The loan contract with the Foundation for the Jewish Community (FJC) has a two-sentence clause on what confidentiality binds the parties. This is the relevant, second sentence, in full:
“[b]orrower shall not publicly disclose the identity of the Lender, except with the Lender’s written approval” (Article 10 Miscellaneous, Section 10.16 Promotional Material, emphasis & italicisation added; page 18 – https://mega.nz/file/AI0iUYga#QzMtaBd0iRTZJ_YNmh2KZ1xKu7Qh_hQ6IcPMVkGWX94 (can be read without downloading: just click on the magnifying glass))
Identity. So no name, no street name. The rest can become public property – all that has to be surmounted is a not inconsiderable obstacle, a key feature of Pacifica, its entrenched & pervasive secrecy culture at the top. The top. What textbooks call the leadership. Those who direct; who exercise imagination & creativity; who take responsibility; who set an example; who inspire; who fulfil their legal, moral, & political duties.
Is it any wonder that people become so frustrated that they leak documents? Is it?
But maybe one’s being unfair, maybe there was a gentleman’s agreement between FJC & Pacifica? Well, the contract is explicit & unambiguous on the degree of legal force held by what is believed to be an oral understanding or agreement: none, in a word. The wording used:
“[t]his Agreement and the other Loan Documents embody the entire agreement and understanding between Lender and Borrower and supersede all prior agreements and understandings between such parties relating to the subject matter hereof and thereof. Accordingly, the Loan Documents may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties” (Article 10 Miscellaneous, Section 10.21 Entire Agreement, my emphases & italicisation; p. 18)
charities as capital, M-M´ . . . richer charities (non-profits, of course) making money out of poorer ones
The questions arise because of the secrecy culture that Pacifica is notorious for. Pacifica office-holders, since the end of last summer, have consistently chosen not to utter the word ‘FJC’, the Foundation for the Jewish Community which lent Pacifica $3.7m on M2Apr2018. At that time Pacifica proudly issued a press statement, & not only named FJC but devoted a paragraph to their activities. The websites of Pacifica stations proudly carried it, two of them to this very day. (The word ‘FJC’ also appears in two other publicly available documents, ones that Pacifica paid for – more precisely, have been invoiced for: the auditor’s reports for FY2016, dated 31May2018, & FY2017, dated 27June2019.)
Given this, it’s reasonable, & diligent, to ask whether FJC still own the loan.
The Marty & Dorothy Silverman Foundation (MDSF) was almost wholly responsible for creating in 1995 the Foundation for the Jewish Community (FJC). The president of FJC is Lorin Silverman, the son. FJC has a policy, declared in their auditor’s reports, of not going to court when a borrower defaults. No, no, nothing as unsavoury as that. Bad publicity too. Money-men pursuing charities. That wouldn’t do. No. Best keep things quiet, keep everything civil. Instead, FJC sells to MDSF, at no discount, the loans they assess as being only “potentially impaired”, the phrase used in their auditor’s reports; this is the latest one, year-end 31Mar2018, dated 22Aug2018: http://fjc.org/uploads/user-uploads/image/FJC%203-31-18%20FINAL.pdf (pages 10 & 11, pp. 12 & 13 of the PDF)
It was disclosed at the M15July Audit Cttee that, quite remarkably, Pacifica has nothing in writing from FJC (or whoever is now the lender) permitting Pacifica to be currently violating the loan conditions. Oh. That’s quite different from when the loan started on 2Apr2018: ED Tom Livingston said in an Apr2018 email, kindly sent to me by Grace Aaron, that “[t]he Board has been told it has a 6 month waiver of the loan covenants.” (Bear in mind, he didn’t say ‘has received a written waiver’ – only “told”.) So that ran out 1Oct2018. It is important to note that in no publicly available document or audiofile has there been mention of this topic – until the 15July meeting.
At this meeting was George Walter, a Senior Controller at NETA, the National Educational Telecommunications Association, which since Sep2018 has done Pacifica’s bookkeeping & accounting. Also present was Jorge Diaz, a Principal Auditor at Rogers & Co., which did the FY2017 audit & are currently doing the 2018. The George & Jorge Show. And they both take a nice pic, yes? https://www.netaonline.org/OurStaff (last Controller pic) & https://www.rogerspllc.com/about/leadership/jorge-diaz-cpa/
George, when asked by Marilyn Vogt-Downey (WBAI listener delegate) about the submission of Pacifica documents within 120 days to the lender of “the $3.2m loan”, replied, “we’re, we’re off, but they know, & they’re urgh, urgh, they’re, they’re content” (16:45, https://kpftx.org/archives/pnb/audit/190715/audit190715a.mp3). Not surprisingly he was pushed further – and, for recent Audit Cttee meetings, it was in a totally unexpected direction. Polina Vasiliev (KPFK staff delegate) asked about “our New York lender” being OK with the loan condition violations: “do we have that in writing?” (21:39). George was as decisive as ever: “[pause] um, [pause] no, urgh, that’s my, urgh knowledge” (22:04).
Then Audit Chair Eileen Rosin dived in, prompting the witness. Tut-tut. Auditor Jorge then tried to assist. Polina persisted, & George, to his great credit said, “[r]ight, & so, t-to my knowledge there’s no, no written waiver. Um, urgh-urgh, it’s very possible that we’ll, urgh, urgh, get one” (23:05). Which only raises the question, why hasn’t a request for a written waiver been made?!? Why has this situation been allowed to arise, & to persist?And was there a written waiver for 2Apr-1Oct2018?And a written waiver for 2Oct2018-1Apr2019?There’s something not quite right here. Something fishy . . . Oh. So, nothing in writing. Oh. And the annual default interest rate is the lesser of either 18% or the maximum legal rate (clause §1.1(10) of the FJC loan contract).
One could have done a separate post on the Eileen & George Double Act that followed, doing a spiel with such gems such as, “the lender is actually a non-profit lender, it’s not like any ordinary bank, I guess […] I’m guessing they would tend to be a bit more lenient than, you know – more willing to work with their clients” (Eileen, 24:14), & “it doesn’t help them to er, to er, to, to threaten default on the loan […] that would be, urgh, not in their interest” (George, 24:44). And FJC’s fiduciary duty towards the donors whose money (& other assets) it now manages? Get real. That’s why FJC’s dodgy & troublesome loans, when they’re simply “potentially impaired”, not even defaulting, are sold on to the Marty & Dorothy Silverman Foundation.
Lastly, Marilyn reminded everyone (25:11), that it had been said, mistakenly, that Pacifica had been promised orally by Empire State Realty Trust that they didn’t have to pay all the monthly rent for housing the WBAI transmitter (Marilyn could have been explicit, saying that the determination of this belief as false was by the court). But to return to the main matter: why won’t people be upfront, & speak of FJC’s business relationship with the Marty & Dorothy Silverman Foundation?
