USOC Looking Into USA Diving For Possible Conflicts Of Interest
The USOC has investigated USA Diving’s BOD for allegations of self-dealing and conflicts of interest, and a top USOC official said decertification is possible if the board does not agree to reforms. The USOC declined to discuss specific findings or its proposed remedy, but sources said the review looked into a '17 vote to distribute national membership revenue back to local clubs where top board members have interests. Investigators also asked about BOD Chair Michele Mitchell’s role in bringing a major international competition in April to the Mission Viejo Nadadores Diving club, where she is head coach, and at least two other matters. USA Diving is still considering how it will respond to the USOC’s findings, said USOC Chief of Sport Performance/NGB Services Rick Adams. He added possible results include bylaw changes, board reforms or even steps to take away its status as the official Olympic governing body. That action is effectively a death penalty for NGBs. The Diving inquiry is part of a new effort to more closely police NGBs, said Adams. The Ropes & Gray report into the Larry Nassar sex abuse scandal faulted the USOC for its lax oversight of USA Gymnastics and the 49 other nonprofits that run individual Olympic sports. Adams said if the USOC uncovers major problems at any NGB, it will be asked to make changes. “Ultimately, if NGBs, Diving or otherwise, fail to comply, the end result would ultimately be a section 8 filing by the USOC,” Adams said. That would lead to decertification. USA Diving acting CEO Jack Perkins, a former BOD member, was scheduled to meet with Adams at USOC headquarters to discuss the report. Perkins and a spokeswoman did not respond to a request for comment.
CONFLICT OF INTEREST? USA Diving’s BOD in '17 voted to return 20% of membership fees to local clubs, with the stated idea that it would serve as a sales incentive, according to a public presentation by Perkins, who was then BOD treasurer. Perkins is the founder of the Mile High Dive Club in Denver. Sources added Mitchell applied for the CEO position in spring of '17 and never recused herself from the board while it considered candidates. The board ultimately chose Lee Johnson, who lasted about 16 months before his departure was announced last September due to the cited need for a “change in the financial strategy.” Johnson declined to comment. According to a power point presentation, the plan to enrich local clubs while also maintaining USA Diving Inc.’s income depended on the changes generating a 29% growth in membership revenue from '16-19 -- numbers one NGB business veteran described as “extremely aggressive."
REIMBURSEMENT PROBLEMS: Shortly before Johnson left the organization, another matter emerged that investigators asked about. The BOD in September directed Johnson to issue current board member Sean McCarthy a $15,500 bonus, according to documents. The bonus came after staff refused to approve more than $13,100 in expenses that McCarthy submitted for reimbursement from his time in '17 as interim high-performance director, according to the documents. Staff said that most of those expenses were not reimbursable under IRS guidelines. According to documents, Perkins wrote, “Taking into account that there may have been discussions/understandings between McCarthy and the BOD with regards to expectations and compensation that the USA Diving National Office may have been unaware of, or that McCarthy and the BOD alone were aware of, the BOD now authorizes a one-time payment in the amount of $15,500.”
ACTING IN THE BEST INTEREST: Before the Diving investigation came to light, the USOC raised general concerns about how many NGB boards are controlled by people with vested interests in the sport. It is pushing NGBs to include more independent directors. Adams said there is not a bright-line definition for conflicts of interest under the Amateur Sports Act. However, all corporate directors are obligated to act in the best interests of the organization and not themselves or their separate professional interests. “Whether you’re for profit or nonprofit, managing conflicts of interest or the perception of conflicts of interest is part of good governance,” he said.