Two and a half years ago, Public Interest Watch, a self-described watchdog
of nonprofit groups, wrote to the Internal Revenue Service urging the agency
to audit Greenpeace and accusing the environmental group of money laundering
and other crimes.
Last September, the IRS began a months-long audit of the U.S. arm of
Greenpeace, known for steering its boats in the way of whaling ships and oil
tankers. This month, Greenpeace says, it received notice from the IRS that the
group "continues to qualify for exemption from federal income tax"
as a nonprofit entity.
Greenpeace says an IRS auditor told it that the PIW letter triggered
the audit. The IRS won't say how it decided to audit Greenpeace.
What is clear is where PIW has gotten a lot of its funding: Exxon
Mobil Corp., the giant oil company that has long been a target of
"I believe organizations should be scrutinized and audited, but I just
don't believe you should get targeted because ... you're a critic of Exxon Mobil,"
said John Passacantando, executive director of Greenpeace USA, the U.S. affiliate
of Amsterdam-based Greenpeace International.
Exxon Mobil confirmed that it has provided funds to PIW, but said that it wasn't
aware of the IRS audit and that it played no role in initiating the audit. In
an email, company spokesman Mark D. Boudreaux said: "PIW's stated mission
of ensuring that charitable organizations spend donations in accordance with
their charitable tax status is a laudable public policy goal."
Another spokesman, Russ Roberts, added: "It's hard for us to have sympathy
for an organization that would complain that the IRS audited them." Exxon
Mobil said it funds think tanks and other groups that agree with its positions
on global warming and other issues.
Eric L. Smith, an IRS spokesman, said that under federal law, he can't discuss
the Greenpeace case. He said a nonpartisan IRS panel of career professionals
reviews allegations against nonprofit groups to determine whether an audit is
warranted. Reviews of the agency's decision-making process, he said, "have
tended to find as a general rule that we are fair and even-handed."
According to its Web site, PIW was founded in 2002 "in response to the
growing misuse of charitable funds by nonprofit organizations and the lack of
effort by government agencies to deal with the problem." Its motto: "Keeping
an Eye on the Self-Appointed Guardians of the Public Interest."
It was founded by Michael J. Hardiman, a Washington-based lobbyist and public-relations
consultant who previously worked for a Republican congressman. As a lobbyist,
he has represented the American Conservative Union and the American Trucking
Association, among other groups.
The PIW Web site says the group's initial funding came from "business
organizations." In an interview, Mr. Hardiman declined to name any of those
sources. He said he left PIW in February 2004 to work in Iraq as a civilian
employee of the Defense Department. His successor at PIW, Lewis Fein, who serves
as interim executive director, also declined to name any of the group's funders.
PIW's most recent federal tax filing, covering August 2003 to July 2004, states
that $120,000 of the $124,094 the group received in contributions during that
period came from Exxon Mobil. The company wouldn't say whether it provided funds
to PIW at other times, but said it no longer gives money to the group. The previous
year, PIW reported donations totaling $49,600, but didn't identify sources.
PIW has criticized several nonprofit groups for alleged misdeeds, including
the American Heart Association, which it accused of allowing its logo to be
used to endorse Subway sandwiches in exchange for donations -- a charge the
AHA denies. It also wrote to the IRS in August 2003 to urge an audit of Dogwood
Alliance, an Asheville, N.C., forest-protection group that has campaigned against
office-supply chains Staples Inc. and OfficeMax Inc.
Sarah Hodgdon, executive director of Dogwood Alliance, said the IRS audited
the group in 2004 but didn't revoke its tax-exempt status. "I suspected
that the audit followed the letter that Public Interest Watch sent," she
She said the group has never targeted Exxon Mobil; the company said it isn't
familiar with Dogwood Alliance.
Messrs. Hardiman and Fein said PIW hasn't specifically targeted groups of a
particular political bent. "We went after conservative and some of the
more lefty groups," Mr. Hardiman said. "We tried to throw our net
Since 2003, one of PIW's biggest targets has been Greenpeace. In its signed application
that year for tax-exempt status from the IRS, PIW named only one nonprofit on
which it was focusing -- Greenpeace -- and noted that it "has launched an
indepth investigation of" the group. While PIW is exempt from paying federal
taxes, contributions to the group aren't tax-deductible.
Greenpeace has labeled Exxon Mobil the "No. 1 climate criminal" and
taken particular exception to the oil company's insistence that fossil fuels
aren't the main cause of global warming. Greenpeace protesters spilled red wine
on tables at an oil-industry meeting in London in February 2003 where Lee Raymond,
Exxon Mobil's chief executive officer at the time, was the guest of honor. In
May that year, activists chained themselves to the main gate of Exxon Mobil's
headquarters in Irving, Texas, where executives were gathering for the company's
In September 2003, PIW wrote to the head of the IRS urging the agency to audit
Greenpeace and to challenge its tax-exempt status. PIW attached a report it
published in which it accused Greenpeace of "blatant self-dealing,"
money laundering and other illegal activities. The letter accused Greenpeace
of "laundering" more than $24 million in tax-deductible contributions
by diverting them to a related entity that had held protests against the Iraq
war, an oil tanker and a nuclear-power station.
Greenpeace officials said an IRS auditor showed up at their Washington office
Sept. 12, 2005. Mr. Passacantando said that when the auditor, Charles Walker,
arrived, he pointed to a picture of an activist chained to an Exxon Mobil gas
pump and said, "You guys are engaged in illegal activity and this stuff
has got to stop." Mr. Walker later said the audit had been triggered by
the PIW complaint, according to Mr. Passacantando.
Mr. Walker didn't return a telephone call seeking comment. Mr. Smith, the IRS
spokesman, said he couldn't comment on Mr. Walker's alleged remarks.
Greenpeace officials said the audit lasted nearly three months; they had a
closing conference with the IRS on Dec. 8. The group received letters from the
IRS dated March 1 that said both arms of the U.S. organization -- Greenpeace
Fund Inc. and Greenpeace Inc. -- still qualified for tax-exempt status.
The letters did note nine "deficiencies" uncovered during the audit,
including Greenpeace's recordkeeping. The agency also found that while the activist
group had been engaged in unspecified unlawful activities, they weren't Greenpeace's
primary purpose and therefore don't affect its tax status.
Write to Steve Stecklow at firstname.lastname@example.org