Recorded Pacifica public meetings – less so the very few published Pacifica documents – have been full of misdescriptions, being misleading, false, even what can only be deemed deliberate falsehoods, intended to reassure, placate, obscure, confuse, & mislead. From the naive to the wilful. This sorry state of affairs refers to both the $3.265m loan conditions & FJC.
Just in case one may think ‘a nod & a wink’ will suffice, just check the FJC contract. It’s explicit & unambiguous on the degree of legal force held by what is believed to be an oral understanding or agreement: none, in a word. The pertinent passage:
“[t]his Agreement and the other Loan Documents embody the entire agreement and understanding between Lender and Borrower and supersede all prior agreements and understandings between such parties relating to the subject matter hereof and thereof. Accordingly, the Loan Documents may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties” (Article 10 Miscellaneous, Section 10.21 Entire Agreement, my italics & bold; p. 18)
A final, crucial point which will be addressed later. Except when the loan was taken out, those in the know have consistently never said who owns the loan –FJC may have sold it on. It may have already been sold to the Marty & Dorothy Silverman Foundation. Indeed, that foundation may even have sold it on. We simply don’t know. Secrecy culture breeds suspicion. It corrodes trust. It undermines the organisation. It’s simply destructive.
Was the 2Apr-1Oct2018 waiver in writing? If not, why? Was there a written waiver for 2Oct2018-1Apr2019? If not, why? Why hasn’t there been a written waiver for 2Apr-1Oct2019? Why did NETA, Pacifica’s supposed competent accountant, not tell ED Maxie Jackson that one was needed? Why didn’t Jackson insist on one? Why didn’t the Pacifica directors do likewise?
The Pacifica National Board needs to disclose who owns the $3.265m loan. Is it still FJC?
Or, if names are not to be named, has Pacifica’s lender changed, & if so, how many times?
Maxie Jackson came. Then he was gone. No-one said a word. No-one raised an eyebrow. Most of all, no-one asked questions. Loose talk is more than dangerous. It’s terminal. And when the Head Honcho is disappeared, who wants to join him? So everyone plays along. Waiting for The Dear Leader to make it all official. To make the unsayable sayable. To know how to phrase things, with the right intensity. The Dear Leader sets the tone. The rest follow obediently. Everyone knows their place. The best of all possible worlds. Pangloss in Pacifica.
The end began with the Personnel Cttee being awoken from its slumber. In PacificaWorld it’s known as Madame. Madame Guillotine. An oft-used device to provide an invaluable service on behalf of the praetorian guard of the organisation: to terminate with extreme prejudice, as the CIA say.
This time it conducted a delayed six-month evaluation of the executive director, Maxie Jackson. It identified 79 parties to offer their opinion on Mr Jackson. Yes. So I repeat: 79. Only nine replied, but that was no problem, in fact it saved a lot of work. All that was needed was the right evidence to support the right conclusion (Robin Collier, Tu28May Personnel Cttee, 2:23 https://kpftx.org/archives/pnb/personnel/190528/personnel190528a.mp3).
The auditors of the FY2017 financial statements, Rogers & Company, presented their report, in person, to the M24June Audit Cttee & to the Th27June PNB. The Audit Cttee recommended its acceptance to the PNB, which duly obliged. The published report is dated Th27June. https://pacifica.org/documents/financial/2017/PACIFICA-17-FS_Final.pdf
No member of either the Audit Cttee or the PNB displayed any awareness of how harmful to Pacifica’s fundraising is the decision of the FY2017 auditors to offer no opinion on the material accuracy of the financial statements presented to them. I explained this harm in a piece written 26June (please see the link at the end).
The auditors started their work, then realised that Pacifica was finding it impossible to reconstruct & provide sufficient evidence, both quantity & quality, in support of the figures in the financial statements. Pacifica could have spent another six, nine months on the task, with no guarantee they’d come up with enough of what the auditors needed.
Also, fundamentally, no-one on the Audit Cttee & PNB displayed any awareness of how serious it is that the auditor’s opinion had deteriorated from the FY2016’s “qualified opinion” (also termed a ‘scope limitation’), Pacifica’s first, to FY2017’s “disclaimer of opinion”, again, a Pacifica first. (The third kind of ‘modified opinion’ is an ‘adverse opinion’.) So, no-one displayed knowledge of what’s made plain, made explicit, by AU-C section 705, the auditing clarification re ‘modifications to the opinion in the independent auditor’s report’: https://www.aicpa.org/content/dam/aicpa/research/standards/auditattest/downloadabledocuments/au-c-00705.pdf
The FY2017 financial statements presented by NETA, on behalf of Pacifica, were rejected by the auditor – not because they judged them materially inaccurate (in that case, according to auditing rules, they would have publicly issued an ‘adverse opinion’) but because there was insufficient supporting documentation to allow them to make a judgment (hence the refusal to issue an opinion; in the obscuring ‘diplomatic’ jargon of the profession, they publicly issued a ‘disclaimer of opinion’).
In plain language, not disclaiming, but refusal & hence rejection.
The auditors refused to validate the financial statements, refused to validate them to even the slightest degree.
The statements remain unvalidated. For all the money spent by Pacifica’s listeners, paying NETA to prepare them, and Rogers & Co. to audit them, what are they worth?
The auditors were saying, in effect, three things:
take these financial statements as you find them – because they have inadequate support;
rationally, one can only take them on faith; &
so, how strong is your faith in Pacifica, both in 2016-7 & now?
The Pacifica advocates of the loan from the Foundation for the Jewish Community, FJC, have presented it as a good Samaritan, doing it out of the kindness of its heart. In fact, FJC is in a competitive market as a manager of donor-advised funds, a sector of the charity industry. One of its money-making operations is running a fund that lends at prime-plus, the Agency Loan Fund, ALF. Donors to FJC can lodge money with ALF, as can outsiders, all hungry for those extra percentage points of interest earnt.
FJC had been having problems finding borrowers for these prime-plus loans: only 46% of ALF had been converted into loans at 31Mar2018, the very time of the 2Apr Pacifica loan (its latest auditor’s report, year-end 31Mar2018, page 20; page 22 of the PDF). So, of course, Pacifica was welcomed with open arms. Sentiment this was not. http://fjc.org/uploads/user-uploads/image/FJC%203-31-18%20FINAL.pdf
The greatest aid to Pacifica transparency, on this or any matter, has not come from the National Board, the PNB. No, this came with the documents leaked W26June2019 on a Facebook group, then co-moderated & -administered by Grace Aaron. She was then, as now, Chair of the Pacifica Foundation. Most of the documents concern the loan from FJC. https://www.facebook.com/groups/PacificaRadiowaves/permalink/1264765520345396/
The ‘root’ contract, called the “loan agreement”, 2Apr2018, signed by Pacifica Interim Executive Director Tom Livingston & FJC President Lorin Silverman:
There’s also an advertising (underwriting) contract as part of the loan, signed 23Mar2018 by iED Livingston; please see below.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The $3.7m loan was reduced to $3.265m loan when Pacifica was unable to collateralise the KPFK transmitter site lease, at Mount Wilson. This was because it’s federal land administered by the Dept. of Agriculture Forest Service, & they wouldn’t give the necessary permissions. (The documentary evidence is contrary to the story being told in 2018 by Grace Aaron et al. that the attempt was to collateralise the transmitter, not the site lease – please see the loan agreement, Sec. 2.1(d); p. 5.)
