SSA in Crisis: Can It Heal Itself? [LONG]

[[email protected]]

(with apologies to non-U.S. readers)

Most of the postings on this subject follow a predictable pattern:
"what a bunch of stupid/unethical/indifferent (pick one) idiots we have
at SSA; why don't they just [fill in the blank with your favorite
brilliant solution]" A few (including mine) urge patience, support, and
a chance to let the process work.

Reluctantly I'm now changing my position from "be patient" to "do
something." For the specifics, skip to the ACTION ITEM at the end. The
rest of this is just a long-winded description of a discouraging
journey the past few weeks.

My new stance may seem like heresy given my past support of SSA. But
after more than three weeks of working with and communicating with SSA
directors, including the Executive Committee (ExComm), I confess I no
longer have complete confidence that the current organization can deal
properly with this crisis.

Like most, I learned about SSA's tax filing/remittance problems from
Dianne Black-Nixon's letter 3 1/2 weeks ago. While publicly urging
patience, I also offered help to directors I know, including ExComm
members. I agreed with most of their decisions but nevertheless had
concerns. Soon I found myself working behind the scenes with several
directors who shared these concerns, which were centered around
maintaining the confidence and trust of SSA members during a time when
their faith in SSA would be tested.

Disclosures by ExComm implied that certain SSA funds were
misappropriated by SSA's Chief Financial & Administrative Officer
(CFAO), who has since been fired. But even if the CFAO were guilty,
others may share responsibility for allowing this to happen. And as
ExComm continued their investigation, the primary reason for our
concern was conflict of interest.

In the corporate (and non-profit) world, a conflict of interest exists
whenever there is an incentive for people in positions of power and
trust to take actions contrary to the best interests of those who have
placed their trust in these individuals. It does not matter whether
said individuals are trustworthy or competent or even whether they
yield to these temptations. If there's an incentive for them to do the
wrong thing, they are said to be conflicted and those conflicts must be
properly addressed.

The conflicts of interest with SSA's crisis relate to the fact that
those working to resolve it--i.e., ExComm, the Budget and Finance
Committee (FinComm), and SSA's accounting firm--potentially share
responsibility for allowing it to occur. I would include SSA Executive
Director Dennis Wright (ED) in this group but ExComm has been careful
to give the impression that they are managing this situation, not the
ED.

Much outcry on this forum has focused on the decision to forgo annual
audits. In my opinion, this misses the mark. To the best of my
recollection as a former director (for nine years in the mid 1990s
through early 2002, including service on ExComm), previous FinComms
elected to have annual reviews performed by Johnson, Miller, SSA's
public accounting firm (CPA) because they were much less expensive than
a full audit (if I recall correctly, on the order of $20,000 less) yet
provided some assurance that material problems would be uncovered.

For those of you without financial backgrounds, there are three levels
of involvement by a CPA with a client. For a "compilation," the CPA
simply cranks out standard-format statements using the client's books
and records. If the numbers add up, the CPA doesn't do much checking;
they just make it look pretty. For a "review," (which is what I believe
SSA had in prior years), the CPA goes a step further and attempts to
uncover material problems. They offer no guarantees but at least the
accountants look under the hood, so to speak. An "audit" (called for by
the By-Laws) involves many more tests and checks based on which the CPA
expresses an opinion as to whether the results conform to generally
accepted accounting principles. An audit provides the highest level of
assurance but, of course, costs the most, because of the extra work
involved and also the liability assumed when expressing an opinion.

In the past, the annual review plus the close relationship between the
CPA and FinComm--who played a very active role in the SSA's finances at
that time--plus performing an occasional full audit made the question
one of economics as well as the By-Laws. In effect, FinComm made the
decision to self insure, judging that an occasional loss, though
unlikely, would still be less than the accumulated added cost of doing
an audit every year. I suspect that may still turn out to be true
despite the magnitude of the potential loss. I recall that the Board
was made aware of this policy (but not asked to approve it, per se) on
at least one occasion while I was a director but I cannot be certain.

In my opinion, then, the critical question is whether FinComm retained
Johnson, Miller to continue preparing SSA's annual financial
statements, and more specifically to do annual reviews. ExComm's
disclosures indicate they did not.

Here's where the potential conflicts arise. Good governance calls for
FinComm to retain the CPA, who would report directly to them (not to
the CFAO or the ED or ExComm or Board), to prepare the annual financial
statements (with a review or, under the By-Laws, an audit). ExComm
meeting minutes note that Johnson, Miller appears not to have been
retained to do any such work after 2002. If FinComm did retain them, in
writing or orally, then Johnson, Miller may (and I emphasize the word
"may") have some culpability and there is an inherent conflict with
their continuing to work on the SSA account. In that case, it gets
messier: ExComm meeting minutes indicate that Johnson, Miller selected
the lawyer in Hobbs that SSA engaged. This attorney quickly recommended
that SSA give Johnson, Miller "carte blanche to do what they needed
with the SSA financial records."

On the other hand, if FinComm did not retain Johnson, Miller, then
FinComm itself may (again, "may") have some culpability, perhaps shared
by ExComm and the Board (although directors could argue they acted in
reliance on FinComm) and there is an inherent conflict with their
playing a key role in this investigation.

It's very important to reiterate that competence and trustworthiness
are irrelevant to this discussion. It doesn't matter whether the CPA or
FinComm or ExComm did anything wrong, intentionally or otherwise. And
I'm not suggesting they did. On the contrary, I've been generally
impressed with the work done by ExComm so far. What matters is that
people who may have legal liability and therefore a vested interest in
the outcome are deeply involved in this investigation. That's a classic
conflict of interest. And it's a recipe for losing the confidence of
SSA members at a time when we need it most.

One remedy for conflict of interest is disclosure. Depending on your
point of view, disclosure to date has been adequate but sometimes
reluctant.

Another remedy is bringing in new people to do the investigative and
remediation work. This is risky. Those who know the most about SSA and
are in the best position to help are probably already involved. It's
difficult enough to get competent volunteers, much less to work for
free in Hobbs going through accounting records and meeting with
attorneys, bankers, the IRS, etc.

A third and, I believe, best remedy is an independent group to monitor
the actions of ExComm, the accountants, the attorney(s), staff, and
others involved. This is where the discussions with the concerned
directors quickly arrived. Ultimately this resulted in a formal
proposal for an Oversight Task Force (OTF). Four SSA members were
prevailed upon by these directors to serve on the OTF: myself and three
other individuals--a highly experienced accountant, an attorney, and a
successful businessman. Because of my prior Board service, I initially
declined to serve on the OTF but was persuaded by the two concerned
directors because of my knowledge of SSA, my business background, and
the fact that my tenure ended in early 2002, prior to the Larry
Sanderson affair.

The OTF proposal was made to the full Board by one of these concerned
directors approximately two weeks ago with, unfortunately, a generally
negative reaction.

How could this happen? Well, some directors had genuine questions about
certain provisions in the OTF proposal but I believe the negative
reaction was due in great part to misunderstanding the OTF's purpose.
Instead of oversight (i.e., monitoring, not decision making), some saw
this as an attempt to usurp power from the Board or ExComm. Some feared
it could interfere with and/or delay the investigation or reveal
confidential information. Others viewed it as a no-confidence vote. In
frustration, I "recused" myself from participation on the OTF and made
a direct appeal to the Board explaining OTF's purpose in more detail
and arguing that it was the Board's fiduciary duty to take action to
oversee the activities of ExComm, FinComm, and others who were
conflicted.

With this clarification, responses to our proposal were gratifyingly
more favorable. In fact, ExComm subsequently expressed their support
for the OTF. To be fair, at least some ExComm members (including Dianne
Black-Nixon) had voiced support all along.

That was nearly two weeks ago. Since then, nothing much has happened.
ExComm continues to manage the investigation and to make decisions. My
sense is that there may be debate even within ExComm on how to proceed.
More than a week ago, one ExComm member emailed me to say it would be
not be practical to hold a tele-conference special Board meeting for
all 26 directors and suggested delaying action on the OTF until the
scheduled Board meeting at the end of this month. My response was that
with every passing day, decisions were being made that could be
criticized by SSA members and should be overseen by an independent
body. I often participate in conference calls with at least that many
people dispersed over the U.S. and India and do not think a properly
managed special meeting--with one agenda item--would be terribly
difficult. Rightly or wrongly, I interpreted this as foot dragging. If
ExComm had supported the OTF with the same admirable alacrity with
which they jumped on the initial disclosure of the tax problems, the
OTF would already be at work and I would not be writing what some will
doubtless interpret as a disloyal or disruptive public posting.

ExComm believes it would be inappropriate for them to charter the OTF
without full Board approval. They have a point, but this reasoning
leads inexorably to the conclusion that, absent oversight, ExComm
should not be making major decisions about the investigation or
corrective action, either.

Ironically, with one troubling exception (see below), I'm less
concerned with what ExComm is actually doing in Hobbs than with how SSA
members may come to perceive or question their actions. To date, ExComm
has moved decisively to manage a tough problem and it's difficult to
quarrel with their actions.

But many members still have a sense that a previous ExComm attempted to
cover up the Larry Sanderson expense account scandal three years ago.
We cannot afford the same cynicism, or worse, now. While most members
understand that some things must remain confidential for legal reasons,
they are uncomfortable or angry if they suspect they are not getting
the real story. And on that score, ExComm's inaction is troubling.

I mentioned an exception, and it's a big one: how responsibility for
this problem is being assigned. ExComm's communications have emphasized
the ED's failure to inform the Board of the non-filing of tax
information returns. At the same time, however, ExComm has minimized
the "errors of omission" of the ExComm/FinComm/Board in not retaining
the CPA to examine the SSA's annual financial statements.

In fact, both lapses are errors of omission. Yet my impression is that
the ED is being positioned as the one most responsible for allowing
this crisis while FinComm's failure to act is being dismissed. For that
matter, ExComm admits that the CFAO reported directly to the Board, not
the ED, until mid 2005 so there is ample reason to share responsibility
for this. While I do not have the facts available to ExComm, the
questions raised are precisely the reason that independent oversight is
needed over those who find themselves in conflicted positions, for
their sake as well as the members'. And it is needed immediately, not
next week or the week after that or after the next major staff or
organizational decision is made.

If this were a public corporation, plaintiffs' attorneys would already
be circling like vultures with the prospect that directors could be
sued and found guilty of breach of their fiduciary duty, in particular
those on FinComm and, likely, ExComm. But there's not enough money here
to interest them. Nor do I believe we should necessarily seek to punish
whomever may have contributed to this debacle. This was a failure,
albeit a predictable one, of a flawed system. Yet I don't think we
ought to sweep anything under the rug, either. I believe most SSA
members would readily forgive the unwitting errors of volunteer
directors so long as they believe they are being dealt with
forthrightly.

I apologize to those I know and respect on the Board and ExComm who are
dedicated, well intentioned, and working hard in thankless positions.
But I fear that some of them do not fully understand the danger that
their inaction will increase the cynicism and apathy already evident in
many SSA members. The lack of urgency and reluctance to initiate
oversight by ExComm and the directors alike suggest that some of them
still don't "get it."

