Nader Suit Not Aimed at All Foundations

To the Editor:

Your article on Ralph Nader’s suit against two directors who dominated a foundation on whose board Mr. Nader served (“Ralph Nader’s Quiet Crusade,” November 5) refers to my participation in the case on Mr. Nader’s behalf. Because the article suggests that the case is a broad attack on the foundation field, some clarification is in order.

Mr. Nader’s complaint in the suit aims at a narrow and quite specific target, consisting of facts in stark contrast to norms in the foundation field. Among other things, the complaint asserts that, over Mr. Nader’s objection, the two directors, Bahij and Doris Chaho, paid themselves annual salaries roughly 24 times those paid for similar services by foundations of comparable size; that they also paid Mrs. Chaho’s sister-in-law substantial compensation for minimal work; and that, though they urged Mr. Nader to join the board because of his national prestige and knowledge, they engaged in a persistent pattern of conduct which effectively excluded him from any real participation in the board’s governance of the Maximilian E. and Marion O. Hoffman Foundation.

If Mr. Nader establishes those allegations at trial, the Chahos’ actions would constitute a variety of serious breaches of charitable fiduciaries’ common duties of loyalty and care. The breaches involve a foundation of significant and expanding size and grant-making power — assets of $36.4-million in 1993 and almost $43-million in 1997, according to The Chronicle’s figures. Hence, when Mr. Nader concluded that his extensive efforts to persuade the Chahos to reform their practices were having no effect, we agreed to begin legal action seeking to end those practices and correct them.

The complaint’s request for court action does no more than that. Filed shortly before the Chahos removed Mr. Nader from the board, it asks for an order compelling the Chahos to return misappropriated funds to the foundation, refrain from further misconduct, and furnish Mr. Nader with sufficient advance information about proposed grants and board meetings to enable him to fulfill his duties as a foundation director.

One can hardly characterize those requests as a “crusade” against the foundation world. Certain of Mr. Nader’s responses to The Chronicle’s questions amply support its casting the story in that light. But he mentioned no such purpose to us before the Chronicle article was published, and he has denied it since. More to the point, the extreme and extraordinary facts of Nader v. Chahos afford no basis for any broader attack on foundations or any subset of them.

Thomas A. Troyer
Caplin & Drysdale
Washington