What did the Pacifica National Board (PNB) commit the members to when it accepted FJC’s offer of the money?
the signed loan agreement is dated 2Apr2018, & it has a three-year term;
significantly, Pacifica directors agreed to a contract that details only two ways to pay the principal by 2Apr2021: selling as many broadcasting licences & station buildings as it takes: “a swap or sale of one or more radio licenses or a sale of other Pacifica owned assets” (Recital B; page 1);
annual interest at three percentage points above US prime rate (Section 2.2; p. 5). (So, an annual 7.75% when the loan started; 8%, effective 14June; 8.25%, 27Sep; 8.5%, 20Dec2018. [UPDATE: 8.25%, effective Th1Aug2019; 8%, Th19Sep; 7.75%, Th31Oct; 7.25%, W4Mar2020; 6.25%, M16Mar.] The three-year interest charge, with the coming recession dragging down the rate, will be less than $800k.);
the default rate, such as after a late payment – not least the paying of the principal on time (Sec. 8.1; p. 13) – is the lower of either 18% a year or the maximum under law (Sec. 1.1(10); p. 2);
Pacifica directors, with no public discussion, agreed to carry advertising, & on 23Mar2018 signed a contract with an advertising broker, F. Y. Eye, Inc.; FJC chose to make Pacifica do this “in lieu” of its “origination fee” (Sec. 3.1(2); pp. 6-7), & you may wonder why – details below; &
FJC never waits for a loan to default: it sells the loan on when it’s only “potentially impaired”, to the Marty & Dorothy Silverman Foundation; details below.
Pacifica’s immediate future is structured more by this contract than anything else.
~~~
PACIFICA’S $37 000 ADVERTISING CONTRACT with A FJC ‘DAUGHTER’ CORPORATION
As part of the FJC contract, on 23Mar2018 iED Tom Livingston signed an underwriting contract on behalf of Pacifica, for it to carry advertising. This hasn’t been acknowledged publicly by any Pacifica body, not least the Pacifica National Board (PNB). The details now follow.
Appended to the loan agreement, signed by Pacifica & FJC, is an unsigned underwriting contract (pp. 25-7). It is “substantially in the form” that Pacifica has agreed to sign with the NYC advertising broker, F.Y. Eye, Inc. (Sec. 3.1(2); pp. 6-7 & 25-7) – a corporation founded by its president, Lorin Silverman . . . yes, the President & Treasurer of FJC, and President & Treasurer of the Marty & Dorothy Silverman Foundation (of which, more anon). And, yes, it was Lorin’s signature that lent the money to Pacifica.
The language here is odd because IED Tom Livingston actually signed an advertising contract a week earlier, on 23Mar2018. The contract is with F. Y. Eye, Inc., & it’s dated 2Apr2018 (linked below). Signing for the latter was its President, Lorin Silverman (yes, a busy guy). Pacifica has publicly issued no document demonstrating that Livingston had been authorised by the PNB to do this. Likewise, there is no public Pacifica document showing that the PNB had agreed to advertising via the FJC loan. Such is the life of a secret society – moreover, one funded directly by the members, members who were never consulted on this matter. Moreover, members who have never shown any evidence, at any time in Pacifica’s 73-year history, of being enamoured to advertising on the Pacifica airwaves. Such is the anti-democratic disposition of the PNB majority. Shameless authoritarians. Eat yer heart out, Lew.
1) The 2019 Local Station Board elections, for half the seats, got underway whilst the nominal 2018 pseudo-elections were still in progress. All ten elections run this year, listener & staff for each of the five stations – last time there was no WPFW-listeners election as there were only five verified candidates for the nine vacated seats (please see https://pacificaradiowatch.home.blog/2019/07/19/nominal-2018-pseudo-election/).
But are these 2019 elections bona fide, are they genuine? Or are they pseudo-elections? Yes, there’s lots of activity, 128 verified wannabe delegates, but what’s it based on? Station staff rolls are derived from employment records. On a much greater scale, how accurate is the most basic building block, the Pacifica membership list, used to generate the elector roll for each station’s listener-election? Are the elector rolls adequate?
Well, they weren’t at 29Oct2018, during the nominal 2018 election process. Yet, with a different National Elections Supervisor (NES), they were claimed to be accurate. No evidence has ever been publicly presented as to how this magical transformation was achieved – a turnaround to be immensely proud of, yes? Crucially, given Pacifica’s long history of lacking credibility, this magical transformation has never been independently verified. (One must say ‘nominal 2018 election’ because the voting was in 2019, 18Jan through 5Mar; the election used a ‘record date’ at 19Nov2018.)
So what about this year’s election? The record date is at Su30June. The elector roll gives name & contact details. That of a reasonably sized town: c. 46 000. How plausible is it that the famously dysfunctional Pacifica is as efficient as a Springfield city council, maintaining, without material inaccuracy, such information? Well, only if Homer were in charge – which makes my point.
2019 is the same as 2018: no evidence has been publicly presented that the 30June elector rolls are materially accurate. None. This creates a reasonable & strong doubt. The only rational conclusion: based on the balance of probabilities, the 2019 process is another pseudo-election.
To help restore credibility to Pacifica elections, an action, necessary but insufficient, is an independent evaluation of the material accuracy of both the membership list & the elector roll. Obviously this won’t happen: politically, the PNB majority would oppose it; economically, Pacifica, last making an annual net income in FY2006, has bills to pay before it can think about reputation.
2) So what happened in 2018? How was it revealed that materially accurate elector rolls didn’t exist? Moreover, how was it revealed that there was no expectation of their imminent creation, certainly not within the time constraint of the 2018 election cycle?
In Aug2018, ED Tom Livingston hired a firm, Drew North Consulting. Graeme Drew, an experienced elections supervisor, became the NES. He & his team started work, in the National Office & the five stations. They soon found what the reality was, & it halted them in their tracks: on M29Oct, he found himself with no alternative but to abandon the job. Why?
The membership records proved inadequate. They weren’t materially accurate: too many errors. Inadequate supporting evidence, of donations made, & of volunteer timesheets. Through a lack of maintenance, the records had become corrupted. The membership list was, in a word, corrupt. It had proven to be unusable, unable to function as the primary source of the elector rolls, the record of those enfranchised to vote. The eligibility of not one candidate could be verified.
The most basic building block was absent. The process had self-destructed. Logically, he terminated the election process. Just as logically, if a NES is empowered to declare a certification of the election results, they are empowered to declare a self-destruction of the election process. And this he was about to do.