Despite protestations to the contrary, there is a tendency in times
like this for ExComm and the Board to "circle the wagons." It's a
natural human response to threats, both from the original problem and
from outraged SSA members who want someone, anyone, to pay in blood. It
is a tendency against which we must fight hard if we are to maintain
the trust of our members.

Sadly, at this point individuals who generously agreed to serve on the
OTF weeks ago are growing cynical about the willingness of SSA to
address its problems. Clearly I am, too.

On a positive note, I see this unfortunate crisis as a wonderful
opportunity to make major changes to SSA to improve its financial
position and increase its effectiveness. The current Board structure is
indeed cumbersome and ineffective. It also makes sense to examine which
functions the SSA should perform and whether some of these should be
outsourced. And I agree with those who believe we should explore
locations other than Hobbs. We have a chance to "start over" with a
clean sheet of paper...without losing those elements of SSA that are
critical. Yet what I have seen in the past 3+ weeks leaves me worried
that we will squander this opportunity.

ACTION ITEM: Please contact your directors and, while offering your
continuing support and trust, urge them to demand the Oversight Task
Force or something like it be put in place immediately. All of
us--members, directors, ExComm, and staff alike--need the clarity and
assurance that only an independent observer can provide.

In the meantime, please maintain the degree of civility on this forum
that I hope you would if the discussion were taking place in person.
Ironically, the offensive and irresponsible behavior of some
participants on rec.aviation.soaring alienates most SSA members and
encourages our leadership, with some justification, to dismiss these
critics as just a bunch of loudmouth idiots. Those who insist on
popping off indiscriminately with wild allegations, accusations, and
statements of opinion-as-fact serve no one but their own egos. Their
actions--presuming they actually care about the future of SSA and the
great things it has and can still do for soaring pilots in this
country--are counterproductive.

Chip Bearden
SSA Member since 1965

[Don Johnstone]

I apologise for responding to this at the top but if
I put it where I should it's a long scoll. As a complete
outsider I have to say that the biggest problem the
management of SSA face is one of credibility. It seems
to me as an outsider that every few years the SSA tries
to tear itself to bits on a public forum and this is
not very attractive. I can only hazard a guess as to
the feelings of the ordinary members.
Whichever way you look at this the only way to restore
credibility is to have the problem looked at by an
independent body who's credibility is unimpeachable.
This may prove to be a difficult task as those who
are most qualified could also be thought to be too
close to the organisation. Perhaps it might be considered
appropriate to second into the independent body a complete
outsider, a senior executive from a foreign gliding
or similar USA based GA organisation, not to judge
the detail or make pronouncements on USA law, but to
provide a completely independent person with no conflict
of interest or indeed interest in the outcome.
You may feel that as an outsider it is none of my damm
business and of course you would be right, it isn't,
but anything is better that seeing glider pilots at
each others throats. Right now perception is more important
than truth to many.
Of course there will be those who will never be satisfied
and that has to be accepted, you can only do the best
you can.

At 20:18 26 September 2006, wrote:
>(with apologies to non-U.S. readers)
>
>Most of the postings on this subject follow a predictable
>pattern:
>'what a bunch of stupid/unethical/indifferent (pick
>one) idiots we have
>at SSA; why don't they just [fill in the blank with
>your favorite
>brilliant solution]' A few (including mine) urge patience,
>support, and
>a chance to let the process work.
>
>Reluctantly I'm now changing my position from 'be patient'
>to 'do
>something.' For the specifics, skip to the ACTION ITEM
>at the end. The
>rest of this is just a long-winded description of a
>discouraging
>journey the past few weeks.
>
>My new stance may seem like heresy given my past support
>of SSA. But
>after more than three weeks of working with and communicating
>with SSA
>directors, including the Executive Committee (ExComm),
>I confess I no
>longer have complete confidence that the current organization
>can deal
>properly with this crisis.
>
>Like most, I learned about SSA's tax filing/remittance
>problems from
>Dianne Black-Nixon's letter 3 1/2 weeks ago. While
>publicly urging
>patience, I also offered help to directors I know,
>including ExComm
>members. I agreed with most of their decisions but
>nevertheless had
>concerns. Soon I found myself working behind the scenes
>with several
>directors who shared these concerns, which were centered
>around
>maintaining the confidence and trust of SSA members
>during a time when
>their faith in SSA would be tested.
>
>Disclosures by ExComm implied that certain SSA funds
>were
>misappropriated by SSA's Chief Financial & Administrative
>Officer
>(CFAO), who has since been fired. But even if the CFAO
>were guilty,
>others may share responsibility for allowing this to
>happen. And as
>ExComm continued their investigation, the primary reason
>for our
>concern was conflict of interest.
>
>In the corporate (and non-profit) world, a conflict
>of interest exists
>whenever there is an incentive for people in positions
>of power and
>trust to take actions contrary to the best interests
>of those who have
>placed their trust in these individuals. It does not
>matter whether
>said individuals are trustworthy or competent or even
>whether they
>yield to these temptations. If there's an incentive
>for them to do the
>wrong thing, they are said to be conflicted and those
>conflicts must be
>properly addressed.
>
>The conflicts of interest with SSA's crisis relate
>to the fact that
>those working to resolve it--i.e., ExComm, the Budget
>and Finance
>Committee (FinComm), and SSA's accounting firm--potentially
>share
>responsibility for allowing it to occur. I would include
>SSA Executive
>Director Dennis Wright (ED) in this group but ExComm
>has been careful
>to give the impression that they are managing this
>situation, not the
>ED.
>
>Much outcry on this forum has focused on the decision
>to forgo annual
>audits. In my opinion, this misses the mark. To the
>best of my
>recollection as a former director (for nine years in
>the mid 1990s
>through early 2002, including service on ExComm), previous
>FinComms
>elected to have annual reviews performed by Johnson,
>Miller, SSA's
>public accounting firm (CPA) because they were much
>less expensive than
>a full audit (if I recall correctly, on the order of
>$20,000 less) yet
>provided some assurance that material problems would
>be uncovered.
>
>For those of you without financial backgrounds, there
>are three levels
>of involvement by a CPA with a client. For a 'compilation,'
>the CPA
>simply cranks out standard-format statements using
>the client's books
>and records. If the numbers add up, the CPA doesn't
>do much checking;
>they just make it look pretty. For a 'review,' (which
>is what I believe
>SSA had in prior years), the CPA goes a step further
>and attempts to
>uncover material problems. They offer no guarantees
>but at least the
>accountants look under the hood, so to speak. An 'audit'
>(called for by
>the By-Laws) involves many more tests and checks based
>on which the CPA
>expresses an opinion as to whether the results conform
>to generally
>accepted accounting principles. An audit provides the
>highest level of
>assurance but, of course, costs the most, because of
>the extra work
>involved and also the liability assumed when expressing
>an opinion.
>
>In the past, the annual review plus the close relationship
>between the
>CPA and FinComm--who played a very active role in the
>SSA's finances at
>that time--plus performing an occasional full audit
>made the question
>one of economics as well as the By-Laws. In effect,
>FinComm made the
>decision to self insure, judging that an occasional
>loss, though
>unlikely, would still be less than the accumulated
>added cost of doing
>an audit every year. I suspect that may still turn
>out to be true
>despite the magnitude of the potential loss. I recall
>that the Board
>was made aware of this policy (but not asked to approve
>it, per se) on
>at least one occasion while I was a director but I
>cannot be certain.
>
>In my opinion, then, the critical question is whether
>FinComm retained
>Johnson, Miller to continue preparing SSA's annual
>financial
>statements, and more specifically to do annual reviews.
>ExComm's
>disclosures indicate they did not.
>
>Here's where the potential conflicts arise. Good governance
>calls for
>FinComm to retain the CPA, who would report directly
>to them (not to
>the CFAO or the ED or ExComm or Board), to prepare
>the annual financial
>statements (with a review or, under the By-Laws, an
>audit). ExComm
>meeting minutes note that Johnson, Miller appears not
>to have been
>retained to do any such work after 2002. If FinComm
>did retain them, in
>writing or orally, then Johnson, Miller may (and I
>emphasize the word
>'may') have some culpability and there is an inherent
>conflict with
>their continuing to work on the SSA account. In that
>case, it gets
>messier: ExComm meeting minutes indicate that Johnson,
>Miller selected
>the lawyer in Hobbs that SSA engaged. This attorney
>quickly recommended
>that SSA give Johnson, Miller 'carte blanche to do
>what they needed
>with the SSA financial records.'
>
>On the other hand, if FinComm did not retain Johnson,
>Miller, then
>FinComm itself may (again, 'may') have some culpability,
>perhaps shared
>by ExComm and the Board (although directors could argue
>they acted in
>reliance on FinComm) and there is an inherent conflict
>with their
>playing a key role in this investigation.
>
>It's very important to reiterate that competence and
>trustworthiness
>are irrelevant to this discussion. It doesn't matter
>whether the CPA or
>FinComm or ExComm did anything wrong, intentionally
>or otherwise. And
>I'm not suggesting they did. On the contrary, I've
>been generally
>impressed with the work done by ExComm so far. What
>matters is that
>people who may have legal liability and therefore a
>vested interest in
>the outcome are deeply involved in this investigation.
>That's a classic
>conflict of interest. And it's a recipe for losing
>the confidence of
>SSA members at a time when we need it most.
>
>One remedy for conflict of interest is disclosure.
>Depending on your
>point of view, disclosure to date has been adequate
>but sometimes
>reluctant.
>
>Another remedy is bringing in new people to do the
>investigative and
>remediation work. This is risky. Those who know the
>most about SSA and
>are in the best position to help are probably already
>involved. It's
>difficult enough to get competent volunteers, much
>less to work for
>free in Hobbs going through accounting records and
>meeting with
>attorneys, bankers, the IRS, etc.
>
>A third and, I believe, best remedy is an independent
>group to monitor
>the actions of ExComm, the accountants, the attorney(s),
>staff, and
>others involved. This is where the discussions with
>the concerned
>directors quickly arrived. Ultimately this resulted
>in a formal
>proposal for an Oversight Task Force (OTF). Four SSA
>members were
>prevailed upon by these directors to serve on the OTF:
>myself and three
>other individuals--a highly experienced accountant,
>an attorney, and a
>successful businessman. Because of my prior Board service,
>I initially
>declined to serve on the OTF but was persuaded by the
>two concerned
>directors because of my knowledge of SSA, my business
>background, and
>the fact that my tenure ended in early 2002, prior
>to the Larry
>Sanderson affair.
>
>The OTF proposal was made to the full Board by one
>of these concerned
>directors approximately two weeks ago with, unfortunately,
>a generally
>negative reaction.
>
>How could this happen? Well, some directors had genuine
>questions about
>certain provisions in the OTF proposal but I believe
>the negative
>reaction was due in great part to misunderstanding
>the OTF's purpose.
>Instead of oversight (i.e., monitoring, not decision
>making), some saw
>this as an attempt to usurp power from the Board or
>ExComm. Some feared
>it could interfere with and/or delay the investigation
>or reveal
>confidential information. Others viewed it as a no-confidence
>vote. In
>frustration, I 'recused' myself from participation
>on the OTF and made
>a direct appeal to the Board explaining OTF's purpose
>in more detail
>and arguing that it was the Board's fiduciary duty
>to take action to
>oversee the activities of ExComm, FinComm, and others
>who were
>conflicted.
>
>With this clarification, responses to our proposal
>were gratifyingly
>more favorable. In fact, ExComm subsequently expressed
>their support
>for the OTF. To be fair, at least some ExComm members
>(including Dianne
>Black-Nixon) had voiced support all along.
>
>That was nearly two weeks ago. Since then, nothing
>much has happened.
>ExComm continues to manage the investigation and to
>make decisions. My
>sense is that there may be debate even within ExComm
>on how to proceed.
>More than a week ago, one ExComm member emailed me
>to say it would be
>not be practical to hold a tele-conference special
>Board meeting for
>all 26 directors and suggested delaying action on the
>OTF until the
>scheduled Board meeting at the end of this month. My
>response was that
>with every passing day, decisions were being made that
>could be
>criticized by SSA members and should be overseen by
>an independent
>body. I often participate in conference calls with
>at least that many
>people dispersed over the U.S. and India and do not
>think a properly
>managed special meeting--with one agenda item--would
>be terribly
>difficult. Rightly or wrongly, I interpreted this as
>foot dragging. If
>ExComm had supported the OTF with the same admirable
>alacrity with
>which they jumped on the initial disclosure of the
>tax problems, the
>OTF would already be at work and I would not be writing
>what some will
>doubtless interpret as a disloyal or disruptive public
>posting.
>
>ExComm believes it would be inappropriate for them
>to charter the OTF
>without full Board approval. They have a point, but
>this reasoning
>leads inexorably to the conclusion that, absent oversight,
>ExComm
>should not be making major decisions about the investigation
>or
>corrective action, either.
>
>Ironically, with one troubling exception (see below),
>I'm less
>concerned with what ExComm is actually doing in Hobbs
>than with how SSA
>members may come to perceive or question their actions.
>To date, ExComm
>has moved decisively to manage a tough problem and
>it's difficult to
>quarrel with their actions.
>
>But many members still have a sense that a previous
>ExComm attempted to
>cover up the Larry Sanderson expense account scandal
>three years ago.
>We cannot afford the same cynicism, or worse, now.
>While most members
>understand that some things must remain confidential
>for legal reasons,
>they are uncomfortable or angry if they suspect they
>are not getting
>the real story. And on that score, ExComm's inaction
>is troubling.
>
>I mentioned an exception, and it's a big one: how responsibility
>for
>this problem is being assigned. ExComm's communications
>have emphasized
>the ED's failure to inform the Board of the non-filing
>of tax
>information returns. At the same time, however, ExComm
>has minimized
>the 'errors of omission' of the ExComm/FinComm/Board
>in not retaining
>the CPA to examine the SSA's annual financial statements.
>
>In fact, both lapses are errors of omission. Yet my
>impression is that
>the ED is being positioned as the one most responsible
>for allowing
>this crisis while FinComm's failure to act is being
>dismissed. For that
>matter, ExComm admits that the CFAO reported directly
>to the Board, not
>the ED, until mid 2005 so there is ample reason to
>share responsibility
>for this. While I do not have the facts available to
>ExComm, the
>questions raised are precisely the reason that independent
>oversight is
>needed over those who find themselves in conflicted
>positions, for
>their sake as well as the members'. And it is needed
>immediately, not
>next week or the week after that or after the next
>major staff or
>organizational decision is made.
>
>If this were a public corporation, plaintiffs' attorneys
>would already
>be circling like vultures with the prospect that directors
>could be
>sued and found guilty of breach of their fiduciary
>duty, in particular
>those on FinComm and, likely, ExComm. But there's not
>enough money here
>to interest them. Nor do I believe we should necessarily
>seek to punish
>whomever may have contributed to this debacle. This
>was a failure,
>albeit a predictable one, of a flawed system. Yet I
>don't think we
>ought to sweep anything under the rug, either. I believe
>most SSA
>members would readily forgive the unwitting errors
>of volunteer
>directors so long as they believe they are being dealt
>with
>forthrightly.
>
>I apologize to those I know and respect on the Board
>and ExComm who are
>dedicated, well intentioned, and working hard in thankless
>positions.
>But I fear that some of them do not fully understand
>the danger that
>their inaction will increase the cynicism and apathy
>already evident in
>many SSA members. The lack of urgency and reluctance
>to initiate
>oversight by ExComm and the directors alike suggest
>that some of them
>still don't 'get it.'
>
>Despite protestations to the contrary, there is a tendency
>in times
>like this for ExComm and the Board to 'circle the wagons.'
>It's a
>natural human response to threats, both from the original
>problem and
>from outraged SSA members who want someone, anyone,
>to pay in blood. It
>is a tendency against which we must fight hard if we
>are to maintain
>the trust of our members.
>
>Sadly, at this point individuals who generously agreed
>to serve on the
>OTF weeks ago are growing cynical about the willingness
>of SSA to
>address its problems. Clearly I am, too.
>
>On a positive note, I see this unfortunate crisis as
>a wonderful
>opportunity to make major changes to SSA to improve
>its financial
>position and increase its effectiveness. The current
>Board structure is
>indeed cumbersome and ineffective. It also makes sense
>to examine which
>functions the SSA should perform and whether some of
>these should be
>outsourced. And I agree with those who believe we should
>explore
>locations other than Hobbs. We have a chance to 'start
>over' with a
>clean sheet of paper...without losing those elements
>of SSA that are
>critical. Yet what I have seen in the past 3+ weeks
>leaves me worried
>that we will squander this opportunity.
>
>ACTION ITEM: Please contact your directors and, while
>offering your
>continuing support and trust, urge them to demand the
>Oversight Task
>Force or something like it be put in place immediately.
>All of
>us--members, directors, ExComm, and staff alike--need
>the clarity and
>assurance that only an independent observer can provide.
>
>In the meantime, please maintain the degree of civility
>on this forum
>that I hope you would if the discussion were taking
>place in person.
>Ironically, the offensive and irresponsible behavior
>of some
>participants on rec.aviation.soaring alienates most
>SSA members and
>encourages our leadership, with some justification,
>to dismiss these
>critics as just a bunch of loudmouth idiots. Those
>who insist on
>popping off indiscriminately with wild allegations,
>accusations, and
>statements of opinion-as-fact serve no one but their
>own egos. Their
>actions--presuming they actually care about the future
>of SSA and the
>great things it has and can still do for soaring pilots
>in this
>country--are counterproductive.
>
>Chip Bearden
>SSA Member since 1965
>
>

