Three Cups of Tea lawsuit could open door to others

Three Cups of Tea

The Chronicle of Philanthropy is reporting that a lawsuit filed against Greg Mortenson, author of Three Cups of Tea, and his organization, the Central Asia Institute, could open the door to further lawsuits — at other charitable organizations.

As you will recall, or can read here, Mortenson and his philanthropy have been accused of a number of things, including fabricating aspects of his inspiring narrative but, more seriously, misusing funds and misleading donors.

The Chronicle’s Debra E. Blum reports:

The complaint, filed last week in a U.S. District Court in Montana, alleges that Mr. Mortenson and the institute fraudulently solicited donations and earned book profits based on his claims about his experiences in Afghanistan and Pakistan.

The lawsuit stems from investigations by the “60 Minutes” news show and the author Jon Krakauer that have cast doubts about Mr. Mortenson’s accounts of his charity’s work and his own adventures. If the lawsuit is granted class-action status, Mr. Mortenson and the Central Asia Institute could be on the hook to return millions of dollars in donations and proceeds from the books.

Of broader interest to the philanthropic community are those who say these lawsuits could reverberate well beyond Mortenson and his charity. The Chronicle:

Legal experts say that if the case, which is seeking class-action status, is allowed to proceed, it would give unprecedented recourse to people who feel they were duped into supporting a charity. It would also, they say, leave charities vulnerable to damaging lawsuits by unhappy donors and customers.

Some experts think the legal complaint is unlikely to proceed. One Chicago legal expert, Jack Siegel, quoted in the article put it this way:

“It’s like saying that everybody who learned that John Edwards was not necessarily the clean-cut guy they thought he was is now entitled to ask for their campaign contributions back,” Siegel says.


About Author

Tom Paulson

Tom Paulson is founder and lead journalist at Humanosphere. Prior to operating this online news site, he reported on science,  medicine, health policy, aid and development for the Seattle Post-Intelligencer. Contact him at tom[at] or follow him on Twitter @tompaulson.

