Red Cross On Hot Seat

When questions arose about how the Red Cross handled all those Sept. 11 donations, the charity portrayed itself as the image of financial accountability, reports CBS News Correspondent Sharyl Attkisson. But that image is being challenged in a harshly worded letter from a leading senator.

The letter from Sen. Charles Grassley, R-Iowa, quotes a CBS News investigation, internal Red Cross documents, and other sources saying that "several important (Red Cross) chapters have a history of financial mismanagement ... the Red Cross knew of these problems before and after 9-11 and ... failed to implement reforms that would guarantee that the chapters account for their finances."

The Red Cross didn't reveal any problems in June when Grassley asked for an accounting of its disaster relief and finance operations.

Of even more concern, Grassley says, is the attitude the Red Cross displayed in a CBS News interview when we asked about audits showing chapters failed to account for donations after Sept. 11, or kept them instead of sending them into headquarters for terror victims.

Actually we were not troubled by the results of the audit at all," said Red Cross chief financial officer Jack Campbell.

The Red Cross says no harm was done because after getting the audit results, it did require chapters to send in all the money they got after Sept. 11, and that virtually all of it is now in the Liberty Fund.

"There seemed to be an attitude of, 'Well this is no big deal.' Well, it is a big deal," said Grassley, the ranking Republican on the Senate Finance Committee.

Grassley wants the Red Cross to answer his criticisms and provide a detailed accounting of the national disaster fund, something the Red Cross wouldn't provide CBS News, even though the account is funded by public grants and donations.

Part One: Disaster Strikes In Red Cross Backyard

Part Two: Red Faces At The Red Cross

Part Three: The Battle Inside The Red Cross