He told ED Maxie Jackson, M29Oct. The day after, he also told the PNB, & said he was going to announce this publicly the next day. The PNB called an emergency private meeting for that evening. The PNB majority chose to ignore the considered, evidenced judgment of the elections professional: they wanted voting to happen – any voting.
These are the words of Graeme Drew, the very first sentence, in full, of his (leaked) NES report to the PNB, Tu30Oct2018: “[o]n Monday, October 29, 2018 I informed your Executive Director of my decision to terminate the 2018 election process.” (my emphases). But worse was to come. On the third, & final page, the news the PNB majority really didn’t want to hear: “I plan to announce the end of the 2018 election on Wednesday, October 31, 2018.” (my emphases). Trying to end something, that’s one thing; telling the public, quite another. http://www.mediafire.com/file/s8eu60d26b3ame9/Pacifica_2018_NES_Final_Report.pdf/file
Unbeknown at the time, this set a precedent, one of huge significance for the chances of the Pacifica Foundation being turned around. Over the subsequent months, hearing the wrong news, also caused the PNB majority to plan, then engineer, the ousting of ED Maxie Jackson. If Pacifica is really good at one thing, this is it.
Obviously, hiring a professional elections supervision firm had been a mistake. A big mistake. One not to be repeated. So an individual had to be hired. For credibility purposes, a Local Elections Supervisor has a certain plausibility about it. Enter the LES for KPFT, in Houston, Alma Viscarra. She found the same reality, equivocated to some extent, but tried her best to do the PNB majority’s bidding. But she didn’t pass the test, & so got chopped. In came the LES for all of KPFA, KPFK, & KPFT, Renee Penaloza. A proven superwoman. Now this was different. This changed things. All obstacles suddenly swept away. Unbridled progress on all fronts. Voting duly taking place. Certified results published. This is the sort of proof the PNB majority like.
So no surprise she’s the NES for these 2019 elections. A safe pair of hands. This is efficiency, Pacifica style.
Thing is, no evidence has ever been presented by NES Penaloza, or the PNB, of the adequacy of the elector rolls used in either set of elections. All we have is de factoassertion, a practical assertion, the carrying on of an activity labelled an election. In the absence of evidence, it is a matter of pure faith that the 2019 elections are bona fide.
The membership list has been magically purified. It would be an exaggeration to say Pacifica excels at the application of alchemy. What Pacifica has done, at least since Oct2006 when the annual losses started, is to muddle through, but not in the way dignified by Charles Lindblom in 1959. http://urban.hunter.cuny.edu/~schram/lindblom1959.pdf
And what is the only rational conclusion to draw? The corrupted membership list remains corrupt. It has been used within a year in two sets of elections. This is corruption. It is being perpetrated out of self-interest by two parties, for different reasons: politically, it’s what the PNB majority want; economically, the NES is happy to do it because she keeps getting paid by Pacifica’s members & listeners.
The only honourable & credible remedy is that there is an independent evaluation of the material accuracy of the membership lists & elector rolls used for both the nominal 2018 pseudo-election & the 2019 pseudo-election.
4) The NES’ public website, with the statements of all 128 verified candidates for the 60 seats: https://elections.pacifica.org/wordpress/[As of W7Aug, reduced to 123 (details below).]
5) Ever wondered what those disembodied voices come from, what the decision-makers look like? Well, Pacifica has the answer – maybe the only one it has.
Pacifica has hardly publicised it, but an elections YouTube channel was created in July 2015. Oddly, it’s named ‘National Election [sic] Supervisor 2019’ although it carries vids for both the current pseudo-election & the one voted on earlier this year, the nominal 2018 pseudo-election. (Note that these older candidate discussion vids, some chaired by NES Renee Penaloza, are packaged away in playlists; not dated, but the aesthetic is noticeably different.)
As of W7Aug2019, the channel has nine subscribers, & has had 1 298 views; this compares with Pacifica having c. 46k members (also, the enfranchised at the last staff elections numbered 978). The channel has 81 vids: 60 one-minute candidate statements (some are discarded edits), & 21 discussions between candidates (12 from this pseudo-election, nine from the last). Since the weekend, the curator has helpfully aggregated most of the vids as 13 topical playlists.
The discussions, in Pacificanese, are candidate forums, bringing together between two & five wanabee delegates, the Pacificanese for those sitting on the local station board. These pseudo-elections, for each station, are for nine listener-seats & three staff-seats, so half the board.
The number of verified candidates, published by the NES on the elections website, has been reduced by five. Originally 128 were declared: 105 listeners (16 KPFA, 23 KPFK, 21 KPFT, 13 WPFW, 32 WBAI), & 23 staff (6 KPFA, 5 KPFK, 4 KPFT, 4 WPFW, 4 WBAI). As of W7Aug, the only changes in the figures concern listener-candidates: up by two at WPFW; & down by seven, two at KPFK (one being the LSB Chair until March this year), one at KPFT, & four at WBAI.
No explanations have been offered by the NES, & a report is long due: there were six in seven weeks, but nothing in the last eight weeks, nothing since Th13June. This fact has not been mentioned in any public PNB meeting. Queen Grace the First, who ousted King Maxie the Third, has displayed no displeasure. Obviously not a problem for her & her minions. However, the silence does not inspire confidence in either NES Penaloza or, more importantly, the electoral process. All reports are work-in-progress, & there has been progress, not least the verifying of the candidates. Puzzling.
Here on the YouTube silver screen are the Paccywood stars of 2019:
KPFA listeners (16 verified candidates, 11 discussants as of W7Aug): Marilla Arguelles, Fred Cook, Lily Kimura, Mantra Plonsey, & Mark Van Landuyt https://www.youtube.com/watch?v=-uF4dRjuVRo (in-vid caption has ‘Arguiles’, 1:57)
Marilyn Langlois, Andrea Turner, & Carol Wolfley https://www.youtube.com/watch?v=smOozi_CxpQ (did Carol edit this? The vid is 31:16, & the in-vid caption of her name pops up four times before any other candidate’s, monopolising over 2/3rds of the vid, before Marilyn’s makes an appearance at 21:39! But of course Carol’s comes next, & with less than five mins to go Andrea’s finally makes a showing. Fair’s fair. The last three are Andrea, then Marilyn, with Carol finishing off, just in case we’d forgotten her name. Unbelievable. Who are these people who reproduce Pacifica, day after day?)