[5-BG]

Chip;
Thank you for the time it took for you to carefully write your message. There was much to digest, and I have several thoughts/responses.
1. Overall, I got the impression that you were going "public" with some of your thoughts because you tried working from the inside and got nowhere against an entrenched power that was circling the wagons. This represents one of the great mistakes that continues to plague the ssa. A small minority of power players simply cannot run a non profit organization which depends upon the support of members, many of whom feel disenfranchised.

2. I have written to the excom on several occasions. Immediately upon reading the first note from the chair, I strongly urged the entire board to resign and to have a master appointed to oversee the reorganization, preferably under court supervision. At that point the ssa was insolvent and it was appropriate for a bankruptcy court to appoint a master. Since the financial issue of the unpaid taxes has evidently been resolved via a loan from the soaring foundation ( which is controlled by the excom), I am not sure if bankruptcy is still a viable option for getting a master involved. HOWEVER, for the board to have decided to borrow from the foundation is another decision which has conflict written all over it and in the long run may NOT have been in the best interests of the ssa or the foundation. Non payment of federal withholding is a PERSONAL LIABILITY to the ED, AND TO THE BOARD!!!. So lets be real clear about what they did.. They paid the taxes and got out from under personal liability. In my opinion, this was a major driver in their decision making over the last few weeks. They chose to MANAGE the situation themselves rather than to expose themselves to leins from the IRS. They have cloaked this decision in rhetoric that is thin at best.
I have not recieved any responses from the excom to several messages.

3. I somewhat DISAGREE with your analysis of the situation re the accountants.
a. the BOARD DECIDED to forgo the audit. it was an act of COMMISSION that they have publically acknowledged. Not an act of OMISSION.

b. The association, the board,the excom and the ED are all controlled by the bylaws. Being a volunteer does not excuse noncompliance, especially when done OVERTLY.

c. I believe that you are a bit off track when you imply that the LEVEL of service purchased from the accountants limits their ( the accounts) liability. Likewise, i believe that your implication that the accountants worked for someone other than the ASOCIATION is off track. While the finance committee or the ED or the chair could be responsible for the selection and determination of the scope of services purchased, THE ACCOUNTANTS WORK FOR THE ASSOCIATION. Regardless of the scope of the assignment, they evidently had knowledge for years that returns and reports were not being filed in a timely manner. The chair informed us that they complained several times to the ed that they were not recieving adequate information from the cfo.. He was evidently unable or unwilling to address these questions from the accountants.
It is my belief that ethical and responsible standards of conduct REQUIRE them to have brought these problems to the attention of the fin com and or to the chair of the board. I cannot understand how a firm could NOT have done this when faced with the certain knowledge that timely reports were not being prepared and filed. At the very least they should have formally RESIGNED the account when faced with continued inaction. Not doing so puts them right in the middle of the problem. Having them do the forensic accounting puts them further in the hole.

4. In my opinion, the real short term problems stems from the SSA insurance policy which insures against fraud and misdeeds by inside officers and probably the board as well. The society will be reimbursed for monies lost due to fraud and other willful acts. BUT THE INSURANCE COMPANY WILL GO AFTER THOSE RESPONSIBLE!! So to the extent that the CFO or the ED or the Board took actions which cause the insurance company to pay out a claim to the society, THEY WILL BE SUED by the insurance company. The concept of "deep pocket" applies here.
It is my opinion that the attorney who, by your account, was suggested by the accountants, has explained this in detail
I find it interesting that NO mention of insurance coverage has been made by the chair to date.. My conclusion is that perhaps all involved are seeking to resolve the financial problems WITHOUT accessing the policy because they have been informed of their legal liability. As an aside, most directors policies do NOT cover legal expenses resulting from acts that were unlawful. In plain english... if the board files a claim, they are probably going to get sued individually by the insurance company and neither the ssa nor the insurance co will be able to pay their legal costs of defense.

This is why they should have resigned, but, imho did not.

5. you wrote "plus performing an occasional full audit made the question
one of economics as well as the By-Laws. In effect, FinComm made the
decision to self insure, judging that an occasional loss, though
unlikely, would still be less than the accumulated added cost of doing
an audit every year. "
You have just hit upon a key issue. A small group of people made a decision to self insure and to make a decision out of economic necissity. This was ILLIGAL. economics do not trump the bylaws. restated, .. the fincom and the board choose to violate the bylaws. they choose not to AMEND them. What they did was wrong, irrisponsible, actionable and is biting them in the ass.

6. you wrote "Sadly, at this point individuals who generously agreed to serve on the
OTF weeks ago are growing cynical about the willingness of SSA to
address its problems. Clearly I am, too."
just how cynical do you feel the average member is today?? How is that member going to feel about having his dues raised or his pretty magizine eliminated so that the ssa can repay the debt to the foundation?? especially if the board decides not to access the insurance money???

