Greg Mortenson must pay $1 million to charity

A Montana Attorney General’s office investigation found significant mismanagement of funds by 'Three Cups of Tea' author Greg Mortenson.

Nearly a year after a 60 Minutes investigation charged “Three Cups of Tea” author Greg Mortenson fabricated some of the accounts in his beloved bestseller and that his charity mishandled donations, news emerged this week that a Montana Attorney General’s office investigation found significant mismanagement of funds at the author’s nonprofit and ordered Mr. Mortenson to reimburse his charity more than $1 million.

According to the investigative report, Mortenson spent millions of dollars in charity money on personal items, family vacations, and charter flights. His charity, the Central Asia Institute, was founded to build schools in Pakistan and Afghanistan.

Mortenson “had significant lapses in judgment resulting in money donated to CAI being spent on personal items such as charter flights for family vacations, clothing, and internet downloads,” Montana State Attorney General Steve Bullock said in an announcement Thursday, as reported by CBS News.

Mortenson’s haphazard control of the charity went largely unchallenged by CAI’s board of directors, which consisted of Mortenson and two people loyal to him, according to the investigative report.

“The result was a lack of financial accountability in which large amounts of cash sent overseas were never accounted for,” reports the AP. “Itemized expenses listed as program-related were missing supporting receipts and documentation. Employees and family members charged items such as health club dues and gifts to CAI credit cards.”

Among the financial mismanagement: Mortenson bought thousands of copies of his books, “Three Cups of Tea,” and “Stones into Schools,” from $3.96 million worth of charity money, reaping royalties that he kept for himself.

The report also found the CAI spent $4.93 million on advertising and promoting Mortenson’s books, a figure that was supposed to be split between the CAI and Mortenson, but never was.

The CAI also paid $2 million in charter flights for Mortenson’s speaking engagements until 2011. The report stated that Mortenson and his family charged $75,276 worth of personal items to the CAI between 2009 and 2010, including “LL Bean clothing, iTunes, luggage, luxurious accommodations and even vacations.”

Thanks to an April 2011 “60 Minutes” report that alleged Mortenson fabricated parts of his memoir and benefited financially from the charity, Montana’s attorney general began a yearlong probe into the CAI. The investigation found Mortenson’s oversight of the CAI grossly negligent and ordered a series of changes.

According to the CAI – which has published a response "respectfully disagree[ing] with some of the analysis and conclusions in the OAG’s report" – Mortenson voluntarily resigned from his position as the CAI’s executive director in November. [This article originally stated that the OAG removed Mortenson from the office.] He will also be barred from voting on the CAI’s board or holding any position of financial oversight, though he may remain an employee there, according to the terms of the settlement.

Mortenson must also reimburse the CAI $1.05 million, nearly half of which (some $495,000) has already been paid, according to the AP. 

It’s a big fall for the bestselling author and until recently, respected philanthropist, whose account of his unsuccessful attempt to climb K2 in South Asia and subsequent experience with an impoverished village in Pakistan inspired him to build schools and other projects in the region.

Though the news is likely to upset Mortenson’s fans and disappoint his investors, they can take some comfort in this statement by Attorney General Bullock.

"Mortenson's pursuits are noble and his achievements are important. However, serious internal problems in the management of CAI surfaced," Attorney General Steve Bullock said in the report. "Despite the severity of their errors, CAI is worth saving."

We hope the CAI can be rehabilitated because far more than the reputation of one man is at stake.

Husna Haq is a Monitor correspondent.