KPFK listeners (21, 10): Michael Atkins, Doug Barnett, & Eric Jacobson https://www.youtube.com/watch?v=qpUZ7VvBVyA (misdescribed at YT as ‘KPFA’. The three KPFK listener vids all lack in-vid captions: they were the first discussions to be published, M5Aug)
Jaime Gomez, Jim Osborne, Paul Roberson, & Elizabeth von Gunten https://www.youtube.com/watch?v=6c5qvk4E-mI (however, Jaime isn’t listed as a verified candidate at the NES’ website, & has no statement there; YT has ‘Jamie’, & ‘van’)
Robert Gartner, Paula Miller, Rick Pothoff, Ted Weisgal, & Vaniecia Williams https://www.youtube.com/watch?v=za5fwn0sMlc (in-vid caption has ‘Garner’, 3:14; ditto has ‘Vaneicia’, 4:05, & the vid’s title too; the elections site has ‘Potthoff’ but KPFT LSB minutes consistently give ‘Pothoff’)
WPFW listeners (15, 0): none (nor any candidate statements, maybe camera shy)
WPFW staff (4, 0): none (nor any candidate statements)
WBAI listeners (28, 0!): none (but lots of candidate statements)
WBAI staff (4, 0): none (but some candidate statements)
Somewhat worrying, given that the NES is responsible for the accuracy of the elector rolls, & for practising basic human respect, is the number of misspelt names, nine, for 38 people, a 24% error rate – and that’s just the names. Why am I not surprised?
These elections became a pseudo-election when the PNB obstinately fired the National Elections Supervisor (NES), Graeme Drew, & carried on regardless. This happened Tu30Oct2018, the evening before he was going to publicly declare that he’d called off the elections, having determined that the elections couldn’t take place because the membership list was so poor that “I am unable to reliably verify any of the applicants for candidacy due to the poor quality of elector lists” (his final, leaked, report to the PNB, Tu30Oct, page 2, my emphasis – a week after its publication he kindly sent it to me). He also determined that there was no prospect of this being remedied any time soon. http://www.mediafire.com/file/s8eu60d26b3ame9/Pacifica_2018_NES_Final_Report.pdf/file
Two pieces, one long, one short, downloadable as PDF’s:
A summary of what happened, & what it reveals about the Pacifica ‘leadership’, is given as an introduction to the 2019 LSB pseudo-elections. On the balance of probabilities, these are more sham elections, because they’re also based on a membership list for which there is no publicly available evidence that it is materially accurate: all we have is a practical assertion that there’s no problem, an assertion that’s to be taken on trust. Well, those days are long over. https://pacificaradiowatch.home.blog/2019/07/19/2019-lsb-elections-are-another-pseudo-election-no-public-evidence-that-elector-rolls-materially-accurate/
The Pacifica advocates of the loan from the Foundation for the Jewish Community, FJC, have presented it as a good Samaritan, doing it out of the kindness of its heart. In fact, FJC is in a competitive market as a manager of donor-advised funds, a sector of the charity industry. One of its money-making operations is running a fund that lends at prime-plus, the Agency Loan Fund, ALF. Donors to FJC can lodge money with ALF, as can outsiders, all hungry for those extra percentage points of interest earnt.
FJC had been having problems finding borrowers for these prime-plus loans: only 46% of ALF had been converted into loans at 31Mar2018, the very time of the 2Apr Pacifica loan (its latest auditor’s report, year-end 31Mar2018, page 20; page 22 of the PDF). So, of course, Pacifica was welcomed with open arms. Sentiment this was not. http://fjc.org/uploads/user-uploads/image/FJC%203-31-18%20FINAL.pdf
The greatest aid to Pacifica transparency, on this or any matter, has not come from the National Board, the PNB. No, this came with the documents leaked W26June2019 on a Facebook group, then co-moderated & -administered by Grace Aaron. She was then, as now, Chair of the Pacifica Foundation. Most of the documents concern the loan from FJC. https://www.facebook.com/groups/PacificaRadiowaves/permalink/1264765520345396/
There’s also an advertising (underwriting) contract as part of the loan, signed 23Mar2018 by iED Livingston; please see below.
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The $3.7m loan was reduced to $3.265m loan when Pacifica was unable to collateralise the KPFK transmitter site lease, at Mount Wilson. This was because it’s federal land administered by the Dept. of Agriculture Forest Service, & they wouldn’t give the necessary permissions. (The documentary evidence is contrary to the story being told in 2018 by Grace Aaron et al. that the attempt was to collateralise the transmitter, not the site lease – please see the loan agreement, Sec. 2.1(d); p. 5.)
What did the Pacifica National Board (PNB) commit the members to when it accepted FJC’s offer of the money?
the signed loan agreement is dated 2Apr2018, & it has a three-year term;
significantly, Pacifica directors agreed to a contract that details only two ways to pay the principal by 2Apr2021: selling as many broadcasting licences & station buildings as it takes: “a swap or sale of one or more radio licenses or a sale of other Pacifica owned assets” (Recital B; page 1);
annual interest at three percentage points above US prime rate (Section 2.2; p. 5). (So, an annual 7.75% when the loan started; 8%, effective 14June; 8.25%, 27Sep; 8.5%, 20Dec2018. [UPDATE: 8.25%, effective Th1Aug2019.] The three-year interest charge, with the coming recession dragging down the rate, will be less than $800k.);
the default rate, such as after a late payment – not least the paying of the principal on time (Sec. 8.1; p. 13) – is the lower of either 18% a year or the maximum under law (Sec. 1.1(10); p. 2);
Pacifica directors, with no public discussion, agreed to carry advertising, & on 23Mar2018 signed a contract with an advertising broker, F. Y. Eye, Inc.; FJC chose to make Pacifica do this “in lieu” of its “origination fee” (Sec. 3.1(2); pp. 6-7), & you may wonder why – details below; &
FJC never waits for a loan to default: it sells the loan on when it’s only “potentially impaired”, to the Marty & Dorothy Silverman Foundation; details below.
Pacifica’s immediate future is structured more by this contract than anything else.
As part of the FJC contract, on 23Mar2018 iED Tom Livingston signed an underwriting contract on behalf of Pacifica, for it to carry advertising. This hasn’t been acknowledged publicly by any Pacifica body, not least the Pacifica National Board (PNB). The details now follow.
Appended to the loan agreement, signed by
Pacifica & FJC, is an unsigned underwriting contract (pp. 25-7). It
is “substantially in the form” that Pacifica has agreed to sign with the
NYC advertising broker, F.Y. Eye, Inc. (Sec. 3.1(2); pp. 6-7 &
25-7) – a corporation founded by its president, Lorin Silverman . . .
yes, the President & Treasurer of FJC, and President & Treasurer
of the Marty & Dorothy Silverman Foundation, which buys FJC loans
that are “potentially impaired”, not even in default (FJC policy,
disclosed in any of their auditor’s reports & IRS form 990’s – the
latest: pp. 10-11, pp. 12-13 of the PDF, http://fjc.org/uploads/user-uploads/image/FJC%203-31-18%20FINAL.pdf; & Schedule O, p. 90 of the PDF, http://fjc.org/uploads/user-uploads/image/file/990%20FY17%20-%20For%20Distribution.pdf). And, yes, it was Lorin’s signature that lent the money to Pacifica.
