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Red Cross management rapped

Senate panel cites woes uncorrected prior to Katrina

WASHINGTON -- The American Red Cross was warned years before Katrina hit to resolve its internal disputes or risk a repeat of problems that plagued the Sept. 11, 2001, relief effort, according to internal documents made public by a Senate panel yesterday.

Thousands of pages of Red Cross e-mail, corporate documents, and whistleblower complaints paint a picture of an organization whose mammoth structure contributed to the charity's uneven response to Hurricane Katrina.

In an e-mail on Oct. 29, 2001, board member Bill George warned Red Cross chairman David McLaughlin to resolve the group's disputes. At the time, the nation's largest charity was reeling from CEO Bernadine Healy's resignation amid charges it had mismanaged Sept. 11 donations.

''The worst thing we could do is to gloss over the split on the board, make some superficial changes in governance, and see the whole scenario repeated three or four years from now," the Medtronic Inc. executive wrote.

''I do not think the board can continue kidding itself that it wants a strong leader and then not giving that person the authority to lead," he said. Four years later, the group's next CEO, Marsha Evans, would resign in the aftermath of Katrina, citing board friction.

Senator Charles Grassley, Republican of Iowa, calling for immediate changes, warned the Red Cross board yesterday that ''business as usual cannot continue." He said the documents raise questions about the Red Cross's ability to keep close watch on billions of dollars in donations.

''This type of culture, a culture that discourages people from coming forward, management that does not want to hear the bad news, and is more concerned about good press than good results, is a theme that I am hearing too often," said Grassley, who as Finance Committee chairman oversees charitable organizations.

His committee released the documents yesterday.

In a statement, the Red Cross said it would fully cooperate with the committee's review. The charity has said it responded to Katrina the best it could in circumstances almost unimaginable, while acknowledging that it stumbled in ''technology, logistics, and coordination."

''The American Red Cross is committed to learning from our prior challenges and making the necessary changes," the charity said yesterday, noting it had recently launched an independent audit to review operations.

A House report earlier this month on the Katrina response found the Red Cross was overwhelmed by shortages of water, food, and other supplies and by a disorganized shelter process. Some lawmakers have called for a change to the national response plan that now gives the Red Cross the primary role and the dollars that flow with it.

Replying to a Senate inquiry, the Red Cross said this month it was working to improve coordination with the Federal Emergency Management Agency and local charity groups.

It said it had no ''fixed deadline" for hiring a new CEO to replace Evans, who took over in August 2002 as the organization was shaking off criticism over how it handled Sept. 11 donations, some of which were quietly set aside for future terror attacks.

In dozens of letters to Grassley's office, former Red Cross employees and volunteers detail a culture of inefficiency in which poor communications, layers of bureaucracy, and resistance to change contributed to waste and chaos after Katrina struck.

Typical of the complaints: Red Cross trucks rolling in with goods or sitting idle in parking lots, but not always accounted for; volunteers staying in hotels rather than shelters, on the grounds that they were holding the room in case it was needed for someone ''with more privilege in the organization"; orders placed for food well in excess of need; extensive travel purchased at retail cost, rather than a negotiated discount based on volume.

''We ask for the Red Cross to be more accountable for donor funds," wrote Christee Lesch, a hurricane volunteer from Iowa. ''They tell the public how much money has been spent on disaster relief, but not how well it is spent."

Documents also show Red Cross leaders eager to repair the group's image following its fund-raising flap, but at times uncertain how to navigate among the local chapters, which represent 30 members of the charity's 50-member board. Ultimately, Evans was counted on -- unsuccessfully -- to smooth out problems.

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