  • Anonymous

    Greg Mortenson Responds to Allegations by Jon Krakauer:
    1. If CAI’s primary mission is to build schools and educate girls in Pakistan and Afghanistan, isn’t public education really about CAI’s fundraising efforts?
    CAI has two purposes– as described in the original 1996 certificate of incorporation and in its application for recognition of exemption as a 501(c)(3) charitable organization filed with the Internal Revenue Service– to establish
    and support education in remote mountain communities of Central Asia and to educate the public about the importance of these educational activities.
    From the beginning, Greg Mortenson’s presentations (educational outreach) have inspired people to support CAI’s mission with time, money and awareness. His presentations and his books help fulfill the stated corporate and charitable purposes of CAI. While it is true that during 2009-2010 a significant amount of CAI’s resources were dedicated to domestic and international educational outreach, the result of that effort makes possible CAI’s ambitious plans overseas for 2011 and beyond.
    “CAI plans to establish more than 60 schools in Afghanistan this year,” Mortenson said. “However, in Pakistan, CAI plans to establish about a dozen schools; the emphasis there is not so much on new schools, but to improve the education quality, scholarships, teacher training – human capacity building.
    In Afghanistan, we still need new buildings. In many ways our work in Afghanistan at this point resembles where we were 10 to 15 years ago in Pakistan.”
    2. Please provide total expenditures broken down in percentages spent on overhead vs. program. Is  CAI really spending 59% of earnings on fundraising?
    CAI is dedicated to using every dollar as efficiently as possible. In 1996, 100% of donor dollars went to programs, while 0% went to overhead. In 2009, 88% went to programs and 12% to overhead. The average annual percentage CAI has spent on programs throughout its history is 78%. In those figures, the programs category includes money set aside in CAI’s Talim (Pashto for “education”) Fund, a nest egg dedicated and restricted solely for overseas projects. The amount raised and set aside in that fund constitutes about 38% of the total of about $60 million that CAI has raised in the past 15 years and brings total program funding to a level that reflects CAI’s mission and donors’ desires.
    With the explosion of support over the past three years, the Talim Fund has grown from $2 million to $20 million, while the number of schools built or significantly supported by CAI increased from 78 to over 170, with plans for more than 70 additional schools in 2011.
    3. Every nonprofit must file an annual tax return. According to reports, your nonprofit only filed once in 14 years – is that true?
    No. IRS 990 forms filed for every year since CAI’s inception are available on our website,
    4. What is your response to allegations that many of the schools you claim to have built do not exist, were built by others, or stand empty?
    Every single day, CAI’s work helps to improve the lives of tens of thousands of people, especially girls, in remote areas of Pakistan and Afghanistan. Throughout the school year (which varies, depending mostly on climate), thousands of students are in classes at CAI schools. Teachers are teaching. And women are meeting at vocational centers, where instructors are providing literacy, health, and myriad other lessons.
    At least once a year, a U.S.-based CAI staff or Board member travels to the region to collect documentation, dedicate new schools and check on CAI projects. However, routine checks of the schools are, like the long-term relationships necessary to sustain this type of work, the responsibility of individual in-country project managers in conjunction with local education committees. That includes insuring that education is indeed taking place in these
    schools. “In order to function successfully, our first priority is to put the local people in charge,” Mortenson said. “Sometimes that is risky, more risky than some people may be comfortable with. But by empowering the local people and putting them in charge, the results are far more sustainable and lead to a much greater sense of ownership or
    pride in the project.”
    Recent media reports have alleged that several CAI schools in Baltistan, in northern Pakistan, were either not being used at all or were not receiving funds. Since those reports did not always cite particulars, it is hard to respond with precision except to say that there could be several reasons for that, including:
    • Many schools in the remote, mountainous areas close for two months or longer in the winter.
    • A disgruntled former manager for programs in Baltistan was not completely honest with Mortenson and
    CAI’s Board in recent years about the status of schools for which he was responsible.
    “Since 1993, CAI has had 15 primary regional managers running the show or in charge of projects and in only one case, in Baltistan, did that system go awry,” Mortenson said. That case involved a manager who may have,engaged in “a confidence trick.” “Confidence tricks have been around for a long time, since colonial times, including where I grew up in Africa,
    where an individual will bend over backwards to help you, refuse to take money for services, befriend you and then after a period of years, begin to test you by committing small infractions to see what your response is,” he said.
    “They also make you very dependent on their services as a vital part of the operation.
    “One of our great dreams in Baltistan was to set up a hostel in Skardu for students from the outlying regions to continue their education and pursue their dreams. Although the Board approved the original hostel plans, not long after it got started the manager told us he needed more money. Over time this manager said, ‘We have such a great need, we need to make hostel bigger, the price has increased, we need more funding.’ This went on until a
    point where CAI discovered he had manipulated the books.
    “I trusted him and loved him like a brother. Unfortunately, for the first time in our history CAI wound up on the short end of stick,” he said. “My mistake was that this was the only project CAI has ever done that didn’t have an education committee exercising local control.”
    • In one village, the CAI school was closed after more than a decade when locals formed a social welfare organization to help people on numerous fronts. The organization, founded and run by a former CAI student, opened a new school, rendering the original CAI school obsolete.
    About the same time as the former Baltistan manager resigned in 2010, some teachers began complaining that they hadn’t been paid. As a result, other CAI workers spent countless hours reconnecting with the communities where that manager had established schools over the past decade. Reinstating those relationships, and trust, takes time.
