David Miscavige & The Independent Movement, Part III
Posted on February 14, 2011 by Admin
Since Part II of this series was published, a new wave of reports of alleged illegal or unethical behavior by David Miscavige and the Miscavige administration has spread across the major media – newspapers, television, radio, etc. The new reports have gone viral on the Internet, further damaging the images of David Miscavige, Tom Cruise, and the Church.
This latest wave was set in motion by a 28-page feature article in one of America’s most reputable magazines, The New Yorker.[1] In the article, a report that the FBI is investigating charges of human trafficking at the International Base of Scientology in Hemet, CA spun off into its own viral wave on the Internet.[2] Charges that Miscavige ordered the use of substantial Sea Org labor to cater to Tom Cruise’s personal, material affairs (such as the creation of a ultra luxury limousine) unleashed yet a third wave.[3]
When Church spokesman Tommy Davis attempted to minimize the private benefit to Cruise from the work of nonprofit, tax-exempt employees, the whistleblowers immediately published photographs and an eyewitness account rebutting the denials.[4]
And so the beat goes on.
These are the real world consequences to the continuation of an attempt to shift responsibility. The Miscavige administration needs to stop blaming the whistleblowers and get in front of the story, or risk government intervention from either the FBI or the IRS. Seizure of assets and revocation of tax exempt status are two of the legal sledge hammers these agencies wield. Not to mention the PR of the Church of Scientology, and of its members, suffers every time the Miscavige administration fails to admit any wrong and attempts to blame others.
How Corporate America Handles Whistleblowers
Uncovering fraud and corruption within organizations is a long-standing problem, dating back at least to the American Civil War when unscrupulous companies sold the Union Army defective rifles, lame horses, and useless ammunition. The major hurdle to uncovering the criminality is lack of access to evidence. Those with the greatest access to inside information are employees. In the private sector, which has to file tax and other annual reports, regulators also have limited access. But even there, a recent study found that more corporate fraud was found by whistleblowers than regulators.[5]
Corporate Corruption Graveyard
Realizing this in 1863, Abraham Lincoln pushed through Congress a law that rewarded whistleblowers for reporting and recovering fraud. The law, known today as the False Claims Act [6] was later gutted and rendered ineffective in the 1940s, but then was amended with real teeth in 1986.
The whistleblower became the bane of corrupt corporations, which at first attacked them unmercifully, branding them as disgruntled employees and liars, and unleashed upon them private investigators to uncover every personal flaw of the whistleblower, which the corporations then flaunted as proof of their low characters and why their allegations should be ignored.
That worked, to a certain extent… until the whistleblower weathered the storm and got in front of a jury. And then it backfired horrifically. The financial and PR consequences of the corporations’ attempts to cover up their wrong doing, by attacking their whistleblowers, was catastrophic. Many large defense contractors went out of business in the late 1980s and 1990s. And more recently, a wave of corporate scandals resulted in extensive litigation and the demise of once-powerful corporate brands. Among the more prominent of this wave were Enron, Arthur Andersen, Tyco International, Adelphia, Worldcom, Global Crossing, Martha Stewart Living Omnimedia, and HealthSouth.
This latest wave of scandals prompted Congress to pass the Sarbanes-Oxley Act, which toughened the penalties for abuses against whistleblowers and for destruction of documents, which apply to all corporations, even nonprofit religious corporations, among other features which apply only to publicly-held, private corporations.[7]
Corporate America eventually learned to discard the “deny everything, attack the whistleblower” strategy, and developed a protocol for whistleblower claims of corruption, which is basically this:
● Don’t attack the whistleblowers;
● Immediately launch an internal investigation headed by reputable professionals and persons who are neither implicated in the wrongdoing or subordinate to those who are;
● Announce the results of the investigation;
● Publicly discipline those responsible for wrongdoing; and
● Put in place and publicly announce internal mechanisms to prevent the recurrence of unethical behavior.
