King of the Board: Part 1 – President of Board goes rogue, seemingly appoints himself King

This is Part 1 of the King of the Board series. Names of people and organizations have been left out for legal reasons.

In a completely unprecedented move the President of the Board of the third largest financial institution on a small Caribbean Island has chosen to completely ignore the wishes of its members at A Special General Meeting called by concerned members and has essentially declared that the membership cannot remove him from office.

The road leading to that extraordinary impasse is a long-twisted road with many moving parts, which leaves many unanswered questions, and suspicions of possible mismanagement of the members’ finances, inappropriate behaviour, hostile relations with members, staff and the Supervisory Committee, and alleged circumvention of the law.

This institution is a cooperative which means that the membership is the ultimate authority at the institution. This is reinforced and further guided by the cooperative societies act, and the bylaws of the institution.

Members of the Board are elected from among the institution’s membership for a three-year term, with a maximum of two consecutive terms. At an Annual General Meeting the membership elects any vacate positions of the Board. Following the AGM, the Board members (newly elected and continuing) then appoint a President, secretary, and treasurer of the Board.

The current President is a few months into the second year of his first term as President. Although many members hoped that someone else would have taken up the presidency following the most recent, very contentious AGM several months ago, none of the other elected Board members seemed interested in the position.

It should be noted that there seems to be a revolving door of the same group of individuals severing on the Board and other volunteer committees of the institution year after year. A popular loophole around the two-term maximum limit has been to take a year off at the end of the second term, and then return to office, or to switch to another committee before returning to the Board.

At the last AGM, held earlier in the year, the membership expressed many misgivings with the handling of the institution’s affairs by the current President and Board. The biggest issue by far, exceedingly more egregious than the other concerns, was the unauthorised investment of the institution’s finances into another unregulated company that provides financial technology services.

Furthermore, not only did the Board fail to seek permission from the membership for that extremely large investment, but the payment of that investment was including in an obscure entry of the financial report of the AGM. A casual reader of the report would be completely unaware that such a major investment had been made. It was only due to the diligent research of a few suspicious members that the truth was brought to light.

That investigation revealed that not only did the Board invest the member’s funds without their knowledge and approval, but the financial legal authority of the nation formally informed the Board that the investment was illegal and that they should immediately request that the funds be returned to the institution. The President and members of the Board, two of which are also Board members of the company they made the investment in, have seemed very reluctant to recoup those funds, for reasons only they can answer.

Tensions were heightened even further by the fact that at the time this investment in the company was made, the Board was on a feverish campaign to encourage members to adopt a mandatory investment into the institution itself, whereby funds would be automatically deducted from their accounts and transferred into a capital investment account every month. A Special General Meeting was held a few months later, where the Board succeeded in getting members to adopt a resolution to implement the mandatory capital investment.

Nonetheless the last AGM ended with a clear mandate from the membership to the Board, to recover their hard-earned monies from the unregulated company. The membership left the AGM with the impression that this mandate would be executed promptly.

It came as a shock to the membership several months later that not only had the Board not recouped the funds, but that the President, members of the Board, and the General Manager, who also used to be a member of the Board (more about this conflict of interest in a future segment), have apparently developed a toxic working environment with the staff of the institution, and have allegedly been completely hostile and noncooperative towards the Supervisory and Compliance Committee, hindering their efforts to perform the crucial oversight they are tasked with by law, and by the membership.

It was in light of these extreme circumstances that members signed a petition to call a Special General Meeting to address their grave concerns on the handling of their finances by the Board, and general management of the institution, and to determine if the existing Board should be allowed to continue, or if they should be replaced. In the wake of this request, a number of members of the Board that were in disagreement with the actions of the President and other Board members resigned from the Board.

This recently held Special General Meeting will possibly go down in history as one of the most bizarre and contentious meetings ever held. The details of this preposterous meeting where the President refused to step down are given in Part 2 of this King of the Board series.