Madonna's Malawi Disaster

The star's much-lauded effort to help girls in the African nation of Malawi blew up. Is
Kabbalah to blame?

by Wayne Barrett

One year ago, Madonna squatted in the rust-colored dirt of a sprawling empty lot
outside Lilongwe, the capital of Malawi, one of the poorest countries in the world. With
curious villagers and invited photographers crowding around, she laid the ceremonial
first brick for a planned $15 million girls’ academy, a noble mission in a nation where
only 27 percent of girls attend secondary school. In a blog post on the website of her
Raising Malawi foundation, she wrote that the brick, inscribed with the words “Dare to
Dream,” was “not just the bedrock to a school—it is a foundation for our shared future.”

Last week it was announced that the future would not be built. Despite the fundraising
success of Raising Malawi, which collected a reported $18 million in donations and
spent $3.8 million on the planned academy, the girls’ school has been abandoned and
the Raising Malawi foundation has imploded.

From its inception in 2006, the pop superstar has been the face of Raising Malawi,
generating headlines around the world by adopting two Malawian children, writing and
producing a documentary about Malawian orphans, and hosting high-profile
fundraisers, including a star-studded event in 2008 co-hosted by Gucci in a 42,000-
square-foot transparent tent on the north lawn of United Nations headquarters. “I want
credibility as a philanthropic organization,” Madonna told the $2,500-a-plate crowd.

To understand what went wrong, one has to look at Madonna’s partner in the
foundation, a mysterious and controversial organization called the Kabbalah Centre
International, which is now a focus of federal investigators. The center is a Jewish
mystical organization that follows a set of esoteric teachings called Kabbalah, which
adherents believe explains the relationship between humans and their creator and our
true purpose in the universe. Madonna has said that she turned to Kabbalah in 1996
when she was pregnant, exhausted from Evita, and looking for an anchor. Since then
she has reportedly donated at least $18 million of her personal fortune to the Kabbalah
Centre.

The center was founded by Philip Berg, a Brooklyn-born New York Life insurance
agent whose first wife happened to be the niece of a famous Kabbalist, Rabbi Yehuda
Brandwein. Berg sired eight children with her, but soon after the rabbi’s death in 1969
he left his wife for his former secretary, Karen. Two years later they launched their own
idiosyncratic brand of Kabbalism, popularizing what had until then been teachings
reserved for advanced Talmudic scholars. The Bergs eventually expanded to 77 centers
and study groups around the world.

The Kabbalah Centre’s impressive growth has been paralleled by the volume of its
detractors, some of whom have labeled it “Jewish Scientology.” Disaffected followers
have accused Berg and his family of treating congregants like personal servants,
housing them four to a bedroom, paying them a $35-a-month stipend, and advising them
to apply for food stamps. One prominent critic, Rabbi Immanuel Schochet, has said,
“They are distorting Kabbalah .?.?. taking some of our sacred books and reducing it to
mumbo-jumbo, all kinds of hocus-pocus.”

Berg, who is now 81 and referred to by insiders as “the Rav” (an honorific meaning
teacher), is still very much the patriarch of the Kabbalah Centre, despite a stroke in
2004. But day-to-day operations are controlled by his wife, Karen, 68, and their two
sons, Michael, 37, and Yehuda, 38, all of whom share the title of codirector.

It’s unclear when Madonna, a famously savvy businesswoman, learned about the
internal problems in her foundation or the degree to which she is aware of what appear
to be a litany of questionable practices at the center. (Madonna declined to speak
directly to NEWSWEEK for this article.)

Kabbalah means “receive” in Hebrew, and that’s certainly what it has meant to the
Bergs. Four of the five Berg families live in Beverly Hills mansions owned and
remodeled by the center. Building permits alone on three of the Berg homes total $1.4
million. Karen and Philip’s house, the third the center has provided for them in the past
decade, boasts a $30,000 swimming pool. The center routinely pays the expenses
accumulated on Karen’s credit cards, which include a personal AmEx card with a
$31,000 limit and, in the past few years, three Bank of America cards with a combined
$81,000 limit. The center covers the Berg families’ food, furniture, clothing, gas,
nannies, tutors, gardeners, housekeepers, personal assistants, and more exotic
indulgences such as luxury cars, first-class flights, and spas. The Bergs’ lavish lifestyle,
one executive says, is “100 percent subsidized.”

