Ex-members: Mas seized foundation

 BY ALFONSO CHARDY

 The Internal Revenue Service audited the Cuban American National Foundation for at least four years because it wanted to know if the group -- a nonprofit educational organization -- was improperly using the bulk of its members' tax-exempt donations to finance its lobbying efforts.

 Though the IRS did not charge the foundation or its officials with any wrongdoing, the agency's findings set the stage for the rebellion now roiling the Cuban exile
 community's most influential organization. Because of the audit, the IRS required the organization to undergo a dramatic internal overhaul, including a change in name and leadership.

 How those changes were handled under foundation leaders and Chairman Jorge Mas Santos, son of the late foundation founder Jorge Mas Canosa, played a key role in the recent resignations of 22 members and prompted some to accuse the Mas family of using the IRS requirements to seize control of the organization and its
 multimillion-dollar operating fund.

 Foundation officials told The Herald that though the IRS did not explain specifically why it was auditing the organization, they concluded the agency was concerned that tax-exempt donations were being improperly used to finance the Cuban American Foundation, the group's lobbying arm in Washington, D.C.

 According to the Internal Revenue Code, a tax-exempt organization ``may not attempt to influence legislation as a substantial part of its activities'' or risk losing its status. The key to whether the IRS determines a nonprofit group is violating the law is whether a ``substantial part'' of its activities are devoted to lobbying.

 In the case of the foundation audit, the IRS found that CANF was indeed involved in lobbying but could not determine whether the activity exceeded the ``substantial part'' measure, according to a written CANF-IRS agreement.

 ``The [IRS] Commissioner and the foundation could not mutually agree on the extent of the foundation legislative and lobbying activities during the tax years under
 examination,'' the agreement said. The audit, completed in 1999, covered the foundation's filings from 1992 to 1995.

 Foundation President Francisco ``Pepe'' Hernández showed the agreement to The Herald, saying it demonstrates the IRS ``found nothing wrong.''

 NAME AND OFFICERS

 Nevertheless, the IRS required that the foundation make two key changes, according to Hernández and the attorney who handled some of the negotiations with the IRS, Ignacio Sánchez -- one of the 22 who quit.

 To avoid confusion on whether the Cuban foundation was influencing legislation, the IRS asked the organization to change either its name or that of the lobbying arm and asked that the top officers of one group not be the same as in the other.

 As a result, Hernández and Sánchez said, CANF changed its name to Jorge Mas Canosa Freedom Foundation and renamed its lobbying agency -- the Cuban American Foundation -- as the Cuban American National Foundation.

 MAS FAMILY

 It also replaced the top officers in the Jorge Mas Canosa Freedom Foundation, all longtime CANF officers, with Mas family members.

 ``Fine, the IRS required the changes but there are two million Cubans out there in exile who could have replaced us, not just the Mas family,'' said Feliciano Foyo,
 longtime foundation treasurer and one of the 22 who quit.

 Hernández, the foundation president, said there was no choice but to leave Mas family members in charge because the agreement between the family and nonfamily
 foundation members about control of the organization did not allow outsiders to act as its top officers.

 Foyo also complained that one Mas family member, Juan Carlos Mas, son of Mas Canosa, was a director in both the new CANF and the new Jorge Mas Canosa
 Freedom Foundation.

 Hernández claims the prohibition on dual service applied to top officers such as presidents, treasurers or secretaries -- not directors.

 SEPARATE ACTIVITIES

 The key requirement, the IRS-CANF agreement says, was that the then-nonprofit Cuban American National Foundation and the lobbying Cuban American Foundation clearly distinguish'' activities.

 While the agreement doesn't specifically say the organizations must change their names or replace their officers, those changes occurred as a result of subsequent
 negotiations with the IRS, Hernández and Sánchez said.

 Originally, Hernández said, officers of the Jorge Mas Canosa Freedom Foundation included four veteran CANF officers and three Mas family members. The nonfamily members were dropped when the IRS demanded that officers in the not-for-profit group not be the same as those in the lobbying organization, Hernández said.

 Angel Arroyo, an IRS spokesman in South Florida, declined comment, citing privacy rules.

 OPERATING FUND

 At the center of the debate over control is the foundation's operating fund, established to keep the foundation operating after Mas Canosa's death.

 Hernández said about one or two months before Mas Canosa died in November 1997, he summoned Hernández and son Mas Santos to his bedside and outlined a plan to fund the foundation.

 To comply with Mas Canosa's wishes, Hernández said, Mas Santos set up the fund by initially dedicating to it 200,000 shares from his personal account of 20.1 million
 shares at MasTec, a telecommunications company where he is chairman.

 ``The concept my father broached with us was an endowment for the foundation,'' Mas Santos said.

 Hernández said the arrangement was for revenue from Mas Santos' shares to be used as matching funds for the annual contributions of foundation directors, trustees and
 associates -- $5,000, $2,500 and $1,000, respectively.

 Revenue from shares in the fund stands now at about $2.6 million, an aide to Hernández said. The fund now belongs to the Jorge Mas Canosa Freedom Foundation,
 successor to CANF, which is controlled by the Mas family.

 In addition to the money and leadership issues, Sánchez said there were other reasons for the resignations, most of which were alluded to in a statement from disaffected members Aug. 7.

 `UNDEMOCRATIC'

 The statement said that over the past two years, the foundation has ``taken an undemocratic path'' running counter to the principles that longtime foundation members
 embraced under Mas Canosa.

 It also said that the foundation's shift under Mas Santos was reflected in ``futile battles,'' ``breached agreements'' and ``unauthorized unilateral decisions.''

 While the statement did not give examples of those allegations, Diego Suárez and Ninoska Pérez -- two other members who quit -- said one issue was Mas Santos'
 ``unconsulted'' decision to lobby for bringing the Latin Grammy Awards to Miami. Some exiles opposed the idea because of the possibility that performers from Cuba might attend.

 PARTISAN POLITICS

 Hernández says that while those who quit may have various reasons for leaving, their resignations were motivated by partisan politics unrelated to foundation goals on Cuba.

 Hernández claimed the resignations were ordered by Republican Party bosses who wanted to punish Mas Santos and the foundation for inviting Sen. Joseph Lieberman, D-Conn., who was Al Gore's vice presidential running mate in the 2000 election, to Miami.

 Foyo rejected Hernández's assertion as a ``laughable lie.'' But Foyo, a Republican Party elector in the 2000 vote, said he and other officers were angered that Lieberman's visit gave the impression the foundation was endorsing a candidate when leaders had agreed not to do so.

 Hernández said the invitation was part of the group's ongoing effort to brief Democrats and Republicans on its Cuba policies.

                                    © 2001