After 'mistakes,' Wyclef Jean group gets new accountants

By Carol Morello
Saturday, January 23, 2010

Wyclef Jean's Yele Haiti Foundation, one of the beneficiaries of Friday night's Hope for Haiti Now telethon is making sweeping changes in how donations are spent and accounted for after questions arose about the charity's previous spending practices.

On Friday, the charity appointed a new accountant, RSM McGladrey, to oversee the collection and distribution of earthquake funds donated to Yele Haiti. Jesse Derris, a publicist for the charity, said all money donated will go to help Haitians survive, dig out and rebuild. He said separate donations are being solicited to pay for the charity's overhead.

Hugh Locke, president of Yele Haiti, said in an interview Friday that, in most cases, the charity will no longer permit transactions with businesses in which board members have a personal stake. Some exceptions might be made, Locke said, but only with the approval of a board that now includes two lawyers as well as Jean, his cousin and fellow Fugees member Jerry Duplessis, and another business associate of Jean's. (Yele was coined by Jean in a song; he says it means "a cry for freedom.")

According to Yele's tax returns, the charity made payments for rent, television spots and a benefit performance by Jean to companies controlled by Jean and Duplessis. The return also reported administrative expenses that were significantly higher as a percentage of revenue than those of comparable charities.

Yele officials said much of the money raised went to a separate Haitian branch of the charity, so its expenditures on services are not fully reflected in the U.S. tax returns. In a tearful news conference Monday, the Haitian-born hip-hopper said that "mistakes" were made but that he never used Yele money for personal benefit.

Yele Haiti was founded in 2005, arising from the Wyclef Jean Foundation, which tax records show was run out of the New Jersey home Jean shared with his younger brother Sam, who was a board member at the time.

Its tax returns for 2005, 2006 and 2007 -- all filed late, in August 2009 -- have been heavily scrutinized since the earthquake in Haiti. Largely because of Jean's celebrity, several million dollars in donations have poured in since the quake, and Yele Haiti stands to get millions more as one of seven charities that will split the proceeds from Friday's telethon.

Locke said the charity has 12 employees in Haiti who are arranging for food and water to be distributed in two Port-au-Prince neighborhoods Sunday. Yele has hired Haitian women to cook hot meals that day in two neighborhoods using provisions from the World Food Program, Locke said. And it will deliver cookware and a million gallon-jugs of water in the slums of Haiti's capital, he said.

Yele might spend as much as $5 million for earthquake relief, much of it in partnership with other non-governmental organizations in Haiti, Locke said. It also will make cash donations to smaller charities that don't attract as many donors, he added.

Yele Haiti's accounting changes were applauded.

"I'm thrilled they're taking steps now to build confidence in donors," said Sanjay Rawal, who co-founded Yele with Jean and now works as a consultant to nonprofit groups. "It's a shame everyone who has looked, and is looking, to Wyclef for leadership is doubting his intentions. I've always known his intensions are pure. He has a supreme opportunity to rise above the controversy by making necessary changes in the organization and offering a concrete plan how to spend money people have entrusted to him."

Art Taylor of the Wise Giving Alliance of the Better Business Bureau said the controversy over Yele's expenditures will help it mature.

"It's not the first or the last charity in the country to find themselves in a position where they're now growing, and suddenly there's new scrutiny and they have to do things differently," he said.

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