[Search for users]
[Overall Top Noters]
[List of all Conferences]
[Download this site]
| Title: | DCU |
| Notice: | 1996 BoD Election results in 1004 |
| Moderator: | CPEEDY::BRADLEY |
|
| Created: | Sat Feb 07 1987 |
| Last Modified: | Fri Jun 06 1997 |
| Last Successful Update: | Fri Jun 06 1997 |
| Number of topics: | 1041 |
| Total number of notes: | 18759 |
492.0. "Why the DCU Needs New Leadership" by SSDEVO::EGGERS (Anybody can fly with an engine.) Thu Mar 12 1992 11:20
WHY THE DCU NEEDS A CHANGE OF LEADERSHIP
========================================
The Board of Directors of the Digital Employees Federal Credit
Union has demonstrated patterns of poor policy decisions, poor
communications with shareholders, and poor oversight of the DCU.
The following concerns brought us to this conclusion, and
convinced us that no incumbent board members should be re-elected, nor
any candidate who shares their attitudes. You may wish to use this
list in evaluating both the nominees and the petition candidates, to
help you vote for the candidates who you are convinced will make the
changes you want at the DCU.
Although the November Special Meeting was a clear mandate for
change we feel that an inappropriate process was used to select the
nominees. Most of the official nominees have similar backgrounds as
the current Board members, and may or may not act to correct the
problems in the DCU.
A more complete version of this document, as well as thorough
supporting documentation, is available from each of the people listed
at the end of this statement. A separate document describes our
concerns about the official nomination process.
FAILURES IN POLICY
------------------
The current Board has made numerous policy decisions that harmed
the DCU and did not serve the best interests of the membership.
1. Risky Investment in Cape Cod Commercial Real Estate:
The Board put $18M of our money into commercial real estate
development on Cape Cod. Why did they approve these risky loans
(which they call investments) through March 1990, when prices had
been falling dramatically for over 2 years?
2. Policy to Indirectly Loan to non-DCU Members:
Direct loans to non-members are illegal according to NCUA
regulations. Indirectly loaning money to non-members, which is
what the DCU did by investing in participation loans at another
credit union (BCCU), is unwise since DCU members are a much better
risk, with a 0.3% or lower default rate. Why didn't the Board
choose to loan our money to us instead?
3. Majority Investment in Participation Loans:
Sometimes credit unions get together to share loans. These are
called "participation loans" and are intended to reduce risk. Why
did the DCU Board INCREASE risk by buying all 16 loans from the
same source and by buying an average of 85% of them?
4. Increasing Fees to Increase Profits:
Why did the Board tell us they had to increase fees because
members were costing the DCU money, and that these fees had
nothing to do with the huge losses on the participation loans?
Page 2
5. Unpublicized and Arbitrary Bylaw Changes:
The Board has changed the bylaws frequently in the past year
without informing members. Immediately after the 12-Nov-1991
Special Meeting, they increased the number of signatures required
to request a special meeting from 200 to 2000/5000. This makes it
harder for members to call an unresponsive Board to account. Will
the new Board announce and allow members to vote on bylaw changes?
6. Loans to Board Members and Officers:
Why won't the Board disclose any DCU loans to them? The Boards
and officers of many banks, S&Ls, and credit unions have committed
great abuses in this area. Trusting Mangone cost us $10M -- will
members of the new Board simply insist that we trust them?
FAILURES IN COMMUNICATION
-------------------------
The current Board of Directors has done a poor job of
communicating with the membership. They have withheld information
that the membership has a right to see and in some cases issued
statements to the membership that we believe are incorrect and
misleading.
7. Misleading Annual Report:
Treasurer Susan Shapiro stated in the 1990 annual report that the
"DCU's financial performance improved with Net Income for 1990, on
target at .8% or $.3 million". Actually, Net Income was down
nearly 90%, due mostly to allocations for participation loan
losses. Will the new Board report information accurately?
8. Auditor's Statement and Notes Unavailable:
Since 1985 the Board has not included the auditor's statement and
notes in the Annual Report. 1985 is the same year the DCU began
to invest in participation/commercial real estate loans. The
auditor's notes contained information on the participation loans.
Further, they initially refused to release the auditor's notes to
members who asked to see them. Why did the Board try to hide
them?
9. Misleading DCU Investment Policy:
In 1987, Chairman Steinkrauss told members that the DCU invests
conservatively in member loans, "government securities and
federally insured banks... and doesn't invest in any sort of
`speculative' instruments." However, they already had millions of
dollars invested in Cape Cod commercial real estate development.
Will the new Board accurately report on our investments?
10. Unexplained Firing of Former President Mangone:
During the 1991 elections, the Board announced that they'd fired
President Mangone, but didn't say why -- we only found out why
when the Cape Cod Times printed the story about the massive
scandal at the BCCU. Will the new Board report bad news to us?