Again a single MASTER with authority vested by a court could resolve these issues, call a general reorganization election and present several alternative business/governance models to the membership and do an impartial job of restructuring. It would be expensive, some people would get sued, but the society would have a chance. As thing are going now, members are feeling less and less a part of the process, mistakes are being compounded and the situation is getting worse. Who in their right mind is going to volunteer to be a director??
Rather than tap the soaring foundation trust fund to pay the taxes, it would be more appropriate for the society to collect from the insurance company and then tap into the foundation for expenses related to the restructuring and reorganization. I would support that, and am very opposed to using the resources of the foundation to get those in power off the hook with the irs.

The underlying problem remains that a very small group of insiders continues to run the organization and, as you stated, circles the wagons when confronted with major problems.


> wrote in message ups.com...
(with apologies to non-U.S. readers)

Most of the postings on this subject follow a predictable pattern:
"what a bunch of stupid/unethical/indifferent (pick one) idiots we have
at SSA; why don't they just [fill in the blank with your favorite
brilliant solution]" A few (including mine) urge patience, support, and
a chance to let the process work.

Reluctantly I'm now changing my position from "be patient" to "do
something." For the specifics, skip to the ACTION ITEM at the end. The
rest of this is just a long-winded description of a discouraging
journey the past few weeks.

My new stance may seem like heresy given my past support of SSA. But
after more than three weeks of working with and communicating with SSA
directors, including the Executive Committee (ExComm), I confess I no
longer have complete confidence that the current organization can deal
properly with this crisis.

Like most, I learned about SSA's tax filing/remittance problems from
Dianne Black-Nixon's letter 3 1/2 weeks ago. While publicly urging
patience, I also offered help to directors I know, including ExComm
members. I agreed with most of their decisions but nevertheless had
concerns. Soon I found myself working behind the scenes with several
directors who shared these concerns, which were centered around
maintaining the confidence and trust of SSA members during a time when
their faith in SSA would be tested.

Disclosures by ExComm implied that certain SSA funds were
misappropriated by SSA's Chief Financial & Administrative Officer
(CFAO), who has since been fired. But even if the CFAO were guilty,
others may share responsibility for allowing this to happen. And as
ExComm continued their investigation, the primary reason for our
concern was conflict of interest.

In the corporate (and non-profit) world, a conflict of interest exists
whenever there is an incentive for people in positions of power and
trust to take actions contrary to the best interests of those who have
placed their trust in these individuals. It does not matter whether
said individuals are trustworthy or competent or even whether they
yield to these temptations. If there's an incentive for them to do the
wrong thing, they are said to be conflicted and those conflicts must be
properly addressed.

The conflicts of interest with SSA's crisis relate to the fact that
those working to resolve it--i.e., ExComm, the Budget and Finance
Committee (FinComm), and SSA's accounting firm--potentially share
responsibility for allowing it to occur. I would include SSA Executive
Director Dennis Wright (ED) in this group but ExComm has been careful
to give the impression that they are managing this situation, not the
ED.

Much outcry on this forum has focused on the decision to forgo annual
audits. In my opinion, this misses the mark. To the best of my
recollection as a former director (for nine years in the mid 1990s
through early 2002, including service on ExComm), previous FinComms
elected to have annual reviews performed by Johnson, Miller, SSA's
public accounting firm (CPA) because they were much less expensive than
a full audit (if I recall correctly, on the order of $20,000 less) yet
provided some assurance that material problems would be uncovered.

For those of you without financial backgrounds, there are three levels
of involvement by a CPA with a client. For a "compilation," the CPA
simply cranks out standard-format statements using the client's books
and records. If the numbers add up, the CPA doesn't do much checking;
they just make it look pretty. For a "review," (which is what I believe
SSA had in prior years), the CPA goes a step further and attempts to
uncover material problems. They offer no guarantees but at least the
accountants look under the hood, so to speak. An "audit" (called for by
the By-Laws) involves many more tests and checks based on which the CPA
expresses an opinion as to whether the results conform to generally
accepted accounting principles. An audit provides the highest level of
assurance but, of course, costs the most, because of the extra work
involved and also the liability assumed when expressing an opinion.

In the past, the annual review plus the close relationship between the
CPA and FinComm--who played a very active role in the SSA's finances at
that time--plus performing an occasional full audit made the question
one of economics as well as the By-Laws. In effect, FinComm made the
decision to self insure, judging that an occasional loss, though
unlikely, would still be less than the accumulated added cost of doing
an audit every year. I suspect that may still turn out to be true
despite the magnitude of the potential loss. I recall that the Board
was made aware of this policy (but not asked to approve it, per se) on
at least one occasion while I was a director but I cannot be certain.

In my opinion, then, the critical question is whether FinComm retained
Johnson, Miller to continue preparing SSA's annual financial
statements, and more specifically to do annual reviews. ExComm's
disclosures indicate they did not.

Here's where the potential conflicts arise. Good governance calls for
FinComm to retain the CPA, who would report directly to them (not to
the CFAO or the ED or ExComm or Board), to prepare the annual financial
statements (with a review or, under the By-Laws, an audit). ExComm
meeting minutes note that Johnson, Miller appears not to have been
retained to do any such work after 2002. If FinComm did retain them, in
writing or orally, then Johnson, Miller may (and I emphasize the word
"may") have some culpability and there is an inherent conflict with
their continuing to work on the SSA account. In that case, it gets
messier: ExComm meeting minutes indicate that Johnson, Miller selected
the lawyer in Hobbs that SSA engaged. This attorney quickly recommended
that SSA give Johnson, Miller "carte blanche to do what they needed
with the SSA financial records."

On the other hand, if FinComm did not retain Johnson, Miller, then
FinComm itself may (again, "may") have some culpability, perhaps shared
by ExComm and the Board (although directors could argue they acted in
reliance on FinComm) and there is an inherent conflict with their
playing a key role in this investigation.

It's very important to reiterate that competence and trustworthiness
are irrelevant to this discussion. It doesn't matter whether the CPA or
FinComm or ExComm did anything wrong, intentionally or otherwise. And
I'm not suggesting they did. On the contrary, I've been generally
impressed with the work done by ExComm so far. What matters is that
people who may have legal liability and therefore a vested interest in
the outcome are deeply involved in this investigation. That's a classic
conflict of interest. And it's a recipe for losing the confidence of
SSA members at a time when we need it most.

One remedy for conflict of interest is disclosure. Depending on your
point of view, disclosure to date has been adequate but sometimes
reluctant.

Another remedy is bringing in new people to do the investigative and
remediation work. This is risky. Those who know the most about SSA and
are in the best position to help are probably already involved. It's
difficult enough to get competent volunteers, much less to work for
free in Hobbs going through accounting records and meeting with
attorneys, bankers, the IRS, etc.

A third and, I believe, best remedy is an independent group to monitor
the actions of ExComm, the accountants, the attorney(s), staff, and
others involved. This is where the discussions with the concerned
directors quickly arrived. Ultimately this resulted in a formal
proposal for an Oversight Task Force (OTF). Four SSA members were
prevailed upon by these directors to serve on the OTF: myself and three
other individuals--a highly experienced accountant, an attorney, and a
successful businessman. Because of my prior Board service, I initially
declined to serve on the OTF but was persuaded by the two concerned
directors because of my knowledge of SSA, my business background, and
the fact that my tenure ended in early 2002, prior to the Larry
Sanderson affair.

The OTF proposal was made to the full Board by one of these concerned
directors approximately two weeks ago with, unfortunately, a generally
negative reaction.

How could this happen? Well, some directors had genuine questions about
certain provisions in the OTF proposal but I believe the negative
reaction was due in great part to misunderstanding the OTF's purpose.
Instead of oversight (i.e., monitoring, not decision making), some saw
this as an attempt to usurp power from the Board or ExComm. Some feared
it could interfere with and/or delay the investigation or reveal
confidential information. Others viewed it as a no-confidence vote. In
frustration, I "recused" myself from participation on the OTF and made
a direct appeal to the Board explaining OTF's purpose in more detail
and arguing that it was the Board's fiduciary duty to take action to
oversee the activities of ExComm, FinComm, and others who were
conflicted.

With this clarification, responses to our proposal were gratifyingly
more favorable. In fact, ExComm subsequently expressed their support
for the OTF. To be fair, at least some ExComm members (including Dianne
Black-Nixon) had voiced support all along.

That was nearly two weeks ago. Since then, nothing much has happened.
ExComm continues to manage the investigation and to make decisions. My
sense is that there may be debate even within ExComm on how to proceed.
More than a week ago, one ExComm member emailed me to say it would be
not be practical to hold a tele-conference special Board meeting for
all 26 directors and suggested delaying action on the OTF until the
scheduled Board meeting at the end of this month. My response was that
with every passing day, decisions were being made that could be
criticized by SSA members and should be overseen by an independent
body. I often participate in conference calls with at least that many
people dispersed over the U.S. and India and do not think a properly
managed special meeting--with one agenda item--would be terribly
difficult. Rightly or wrongly, I interpreted this as foot dragging. If
ExComm had supported the OTF with the same admirable alacrity with
which they jumped on the initial disclosure of the tax problems, the
OTF would already be at work and I would not be writing what some will
doubtless interpret as a disloyal or disruptive public posting.

ExComm believes it would be inappropriate for them to charter the OTF
without full Board approval. They have a point, but this reasoning
leads inexorably to the conclusion that, absent oversight, ExComm
should not be making major decisions about the investigation or
corrective action, either.

Ironically, with one troubling exception (see below), I'm less
concerned with what ExComm is actually doing in Hobbs than with how SSA
members may come to perceive or question their actions. To date, ExComm
has moved decisively to manage a tough problem and it's difficult to
quarrel with their actions.

But many members still have a sense that a previous ExComm attempted to
cover up the Larry Sanderson expense account scandal three years ago.
We cannot afford the same cynicism, or worse, now. While most members
understand that some things must remain confidential for legal reasons,
they are uncomfortable or angry if they suspect they are not getting
the real story. And on that score, ExComm's inaction is troubling.

I mentioned an exception, and it's a big one: how responsibility for
this problem is being assigned. ExComm's communications have emphasized
the ED's failure to inform the Board of the non-filing of tax
information returns. At the same time, however, ExComm has minimized
the "errors of omission" of the ExComm/FinComm/Board in not retaining
the CPA to examine the SSA's annual financial statements.

In fact, both lapses are errors of omission. Yet my impression is that
the ED is being positioned as the one most responsible for allowing
this crisis while FinComm's failure to act is being dismissed. For that
matter, ExComm admits that the CFAO reported directly to the Board, not
the ED, until mid 2005 so there is ample reason to share responsibility
for this. While I do not have the facts available to ExComm, the
questions raised are precisely the reason that independent oversight is
needed over those who find themselves in conflicted positions, for
their sake as well as the members'. And it is needed immediately, not
next week or the week after that or after the next major staff or
organizational decision is made.

