Keeping the CFO in the Dark - Thoughts from the NRA Trial Part 3
NRA EVP LaPierre admits under oath he never told Treasurer/CFO Spray about the Bankruptcy filing
The process the NRA used to prepare and file for Chapter 11 Bankruptcy is mind boggling. As outlined in the previous article on keeping the Board in the Dark, EVP LaPierre and the Officers, President Meadows, 1st VP Cotton and 2nd VP Lee hid their bankruptcy preparations from the Board of Directors. What also came out in testimony in the trial is that EVP LaPierre also hid the bankruptcy preparations and filing from CFO/Treasurer Spray.
As noted in the previous article, I was part of a Chapter 11 process almost 20 years ago. The CFO was pivotal all of the meetings and discussions as we debated the implications of filing the bankruptcy and building our reorganization plan. It stretches credulity to understand how the “Gang of 4” (LaPierre, Meadows, Cotton and Lee) could do the financial analysis and modeling necessary to prepare for a bankruptcy or a reorganization plan without including the CFO as a crucial player.
The Bankruptcy filing is not the only example of hiding critical items from the CFO. CFO Spray testified that he did not sign off on the IRS 990 filing because he did not have comfort with the level of detail in the calculation of EVP Lapierre’s Excess Benefits. LaPierre claimed that that calculation, done by the Brewer law firm, was legally privileged. Business records of the NRA and calculations in official tax filing being held from the CFO due to privilege is a new one. LaPierre signed the 990 himself. A CFO is ethically bound to ensure the accuracy of tax filings and it is reasonable and customary for the CFO to have access to the backup details for any item on the tax return. Spray testified that his not signing the 990 changed his relationship with LaPierre and that from that point he was, “out of the loop.”
CFO Spray was directed to set up a $5 million draw account for the Brewer law firm. Only the officers of the NRA, Meadows, Cotton and Lee would have approval authority for the spending from this account. All of the spending was for the Brewer law firm and the NRA’s internal controls in reviewing the details of these invoices and backup detail were not followed.
Even after CFO Spray was fired, the pattern continues with the new CFO Ms. Rowley.
The Gang of 4 negotiated and signed a contract with the Ankura firm for services relating to a Chief Restructuring Officer. For such a material contract, the CFO is usually intimately involved in the negotiation of the agreement, or at a minimum, reviewed by the CFO prior to execution, not kept in the dark. From the testimony of CFO Rowley, it appears that this agreement, like the $5 million draw account for the Brewer firm, will bypass the normal internal controls for invoices and payments and put approvals only in the hands of the Gang of 4. Why are the internal controls not being followed for this new agreement?
I’ve been a vocal critic of NRA EVP Wayne Lapierre for his leadership style, and the Board leadership in not properly exercising their fiduciary responsibilities by submitting petitions calling for EVP Lapierre’s resignation as well as the resignation of the Board Officers and members of the executive, audit and finance committees at the 2019 and 2020 NRA Annual meetings. If they have not been removed by the 2021 meeting in Houston, I will do so again.
The 2021 Board election is where the members can have a say and change the culture of the NRA Board and get long overdue new leadership. The only director up for re-election that deserves support is Owen “Buz” Mills as he is publicly supporting Judge Journey’s efforts to reform the NRA. The remaining board candidates deserve no vote.
I ask that you please write me in on the ballot for the 2021 board of directors election when you get you ballot in the next couple of weeks. It will be out in the June/July issue of your NRA magazine.
Write In’s MUST have the information as depicted below. Thank you for your support.
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