Not surprisingly, this protocol parallels the Danger Formula developed by LRH.
Conducting an independent, internal investigation of matters under scrutiny by the government is a key component of any response strategy, and can even head off investigations or satisfy a court that harsh penalties, such as seizure of assets or revocation of tax-exempt status, are not warranted.
Imagine for a moment how different the current situation would have gone if, rather than attacking Marty Rathbun after the publishing of The Truth Rundown [8], the boards of CST had announced an internal investigation into the charges headed by highly reputable professionals completely independent of David Miscavige.
The First Line of Defense
Having strong ethical values is the first line of defense, according to Harold Tinkler, the Chief Ethics Officer at Deloitte Touche Tohmatsu International, the corporate accounting and consulting firm. Here is what Mr. Tinkler says are the three essential elements to any ethics program:
Ultimately, creating an ethical culture comes down to company leadership and its ability to convey, through their actions and examples, the right way to do things. Second comes “controls” —a system of checks and balances that safeguards the integrity, not only of financial and operating data, but of employee behavior at all levels. All intra and extra-company dealings have to be guided by ethically-driven protocols. Third, ethical abuses must have tangible “consequences.” People must be held “accountable” for their behavior.
These elements were also recognized by LRH, who created a system of checks and balances to go into effect and safeguard Scientology after his death. See: LRH Intent. He also set up an ethics and justice system to guide executives and staff and hold each and everyone accountable for their behavior. The system includes a Watchdog Committee (no longer functioning), and International Execcutive Strata (gone), and a convening authority for worldwide matters, ED International (banished to “the Hole” at Int Base, according to multiple eyewitness reports from people who were in a position to know). See: Existing Scene.
Miscavige is accountable to no one within the organization. LRH’s system of checks and balances was never implemented. CST has been relegated to a lower-level echelon, its general directors and trustees appointed by Miscavige, its officers also selected and run by Miscavige.
At the top of Scientology’s governing structure, there is no first line of defense.
Seven Signs of Ethical Collapse
Nonprofit religious corporations have their own types of corrupt practices, mostly involving private benefit by its leaders and top donors – what IRS regulations call “disqualified persons” – and physical and emotional abuses of its members. Because churches are un-regulated and do not have to file annual reports, an additional hurdle for reform exists. Outsiders have little ready access to evidence of internal affairs. Therefore, unless the religious entity has in place reliable internal mechanisms for self-investigation and correction, the only way for corruption to be uncovered is through employees who are willing to endure personal attacks and ostracism by their coreligionists – and blow the whistle.
According to a leading law firm that specializes in corporate corruption, the seven signs of ethical collapse are (paraphrased):
• Pressure to maintain production statistics
• Fear to speak up
• Young, impressionable staff & a bigger than life CEO
• A weak board
• Cultures of conflicts of interest & mutual benefit
• Innovation like no other – an arrogant law of success
• Goodness in some areas atones for evil in others. [9]
Scientologists will immediately recognize the pressure for statistics, and the bigger than life CEO surrounded by young staff. They may also see in Miscavige the arrogant law of success (tax exempt status obtained, best friend Tom Cruise, grand buildings, a billion dollar IAS fund, and LRH materials released in high quality CDs and books). Certainly, goodness abounds in some areas. People are still being introduced to LRH technology and gaining states of spiritual awareness not previously dreamed of.
Those who have bravely (why should bravery be required?) put on their Keeping Scientology Working (KSW) hats and informed themselves, through this website and others, will also recognize in allegations leveled by sources who were in a position to know, that fear and silence exist at the highest levels; not just weak boards but non-existent ones, mere rubber stamps for Miscavige’s will; and a culture of conflicts of interest & mutual benefit – although quite limited in scope to Miscavige, his lawyers (including the Special Directors of CST), and Tom Cruise.