It should be noted that the chronology in the loan agreement, the talk of ‘Pacifica has agreed to sign’, has to be juxtaposed with the fact that this advertising agreement was actually signed just over a week earlier, on 23Mar2018. It was done by iED Tom Livingston, a contract with F. Y. Eye, Inc., dated 2Apr2018 (linked below). Signing for the latter was its President, Lorin Silverman (yes, a busy guy). Pacifica has publicly issued no document demonstrating that Livingston had been authorised by the PNB to do this. Likewise, there is no public Pacifica document showing that the PNB had agreed to advertising via the FJC loan. Such is the life of a secret society – moreover, one funded directly by the members, members who were never consulted on this matter. Moreover, members who have never shown any evidence, at any time in Pacifica’s 73-year history, of being enamoured to advertising on the Pacifica airwaves. Such is the anti-democratic disposition of the PNB majority. Shameless authoritarians. Eat yer heart out, Lew. https://mega.nz/#F!PloCiSqJ!9rLejSkttE7gCVCCq3q86g?qkxynCxQ
These are the auditor’s reports of the period from 1Oct2004, so from fiscal 2005 (FY2005). The run is 13 years, through FY2017.
Prefatorily, I just want to draw attention to how important it is that basic knowledge is widely accessible. Knowledge of this series is necessary for the possibility of informed, rational discussion of Pacifica, not least because the institutional memory of the organisation is largely not lodged in archives but in people’s heads, those who have been involved in Pacifica, some for many, many decades. An important effect, biasing how discussion proceeds, is that knowledge is not shared, not readily available to all, but instead it’s privileged, possessed by the few.
That’s why, for example, Grace Aaron, more often than most attendees of a meeting, will mention a policy, which no-one else may know exists, she can even call it up on the screen, & say she’s quoting from it. And she can’t be challenged, even as to whether it’s still current. Crucially, Pacifica cttees lack induction for new members, & the cttees lack a rudimentary archive, including one that’s publicly available. As another example, she can claim that problems x, y, & z started in 2012, when in fact the record shows, say, that the tardiness in the production of auditor’s reports started in Oct2009, & annual losses started in FY2007. Knowledge claims & accountability require checking against easily accessible primary sources.
The politico-epistemic condition of Pacifica is oligopolistic, of the few. So no surprise that Pacifica’s form of ruling is the oligarchy, a clique within, & outside, the Pacifica National Board. Knowledge is integral to ruling because politics is inherently about control, here control of access to something important for action. (This is one case of the general nature of control, control over the quality of relations, both between people, & between people & what’s important.) Hence the centrality, & vehement defence, of Pacifica’s secrecy culture for those trying to keep the organisation as it is. So, yes, there’s a politics of the (boring) archive. And conceptually it’s not reducible to Francis Bacon’s claim that knowledge is power.
Individual auditor’s reports: go to the above link, then click on a report; download, or read online by hovering over it, clicking the three horizontal dots, & then ‘preview’. Note that two reports are buried in their PDF: FY2006 is from p. 40; & FY2010 from p. 34. FY2010 also has an important page missing (p. 1), the whole of the auditor’s narrative.
[UPDATE: this page was found elsewhere, & that auditor’s report has been added to the folder.]
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I had just started writing this paragraph in a slightly different way, but Sa3Aug I went to the financials archive at the Foundation’s website, https://pacifica.org (tab at top), & saw that the archive has been changed significantly, either that day or the day before. I was going to put here, ‘This presentation is more complete & accessible than the audit archive at Pacifica’s site, which has these deficiencies: the FY2009 auditor’s report isn’t there; the FY2010 report lacks a crucial page, the auditor’s narrative (page 1); & the FY2006 & 2010 reports are buried inside the PDF, after the 990. I have sent “National Office” the URL of this PacificaWatch webpage.’ (This topic was appended to a Su4Aug open letter to iED John Vernile on two important matters: his written plan for Pacifica, & the need for Pacifica to explain why Maxie Jackson is no longer at his post.)
The pacifica.org archive index page is obviously being re-written, but on checking the deficiencies I listed, these remain: there is a link labelled ‘FY2009 Audit’ but, unfortunately, it’s to the FY2011 report; the link labelled ‘FY2010 Audit’ leads to “Not Found”; & there’s no link for FY2006, just “Temporarily Unavailable”. I haven’t checked the other links. (The Pacifica worker doing this, perhaps Director & Audit Cttee Chair Eileen Rosin, who’d spoken in Cttee on this topic, can find it at http://pacificana.org/public/files/National/Financials/Audits/PacificaAudit2009.pdf – it’s not at the California Registry of Charitable Trusts; incidently, that records Pacifica’s registry status as “Delinquent”, albeit not giving today’s date but 16Nov2018: pump ‘Pacifica Foundation’ into http://rct.doj.ca.gov/Verification/Web/Search.aspx?facility=Y.) [UPDATE: registry status became “Current” as of Th22Aug.]
Still, I’ve sent the email to the immaterial (in the two senses, regrettably), nominal National Office; hence it had to be addressed to the principal administrator, iED Vernile. He has better things to do, but that’s how it is with an organisational structure that is exemplarily flat, lean, mean.
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The FY2018 audit: iCFO Tamra Swiderski had given August as the expected finish date, but her latest report, at the Th1Aug PNB, is that “I don’t know exactly, urgh, what deadline we’re working on now for the audit, um, but I know we’re working to get something to the auditors that’s as complete as it can be, um, as soon as we can. Um, it’s pretty much all that I’m working on right now” – 10:19, https://kpftx.org/archives/pnb/pnb190801/pnb190801a.mp3. Not her finest moment. The Chair of the PNB Audit Cttee is a Pacifica director, so heard all this. Ms Eileen Rosin did ask a question – on a topic Tamra didn’t address (a handbook). So Eileen pointedly refused to ask (1) why is there no current deadline?, & (2) why was the old deadline not met? The answers are obvious. The transaction & transfer records, & the supporting documentation, are still that incomplete & chaotic. So much so that it’s impossible to rationally decide a deadline. A PacificaWorld Deadline is just words – not so much an aspiration, as it is useful as a sop to a Cttee lacking expertise, lacking nous. (Ms Swiderski is a current, & longstanding, employee of NETA: no conflict of interest? https://www.netaonline.org/OurStaff, penultimate row of controllers. Ditto her predecessor, Larry Dankner, who never attended a recorded public Pacifica meeting, although listed on some draft agendas (‘Our Staff’, top row of controllers).
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NOTES TO THE SERIES OF AUDITOR’S REPORTS
[These will be shortened, with the excised being included in a commentary on this 13-year run of auditor’s reports, & posted below.]
1. Restatements . . . Be aware that financial statements given in one auditor’s report have on occasion been restated by a subsequent auditor’s report. This happened five times, by the reports of FY2007, 2009, 2010, 2012, & 2015. The most striking was a ‘negative swing’ of $1.5m, restating FY2008’s net income of $1 068 901 as a loss of $433 161 (the FY2009 report; d’oh!). Restatement has been of both size of amounts & their categorisation. Reports detailing the restatements: FY2007 (Note 18, p. 15); FY2009 (Note 18, pp. 23-4); FY2010 (Note 19, p. 18); FY2012 (Note 14, p. 15); & FY2015 (Note 22, p. 20).
