Another Low for the AP

Memo to the management of the Associated Press: Please pull the plug on your "Impact" series before you get embarrassed--again.

Designed as a showcase for hard-hitting analytical and investigative pieces, the Impact series has also generated a few clunkers. One of the more infamous examples came a decade ago, with a series of articles on the alleged massacre of innocent civilians during the Korean War. A team headed by AP reporter Charles Hanley reported that U.S. troops killed scores of civilians near the village of No Gun Ri, at a critical bridge crossing.

The purported atrocity occurred in July 1950, less than two months after North Korean forces crossed the DMZ. The ROK Army had essentially dissolved under the enemy onslaught, leaving a handful of poorly trained and equipped American units to hold the line.

One of those units was the famous 7th Calvary Regiment, assigned to the No Gun Ri crossing. Fearing that North Korean troops would attempt to blend in with columns of fleeing civilians--and seize key road and rail junctions--U.S. commanders issued orders to fire on anyone attempting to pass through American lines.

While it's unclear how widely the directive was disseminated and followed, members of the 7th Calvary did fire on civilians at No Gun Ri between 27-29 July 1950, and there were casualties. As part of the investigation, the AP produced radio logs which recorded receipt and transmission of the order to "fire on everyone." For their efforts, Mr. Hanley and his team won the Pulitzer Prize in 1999.

Unfortunately for the AP, the credibility of their report was seriously damaged by the research of an Army historian, then-Major Robert Bateman. Combing through Army files and other records, Bateman determined that the "massacre" was on a much smaller scale than the wire service indicated.

According to Bateman, there was probably a single incident of civilians being fired on by U.S. troops, the result of poor leadership and other factors. Bateman's work suggested that the number of civilians who died was between eight and 35--a far cry from the 400 reported by the Associated Press.

More importantly, Major Bateman completely debunked the veracity of the AP's "star witness," Army veteran Ed Daily. In the original series, Hanley identified Daily as a member of the 7th Calvary who fired his machine gun into crowds of civilians at No Gun Ri, killing scores of them. The AP also reported that Daily received a battlefield commission in Korea, scores of decorations (including the Distinguished Service Cross), and was trapped for a time behind enemy lines.

But Bateman's examination of Army records exposed Daily as an utter fraud. While he served in Korea, Mr. Daily was actually a vehicle mechanic who was never assigned to the 7th Calvary, and never stationed at No Gun Ri. In fact, Daily later served a stretch in federal prison for collecting $400,000 in VA disability benefits, based on bogus claims about his "service" at No Gun Ri. When confronted with the distortions and inaccuracies in their account, the AP team launched a smear campaign against Major Bateman.

A decade later, the Impact Team is back on the military beat, this time looking at the operations of Army Emergency Relief, the official charity of the U.S. Army. Based on its analysis of the organization's tax records (and other documents), the AP concludes the charity is "hoarding" millions of dollars meant for military members and their families.

Between 2003 and 2007 — as many military families dealt with long war deployments and increased numbers of home foreclosures — Army Emergency Relief grew into a $345 million behemoth. During those years, the charity packed away $117 million into its own reserves while spending just $64 million on direct aid, according to an AP analysis of its tax records.

Tax-exempt and legally separate from the military, AER projects a facade of independence but really operates under close Army control. The massive nonprofit — funded predominantly by troops — allows superiors to squeeze soldiers for contributions; forces struggling soldiers to repay loans — sometimes delaying transfers and promotions; and too often violates its own rules by rewarding donors, such as giving free passes from physical training, the AP found.

Founded in 1942, AER eases cash emergencies of active-duty soldiers and retirees and provides college scholarships for their families. Its emergency aid covers mortgage payments and food, car repairs, medical bills, travel to family funerals, and the like.

Instead of giving money away, though, the Army charity lent out 91 percent of its emergency aid during the period 2003-2007. For accounting purposes, the loans, dispensed interest-free, are counted as expenses only when they are not paid back.

Never mind that these practices are perfectly legal. Or that AER has been operating successfully since 1942, serving groups that were largely ignored by other charities. Instead, the experts interviewed by the AP believe that the Army charity should be dispensing more aid, with less of a cushion for future expenses.

If all of this sounds a bit familiar, it should. In December 2007, the Washington Post ran a similar piece on a wider range of military charities. But the conclusions were strikingly similar, and the AP tracked down some of the same critics contacted by the Post, including Daniel Borochoff, President of the American Institute of Philanthropy (AIP). We should note that the Post article was based on a report from Borochoff's organization.

But that assessment also revealed a fundamental misunderstanding of how the AER--and its Air Force and Navy counterparts--operate. In his 2007 report, Mr. Borochoff wondered why the charities didn't spend more money on homeless veterans. Apparently, he didn't understand there are virtually no homeless among the groups served by these charities--active-duty military personnel, retirees and their families.

The AP wisely avoids that narrative, but many of their complaints are petty. For example, they decry the charity's "intrusion" into an applicant's finances when a soldier applies for assistance. But that misses the larger point; if the individual is having serious financial problem, that can easily affect their job performance, family life, security clearance and a host of other issues. Given those realities, it makes sense for the charity to do a little digging.

Beyond that, there are questions about the Army offering "incentives" for soldiers who make contributions to the charity--a violation of the rules that govern AER. The AP is also concerned about the service cracking down on personnel who don't repay their loans. Did the wire service ever think that the charity--and the personnel who administer it--are trying to teach fiscal discipline and responsibility, so the applicants don't need AER in the future?

But such distinctions are clearly lost on the AP. In fact, reporter Jeff Donn freely admits that the charity has helped thousands of soldiers and their families through the years. And even the wire service might admit that the charity's "hoarding" was prudent. Despite the recent decline in the stock market, AER still has a $214 million portfolio, giving the charity a cushion to weather future financial storms--and still help the troops.