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A settlement was reached in early February between the New York State Attorney General and the Grand Marnier Foundation over allegations that six directors of the foundation had excessively compensated themselves for board service over a 10-year period. They commanded roughly $50,000 a year each for services rendered, the Attorney General charged, thereby violating their fiduciary responsibilities. While the defendants never denied having accepted nearly $3.5 million collectively in compensation, they maintained the earnings were not extreme or illegal. In the accepting the settlement, the directors agreed to repay $1.5 million to the foundation and allow the board to be restructured. In response to situations like these, Senator Charles Grassley (R-Iowa) is calling for greater government oversight of the nonprofit sector. Grassley, who is chair of the Senate Finance Committee that oversees the Internal Revenue Service, has long argued that the IRS needs to be more aggressive about monitoring nonprofits’ financial dealings. On March 4, Grassley said he is considering introducing new legislation that would impose harsher penalties on board members caught withholding financial information or filing late tax returns and more restrictions on directors conducting business between their foundation and their employer. [03/08/04]

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