2. ‘Substantial doubt about continuing as a going concern’ . . . Five times auditors have given this Black Mark: FY2010, FY2011, FY2015, FY2016, & FY2017. That’s five in the last eight. Each time, given the financial statements & knowledge of post-year-end events, the auditors found it necessary to conclude that there is, to use the standard phrase, ‘a substantial doubt about the ability of the organisation to continue as a going concern’. The test here is being liquid without undergoing structural change; as the FY2010 auditor, Ross Wisdom, put it: “the Foundation’s ability to meet its obligations as they become due without substantial disposition of assets outside the ordinary course of operations, or restructuring of debt, or externally forced revisions of its operations or similar actions” (Note 20, p. 18).
3. Auditor’s modified opinion . . . If auditors aren’t ‘happy’ with financial statements they give, in the jargon, a modified opinion. There are three kinds: a qualified opinion (also termed a scope limitation); an adverse opinion; & a disclaimer of opinion. (Note that some PNB Audit Cttee members have, falsely, treated ‘modified’ & ‘qualified’ as synonyms; they also speak of a ‘clean audit’, presumably financial statements given an unmodified opinion by the auditor, that is, they are judged to be materially accurate.) Please see this well-written explication from the professional body of accountants & auditors: https://www.aicpa.org/content/dam/aicpa/research/standards/auditattest/downloadabledocuments/au-c-00705.pdf (AU-C = Auditing Clarification)
a) Qualified opinion: only once have auditors found it necessary to give this to the offered financial statements, FY2016. The auditors that year, Regalia & Associates, gave two reasons.
First, the FY2015 & 2016 pension audits hadn’t been done, so a materially accurate pensions liability amount hadn’t been provided to Pacifica &, therefore, to the general auditor, Regalia. Regalia concluded, “[w]e were thus unable to obtain sufficient appropriate audit evidence”. This formulation includes something they didn’t spell out: they, & indeed Pacifica, were also unable to reliably estimate the pensions liability, something permissible within accounting standards, which would have removed a reason for having to give a modified opinion on the statements. This inability could only have been because of the poor state of the transaction records & supporting documentation (FY2016 auditor’s report, pages 1a & 1b).
Second, a familiar refrain, the accounting records & supporting documentation weren’t in the best of health, to put it mildly. Regalia, again: “[a]dditionally, we encountered difficulties in obtaining sufficient supporting documentation from some of the locations. Certain of the stations do not use the same accounting software as the corporate office. Some of the data from these stations could not be fully verified because it was missing.” The next, & last sentence is the killer: “[c]onsequently, we were unable to determine whether any adjustments to the amounts recorded in the accounting records were necessary” (p. 1b, emphases added). Oh.
As mentioned, a qualified opinion is also known as a scope limitation, & the lack of adequate FY2016 accounting records & supporting documentation was limited enough to warrant a qualified opinion, rather than not giving an opinion at all about the material accuracy, & so the fairness, of the financial statements presented to the auditor by Pacifica. FY2017 proved a quite different matter.
b) Disclaimer of opinion: again, only given once, FY2017. This was given by the new auditors, Rogers & Company. Concerning the pensions liability, they replicated wording of the previous year’s auditor’s report, now adding that there were two more absent pensions audits (p. 1).
Moreover, the auditors declared a general deterioration in Pacifica’s record-keeping compared with the previous year: “[a]dditionally, we were unable to obtain audit evidence to support the amounts and disclosures in the financial statements due to difficulties in obtaining sufficient supporting documentation from some of the locations […] As a result, we were unable to determine whether any adjustments were necessary to make to the Foundation’s statement of financial position[,] and the elements making up the statements” (p. 2, emphases added).
The state of affairs required them to conclude that a scope limitation was unwarranted, & that they had no alternative but to offer no opinion on the financial statements provided by Pacifica: “we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion” (p. 2).
The auditors were unable to vouch for the material accuracy, the fairness, of the FY2017 financial statements presented to them by Pacifica.
The FY2018 financial statements are likely to be treated the same way, according to the auditor at the M19Aug Audit Cttee. Please see the next note.
4. The FY2017 financial statements, in not carrying an auditor’s opinion, cannot be relied upon by anyone, not least potential grantors & donors: their material accuracy, & so being a fair representation of Pacifica’s financial position, was NOT vouched for by the auditors.
The statements are effectively worthless – their only worth is deleterious to Pacifica, telling the reader that that year’s financial records & supporting documentation were so incomplete that the auditors couldn’t offer an opinion about the statements. The FY2017 statements can’t be used for any grant applications or sent to potential donors. I have examined this in more detail at https://pacificaradiowatch.home.blog/2019/07/19/fy2017-auditor-refuses-to-declare-that-the-statements-are-materially-accurate/
Worryingly, half a dozen or so members of PNB cttees, speaking publicly, haven’t grasped this.
The FY2018 financial statements are likely to receive the same treatment, according to the auditor, speaking at the M19Aug Audit Cttee. Jorge Diaz, of Rogers & Co, in response to a question from KPFK staff-delegate Polina Vasiliev (18:19), said:
“I would imagine though, for the 2018, you’re still going to receive a disclaimer given that, that the [pensions] progress is really, ur, to my knowledge, is, um, only been complete, I guess, for 2015 & 2016 [not true: the most advanced audit is the 2015, & that’s only in draft], so, um, you know, really making sure we can see in, um, you know, once those reports are finalised I can kind of take a look as well, to see if there’s any way we can certainly lift that disclaimer, but I would anticipate right now you’re still probably going to be receiving a disclaimer in 2018, um, because, um, you know, those, those, those [pension] audits are still in progress”
(Mr Diaz made a serious error when also saying, “you’ve had, um, you know, you’ve had, urgh, disclaimers of opinion in the past – we issued a disclaimer last year for the 2016 audit, um – sorry, 2017 – &, um, um, you know, the previous auditor as well” (19:28, emphases added). No: as noted above, Regalia issued a qualified opinion for FY2016, not a disclaimer of opinion. Pacifica has only ever received a disclaimer once, that from Rogers & Co, for FY2017. Surprisingly sloppy.)
To repeat, a disclaimer has a damning consequence for Pacifica: the financial statements offered by Pacifica for that year’s financial performance cannot be relied upon by a possible grantor, such as the Corporation for Public Broadcasting (CPB), or any large donor. Pacifica will have to wait for Jan or Feb2020 at the earliest, when the FY2019 auditor’s report may be published. This reality hasn’t been recognised in any public meeting of the PNB & its cttees.
5. How does recent total income compare with the past? The latest financial statements to be accepted as materially accurate by the auditors are those for FY2016. (Those for FY2017 were, in effect, rejected, it proving impossible for the auditors to judge their worth.) The FY2016 total income is $10 467 112 (p. 3). But note this important qualification: listener support & donations is given as a net figure.
