlin to resolve the group's disputes. At the time, the nation's largest charity was reeling from CEO Bernadine Healy's resignation amid charges it had mismanaged Sept. 11 donations.

"The worst thing we could do is to gloss over the split on the board, make some superficial changes in governance, and see the whole scenario repeated three or four years from now," the Medtronic Inc. executive wrote.

"I do not think the board can continue kidding itself that it wants a strong leader and then not giving that person the authority to lead," he said. Four years later, the group's next CEO, Marsha Evans, would resign in the aftermath of Katrina, citing board friction.

Investigators tell CBS News that a bloated governing board of 50 members was a problem unto itself. Most of the members, according to the documents, didn't attend meetings and didn't know about the decision to drum out Evans until it was a done deal, Attkisson reports.

Sen. Charles Grassley, R-Iowa, calling for immediate changes, warned the Red Cross board Monday that "'business-as-usual' cannot continue." He said the documents raise questions about the Red Cross' ability to keep close watch on billions of dollars in donations.

"This type of culture, a culture that discourages people from coming forward, management that does not want to hear the bad news and is more concerned about good press than good results, is a theme that I am hearing too often," said Grassley, who as Finance Committee chairman oversees charitable organizations.

His committee released the documents Monday.

In a statement, the Red Cross said it would fully cooperate with the committee's review. The charity has said it responded to Katrina the best it could in circumstances almost unimaginable, while acknowledging that it stumbled in "technology, logistics and coordination."

"The American Red Cross is committed to learning from our prior challenges and making the necessary changes," the charity said Monday, noting it had recently launched an independent audit to review operations.