    As for allegations that CAI “claims” schools it did not build, the organization has numerous relationships with communities where schools were built by other entities that were not providing adequate support. Leaders in those communities approached CAI for help to pay teachers and buy school supplies. In some places, CAI also added additional classrooms to existing schools. In such cases, CAI becomes the key supporter of the school, providing money and advice for long-term sustainability. Finally, CAI staff members in the U.S., Pakistan, and Afghanistan have embarked on a comprehensive survey of all schools and programs to insure our information is current and accurate. CAI is also working closely with
    officials in the Pakistan and Afghanistan governments to verify the status of all CAI projects.
    5. Does CAI pay teachers at CAI schools or are they paid by others and if so, by whom?
    In Pakistan, CAI’s regional managers are wired funds for teachers’ salaries, which are then given to the education committees in each village for distribution. In some cases that happens monthly; in more remote areas, the money is distributed by CAI quarterly or semiannually. In addition, some communities charge a small tuition to families that can pay – the equivalent of a couple of U.S. dollars per month or less – and that money is then used to pay additional teachers as the schools grow.
    In Afghanistan, CAI helps with construction of the schools, but upon completion, the schools belong to the Afghan government, which is supposed to provide the teachers and pay them.
    But in some cases, CAI supplements government funding with additional money for additional teachers. And in the more remote areas, when the government does not make good on its obligation to pay teacher salaries, CAI steps in to pay them and ensure they continue to come to work every day.
    6. Please address the allegations that many Board members have resigned.
    Over the years, some Board members have resigned due to philosophical and/or managerial differences with other Board members and/or with Greg Mortenson. Since its inception, CAI has had 14 board members, with an average 5.2-year term of service.
    7. Also, three Board members, including Greg Mortenson, are too few. Is the organization giving any consideration to beefing up the Board?
    Yes, the current CAI Board is in the process of expanding the number of Board members and is reviewing qualifications of potential candidates.
    8. How do you defend the fact that of the 11 schools claimed to have been built in Kunar Province, Afghanistan, there were really only three?
    CAI has built four schools in Kunar Province and has another five schools under construction, according to its Afghan operations manager, Wakil Karimi. Work on those five has been suspended several times because the ongoing fighting creates a “risky situation.”
    “In Kunar, the situation is dangerous and we had to suspend building in some places, pending negotiations with the Taliban,” he said. “Al Qaeda and Taliban, they control roads and just kidnap people for the money. We communicate with Taliban and when they say, ‘you can start your work,’ then we start again.”
    Plus, establishing schools in this region is long-term work; three of the four that are now complete took several years from inception to completion. Often a school is established first by providing a teacher, with classes in a tent or rented building.
    Meanwhile, CAI staff work with the local education committee to address all community concerns, including those of extremists, and identify land. In some cases, schools were well into this process when negotiations fell apart due to “no land,” or “Taliban not agree,” Karimi said.
    The provincial and district education managers have assured CAI they are more than satisfied with CAI’s work in Kunar, as are the communities CAI serves. “Go inside of the village, talk to the local people. Their children are coming to the school. They are the ones who know,” Karimi said.
    9. How much of Greg Mortenson’s books were fabricated or embellished?
    The contents of Greg Mortenson’s books Three Cups of Tea and Stones Into Schools are based on events that actually happened. Media allegations that Greg did not visit Korphe in 1993 are false; he first visited Korphe in September 1993 after failing to reach the summit of K2 and later built a school there.
    And Greg was, in fact, detained and held against his will in 1996, with his passport and money confiscated, although his captors did treat him well, as he accurately described in his book. Greg’s initial rebuttal to some of the allegations can be viewed at
    10. Has Greg used funds for private jets unnecessarily?
    There are three reasons Greg has used charter planes.
    Number one, Greg’s schedule often presents difficult logistical scenarios that are nearly impossible to accomplish with commercial airlines. Generally, he has to fly late at night to accommodate his hectic schedule, which in the past four years put him in an average 126 cities per year, plus international travel and overseas project visits. Number two is his health, which has been in decline for the past 18 months. And number three is security.
    Greg has received threats against his life, and commercial travel sometimes presents over-exposure to threatening elements.
    Greg began paying his own travel expenses in January 2011.
    11. The Board statement that “counsel concluded there is no ‘excess benefit’ – that is, CAI
    appropriately receives a greater benefit from Greg’s activities than Greg does himself,” is vague. Please elaborate.
    Any time Greg gives a presentation about how he came to dedicate his life to building schools in Pakistan and Afghanistan and people are inspired, those people donate to CAI, not Greg personally, in furthering CAI’s mission. In addition, his presentations and his books, although his alone, do help CAI accomplish its stated charitable purposes by educating the public and drawing awareness to the significant needs of that region and the significant
    cultural differences between the U.S. and that region.
    While Greg has benefitted from this collaboration, CAI has benefited even more.
    Greg and the Board initiated a self-imposed analysis and evaluation, with outside advice, of their collaboration in January 2011. The results of the inquiry were presented to the Board on April 13. Based on that assessment and the Board’s longtime confirmation of the effectiveness of its collaboration with Greg, the Board confirmed its intention to continue to refine and address the particulars of their relationship on an ongoing basis.
    12. What about the possibility of turning over accountability of running the schools to a local
    organization; if there is no organization, then perhaps an organization under the umbrella of CAI?
    In Afghanistan, CAI already operates under the auspices of three organizations: CAI; the Marco Polo Foundation, a registered nonprofit that primarily covers central and northern Afghanistan and has schools in Badakhshan (including the Wakhan Corridor and Pamir), Takhar, and Baghlan provinces; and Star of Knowledge, a registered nonprofit that covers Urozgan, Khost, Paktia, Nangarhar, Logar, Wardak, Kunar, Panshjir, Kapisa,
    Parvan, and, this year, Bamiyan provinces.
    Our Pakistan operations all remain under the auspices of CAI, although they are divided into regions: Baltistan, Gilgit-Hunza, Azad Kashmir, and Punjab. The staff that run the regional operations are all from those areas.