IRS Starts Team on Easement Abuses

An extensive investigative report released this week by the committee staff raised concerns about a range of practices at the Arlington-based charity. Some senators said the problems identified by the report appeared limited and praised the Conservancy for making changes.

"They have made real progress," said Sen. Charles E. Schumer (D-N.Y.). Sen. John D. Rockefeller IV (D-W.Va.) said the Conservancy "committed some errors . . . which have since been resolved."

Sen. Max Baucus (D-Mont.) praised the Conservancy's governance changes but said the staff investigation and other evidence showed "how lax procedures by land trusts . . . can give conservation efforts a bad name."

The committee chairman, Charles E. Grassley (R-Iowa), highlighted a previously undisclosed 2002 internal audit found in the Conservancy's files. The report looked into the Conservancy's nature preserve near Texas City, Tex., which contains the last native breeding ground of the Attwater's prairie chicken, one of the most endangered birds in North America. The Conservancy drilled for oil under the bird's nesting area.

In the report, the auditors described the Conservancy's attempt to buy another charity's oil and natural gas rights on the land through a third party as a "patently deceptive offer."

"Were the events that transpired at the Preserve to become public knowledge, the Conservancy's good reputation could be badly damaged," the audit concluded, eight months before an article on the transactions appeared in The Post.

The report noted that the director of the Conservancy's Texas division believed "we conducted ourselves aggressively and lost our values," adding that the group's "failure to act with 'integrity beyond reproach' is the gravest mistake that it made."

At the hearing, Grassley said: "It goes without saying that this is not what should be happening at the Nature Conservancy, or any other charity, for that matter."

Staff writer David B. Ottaway contributed to this report.