If this were a public corporation, plaintiffs' attorneys would already
be circling like vultures with the prospect that directors could be
sued and found guilty of breach of their fiduciary duty, in particular
those on FinComm and, likely, ExComm. But there's not enough money here
to interest them. Nor do I believe we should necessarily seek to punish
whomever may have contributed to this debacle. This was a failure,
albeit a predictable one, of a flawed system. Yet I don't think we
ought to sweep anything under the rug, either. I believe most SSA
members would readily forgive the unwitting errors of volunteer
directors so long as they believe they are being dealt with
forthrightly.

I apologize to those I know and respect on the Board and ExComm who are
dedicated, well intentioned, and working hard in thankless positions.
But I fear that some of them do not fully understand the danger that
their inaction will increase the cynicism and apathy already evident in
many SSA members. The lack of urgency and reluctance to initiate
oversight by ExComm and the directors alike suggest that some of them
still don't "get it."

Despite protestations to the contrary, there is a tendency in times
like this for ExComm and the Board to "circle the wagons." It's a
natural human response to threats, both from the original problem and
from outraged SSA members who want someone, anyone, to pay in blood. It
is a tendency against which we must fight hard if we are to maintain
the trust of our members.

Sadly, at this point individuals who generously agreed to serve on the
OTF weeks ago are growing cynical about the willingness of SSA to
address its problems. Clearly I am, too.

On a positive note, I see this unfortunate crisis as a wonderful
opportunity to make major changes to SSA to improve its financial
position and increase its effectiveness. The current Board structure is
indeed cumbersome and ineffective. It also makes sense to examine which
functions the SSA should perform and whether some of these should be
outsourced. And I agree with those who believe we should explore
locations other than Hobbs. We have a chance to "start over" with a
clean sheet of paper...without losing those elements of SSA that are
critical. Yet what I have seen in the past 3+ weeks leaves me worried
that we will squander this opportunity.

ACTION ITEM: Please contact your directors and, while offering your
continuing support and trust, urge them to demand the Oversight Task
Force or something like it be put in place immediately. All of
us--members, directors, ExComm, and staff alike--need the clarity and
assurance that only an independent observer can provide.

In the meantime, please maintain the degree of civility on this forum
that I hope you would if the discussion were taking place in person.
Ironically, the offensive and irresponsible behavior of some
participants on rec.aviation.soaring alienates most SSA members and
encourages our leadership, with some justification, to dismiss these
critics as just a bunch of loudmouth idiots. Those who insist on
popping off indiscriminately with wild allegations, accusations, and
statements of opinion-as-fact serve no one but their own egos. Their
actions--presuming they actually care about the future of SSA and the
great things it has and can still do for soaring pilots in this
country--are counterproductive.

Chip Bearden
SSA Member since 1965

[5-BG]

don.. you wrote "It seems
to me as an outsider that every few years the SSA tries
to tear itself to bits on a public forum and this is
not very attractive.

it is the only forum we have.

I believe that a court appointed master is along the lines of what you are suggesting.
"Don Johnstone" > wrote in message ...

I apologise for responding to this at the top but if
I put it where I should it's a long scoll. As a complete
outsider I have to say that the biggest problem the
management of SSA face is one of credibility. It seems
to me as an outsider that every few years the SSA tries
to tear itself to bits on a public forum and this is
not very attractive. I can only hazard a guess as to
the feelings of the ordinary members.
Whichever way you look at this the only way to restore
credibility is to have the problem looked at by an
independent body who's credibility is unimpeachable.
This may prove to be a difficult task as those who
are most qualified could also be thought to be too
close to the organisation. Perhaps it might be considered
appropriate to second into the independent body a complete
outsider, a senior executive from a foreign gliding
or similar USA based GA organisation, not to judge
the detail or make pronouncements on USA law, but to
provide a completely independent person with no conflict
of interest or indeed interest in the outcome.
You may feel that as an outsider it is none of my damm
business and of course you would be right, it isn't,
but anything is better that seeing glider pilots at
each others throats. Right now perception is more important
than truth to many.
Of course there will be those who will never be satisfied
and that has to be accepted, you can only do the best
you can.