11. Misleading Checking Account Fee Introduction:
The "Choices" brochure claimed to give us more choices, but it
actually eliminated our choice of having free checking accounts.
Will the new Board avoid using "PR-speak" to disguise the facts?
Page 3
12. Information Protection Policy:
The DCU Board responded to questions about their activities during
the Mangone fraud by adopting an "Information Protection Policy"
which requires that members demonstrate a "business need to know"
and pay a fee to get copies of such things as Board minutes and
auditor's reports. Many requests have been denied. Will the new
Board reveal information about their performance?
13. Limitation on Candidate Statements:
The nominating committee that Chairman Steinkrauss picked is
limiting candidates to 150 word statements in the ballot mailing.
This is all most DCU members will see about the candidates. Is
this enough to let voters make an informed judgment? Will the new
Board allow challengers enough words to make their case?
14. President Cockburn on Nominating Committee:
DCU Election Guidelines prohibit any DCU employee from
participating in a DCU election except to cast his own ballot. So
why was DCU President Chuck Cockburn made a member of the
Nominating Committee? Will the new Board follow its own
guidelines?
FAILURES IN OVERSIGHT
---------------------
The current Board failed in its duty of oversight over the
activities of the DCU and over its former President, Richard Mangone.
15. Mangone's Involvement in BCCU:
No one who has any financial interest in a loan is allowed to hear
the Board discuss that loan. So why was Mangone, a founder and
Board member of BCCU, allowed to solicit the DCU Board to loan 18
million dollars, 2/3 of our net equity, to BCCU?
16. Improper Transfer of $3.5M by Mangone:
In June of 1990, Mangone ordered a wire transfer of $3.5M to BCCU,
where it was distributed to persons unknown. How could that much
money have moved on one person's authority, and then escaped the
notice of every member of the board for nine months?
17. Too Much Faith in the President:
Board members accepted loan documentation presented by Mangone
with few or no independent checks. They could have known
something was wrong if the DCU had simply done credit checks on
the borrowers.
18. Lack of Supervisory Committee:
Board member Abbott Weiss stated at the Special Meeting that an
active Supervisory Committee is a key part of the oversight of the
credit union -- and of the Board itself. The Board appoints this
committee, but it hadn't met for years. Why did they fail to
provide proper oversight of the DCU and of their own activities?
Page 4
19. Claimed Lack of Qualified Auditors:
President Cockburn made the amazing statement that the external
auditor that they were using wasn't very familiar with credit
unions -- and there wasn't an internal auditor. The Supervisory
Committee is supposed to oversee auditing, but it has been
inactive for several years. Why didn't this Board provide for
competent auditing of the DCU?
20. Loss of Member Involvement in Credit Committee:
The credit committee used to consist of members (some elected) who
reviewed credit decisions. The Board changed it to an appointed
body of DCU employees. Why did the Board eliminate member
participation in this committee? Will the new Board restore it?
21. Attachment Placed on former President Mangone's Assets:
In October 1990, a court order attached Mangone's assets at the
DCU, as part of a lawsuit against DCU's general counsel. Why did
the Board ask no one except Mangone himself for an explanation of
this?
CONCLUSION
----------
The primary responsibilities of the Board of Directors of the DCU
are to set policy, communicate with and represent members, and
exercise oversight. They have failed in each of these areas, yet have
refused to accept any responsibility, choosing instead to say that
they were taken in by the clever deceit of former President Mangone.
The current Board members, and the Nominating Committee itself, are
primarily from financial backgrounds. It appears to us that they view
the DCU as a bank that offers services to its depositors, rather than
as a cooperative whose prime goal is to work in the best interest of
its member-owners.
The issues and concerns listed above lead us to believe that
financial and management expertise is not sufficient. What we need
are Board members with integrity and common sense. Also, we believe
that a diverse Board -- both in terms of background and geographical
location -- will better represent and better serve the DCU membership.
Over the last few years the DCU has been weakened both by bad loans
and by loss of membership confidence. We believe it critical that the
new board address the issues discussed above and restore member
confidence in our credit union. We hope that the DCU can once again
be the great employee benefit we all want it to be.
Mark Buda Tom Eggers David Garrod Christopher Gillett
Phil Gransewicz Abhijit Gupta Jack Hutchinson Janet Levy
Bill Kilgore Paul Kinzelman Steve Sherman Alfred Thompson
[Permission is granted to distribute this document to any Digital
employee or DCU member, provided that the entire text is included,
especially including the above names, as per Digital Policy.]
| T.R | Title | User | Personal
Name | Date | Lines |
|---|
| 492.1 | note 450.0 revised | SSDEVO::EGGERS | Anybody can fly with an engine. | Wed Mar 11 1992 23:41 | 6 |
| The basenote is the revised version of note 450.0. We, the signers of
the basenote, believe the version posted in 450.0 met all the
requirements of Digital's PP&P, but we have revised it to take into
account several specific objections from Ron Glover. We believe this
version satisfies both the letter and spirit of Mr. Glover's concerns
with the previous version.
|
| 492.2 | Supression of good questions. | BSS::RONEY | Charles Roney | Thu Mar 12 1992 12:54 | 12 |
|
Well, I thought that the last sentence that was deleted on #17
was a very valid and pertinent question (of course, this is just
my insignificant perception!). Too bad that the powers that be
don't want it asked no matter what. I guess the truth hurts.