(By the way, a statement attributed to David Miscavige by Batangas Today [10], attempts to justify the use of Sea Org labor to benefit Tom Cruise because Tom has given so much to Scientology. If true, Miscavige doesn’t get it. It is because Tom has given so much that he is, under IRS regulations, a “disqualified person” who is not entitled to receive private benefit. Special rules exist that are designed to prevent disqualified persons from receiving private benefits from tax-exempt organizations, which are supposed to operate solely for public benefit.[11] We will elaborate on this in an upcoming article covering the risk of revocation of tax-exempt status.)
PR Tech Correctly Applied
Included in PR technology is the need to be in ARC (Affinity-Reality-Communication = Understanding) with the general public, and to “set policy” “if lacking” in order to make the Church’s “actions or products known, accepted and understood.” [11] (PR Series 5, PR DEFINITION.)
“What is the R [Reality] of another or others? This involves SURVEYS.” [12]
The alleged physical and mental abuses of its members by a Church – or by any organization – violates public Reality. Whether the beatings occurred by the leader or his top lieutenants is really beside the point since it happened under the leader’s watch.
Under similar situations, many corporations would immediately replace the top executive regardless of who did the beatings. To continue to operate as if nothing was done wrong by the administration and its top staff continues to invite more attacks and causes greater loss of credibility, until at last there will be complete public abandonment, governmental intervention, and a large, splintered field.
In our opinion, a survey of the general public will reveal that its “Reality” is that Mr. Miscavige is responsible for the beatings; that he rules by intimidation and domination, which we know are traits, not of a good leader, but of a person at tone 1.5 (anger) on the tone scale. If this is the case, then to further blame and castigate the whistleblowers, calling them liars and apostates (a false label in most cases), will only serve to worsen our PR image and credibility, driving away all but the most ardent and invested supporters, and ultimately will force governmental intervention.
One should “NEVER USE LIES IN PR,” according to LRH policy. “All the lies will dead end some day.” (Emphasis in original; PR Series 2).
Only a meaningful internal, independent investigation can enable the Church to get in front of the story and begin to rehabilitate its image and restore its credibility.
This can likely only occur with the implementation of LRH’s intention for the change in governance of Scientology after his departure – a change from one-man rule to a three corporation system, with seven boards. This system expresses the checks and balances envisioned by LRH. The checks and balances would be effected by fully hatted, independent board members who are not subject to domination, interference, threat or duress by any person. We would thereby have fully functioning boards, as LRH mandated, and all executives would be subject to and held accountable by LRH ethics and justice policies, with no one being above policy or correction.
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[1] http://www.newyorker.com/reporting/2011/02/14/110214fa_fact_wright
[2] See, e.g.: http://gawker.com/#!5753356/the-fbi-is-investigating-scientology-for-human-trafficking;
http://www.dailymail.co.uk/news/article-1354449/Scientologists-outraged-defectors-claims-human-trafficking-enslavement.html;
http://www.telegraph.co.uk/news/newstopics/religion/8309698/Church-of-Scientology-investigated-by-FBI.html
[3] See, e.g.: http://gawker.com/#!5757217;
http://www.huffingtonpost.com/2011/02/08/tom-cruise-scientology-under-fbi-investigation_n_820250.html
[4] http://markrathbun.files.wordpress.com/2011/02/bikeshangarexcursion.pdf
[6] 31 U.S.C. Section 3730
[7] http://apps.americanbar.org/legalservices/probono/nonprofits_sarbanes_oxley.html
[8] http://www.tampabay.com/specials/2009/reports/project/
[9] http://firmseek.dreamhosters.com/fowler/LaffertyNARA2009.pdf, page 44
[11] For a layman’s explanation, see:
http://nonprofitmanagement.suite101.com/article.cfm/excess_benefit_transactions
For a legal definition, see ¶ 332.2 at:
http://federaltaxissues.com/0300_private/0330_private_excess.php
[12] PR Series 5, PR DEFINITION.
[13] PR Series 2, THE MISSING INGREDIENT.