At 20:18 26 September 2006, wrote:
>(with apologies to non-U.S. readers)
>
>Most of the postings on this subject follow a predictable
>pattern:
>'what a bunch of stupid/unethical/indifferent (pick
>one) idiots we have
>at SSA; why don't they just [fill in the blank with
>your favorite
>brilliant solution]' A few (including mine) urge patience,
>support, and
>a chance to let the process work.
>
>Reluctantly I'm now changing my position from 'be patient'
>to 'do
>something.' For the specifics, skip to the ACTION ITEM
>at the end. The
>rest of this is just a long-winded description of a
>discouraging
>journey the past few weeks.
>
>My new stance may seem like heresy given my past support
>of SSA. But
>after more than three weeks of working with and communicating
>with SSA
>directors, including the Executive Committee (ExComm),
>I confess I no
>longer have complete confidence that the current organization
>can deal
>properly with this crisis.
>
>Like most, I learned about SSA's tax filing/remittance
>problems from
>Dianne Black-Nixon's letter 3 1/2 weeks ago. While
>publicly urging
>patience, I also offered help to directors I know,
>including ExComm
>members. I agreed with most of their decisions but
>nevertheless had
>concerns. Soon I found myself working behind the scenes
>with several
>directors who shared these concerns, which were centered
>around
>maintaining the confidence and trust of SSA members
>during a time when
>their faith in SSA would be tested.
>
>Disclosures by ExComm implied that certain SSA funds
>were
>misappropriated by SSA's Chief Financial & Administrative
>Officer
>(CFAO), who has since been fired. But even if the CFAO
>were guilty,
>others may share responsibility for allowing this to
>happen. And as
>ExComm continued their investigation, the primary reason
>for our
>concern was conflict of interest.
>
>In the corporate (and non-profit) world, a conflict
>of interest exists
>whenever there is an incentive for people in positions
>of power and
>trust to take actions contrary to the best interests
>of those who have
>placed their trust in these individuals. It does not
>matter whether
>said individuals are trustworthy or competent or even
>whether they
>yield to these temptations. If there's an incentive
>for them to do the
>wrong thing, they are said to be conflicted and those
>conflicts must be
>properly addressed.
>
>The conflicts of interest with SSA's crisis relate
>to the fact that
>those working to resolve it--i.e., ExComm, the Budget
>and Finance
>Committee (FinComm), and SSA's accounting firm--potentially
>share
>responsibility for allowing it to occur. I would include
>SSA Executive
>Director Dennis Wright (ED) in this group but ExComm
>has been careful
>to give the impression that they are managing this
>situation, not the
>ED.
>
>Much outcry on this forum has focused on the decision
>to forgo annual
>audits. In my opinion, this misses the mark. To the
>best of my
>recollection as a former director (for nine years in
>the mid 1990s
>through early 2002, including service on ExComm), previous
>FinComms
>elected to have annual reviews performed by Johnson,
>Miller, SSA's
>public accounting firm (CPA) because they were much
>less expensive than
>a full audit (if I recall correctly, on the order of
>$20,000 less) yet
>provided some assurance that material problems would
>be uncovered.
>
>For those of you without financial backgrounds, there
>are three levels
>of involvement by a CPA with a client. For a 'compilation,'
>the CPA
>simply cranks out standard-format statements using
>the client's books
>and records. If the numbers add up, the CPA doesn't
>do much checking;
>they just make it look pretty. For a 'review,' (which
>is what I believe
>SSA had in prior years), the CPA goes a step further
>and attempts to
>uncover material problems. They offer no guarantees
>but at least the
>accountants look under the hood, so to speak. An 'audit'
>(called for by
>the By-Laws) involves many more tests and checks based
>on which the CPA
>expresses an opinion as to whether the results conform
>to generally
>accepted accounting principles. An audit provides the
>highest level of
>assurance but, of course, costs the most, because of
>the extra work
>involved and also the liability assumed when expressing
>an opinion.
>
>In the past, the annual review plus the close relationship
>between the
>CPA and FinComm--who played a very active role in the
>SSA's finances at
>that time--plus performing an occasional full audit
>made the question
>one of economics as well as the By-Laws. In effect,
>FinComm made the
>decision to self insure, judging that an occasional
>loss, though
>unlikely, would still be less than the accumulated
>added cost of doing
>an audit every year. I suspect that may still turn
>out to be true
>despite the magnitude of the potential loss. I recall
>that the Board
>was made aware of this policy (but not asked to approve
>it, per se) on
>at least one occasion while I was a director but I
>cannot be certain.
>
>In my opinion, then, the critical question is whether
>FinComm retained
>Johnson, Miller to continue preparing SSA's annual
>financial
>statements, and more specifically to do annual reviews.
>ExComm's
>disclosures indicate they did not.
>
>Here's where the potential conflicts arise. Good governance
>calls for
>FinComm to retain the CPA, who would report directly
>to them (not to
>the CFAO or the ED or ExComm or Board), to prepare
>the annual financial
>statements (with a review or, under the By-Laws, an
>audit). ExComm
>meeting minutes note that Johnson, Miller appears not
>to have been
>retained to do any such work after 2002. If FinComm
>did retain them, in
>writing or orally, then Johnson, Miller may (and I
>emphasize the word
>'may') have some culpability and there is an inherent
>conflict with
>their continuing to work on the SSA account. In that
>case, it gets
>messier: ExComm meeting minutes indicate that Johnson,
>Miller selected
>the lawyer in Hobbs that SSA engaged. This attorney
>quickly recommended
>that SSA give Johnson, Miller 'carte blanche to do
>what they needed
>with the SSA financial records.'
>
>On the other hand, if FinComm did not retain Johnson,
>Miller, then
>FinComm itself may (again, 'may') have some culpability,
>perhaps shared
>by ExComm and the Board (although directors could argue
>they acted in
>reliance on FinComm) and there is an inherent conflict
>with their
>playing a key role in this investigation.
>
>It's very important to reiterate that competence and
>trustworthiness
>are irrelevant to this discussion. It doesn't matter
>whether the CPA or
>FinComm or ExComm did anything wrong, intentionally
>or otherwise. And
>I'm not suggesting they did. On the contrary, I've
>been generally
>impressed with the work done by ExComm so far. What
>matters is that
>people who may have legal liability and therefore a
>vested interest in
>the outcome are deeply involved in this investigation.
>That's a classic
>conflict of interest. And it's a recipe for losing
>the confidence of
>SSA members at a time when we need it most.
>
>One remedy for conflict of interest is disclosure.
>Depending on your
>point of view, disclosure to date has been adequate
>but sometimes
>reluctant.
>
>Another remedy is bringing in new people to do the
>investigative and
>remediation work. This is risky. Those who know the
>most about SSA and
>are in the best position to help are probably already
>involved. It's
>difficult enough to get competent volunteers, much
>less to work for
>free in Hobbs going through accounting records and
>meeting with
>attorneys, bankers, the IRS, etc.
>
>A third and, I believe, best remedy is an independent
>group to monitor
>the actions of ExComm, the accountants, the attorney(s),
>staff, and
>others involved. This is where the discussions with
>the concerned
>directors quickly arrived. Ultimately this resulted
>in a formal
>proposal for an Oversight Task Force (OTF). Four SSA
>members were
>prevailed upon by these directors to serve on the OTF:
>myself and three
>other individuals--a highly experienced accountant,
>an attorney, and a
>successful businessman. Because of my prior Board service,
>I initially
>declined to serve on the OTF but was persuaded by the
>two concerned
>directors because of my knowledge of SSA, my business
>background, and
>the fact that my tenure ended in early 2002, prior
>to the Larry
>Sanderson affair.
>
>The OTF proposal was made to the full Board by one
>of these concerned
>directors approximately two weeks ago with, unfortunately,
>a generally
>negative reaction.
>
>How could this happen? Well, some directors had genuine
>questions about
>certain provisions in the OTF proposal but I believe
>the negative
>reaction was due in great part to misunderstanding
>the OTF's purpose.
>Instead of oversight (i.e., monitoring, not decision
>making), some saw
>this as an attempt to usurp power from the Board or
>ExComm. Some feared
>it could interfere with and/or delay the investigation
>or reveal
>confidential information. Others viewed it as a no-confidence
>vote. In
>frustration, I 'recused' myself from participation
>on the OTF and made
>a direct appeal to the Board explaining OTF's purpose
>in more detail
>and arguing that it was the Board's fiduciary duty
>to take action to
>oversee the activities of ExComm, FinComm, and others
>who were
>conflicted.
>
>With this clarification, responses to our proposal
>were gratifyingly
>more favorable. In fact, ExComm subsequently expressed
>their support
>for the OTF. To be fair, at least some ExComm members
>(including Dianne
>Black-Nixon) had voiced support all along.
>
>That was nearly two weeks ago. Since then, nothing
>much has happened.
>ExComm continues to manage the investigation and to
>make decisions. My
>sense is that there may be debate even within ExComm
>on how to proceed.
>More than a week ago, one ExComm member emailed me
>to say it would be
>not be practical to hold a tele-conference special
>Board meeting for
>all 26 directors and suggested delaying action on the
>OTF until the
>scheduled Board meeting at the end of this month. My
>response was that
>with every passing day, decisions were being made that
>could be
>criticized by SSA members and should be overseen by
>an independent
>body. I often participate in conference calls with
>at least that many
>people dispersed over the U.S. and India and do not
>think a properly
>managed special meeting--with one agenda item--would
>be terribly
>difficult. Rightly or wrongly, I interpreted this as
>foot dragging. If
>ExComm had supported the OTF with the same admirable
>alacrity with
>which they jumped on the initial disclosure of the
>tax problems, the
>OTF would already be at work and I would not be writing
>what some will
>doubtless interpret as a disloyal or disruptive public
>posting.
>
>ExComm believes it would be inappropriate for them
>to charter the OTF
>without full Board approval. They have a point, but
>this reasoning
>leads inexorably to the conclusion that, absent oversight,
>ExComm
>should not be making major decisions about the investigation
>or
>corrective action, either.
>
>Ironically, with one troubling exception (see below),
>I'm less
>concerned with what ExComm is actually doing in Hobbs
>than with how SSA
>members may come to perceive or question their actions.
>To date, ExComm
>has moved decisively to manage a tough problem and
>it's difficult to
>quarrel with their actions.
>
>But many members still have a sense that a previous
>ExComm attempted to
>cover up the Larry Sanderson expense account scandal
>three years ago.
>We cannot afford the same cynicism, or worse, now.
>While most members
>understand that some things must remain confidential
>for legal reasons,
>they are uncomfortable or angry if they suspect they
>are not getting
>the real story. And on that score, ExComm's inaction
>is troubling.
>
>I mentioned an exception, and it's a big one: how responsibility
>for
>this problem is being assigned. ExComm's communications
>have emphasized
>the ED's failure to inform the Board of the non-filing
>of tax
>information returns. At the same time, however, ExComm
>has minimized
>the 'errors of omission' of the ExComm/FinComm/Board
>in not retaining
>the CPA to examine the SSA's annual financial statements.
>
>In fact, both lapses are errors of omission. Yet my
>impression is that
>the ED is being positioned as the one most responsible
>for allowing
>this crisis while FinComm's failure to act is being
>dismissed. For that
>matter, ExComm admits that the CFAO reported directly
>to the Board, not
>the ED, until mid 2005 so there is ample reason to
>share responsibility
>for this. While I do not have the facts available to
>ExComm, the
>questions raised are precisely the reason that independent
>oversight is
>needed over those who find themselves in conflicted
>positions, for
>their sake as well as the members'. And it is needed
>immediately, not
>next week or the week after that or after the next
>major staff or
>organizational decision is made.
>
>If this were a public corporation, plaintiffs' attorneys
>would already
>be circling like vultures with the prospect that directors
>could be
>sued and found guilty of breach of their fiduciary
>duty, in particular
>those on FinComm and, likely, ExComm. But there's not
>enough money here
>to interest them. Nor do I believe we should necessarily
>seek to punish
>whomever may have contributed to this debacle. This
>was a failure,
>albeit a predictable one, of a flawed system. Yet I
>don't think we
>ought to sweep anything under the rug, either. I believe
>most SSA
>members would readily forgive the unwitting errors
>of volunteer
>directors so long as they believe they are being dealt
>with
>forthrightly.
>
>I apologize to those I know and respect on the Board
>and ExComm who are
>dedicated, well intentioned, and working hard in thankless
>positions.
>But I fear that some of them do not fully understand
>the danger that
>their inaction will increase the cynicism and apathy
>already evident in
>many SSA members. The lack of urgency and reluctance
>to initiate
>oversight by ExComm and the directors alike suggest
>that some of them
>still don't 'get it.'
>
>Despite protestations to the contrary, there is a tendency
>in times
>like this for ExComm and the Board to 'circle the wagons.'
>It's a
>natural human response to threats, both from the original
>problem and
>from outraged SSA members who want someone, anyone,
>to pay in blood. It
>is a tendency against which we must fight hard if we
>are to maintain
>the trust of our members.
>
>Sadly, at this point individuals who generously agreed
>to serve on the
>OTF weeks ago are growing cynical about the willingness
>of SSA to
>address its problems. Clearly I am, too.
>
>On a positive note, I see this unfortunate crisis as
>a wonderful
>opportunity to make major changes to SSA to improve
>its financial
>position and increase its effectiveness. The current
>Board structure is
>indeed cumbersome and ineffective. It also makes sense
>to examine which
>functions the SSA should perform and whether some of
>these should be
>outsourced. And I agree with those who believe we should
>explore
>locations other than Hobbs. We have a chance to 'start
>over' with a
>clean sheet of paper...without losing those elements
>of SSA that are
>critical. Yet what I have seen in the past 3+ weeks
>leaves me worried
>that we will squander this opportunity.
>
>ACTION ITEM: Please contact your directors and, while
>offering your
>continuing support and trust, urge them to demand the
>Oversight Task
>Force or something like it be put in place immediately.
>All of
>us--members, directors, ExComm, and staff alike--need
>the clarity and
>assurance that only an independent observer can provide.
>
>In the meantime, please maintain the degree of civility
>on this forum
>that I hope you would if the discussion were taking
>place in person.
>Ironically, the offensive and irresponsible behavior
>of some
>participants on rec.aviation.soaring alienates most
>SSA members and
>encourages our leadership, with some justification,
>to dismiss these
>critics as just a bunch of loudmouth idiots. Those
>who insist on
>popping off indiscriminately with wild allegations,
>accusations, and
>statements of opinion-as-fact serve no one but their
>own egos. Their
>actions--presuming they actually care about the future
>of SSA and the
>great things it has and can still do for soaring pilots
>in this
>country--are counterproductive.
>
>Chip Bearden
>SSA Member since 1965
>
>

[Bill Daniels]

Well, no. I think Don is politely suggesting that other national soaring clubs like the BGA and perhaps the DAeC could offer useful outside views in the spirit of a concerned friend and neighbor.

If this is the case, I would take it as a good idea. An outsider can sometimes offer new perspectives and, having no ultimate stake in the matter at hand, may even be heard over the noise.

It would be nice if there were a forum less public than this one where internal matters of the SSA could be discussed by the membership. That there isn't such a forum is perhaps a small part of the problem.

Bill Daniels
"5-BG" <5-bghatesspam @ fake.com> wrote in message ...
don.. you wrote "It seems
to me as an outsider that every few years the SSA tries
to tear itself to bits on a public forum and this is
not very attractive.

it is the only forum we have.

I believe that a court appointed master is along the lines of what you are suggesting.
"Don Johnstone" > wrote in message ...

I apologise for responding to this at the top but if
I put it where I should it's a long scoll. As a complete
outsider I have to say that the biggest problem the
management of SSA face is one of credibility. It seems
to me as an outsider that every few years the SSA tries
to tear itself to bits on a public forum and this is
not very attractive. I can only hazard a guess as to
the feelings of the ordinary members.
Whichever way you look at this the only way to restore
credibility is to have the problem looked at by an
independent body who's credibility is unimpeachable.
This may prove to be a difficult task as those who
are most qualified could also be thought to be too
close to the organisation. Perhaps it might be considered
appropriate to second into the independent body a complete
outsider, a senior executive from a foreign gliding
or similar USA based GA organisation, not to judge
the detail or make pronouncements on USA law, but to
provide a completely independent person with no conflict
of interest or indeed interest in the outcome.
You may feel that as an outsider it is none of my damm
business and of course you would be right, it isn't,
but anything is better that seeing glider pilots at
each others throats. Right now perception is more important
than truth to many.
Of course there will be those who will never be satisfied
and that has to be accepted, you can only do the best
you can.