Hmmm.... Sort of tells you something right there!
|
| 492.3 | | SSDEVO::EGGERS | Anybody can fly with an engine. | Thu Mar 12 1992 13:52 | 11 |
| Re: .-1
The number on the "old" version was 19 and on the "new" version 17, if
we are talking about possible relations between a new BoD and Mr.
Cockburn. I saw nothing from the powers-that-be requiring the deletion
of that sentence.
Improvements were made in addition to those required so please don't
read too much into every little change. Let's accept the present
version, ignore the old version, and get on with turning out informed
voters.
|
| 492.4 | Let's not be too complacent! | JMPSRV::MICKOL | Greetings from the Snow Belt! | Fri Mar 13 1992 02:17 | 15 |
| Well, I'm concerned about the management reaction to the original 'New DCU
Leadership' statement and the apparent threats and/or warnings that were
given to the original poster.
So that I don't have to go do a line-by-line comparison of the two documents,
can someone explain what the powers that be and the mystery complainer took
offense to?
This whole situation gets more incredulous every time I enter this notes
conference.
Regards,
Jim
|
| 492.5 | | SSDEVO::EGGERS | Anybody can fly with an engine. | Fri Mar 13 1992 02:29 | 5 |
| As I said in .-2 (or whatever), I would prefer to get on with job of
turning out informed voters rather than rehashing the very large number
of small revisions, many of them not required. If you do choose to
compare the two, would you please save your results until after the
election so we don't get diverted away from the election itself.
|
| 492.6 | | RGB::SEILER | Larry Seiler | Fri Mar 13 1992 09:08 | 12 |
| I am heartened by the concern expressed in .4. However, I think that it's
best to focus on the election right now and consider the best response to
the other issues after things have calmed down a bit.
Of course, the risk is that people will forget about the issues you raise
after the election. But I hope and trust that won't happen.
Anyone who would like to discuss it further is welcome to directly contact
me or any of the other signers of the original message.
Thanks,
Larry
|
| 492.7 | Some thoughts on New Leadership, and a Qualified Board | VSSCAD::RITCHIE | Elaine Kokernak Ritchie | Mon Mar 16 1992 15:46 | 48 |
| I'm entering this here, because it seems it's already been discussed, but I
can't find an exact match.
I've been reading candidate statements as they have been coming in. With this
notes file as my primary source, I have seen the petition candidate information
first, followed recently by some statements from Nominated Candidates. I'm
noticing a dividing line in the area of qualifications.
Nominated Candidates seem to stress their success as a Digital Employee as their
major strength. I've purposely searched, and they seem to de-emphasize their
community service. Petition candidates seem to be strong in the community
service arena.
Hypothesis: Candidates who are active outside of Digital were not nominated by
the board because they were perceived as being less available for DCU Board
duties than people who are less active in their community, and therefore less
qualified to serve on the BoD. This is probably pretty far from the truth.
If the Board of Directors of a credit union is run like the Board of Directors
of Digital Equipment Corporation, then board members might think they can meet
in far off places, and be reimbursed for it. They might think the members value
them as experts in their field who are due compensation. They might think it
looks good on their resume.
Maybe the problem with the current board is that they have not been able to
separate their role as a corporate employee with their role as an elected
representative of DEFCU members. The DEFCU is no place to pretend you are
climbing a Corporate ladder. Service on the DEFCU BoD is a voluntary position
as a representative. Each board member represents over 12,000 members! Just as
we engineers are taught that we cannot design software only for ourselves, the
BoD cannot design a credit union only for themselves.
Perhaps what the DEFCU needs is more people who serve their community, who
volunteer to run the towns in which they live, or the charitable organizations
which benefit others. While a corporation has to only meet one goal, a town
or charitable organization has to use its resource to meet many goals.
It is precisely this spirit of community giving and cooperation that defines a
credit union. Have any of you heard the radio ads for the Workers Credit Union
lately? Clearly and concisely they define what a credit union is...
member-owned...cooperative... dividends returned to members in the form of lower
loan rates and higher savings rates. It mesmerizes me every time I hear it. I
would like to get a transcript, or play the tape of it at the Annual Meeting.
Think about it.
Just my 2c.
Elaine
|
| 492.8 | | TOMK::KRUPINSKI | DCU Election: Vote for REAL Choices | Mon Mar 16 1992 15:53 | 6 |
| Elaine,
I think your 2� is worth $1,000,000.00!!
Tom_K
|