Charity Hiring Lawyers to Try to Prevent Hill Probe

By Joe Stephens and David B. Ottaway
Washington Post Staff Writers
Friday, May 16, 2003

The Nature Conservancy is hiring outside lawyers and one of the nation's largest public relations companies to help head off a congressional investigation following disclosure that the nonprofit has sold scenic properties to its own trustees, internal Conservancy memos show.

The Arlington-based charity has retained Edelman Public Relations, whose Washington office is headed by former Republican and Democratic advisers, as part of a damage-control strategy that includes Capitol Hill meetings, calls to donors, third-party letters to newspapers, full-page advertisements and attempts to pacify charitable foundations, the memos show. Conservancy staffers also are working to "place stories" in the media that describe successful conservation projects.

"We will be hiring a law firm by the end of the day today that will help us with the Capitol Hill issues," a Conservancy staffer wrote this week, recounting a conference call among the organization's senior managers. "There are Congressmen that are concerned and as you know we need their support.

"We do not want them to launch an investigation of [the Conservancy] and this firm will help us on these issues."

Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) and ranking Democrat Max Baucus (Mont.) said last Friday that they planned to ask the charity to account for a range of practices, including the sale of raw land at reduced prices to the organization's trustees for use as home sites. Some of those deals have coincided with charitable contributions to the Conservancy from the buyers, who then benefited from significant tax breaks.

The senators' interest stems from a Washington Post series last week that detailed the organization's rapid growth -- its assets now exceed $3 billion -- and described how the charity's financial transactions have benefited its supporters, including corporations that have paid pollution-related fines.

The articles reported how the Conservancy had drilled for oil under the breeding ground of an endangered bird, and how it had bought land and services from corporations whose executives sat on the nonprofit's governing board.

Grassley said in a written statement yesterday: "In my view, the best thing for the Nature Conservancy to do when it comes to both its donors and oversight from Congress is to be transparent in its practices and forthcoming with information."

In a May 5 memo, Conservancy President Steven J. McCormick told his staff, "As the story rolls out, we will continue our approach of answering all questions and harboring no secrets." This week, his spokesman declined to identify which law firm was being retained, how much its services would cost and whether the bill will be paid with donors' contributions.

Other Conservancy memos obtained by The Post show the organization is mounting a coordinated, global campaign to protect its interests.

"We . . . are working to identify firms that can help us gain access to key offices on the Hill," said one memo, bearing McCormick's name and e-mailed on Monday to the organization's executives in the United States and abroad. "We have launched a proactive effort to reach out to all critical members of Congress, key legislative staff and federal agencies."

Longtime supporters stand by the charity, McCormick wrote, but others "have serious questions about our business practices, especially surrounding the use of conservation easements and our relationships with corporations."

Conservation easements are legally binding agreements to restrict some commercial development, which the Conservancy routinely attaches to properties before resale. In many instances, however, the easements have allowed the new owners to construct one or more houses on the ecologically sensitive sites, the series reported.

"In markets where the series has run, I think it is safe to say that our reputation has been dealt a serious blow," McCormick wrote in the memo, which was labeled "Importance: High."

"This is definitely the case on Capital Hill. There is some evidence that the series is being distributed to other audiences that we care about, such as the foundation community."

The conference-call memo states that the articles "upset" foundation officials, particularly at the Doris Duke Charitable Foundation, which has given the nonprofit more than $10 million.

A fourth memorandum says that the Conservancy is encouraging "anyone, including partners and staff," to write letters to the editor protesting the series.

In an opinion column published Tuesday in The Post, McCormick said that, in response to the series, the Conservancy had suspended a range of activities highlighted in the articles, including land sales to trustees. The column said the Post articles were distorted and lacking in context, and that they mischaracterized the group's mission and motives.

Edelman's Washington office is headed by Michael F. Deaver, a former Reagan administration adviser, and Leslie Dach, a former Clinton administration adviser. Edelman represented the Red Cross after charges that the organization had misled donors after the Sept. 11, 2001, terrorist attacks. Other clients have included major corporations that have representatives on the Conservancy's governing board, including General Motors Corp., Georgia-Pacific Corp. and Southern Co.

"We have sought the advice of independent outside experts to help us navigate through all stages of this process, from dealing with issues of governance and transparency to how best to communicate to Washington-area audiences about the steps that we are taking," the Conservancy said in a written statement to The Post. "Our expertise is in conservation. It seems only prudent to engage others more versed in some of these areas to offer us their perspectives as we work through these issues."

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