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Questions Linger Over ‘Three Cups of Tea’ Author Mortenson’s Tales, Charity

April 22, 2011 at 6:32 PM EDT
"Three Cups of Tea'" author Greg Mortenson has denied allegations stemming from a "60 Minutes" report that parts of his best-selling book were fabricated and his organization has misused funds. Margaret Warner discusses the scandal with Outside Magazine's Alex Heard and the American Institute of Philanthropy's Daniel Borochoff.
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JIM LEHRER: And to a scandal involving a well-known author who’s now being accused of lying.

Margaret Warner has our story.

MARGARET WARNER: Greg Mortenson’s “Three Cups of Tea,” out in 2006, became an international sensation, riding The New York Times best-seller list for four years and selling more than 4 million copies worldwide.

In it, Mortenson tells of his ill-fated 1993 attempt to climb K2, the world’s second-highest mountain, of stumbling into the Pakistani village of Korphe and being nursed back to health and of promising villagers he would return to build a school for girls.

In 1996, Mortenson founded the nonprofit Central Asia Institute and through it raised millions of dollars to build what its website says have been more than 140 schools in Pakistan and Afghanistan.

GREG MORTENSON, “Three Cups of Tea”: The real enemy is ignorance and hatred, so we should all put all of our strength, our prayers and resources for the education of our children. That is the most important thing.

MARGARET WARNER: After the book hit big, Mortenson also began pulling down hefty speaking fees and advising top U.S. commanders in Afghanistan.

But on Sunday night, a report on CBS’ “60 Minutes” challenged Mortenson’s credibility.

JON KRAKAUER, author: It’s a beautiful story, and it’s a lie.

MARGARET WARNER: The piece alleged Mortenson has misled readers and donors about many elements: his initial trek to Korphe; an alleged kidnapping by the Taliban; how many schools he’s actually built; and how the Central Asia Institute uses its money.

Bestselling author Jon Krakauer told “60 Minutes” he had donated handsomely to the institute, until the board’s treasurer warned him to stop.

STEVE KROFT, CBS News: Did he say why?

JON KRAKAUER: He said, in so many words, that Greg uses Central Asia Institute as his private ATM machine, that there’s no accounting; he has no receipts.

MARGARET WARNER: Mortenson refused to talk to “60 Minutes,” but he told Outside magazine his co-author had insisted on compressing some events. He denied any financial impropriety and said the mission of building schools would continue.

And for more, we turn to Alex Heard, editorial director of Outside magazine. He conducted the recent interview with Mortenson. And Daniel Borochoff, president of the American Institute of Philanthropy, he investigated Mortenson’s charity and was interviewed in the “60 Minutes” piece.

And welcome to you both, gentlemen.

Alex Heard, tell us more about these allegations against Mortenson. What is he accused of doing?

ALEX HEARD, Outside magazine: Well, as you said, he’s accused of fabricating major stories in his memoir “Three Cups of Tea,” and also I think “Stones into Schools,” but the focus is primarily on the first book.

And the foundation story of how this Central Asia Institute and its mission was conceived of involves that descent from K2 and him wandering into the village of Korphe, where the villagers celebrated his presence and he made a promise to them to return and build a school some day.

MARGARET WARNER: So, what’s not true about that?

ALEX HEARD: And the allegation…

MARGARET WARNER: I’m sorry.  

ALEX HEARD: Well, he — I’m sorry.

The allegation is that he didn’t enter that village at all during the descent from K2, and in fact, didn’t go there for the first time until a year later.

When I interviewed him just before the program aired last Sunday, he said that he changed the story from the book, admitted that it was false, and said that he had entered the village but only for a few hours, and that his return trip, when he — when the school epiphany happened, actually happened a year later.

So, you have three different versions right there.

MARGARET WARNER: And just tell us — and then I want to get back to what he told you — but, first of all, what about this story about being kidnapped by the Taliban? We saw that photograph there.

ALEX HEARD: Well, that supposedly happened in the summer of 1996. And he said he was visiting the south Waziristan agency, which is a different region of Pakistan from the Korphe area, and that he was kidnapped for eight days by Taliban and then subsequently released.

In the book, the details are a little different from what he told me. And he — when I spoke to him, he said that he was detained. He insisted that he had been detained against his will by armed men. Krakauer and “60 Minutes” say it didn’t happen at all, that he was accompanied by a guide he had paid and he was treated with kindness during his entire stay there and fabricated the Taliban story for the purpose of dramatic effect.

MARGARET WARNER: Now, Mr. Borochoff, you have looked into, meanwhile, the end of the charity, the Central Asia Institute, and the whole question of how he raised and spent money. What did you find there?

DANIEL BOROCHOFF, American Institute of Philanthropy: Well, first, we found out that he didn’t have an audited financial statement, so very little in the way of accountability.