The Bergs’ lifestyle seems extraordinary, especially in light of the application the center
filed with the IRS in 1998 seeking tax exemption as a church. To the question of
whether “any funds or property of the organization” were to be used by any minister or
officer “for his or her own personal needs and convenience,” the center answered that
members of the religious order (including the Bergs) “have taken a vow of poverty” and
look to the center “for their meals, lodging and other subsistence.” Paradoxically, while
the center takes full advantage of tax laws benefiting religious organizations, its website
states that “Kabbalah is not a religion.”

A recently filed bankruptcy lawsuit has alleged that the Kabbalah Centre was a
beneficiary of a $70 million Ponzi scheme perpetrated by Goldan, LLC, that ended with
the criminal prosecution and conviction of Mark Goldman, a Goldan principal. There
have also been several civil suits filed recently alleging that the Kabbalah Centre had
exploited the trust of wealthy followers in order to pillage their bank accounts. A
wealthy Kabbalist, Courtenay Geddes, filed a separate lawsuit in the same court
alleging that after she came up with the idea of a Kabbalah home-schooling program,
which Yehuda Berg expressed “excitement” about, she donated $495,075 to get it
started, but no such program ever materialized. “The Kabbalah Centre and the Berg
defendants have engaged in a historical practice of defrauding people and business out
of great sums of monies.” (The center didn’t respond to NEWSWEEK’s inquiries about
these matters and has yet to file a response in these cases.)

Only one Kabbalah Centre entity, Spirituality for Kids, files disclosure forms with the
IRS. Spirituality for Kids was Madonna’s pet project before Raising Malawi, and she
served as its chairman of the board. According to its filings, it had an offshore account
in the Cayman Islands, a tax haven that seems an odd place for an entity that runs
children’s programs in L.A. to be banking. Spirituality for Kids has also raised at least
$5 million for Malawi.

In 2005 the center was hit with a torrent of bad press about marketing such items as
Kabbalah miracle water and a $35 set of Kabbalah shot glasses. Soon afterward,
Michael Berg and Madonna cofounded Raising Malawi. Early the next year, Michael
Berg flew to Malawi aboard a private jet provided by the Kabbalist wife of an L.A.
billionaire. Joining them were Madonna’s then-husband, Guy Ritchie, and actors James
Van Der Beek and Heather McComb. Berg also imported a camera crew to Malawi,
which shot the faces of malnourished children under a banner that read “Welcome
Kabbalah.”

The center told NEWSWEEK that its Malawi fundraising efforts had brought in $12.5
million in donations and it had spent $10.6 million to “fund Malawi activities” since
2006. These numbers cannot be verified, and the center’s attorney declined to provide
any specifics about how these millions were spent.

The Berg family and Madonna have recently hired top-level spin doctors to help them
manage the Raising Malawi blowback. The Bergs brought in Mark Fabiani, a key player
on the Clinton White House counsel’s damage-control team during the Monica
Lewinsky scandal who has since represented such celebrities in crisis as Lance
Armstrong and Kobe Bryant. Simultaneously, Madonna hired Trevor Neilson, another
Clinton White House veteran whose Global Philanthropy Group specializes in star
donors who need a public-relations face-lift; he has represented Angelina Jolie, Ashton
Kutcher, and Demi Moore.

Soon after NEWSWEEK raised questions about ties between Raising Malawi and the
Kabbalah Centre in February, Neilson moved to separate the two, replacing the Raising
Malawi board of directors with a new board consisting of Madonna, her manager Guy
Oseary, and her accountant Richard Feldstein. But Neilson acknowledges that the center
actually appointed this new board, as it had appointed the old one, and that Raising
Malawi will remain a center subsidiary until “a final IRS determination letter”
approving the new structure is issued. Raising Malawi, which had been headquartered
in the Kabbalah Centre offices since its inception, finally moved out in mid-March; its
two remaining staffers stayed to work for the center.

More recently, Fabiani and Neilson have successfully diverted attention from Madonna
and the center by announcing that Neilson’s group has completed a report pinning much
of the blame on Raising Malawi academy director Anjimile Oponyo, the sister of
Malawi’s first female vice president. The report accused her of “outlandish
expenditures,” including a high salary, a car, housing, and a golf-club membership.
Putting aside the fact that these items were included in her contract by Madonna aides,
the actual expenditures seem trivial in the face of the $3.8 million lost on the school
project. The golf membership cost a mere $461.27 a year and was offered as an aid to
networking with government officials and potential donors. The car that was bought for
her was a reconditioned 1996 Toyota. Her salary, $96,000, was actually a pay cut from
previous positions she had held at the World Bank and the United Nations. Oponyo,
who was interviewed by Madonna herself, agreed to move to the impoverished country
with four of her six children.
The second target of Neilson’s report is Philippe Van Den Bossche, the executive
director of Raising Malawi, who was forced out in October. Van Den Bossche is often
depicted in news reports merely as the boyfriend of Madonna’s ex-trainer. In fact, he
started dating the trainer only after he assumed his Malawi position. He got the job
through the center, where he was the development director before Madonna hired him
to run her charitable activities. Most significantly, according to multiple sources, every
dollar he spent was approved by the center. (Oponyo and Van Den Bossche are bound
by strict confidentiality agreements that prevent them from defending themselves
publicly.)