That accounting policy started with FY2013 (p. 4), & the cost here is premiums, jargon for goods & services used as an incentive, a bribe/sweetener, for donors to come up with the cash (Note 12, p. 16). But why is it reasonable to conceptualise, to treat, this fundraising cost alone not as an expense but a contra against income, as an anti-income, as it were? It’s also an odd policy as it lowers the amount immediately associated in people’s minds with the public’s support for Pacifica. And it’s not a small sum: at its peak, $1 245 590 in 2013, & $1 071 315 in 2014, in both years comparable to fundraising personnel costs (pp. 16 & 18, & pp. 15 & 17; Note 12 in each report).
In the period examined, FY2005 to present, the highest gross income was FY2006, $18 015 548 (p. 4). (Not surprisingly, that year was the highest net income, $1 662 532; not much competition, there’s only one other net income, FY2005.) There has been inflation since then, 19.1% for the decade, so in Sep2016 money that’s c. $21 448 000. FY2016 had premiums of $458 914, making gross income $10 926 026 (pp. 8 & 3); this is 50.9%. Thus, in real terms, Pacifica’s gross income almost halved in the decade starting late 2006. That is the scale of Pacifica’s absolute decline.
6. In similar vein, how has recent listener support & donations measured up? Has it effectively halved during the decade? Yes. It’s over 11 years, because the FY2005 amount is greater in real terms than the next year’s, although it’s c. $68k less (in money terms) – p. 4. So the highest in real terms is FY2005’s $13 705 687 (p. 6), which in Sep2016 money is c. $16 843 000, there having been inflation of 22.9%. FY2016 had a net figure of $8 246 789, plus premiums of $458 914, giving a gross of $8 705 703 (pp. 8 & 3); this is 51.7%. So again, in real terms, Pacifica’s gross listener support & donations almost halved in the 11 years starting late 2005. Even sadder is knowing that what’s diminished by much more than half, denuded, in fact, is Pacifica’s reputation.
7. When did Pacifica last have audited net assets at the balance sheet date? That was 30Sep2012, $495 924. It was wiped out by the FY2013 loss of $2 824 046.
The zenith for net assets was $7 684 012 at 30Sep2006. (Note that the higher figure in the FY2008 auditor’s report was restated downwards in the following year’s report.) FY2006 was indeed Pacifica’s last annual net income. Correlatively, net assets have fallen each subsequent year, turning into net liabilities, a cumulative fall of over $12m. The last audited net liabilities were $4 525 638, at 30Sep2016. (The following year’s financial statements were, in effect, rejected by the auditors: they had to do this because they found insufficient evidence to allow them to offer an opinion on the statements’ material accuracy.)
8. When did Pacifica last have audited net current assets at the balance sheet date, also called working capital or liquidity? Current assets are the assets that are expected to be used up, consumed, in the next financial period, usually a year. Current liabilities are the liabilities due to be paid in that same period. The difference, the net, if it’s a positive amount, is termed working capital, or liquidity. There’s an important point here: don’t confuse working capital with cash in the bank. They’re not the same. Working capital isn’t a sum of money one has ‘to play with’, to pay bills & pay for projects to develop the organisation. No, working capital is a second-order sum, a particular difference, & it’s a measure of the condition of the organisation, the metric termed liquidity.
(I studiously don’t speak of solvency/insolvency in this section because it’s a legal concept, & its meaning varies between jurisdictions. I stick to the concepts used in accounting.)
The last time Pacifica had audited liquidity at the balance sheet date was 30Sep2009, $1 294 733. Yes, 2009.
The last audited figures were at 30Sep2016, & Pacifica was illiquid, having net current liabilities, totalling $6 719 281: current assets were $637 716, & current liabilities $7 356 997. That means $11.55-worth of creditors were chasing every $1 that Pacifica had to pay them. In all honesty, Pacifica doesn’t have a CFO, it has a JIC, a Juggler-in-Chief.
(Pacifica got good news for a change on 12Mar. ED Maxie Jackson told the Finance Cttee (17:53) that Democracy Now! had written-off Pacifica’s broadcasting debt: $2.361m. That’s 32% of the last audited current liabilities figure. Mustn’t grumble. https://kpftx.org/archives/pnb/finance/190312/finance190312a.mp3)
(Inexplicably, this fact didn’t appear in the FY2017 auditor’s report, dated 27June2019, as a post-balance sheet event (a ‘subsequent event’, in the jargon). Passed the PNB Audit Cttee by, & the PNB itself.)
Finally, a worrying development has been instigated by the new bookkeepers & accountants, NETA, the National Educational Telecommunications Association. They’ve chosen, no doubt with the agreement of the PNB Chair, to make the balance sheet less transparent: current liabilities are no longer disclosed (FY2017 auditor’s report, p. 4). It means that Pacifica’s high degree of illiquidity is concealed from view. A silly manoeuvre, not least because anyone wanting that figure will simply be prudent, with every chance of over-estimating the illiquidity. D’oh!
Not being prudent but crude, one can estimate the effects of both the DN! write-off & the ESRT/FJC debt adjustment, the latter giving a liquidity ‘bounce’ by stripping rent payable out of current liabilities, & dumping (temporarily) the FJC debt, due 2Apr2021, into non-current liabilities.
At 30Sep2018, taking rent arrears as $2m, makes current liabilities $5.4m, & the illiquidity quotient 8.1 (5.4 / ⅔). At 30Sep2019, & so including the DN! write-off, current liabilities become $3m, & illiquidity 4.5 (3 / ⅔ ). Looking better. But at 30Sep2020 it more than doubles, with the FJC loan becoming a current liability on 2Apr2020: 6.265 / ⅔ = 9.4, so $9.40-worth of creditors chasing every $1 that Pacifica has to pay them. Oh.
9. The $625 235 deficit of the aggregated permanently-restricted donor endowment fund. This consists in five separate funds created by donors who gave in good faith, with the correlate of Pacifica promising that the specified donor instructions would be respected at all times by Pacifica officers.
Pacifica has never stated orally or in writing (a) whether this deficit violates donor instructions, (b) why this deficit was allowed to arise, (c) who authorised the deficit, & its subsequent augmentation, (d) what the money was spent on,
& (e) what is the plan to eliminate the deficit, & by which
date. Successive sets of directors have been in office during this
period, with no evidence of fiduciary responsibility being exercised.
$625 235 is the balance of the account (corrected, as it had a typo), according to the latest audited financial statements, those for FY2016. (The FY2017 auditors offered no opinion on the material accuracy of the statements provided to them by NETA because, as discussed in note 3(b) above, “we were unable to obtain audit evidence to support the amounts and disclosures in the financial statements […] As a result, we were unable to determine whether any adjustments were necessary to make to the Foundation’s statement of financial position[,] and the elements making up the statements” (Auditor’s Report, p. 2, emphases added). So those statements are effectively worthless.)
At year-end, the FY2016 fund account was $1
116 055, but only had assets with a fair value of $490 820 (Auditor’s
Report, Note 11, p. 14, typo corrected). [this note will be completed this week (Tu10Sep)]
PacificaWatch 