Nonprofit Watchdog Files IRS Complaint Against Greenpeace, Seeks Federal Probe, Says Greenpeace Violates Tax Laws, Diverts Millions

9/22/2003

From: Mike Hardiman, 202-431-1467

WASHINGTON, Sept. 22 -- A nonprofit watchdog group today filed a complaint with the Internal Revenue Service against Greenpeace on Monday, urging the agency to investigate the environmental organization.

In a report entitled "Green-Peace, Dirty Money: Tax Violations in the World of Non-Profits," Public Interest Watch detailed how Greenpeace -- one of the nation's most recognizable and visible non-profits -- is knowingly and systematically violating U.S. tax laws.

At the heart of the matter is the way in which Greenpeace's complex corporate structure masks its misuse of tax-exempt contributions, said Mike Hardiman, executive director of Public Interest Watch (PIW).

"American tax law very clearly differentiates between taxable and tax-exempt contributions, and the ways in which they can be used," Hardiman said. "Greenpeace has devised a system for diverting tax-exempt funds and using them for non-exempt -- and oftentimes illegal -- purposes. It's a form of money laundering, plain and simple."

The report details how during a three-year span, one Greenpeace entity diverted over $24 million in tax-exempt contributions. Such contributions are supposed to be used for "educational" programs, but instead funded non-exempt activities, the report showed.

A review of IRS filings and annual reports for tax years 1998, 1999, and 2000 showed that Greenpeace Fund, Inc., funneled tax-exempt contributions to non-exempt programs in the amounts of:

-- $3.8 million to Greenpeace, Inc., 1998

-- $4 million to Greenpeace International and other affiliates in 1998

-- $4.25 million to Greenpeace, Inc., in 1999

-- $3.8 million to Greenpeace International and other affiliates in 1999

-- $4.5 million to Greenpeace, Inc., in 1999

-- $3.7 million to Greenpeace International in 2000

-- $0.8 million to Greenpeace affiliates in foreign countries in 2000

Examples of non-exempt activities undertaken by the recipient organizations include:

-- Blockading a naval base in protest of the war in Iraq;

-- Boarding an oil tanker for a "banner hang";

-- Breaking into the central control building of a nuclear power station; and

-- Padlocking the gates of a government research facility.

"The law says that tax-exempt contributions must be spent on tax-exempt programs. Greenpeace is spending tax-exempt contributions on non-exempt -- and oftentimes illegal -- programs," Hardiman said. "This is a clear violation of the law."

Because Greenpeace receives significant donations from large entities, such as the Rockefeller Brothers Fund and the Turner Foundation, the report also calls into question the accountability of these donors.

"Foundations that make tax-exempt contributions are responsible for verifying that their funds are used appropriately," Hardiman said. "In this case, the funds clearly are not being used appropriately, which means one of two things: Either the foundations have no idea how their money is being spent, or the foundations are knowingly helping Greenpeace break the law."

In addition to the IRS investigation, the report calls for a series of remedies, including:

-- Greater oversight on the part of grant-making foundations;

-- Regulatory and legislative investigations of Greenpeace on federal and state levels; and

-- Action under California law governing non-profits.

"What these organizations are doing, pure and simple, is cheating the government. They're funding their operations with tax-deductible contributions, costing the government and taxpayers millions of dollars every year," Hardiman said. "Yet they're ignoring the conditions imposed by law to ensure that such taxpayer-funded groups are truly serving the public interest."

Hardiman also said PIW was considering filing a lawsuit under provisions set forth in a section of California's Business & Professions Code, commonly referred as a 17200 lawsuit.

"The state of California has a series of statutes designed to protect the public from impropriety on the part of non-profits," Hardiman, said." And in the case of Greenpeace, it's clear violations of the law mean that the state's Attorney General should take action. And if the state's Attorney General proves unwilling, we would encourage him to grant PIW 'relator status' so that we can."

"Relator status" can be granted by the Attorney General to an individual or entity to pursue legal claims under 17200 law in the name of the People of the State of California.

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About Public Interest Watch

Public Interest Watch (PIW) was established in 2002 in response to the growing misuse of charitable funds by nonprofit organizations and the lack of effort by government agencies to deal with the problem. PIW works to fight charitable trust abuse by exposing individual cases of abuse and advocating for stronger governmental oversight, including requirements for greater financial disclosure by charitable organizations.

PIW is a Washington, DC-based nonprofit corporation, with additional offices in California. PIW is a 501(c)(4) tax-exempt organization, which means contributions to PIW are not tax-deductible. To learn more, visit http://www.publicinterestwatch.org.