WQED and Transparency
Joel Kaplan
February 8, 2012
The Corporation for Public Broadcasting's Inspector General recently conducted an audit of WQED Multimedia in Pittsburgh where he found, among other things, that because WQED did not comply with CPB guidelines for reporting non-federal financial support, CPB ended up making improper Community Service Grants to WQED in excess of $798,000. WQED did not agree with the majority of the Inspector General's findings.
The 37-page audit report and WQED's six-page response can be found here:
http://www.cpb.org/oig/reports/2012-12-11_WQED_Final_Report.pdf
If you read the audit report you will find that it is filled with redactions about specific monetary expenditures at the heart of the audit report. A reporter contacted the CPB ombudsman and questioned why—given CPB's commitment to transparency— such redactions were allowed.
In her letter to the inspector general responding to the audit report, Deborah L. Acklin, president and CEO of WQED, asked for the redactions. She wrote, “We are currently considering a large fundraising campaign and we believe this information would be financially damaging to WQED. Additionally, the amounts from the operations and sale of the magazine are proprietary and contractually confidential.” Ms. Acklin is referring to the sale by WQED of Pittsburgh Magazine in May 2009.
Ken Konz, the CPB Inspector General, said this when asked about the redactions:
“On December 12, 2011, we issued our report to CPB management. The report was intended to enable CPB management to exercise appropriate oversight and make decisions as to the appropriateness of such funding and compliance with statutory requirements.
“By statute we are required to publish 'portions of any report or audit … made publicly available' on our website. WQED requested redaction of certain portions of the report and requested us not to provide it to the public. After evaluating their request, we made our independent determination as to what information should be redacted in our public report.”
In follow-up phone calls and emails to both Mr. Konz and WQED, I questioned both WQED's request for redactions and the IG's willingness to accede to that request.
WQED is a public broadcaster that accepts federal funds. Its financial operations should be completely open for inspection. It is wrong for it to request and be granted redactions of any part of its financial audits or operations.
In fact, CPB itself has expressed a commitment to transparency in its latest business plan. Here is an excerpt from that plan:
“CPB has engaged in a continuous process of improving its own transparency in operations and grant-making and for many years has required a level of transparency in station governance and management. Community Service Grant recipients have long been required to comply with open meetings laws, to make audited financial statements available to the public, and to disclose certain information relating to CPB funding.
“Recently, the Board approved additional requirements for transparency for CSG recipients. For example, in FY 2012 stations will be required to post information about governing boards and executive compensation on station websites.”
When asked about how the redacted audit report reconciles with CPB's commitment to transparency, Inspector General Konz responded:
“You asked why the subject of an audit report has the authority to request information be redacted. Our consideration of WQED's request to redact proprietary information is mandated by federal and state laws, such as the federal Trade Secrets Act, 18 U.S.C. §1832, and the Pennsylvania Uniform Trade Secrets Act, 12 Pa.Cons.Stat. §5302.
“These laws prohibit unauthorized publication of proprietary data. We could be subject to criminal penalties if we publicly disseminated information we knew could potentially injure an auditee. By statute inspectors general are required to make its reports or portions of its reports available to the public by posting it on its website. Our action to redact proprietary information in the WQED report is consistent with governing statutes.
“To put this matter in proper context, CPB management requested that we conduct this audit based on a desk review CPB performed on WQED's Annual Financial Report. We reported our results to CPB in an unredacted final audit report. Our final report included WQED's full response to the draft report's findings and recommendations, as well as WQED's request to redact proprietary and contractually confidential information in the report. We also provided CPB with a copy of the redacted report, so CPB management had all the information they needed to decide how to address the report's findings.
“For your reference, upon issuance of a final report CPB officials have 180 days to make a final management decision addressing all of the report's findings and recommendations. During this audit resolution process, CPB will decide to accept, modify or disagree with our recommendations. They will evaluate the audit report's recommendations, the auditee's response, and may request additional information from the auditee before making a final decision. CPB's final decision will be documented in a management decision letter issued to the auditee. Typically, these management decisions are not made available to the public. The auditee can also appeal CPB's management decision and provide additional justification for reconsideration by CPB.”
Like the office of the Ombudsman, the Inspector General is an independent office within CPB. He reports to the CPB Board of Directors as well as the U.S. Congress. “While we are independent, we do not believe our action to redact the WQED report was inconsistent with CPB's 'commitment to transparency,'” Mr. Konz wrote.
As for WQED, when asked why the station requested the redactions, this is the response I received from George Hazimanolis, senior director of corporate communications for the station:
“WQED sold a for-profit entity several years ago (Pittsburgh Magazine) and is contractually obligated to not disclose the terms or financial information of the transaction.
“For reasons identified in Ms. Acklin's letter of November 4, 2011, there were several redaction requests. CPB offered to redact portions of the report that involved proprietary information. After the letter of November 4 and after mutual consideration with OIG, the final decision from WQED was that only information pertaining to the sale of the magazine be redacted.”
However, an examination of the audit report indicated there were many redactions beyond the sale of the magazine. When asked about that, here was Mr. Hazimanolis' response:
“The OIG offered WQED the opportunity to redact anything that was proprietary and harmful to WQED's business, which we understood to be normal procedure. WQED responded very broadly to that offer. After discussions with the OIG WQED requested, in accordance with its sales agreement with the buyer of Pittsburgh Magazine, that numbers relating to the financial information or numbers that could have been used to reveal the sale price of Pittsburgh Magazine be redacted. In the end, only those numbers were redacted in the final report.
“When the final report was published on the website, the OIG had redacted the magazine numbers and also any numbers that could be used to calculate the financial information related to the magazine. The OIG redacted proper names that were in the report to maintain confidentiality of donors who wish to remain anonymous according to grant agreements.”
I appreciate both the Inspector General and WQED responding to my inquiries.
Nevertheless, I continue to believe that it was wrong for most of this information to be redacted and it is inconsistent with CPB's pledge of transparency. It becomes even more problematic when the names of donors are redacted since it does not allow the public to make an independent determination about whether any undue or improper influence is being used in determining what types of materials are run over the public broadcasting airwaves.
Given that the Community Service Grants are provided to public broadcasting stations by CPB, I am hopeful that the CPB Board of Directors will in the future make such funding contingent on a recipient station's willingness to be transparent in all of its operations.