At 20:18 26 September 2006, wrote:
>(with apologies to non-U.S. readers)
>
>Most of the postings on this subject follow a predictable
>pattern:
>'what a bunch of stupid/unethical/indifferent (pick
>one) idiots we have
>at SSA; why don't they just [fill in the blank with
>your favorite
>brilliant solution]' A few (including mine) urge patience,
>support, and
>a chance to let the process work.
>
>Reluctantly I'm now changing my position from 'be patient'
>to 'do
>something.' For the specifics, skip to the ACTION ITEM
>at the end. The
>rest of this is just a long-winded description of a
>discouraging
>journey the past few weeks.
>
>My new stance may seem like heresy given my past support
>of SSA. But
>after more than three weeks of working with and communicating
>with SSA
>directors, including the Executive Committee (ExComm),
>I confess I no
>longer have complete confidence that the current organization
>can deal
>properly with this crisis.
>
>Like most, I learned about SSA's tax filing/remittance
>problems from
>Dianne Black-Nixon's letter 3 1/2 weeks ago. While
>publicly urging
>patience, I also offered help to directors I know,
>including ExComm
>members. I agreed with most of their decisions but
>nevertheless had
>concerns. Soon I found myself working behind the scenes
>with several
>directors who shared these concerns, which were centered
>around
>maintaining the confidence and trust of SSA members
>during a time when
>their faith in SSA would be tested.
>
>Disclosures by ExComm implied that certain SSA funds
>were
>misappropriated by SSA's Chief Financial & Administrative
>Officer
>(CFAO), who has since been fired. But even if the CFAO
>were guilty,
>others may share responsibility for allowing this to
>happen. And as
>ExComm continued their investigation, the primary reason
>for our
>concern was conflict of interest.
>
>In the corporate (and non-profit) world, a conflict
>of interest exists
>whenever there is an incentive for people in positions
>of power and
>trust to take actions contrary to the best interests
>of those who have
>placed their trust in these individuals. It does not
>matter whether
>said individuals are trustworthy or competent or even
>whether they
>yield to these temptations. If there's an incentive
>for them to do the
>wrong thing, they are said to be conflicted and those
>conflicts must be
>properly addressed.
>
>The conflicts of interest with SSA's crisis relate
>to the fact that
>those working to resolve it--i.e., ExComm, the Budget
>and Finance
>Committee (FinComm), and SSA's accounting firm--potentially
>share
>responsibility for allowing it to occur. I would include
>SSA Executive
>Director Dennis Wright (ED) in this group but ExComm
>has been careful
>to give the impression that they are managing this
>situation, not the
>ED.
>
>Much outcry on this forum has focused on the decision
>to forgo annual
>audits. In my opinion, this misses the mark. To the
>best of my
>recollection as a former director (for nine years in
>the mid 1990s
>through early 2002, including service on ExComm), previous
>FinComms
>elected to have annual reviews performed by Johnson,
>Miller, SSA's
>public accounting firm (CPA) because they were much
>less expensive than
>a full audit (if I recall correctly, on the order of
>$20,000 less) yet
>provided some assurance that material problems would
>be uncovered.
>
>For those of you without financial backgrounds, there
>are three levels
>of involvement by a CPA with a client. For a 'compilation,'
>the CPA
>simply cranks out standard-format statements using
>the client's books
>and records. If the numbers add up, the CPA doesn't
>do much checking;
>they just make it look pretty. For a 'review,' (which
>is what I believe
>SSA had in prior years), the CPA goes a step further
>and attempts to
>uncover material problems. They offer no guarantees
>but at least the
>accountants look under the hood, so to speak. An 'audit'
>(called for by
>the By-Laws) involves many more tests and checks based
>on which the CPA
>expresses an opinion as to whether the results conform
>to generally
>accepted accounting principles. An audit provides the
>highest level of
>assurance but, of course, costs the most, because of
>the extra work
>involved and also the liability assumed when expressing
>an opinion.
>
>In the past, the annual review plus the close relationship
>between the
>CPA and FinComm--who played a very active role in the
>SSA's finances at
>that time--plus performing an occasional full audit
>made the question
>one of economics as well as the By-Laws. In effect,
>FinComm made the
>decision to self insure, judging that an occasional
>loss, though
>unlikely, would still be less than the accumulated
>added cost of doing
>an audit every year. I suspect that may still turn
>out to be true
>despite the magnitude of the potential loss. I recall
>that the Board
>was made aware of this policy (but not asked to approve
>it, per se) on
>at least one occasion while I was a director but I
>cannot be certain.
>
>In my opinion, then, the critical question is whether
>FinComm retained
>Johnson, Miller to continue preparing SSA's annual
>financial
>statements, and more specifically to do annual reviews.
>ExComm's
>disclosures indicate they did not.
>
>Here's where the potential conflicts arise. Good governance
>calls for
>FinComm to retain the CPA, who would report directly
>to them (not to
>the CFAO or the ED or ExComm or Board), to prepare
>the annual financial
>statements (with a review or, under the By-Laws, an
>audit). ExComm
>meeting minutes note that Johnson, Miller appears not
>to have been
>retained to do any such work after 2002. If FinComm
>did retain them, in
>writing or orally, then Johnson, Miller may (and I
>emphasize the word
>'may') have some culpability and there is an inherent
>conflict with
>their continuing to work on the SSA account. In that
>case, it gets
>messier: ExComm meeting minutes indicate that Johnson,
>Miller selected
>the lawyer in Hobbs that SSA engaged. This attorney
>quickly recommended
>that SSA give Johnson, Miller 'carte blanche to do
>what they needed
>with the SSA financial records.'
>
>On the other hand, if FinComm did not retain Johnson,
>Miller, then
>FinComm itself may (again, 'may') have some culpability,
>perhaps shared
>by ExComm and the Board (although directors could argue
>they acted in
>reliance on FinComm) and there is an inherent conflict
>with their
>playing a key role in this investigation.
>
>It's very important to reiterate that competence and
>trustworthiness
>are irrelevant to this discussion. It doesn't matter
>whether the CPA or
>FinComm or ExComm did anything wrong, intentionally
>or otherwise. And
>I'm not suggesting they did. On the contrary, I've
>been generally
>impressed with the work done by ExComm so far. What
>matters is that
>people who may have legal liability and therefore a
>vested interest in
>the outcome are deeply involved in this investigation.
>That's a classic
>conflict of interest. And it's a recipe for losing
>the confidence of
>SSA members at a time when we need it most.
>
>One remedy for conflict of interest is disclosure.
>Depending on your
>point of view, disclosure to date has been adequate
>but sometimes
>reluctant.
>
>Another remedy is bringing in new people to do the
>investigative and
>remediation work. This is risky. Those who know the
>most about SSA and
>are in the best position to help are probably already
>involved. It's
>difficult enough to get competent volunteers, much
>less to work for
>free in Hobbs going through accounting records and
>meeting with
>attorneys, bankers, the IRS, etc.
>
>A third and, I believe, best remedy is an independent
>group to monitor
>the actions of ExComm, the accountants, the attorney(s),
>staff, and
>others involved. This is where the discussions with
>the concerned
>directors quickly arrived. Ultimately this resulted
>in a formal
>proposal for an Oversight Task Force (OTF). Four SSA
>members were
>prevailed upon by these directors to serve on the OTF:
>myself and three
>other individuals--a highly experienced accountant,
>an attorney, and a
>successful businessman. Because of my prior Board service,
>I initially
>declined to serve on the OTF but was persuaded by the
>two concerned
>directors because of my knowledge of SSA, my business
>background, and
>the fact that my tenure ended in early 2002, prior
>to the Larry
>Sanderson affair.
>
>The OTF proposal was made to the full Board by one
>of these concerned
>directors approximately two weeks ago with, unfortunately,
>a generally
>negative reaction.
>
>How could this happen? Well, some directors had genuine
>questions about
>certain provisions in the OTF proposal but I believe
>the negative
>reaction was due in great part to misunderstanding
>the OTF's purpose.
>Instead of oversight (i.e., monitoring, not decision
>making), some saw
>this as an attempt to usurp power from the Board or
>ExComm. Some feared
>it could interfere with and/or delay the investigation
>or reveal
>confidential information. Others viewed it as a no-confidence
>vote. In
>frustration, I 'recused' myself from participation
>on the OTF and made
>a direct appeal to the Board explaining OTF's purpose
>in more detail
>and arguing that it was the Board's fiduciary duty
>to take action to
>oversee the activities of ExComm, FinComm, and others
>who were
>conflicted.
>
>With this clarification, responses to our proposal
>were gratifyingly
>more favorable. In fact, ExComm subsequently expressed
>their support
>for the OTF. To be fair, at least some ExComm members
>(including Dianne
>Black-Nixon) had voiced support all along.
>
>That was nearly two weeks ago. Since then, nothing
>much has happened.
>ExComm continues to manage the investigation and to
>make decisions. My
>sense is that there may be debate even within ExComm
>on how to proceed.
>More than a week ago, one ExComm member emailed me
>to say it would be
>not be practical to hold a tele-conference special
>Board meeting for
>all 26 directors and suggested delaying action on the
>OTF until the
>scheduled Board meeting at the end of this month. My
>response was that
>with every passing day, decisions were being made that
>could be
>criticized by SSA members and should be overseen by
>an independent
>body. I often participate in conference calls with
>at least that many
>people dispersed over the U.S. and India and do not
>think a properly
>managed special meeting--with one agenda item--would
>be terribly
>difficult. Rightly or wrongly, I interpreted this as
>foot dragging. If
>ExComm had supported the OTF with the same admirable
>alacrity with
>which they jumped on the initial disclosure of the
>tax problems, the
>OTF would already be at work and I would not be writing
>what some will
>doubtless interpret as a disloyal or disruptive public
>posting.
>
>ExComm believes it would be inappropriate for them
>to charter the OTF
>without full Board approval. They have a point, but
>this reasoning
>leads inexorably to the conclusion that, absent oversight,
>ExComm
>should not be making major decisions about the investigation
>or
>corrective action, either.
>
>Ironically, with one troubling exception (see below),
>I'm less
>concerned with what ExComm is actually doing in Hobbs
>than with how SSA
>members may come to perceive or question their actions.
>To date, ExComm
>has moved decisively to manage a tough problem and
>it's difficult to
>quarrel with their actions.
>
>But many members still have a sense that a previous
>ExComm attempted to
>cover up the Larry Sanderson expense account scandal
>three years ago.
>We cannot afford the same cynicism, or worse, now.
>While most members
>understand that some things must remain confidential
>for legal reasons,
>they are uncomfortable or angry if they suspect they
>are not getting
>the real story. And on that score, ExComm's inaction
>is troubling.
>
>I mentioned an exception, and it's a big one: how responsibility
>for
>this problem is being assigned. ExComm's communications
>have emphasized
>the ED's failure to inform the Board of the non-filing
>of tax
>information returns. At the same time, however, ExComm
>has minimized
>the 'errors of omission' of the ExComm/FinComm/Board
>in not retaining
>the CPA to examine the SSA's annual financial statements.
>
>In fact, both lapses are errors of omission. Yet my
>impression is that
>the ED is being positioned as the one most responsible
>for allowing
>this crisis while FinComm's failure to act is being
>dismissed. For that
>matter, ExComm admits that the CFAO reported directly
>to the Board, not
>the ED, until mid 2005 so there is ample reason to
>share responsibility
>for this. While I do not have the facts available to
>ExComm, the
>questions raised are precisely the reason that independent
>oversight is
>needed over those who find themselves in conflicted
>positions, for
>their sake as well as the members'. And it is needed
>immediately, not
>next week or the week after that or after the next
>major staff or
>organizational decision is made.
>
>If this were a public corporation, plaintiffs' attorneys
>would already
>be circling like vultures with the prospect that directors
>could be
>sued and found guilty of breach of their fiduciary
>duty, in particular
>those on FinComm and, likely, ExComm. But there's not
>enough money here
>to interest them. Nor do I believe we should necessarily
>seek to punish
>whomever may have contributed to this debacle. This
>was a failure,
>albeit a predictable one, of a flawed system. Yet I
>don't think we
>ought to sweep anything under the rug, either. I believe
>most SSA
>members would readily forgive the unwitting errors
>of volunteer
>directors so long as they believe they are being dealt
>with
>forthrightly.
>
>I apologize to those I know and respect on the Board
>and ExComm who are
>dedicated, well intentioned, and working hard in thankless
>positions.
>But I fear that some of them do not fully understand
>the danger that
>their inaction will increase the cynicism and apathy
>already evident in
>many SSA members. The lack of urgency and reluctance
>to initiate
>oversight by ExComm and the directors alike suggest
>that some of them
>still don't 'get it.'
>
>Despite protestations to the contrary, there is a tendency
>in times
>like this for ExComm and the Board to 'circle the wagons.'
>It's a
>natural human response to threats, both from the original
>problem and
>from outraged SSA members who want someone, anyone,
>to pay in blood. It
>is a tendency against which we must fight hard if we
>are to maintain
>the trust of our members.
>
>Sadly, at this point individuals who generously agreed
>to serve on the
>OTF weeks ago are growing cynical about the willingness
>of SSA to
>address its problems. Clearly I am, too.
>
>On a positive note, I see this unfortunate crisis as
>a wonderful
>opportunity to make major changes to SSA to improve
>its financial
>position and increase its effectiveness. The current
>Board structure is
>indeed cumbersome and ineffective. It also makes sense
>to examine which
>functions the SSA should perform and whether some of
>these should be
>outsourced. And I agree with those who believe we should
>explore
>locations other than Hobbs. We have a chance to 'start
>over' with a
>clean sheet of paper...without losing those elements
>of SSA that are
>critical. Yet what I have seen in the past 3+ weeks
>leaves me worried
>that we will squander this opportunity.
>
>ACTION ITEM: Please contact your directors and, while
>offering your
>continuing support and trust, urge them to demand the
>Oversight Task
>Force or something like it be put in place immediately.
>All of
>us--members, directors, ExComm, and staff alike--need
>the clarity and
>assurance that only an independent observer can provide.
>
>In the meantime, please maintain the degree of civility
>on this forum
>that I hope you would if the discussion were taking
>place in person.
>Ironically, the offensive and irresponsible behavior
>of some
>participants on rec.aviation.soaring alienates most
>SSA members and
>encourages our leadership, with some justification,
>to dismiss these
>critics as just a bunch of loudmouth idiots. Those
>who insist on
>popping off indiscriminately with wild allegations,
>accusations, and
>statements of opinion-as-fact serve no one but their
>own egos. Their
>actions--presuming they actually care about the future
>of SSA and the
>great things it has and can still do for soaring pilots
>in this
>country--are counterproductive.
>
>Chip Bearden
>SSA Member since 1965
>
>

