Senators Question Conservancy's Practices

The committee expressed concern that, although the Conservancy had entered business transactions with board members and their corporations, it provided only limited details about the transactions in its annual return to the IRS. In many cases, the report added, "it appears that TNC did not confirm that the transactions were done at terms that were fair and reasonable to TNC."

The organization's public disclosure of the deals "was oftentimes ambiguous or incomplete, and in a few instances, misleading," the Finance Committee said. It recommended that the IRS require fuller disclosure of conflicts of interest for all charities.

The Senate panel also looked into the Conservancy's innovative emissions trading program, under which U.S. companies that produce air pollution gave the Conservancy $34 million over a period of years to help preserve Latin American forests. In return, General Motors Corp., American Electric Power Inc. and other large businesses received "emissions credits." The companies hope the transactions will one day allow them to avoid spending millions of dollars for emissions controls on their U.S. plants.

The report questioned whether the deals would truly benefit the environment, and whether the companies had "obtained an impermissible private benefit as a result of the arrangements."

The report noted that during a period in which the Conservancy sealed a $10 million emission credit deal with General Motors, former GM chairman John F. Smith Jr. sat on the boards of the Conservancy and GM. The Conservancy reported to the IRS in its annual return that Smith had not taken part in the deal, to avoid a conflict of interest.

"TNC's statement that Mr. Smith 'did not participate or vote' . . . is misleading and inaccurate," the report said. "TNC records provided to the Committee show that Mr. Smith voted on the transaction as a member of TNC's Conservation Committee, and executed the agreement on behalf of General Motors Corporation and GM's Brazilian affiliate . . .

"Mr. Smith's role in the transaction should have been more accurately described by TNC."

A Conservancy spokesman said Smith mistakenly signed a ballot for a board vote on the issue.