But what’s particularly interesting is, he’s mixing his — what he gains business — what he gains from selling his book, the royalties, and the speaking fees which he is now getting — or has been getting — $30,000 to speak, and the charity is paying all the costs in terms of ads — over a million dollars — and then about $1.4 million worth of domestic travel costs.

And yet, Mortenson is not giving — keeping all the revenues. So, there’s millions of dollars in revenues that could be going to help the girls in Pakistan and Afghanistan. And people ought to be concerned about that.

MARGARET WARNER: Is there nothing in any of the records you saw about him then giving any money himself to Central Asia Institute from all of this — these speaking fees and book royalties?

DANIEL BOROCHOFF: Nothing is reported. He has claimed that he is giving hundreds of thousands of dollars. But that’s vague. He really needs to say, if he is, what actually he’s giving, because even if it’s hundreds of thousands of dollars, the charity is spending millions of dollars to generate revenues for him.

MARGARET WARNER: Alex Heard, back to you.

So, you did talk to Greg Mortenson over the weekend, I gather, as the piece was about to come out. What did he say more broadly, say about all this financial — these financial irregularities that are being alleged?

ALEX HEARD: Well, there was a complicated series of answers, but he did admit he is not a good manager and shouldn’t be running the financial side of this.

The numbers — you know, I don’t have privy to their audit, some of the audited statements that haven’t been released, but one thing he told me that was interesting, he claimed that he has been setting aside money, large amounts of money, for a fund totaling $20 million, he said, that would be used to keep operations going in the event that he is no longer able to run the organization.

So, the implication was that some of this money has been stockpiled in a nest egg for use in the future by CAI.

MARGARET WARNER: Mr. Borochoff, what about the central issue of really how many schools he has built and run in Afghanistan and Pakistan?

One — another — a videographer came out with a statement today saying he had traveled with Mortenson, he had seen some of these schools, and that he had seen evidence, as do many people in the military, that many of them do exist.

What — what’s — get us to the bottom of that.

DANIEL BOROCHOFF: OK.

Well, “60 Minutes” looked at — looked at 30 different schools and found out that half of them were not operating, were used to store spinach or hay, and had not received money in the last few years from Central Asia Institute.

Also, his connection with the military is curious, because these are really dangerous areas. And why does he want to publicly identify with the military? He could advise them secretly, in private, but that’s dangerous. And there’s groups like Doctors Without Borders that purposely don’t — don’t accept money from the — even the U.S. government, because they don’t want to have that association that could lead to their facilities and programs being attacked.

MARGARET WARNER: Going back to you, Alex Heard, so bottom line is, is Greg Mortenson saying, essentially, he’s just made some management mistakes but that his work is serious and he’s going forward with it?

ALEX HEARD: Right.

I mean, he indicated to me that he wants it to make some changes and obviously he knows that it has to happen. But implanted in some of his statements is the idea that he is going to take a long leave of absence. I don’t know if that will turn out. But you get the idea that he is also preparing for the possibility that the organization will have to go on for a while at least without his direct involvement.

MARGARET WARNER: Mr. Borochoff, can you explain — because you look at charities, all kinds of charities — how could such a high-profile charity, something like this go on, so little documentation for several years, without anyone noticing?

DANIEL BOROCHOFF: Well, we noticed it in 2009. We had a number of people asking about it.

What’s curious is why the regulators weren’t more concerned about it, because you are required in a number of states to have an audited financial statement if you are raising any significant amount of money. And something is wrong with our regulatory system to have let him get away with this — to get away with this. It is really a surprise.

But people need to realize that the financial statements tell a story also. And it’s very revealing and interesting. For instance, Mr. Mortenson talks a lot about providing salaries for teachers. Well, if you look at the audit, only $35,000 actually went to pay for teachers’ overseas salaries.

MARGARET WARNER: So, Mr. Borochoff, what danger do you think exists — and we are hearing this from some nonprofit groups today — that a scandal involving such a celebrated charity will really chill people’s enthusiasm or belief in donating to charities that do work in remote, far-off places?

DANIEL BOROCHOFF: Well, it does taint — unfortunately, it taints the whole field. People become skeptical and distrusting.

And they have to be careful with a celebrity or really famous hero-type figure, and really go to see what’s happening. But there — the good news is, there is a lot of great nonprofit organizations. At CharityWatch.org, we have posted a number of top-rated groups. We scrutinize the finances, groups like Global Fund for Women, International Rescue Committee, Save the Children, that do have good programs over there helping children.

So, there’s a lot of great opportunities. People shouldn’t give up, but have — but have healthy skepticism.

MARGARET WARNER: OK.

Daniel Borochoff and Alex Heard, thank you both.

ALEX HEARD: Thank you.

DANIEL BOROCHOFF: Pleasure.