Amid the charges of malfeasance in the report, no one has pointed out that Madonna
staged two elaborate ceremonies within six months of each other, a groundbreaking and
the bricklaying event, that reportedly cost $106,250—$10,000 more than Oponyo’s
entire annual salary. Also unmentioned is the 2008 IRS filing that lists $1,042,623 in
“unspecified operating and construction costs”—a sizable chunk of Raising Malawi’s
total expenditures that remains unexplained (and all made before Oponyo was hired).
When asked about these costs, Neilson offered no response.

The more important fact seems to be that only $850,000 of the $3.8 million spent on the
academy was paid out in Malawi. The lion’s share, almost $3 million, was spent by the
Kabbalah Centre’s office in L.A. under the watch of the center’s Michael Berg. “We
have not seen anything that leads us to be concerned about how money was spent [by
the center],” Neilson says flatly. (He refused to provide his Global Philanthropy Group
report to NEWSWEEK.)

In fact, Raising Malawi and the Kabbalah Centre have always been inextricably
intertwined—despite efforts by others to separate them. Neilson concedes that the
center kept its Malawi account open, receiving and spending money after Raising
Malawi registered separately with the IRS. A Neilson aide says the center “took in more
revenue than was spent” on Malawi projects in 2006 and 2007 and that “those ‘profits’
remained” on its books, designated for Malawi use. Neilson won’t say how much in
profit the center kept for the past five years but says it is being used to settle the debt
Raising Malawi owes the center.

The explanation prompts more questions than it answers. If the center was holding
millions in Raising Malawi funding since 2006, why didn’t it transfer the funds when
Raising Malawi ran deficits in 2009 and 2010? And what about 2008, when the
foundation had its best fundraising year, finishing with a half-million-dollar surplus, yet
the center listed a $1.8 million liability from Raising Malawi on its IRS filings? How
could there be a liability if it was the center that in fact owed Raising Malawi the
millions it had collected over the prior two years?

When NEWSWEEK asked the center’s tax attorney Shane Hamilton how the Kabbalah
Centre and Raising Malawi divided the money that was raised for Malawi, he replied: “I
don’t know if they have a structure.” This fluid “intercompany debt,” as one Neilson
aide described it, reinforces the charges made by critics that the center used Malawi as a
fundraising tool, and that there is no way to independently determine what was really
done in the name of its orphans. Neilson will now say only that it was unfortunate that
Raising Malawi was “linked to any religious organization” from the beginning because
it limited the foundation’s “ability to generate broad public support.”
Neilson has offered at least two other explanations for why the Raising Malawi school
was not built: that there weren’t enough girls living near the school to attend it (despite
the fact that the academy was planned as an elite boarding school for girls from every
district in the country) and that the Malawian government never executed a title transfer
for the site. However, NEWSWEEK has obtained a Jan. 4 lease signed by the land
registrar in Malawi stating that the Raising Malawi academy “is now registered as the
proprietor of the leasehold interest” in that property. Morgan Tembo, a member of the
local advisory board for the school, met Neilson during his visit to Malawi and says, “If
Trevor is saying that the lease or title is one of the reasons construction stopped, it’s not
true.”

What is true is that there are indications the center had made the decision to pull the
plug on the school long before it was announced: the last check was sent to Malawi in
July of last year, just three months after the bricklaying ceremony, and it was for a mere
$8,659. There was no apparent plan to cover the costs of operating the school.

“My original vision is now on a much bigger scale,” Madonna said in a statement after
the school’s collapse. “I want to reach thousands, not hundreds, of girls. I want to do
more and I want to do it better.”

Neilson says Raising Malawi will now focus on financing “proven interventions.” If
Madonna is willing to throw her money and prodigious fundraising talents behind the
effective programs that already exist, that would be the best news possible for Malawi.
UNICEF’s Schools for Africa program, for example, has renovated or built 1,000
schools and trained 100,000 teachers since 2004.