[[email protected]]

Bill Daniels wrote:

"It would be nice if there were a forum less public than this one where
internal matters of the SSA could be discussed by the membership. That
there isn't such a forum is perhaps a small part of the problem."

I remember there used to be such a forum on the SSA web site.
Apparently it was lost when the site was "upgraded" a year or two ago.

[Vaughn Simon]

> wrote in message
ups.com...
>
> Bill Daniels wrote:
>
> "It would be nice if there were a forum less public than this one where
> internal matters of the SSA could be discussed by the membership. That
> there isn't such a forum is perhaps a small part of the problem."
>
> I remember there used to be such a forum on the SSA web site.
> Apparently it was lost when the site was "upgraded" a year or two ago.
>

As far as I can tell, it is still there, (news.ssa.org) but it has fallen
into disuse. That may not be the best place for such a frank discussion; things
could get ugly and the existence of the discussion itself could unnecessarily
become a political issue. I have seen it happen!

While I understand the feelings of others, this is a vital subject! RAS is
the only place I know of where the proper "critical mass" of SSA members can be
found on a daily basis to have a meaningful discussion.

Vaughn

[Eric Greenwell]

wrote:
> Bill Daniels wrote:
>
> "It would be nice if there were a forum less public than this one where
> internal matters of the SSA could be discussed by the membership. That
> there isn't such a forum is perhaps a small part of the problem."
>
> I remember there used to be such a forum on the SSA web site.
> Apparently it was lost

I don't think it was lost, but discarded because it was so little used.
This was particularly noticable during the Sanderson episode, when
everyone used ras instead of the SSA newsgroups.

> when the site was "upgraded" a year or two ago.

"Upgraded" in quotes? You don't think the site is much better in the
last two years? I think it's got a lot more content that is easier to
find, and it looks great. Do you really wish we had the site from two
years ago?

--
Note: email address new as of 9/4/2006
Change "netto" to "net" to email me directly

Eric Greenwell - Washington State, USA

"Transponders in Sailplanes" on the Soaring Safety Foundation website
www.soaringsafety.org/prevention/articles.html

"A Guide to Self-launching Sailplane Operation" at www.motorglider.org

[Brian Glick]

Chip

I could not agree with you more. No stone should be left unturned in getting
to the bottom of this. Unfortunately, the only way to use a 'broad brush"
and clean this mess up would be to sweep out the "insiders" and replace them
with people that will eventually become insiders. We seem to elect our
directors now, so I am at a loss to tell you if we are all misinformed when
we vote, or we have been all lead astray. I repeat what I said in an earlier
post, and that is, the people that I know on the Excomm and the board are
above reproach. That being said, does that make every member that voted for
their directors culpable in this situation? If that is so, what is to stop
an insurance company from coming after all of us. The answer: NOTHING! I did
indeed vote for my current director, and have every confidence that the job
being done by this person is in the best interests of all of us in the
society. Hindsight is really 20\20 and we are all going blind trying to say
what should have been done differently. It is too late to cry over spilled
milk. That being said, I need to point out, in light of the Sanderson
problem, the computer problem, and now this, we seem to be an organization
that takes 3 steps forward, and 2 back. Somehow, we must solve this. Do I
have all the answers, no, but all of us together can make it work. I also
said this earlier, but it bears repeating as well. Everyone elected to run
the SSA need to vote for the good of the society, and not their
buddies\clubs best interests. This is most times harder than it seems, just
look at Congress. SSA caters to a lot of different facets of soaring. All
will be worse off if we don't stop this type of thing for good. Many people
have done a lot of good for us over the years, many have also looked good
while quietly serving their own agenda. It is time to think of the big
picture, and the big agenda. I think you have done that. I applaud that! Now
let's all do that. Stop whining, stop trying to blame everyone. Figure out
where the money went, who misused it, and put in place a real and lasting
sytem of checks and balances. Someone has already been sent packing over
improper financials and the like. More should follow. This clearly did not
start OR end with the CFO. The board and the Excomm are only as good as the
people who work and report to them. If we can not trust those people, then
new ones that we can trust should be hired. Until then (and this is not
aimed at you Chip) get off the boards back and let them do what we elected
them to do. Have trust in them. They are us. Members, elected by us, who
have NO REASON to purposely mismanage their OWN money. After all, these
people care as much about soaring as we all do. Action will be had soon.
This situation did not happen overnight, and will not be solved by one
conference call. Rome was not built in a day, nor did this situation take
only a month or so to build. This started years ago. One phone call among
the board will not make that much difference. Until then, we all need to
contact our directors and offer to help. Who knows, one of us could make all
the difference.

Brian Glick

Mifflin, PA
> wrote in message
ups.com...
> (with apologies to non-U.S. readers)
>
> Most of the postings on this subject follow a predictable pattern:
> "what a bunch of stupid/unethical/indifferent (pick one) idiots we have
> at SSA; why don't they just [fill in the blank with your favorite
> brilliant solution]" A few (including mine) urge patience, support, and
> a chance to let the process work.
>
> Reluctantly I'm now changing my position from "be patient" to "do
> something." For the specifics, skip to the ACTION ITEM at the end. The
> rest of this is just a long-winded description of a discouraging
> journey the past few weeks.
>
> My new stance may seem like heresy given my past support of SSA. But
> after more than three weeks of working with and communicating with SSA
> directors, including the Executive Committee (ExComm), I confess I no
> longer have complete confidence that the current organization can deal
> properly with this crisis.
>
> Like most, I learned about SSA's tax filing/remittance problems from
> Dianne Black-Nixon's letter 3 1/2 weeks ago. While publicly urging
> patience, I also offered help to directors I know, including ExComm
> members. I agreed with most of their decisions but nevertheless had
> concerns. Soon I found myself working behind the scenes with several
> directors who shared these concerns, which were centered around
> maintaining the confidence and trust of SSA members during a time when
> their faith in SSA would be tested.
>
> Disclosures by ExComm implied that certain SSA funds were
> misappropriated by SSA's Chief Financial & Administrative Officer
> (CFAO), who has since been fired. But even if the CFAO were guilty,
> others may share responsibility for allowing this to happen. And as
> ExComm continued their investigation, the primary reason for our
> concern was conflict of interest.
>
> In the corporate (and non-profit) world, a conflict of interest exists
> whenever there is an incentive for people in positions of power and
> trust to take actions contrary to the best interests of those who have
> placed their trust in these individuals. It does not matter whether
> said individuals are trustworthy or competent or even whether they
> yield to these temptations. If there's an incentive for them to do the
> wrong thing, they are said to be conflicted and those conflicts must be
> properly addressed.
>
> The conflicts of interest with SSA's crisis relate to the fact that
> those working to resolve it--i.e., ExComm, the Budget and Finance
> Committee (FinComm), and SSA's accounting firm--potentially share
> responsibility for allowing it to occur. I would include SSA Executive
> Director Dennis Wright (ED) in this group but ExComm has been careful
> to give the impression that they are managing this situation, not the
> ED.
>
> Much outcry on this forum has focused on the decision to forgo annual
> audits. In my opinion, this misses the mark. To the best of my
> recollection as a former director (for nine years in the mid 1990s
> through early 2002, including service on ExComm), previous FinComms
> elected to have annual reviews performed by Johnson, Miller, SSA's
> public accounting firm (CPA) because they were much less expensive than
> a full audit (if I recall correctly, on the order of $20,000 less) yet
> provided some assurance that material problems would be uncovered.
>
> For those of you without financial backgrounds, there are three levels
> of involvement by a CPA with a client. For a "compilation," the CPA
> simply cranks out standard-format statements using the client's books
> and records. If the numbers add up, the CPA doesn't do much checking;
> they just make it look pretty. For a "review," (which is what I believe
> SSA had in prior years), the CPA goes a step further and attempts to
> uncover material problems. They offer no guarantees but at least the
> accountants look under the hood, so to speak. An "audit" (called for by
> the By-Laws) involves many more tests and checks based on which the CPA
> expresses an opinion as to whether the results conform to generally
> accepted accounting principles. An audit provides the highest level of
> assurance but, of course, costs the most, because of the extra work
> involved and also the liability assumed when expressing an opinion.
>
> In the past, the annual review plus the close relationship between the
> CPA and FinComm--who played a very active role in the SSA's finances at
> that time--plus performing an occasional full audit made the question
> one of economics as well as the By-Laws. In effect, FinComm made the
> decision to self insure, judging that an occasional loss, though
> unlikely, would still be less than the accumulated added cost of doing
> an audit every year. I suspect that may still turn out to be true
> despite the magnitude of the potential loss. I recall that the Board
> was made aware of this policy (but not asked to approve it, per se) on
> at least one occasion while I was a director but I cannot be certain.
>
> In my opinion, then, the critical question is whether FinComm retained
> Johnson, Miller to continue preparing SSA's annual financial
> statements, and more specifically to do annual reviews. ExComm's
> disclosures indicate they did not.
>
> Here's where the potential conflicts arise. Good governance calls for
> FinComm to retain the CPA, who would report directly to them (not to
> the CFAO or the ED or ExComm or Board), to prepare the annual financial
> statements (with a review or, under the By-Laws, an audit). ExComm
> meeting minutes note that Johnson, Miller appears not to have been
> retained to do any such work after 2002. If FinComm did retain them, in
> writing or orally, then Johnson, Miller may (and I emphasize the word
> "may") have some culpability and there is an inherent conflict with
> their continuing to work on the SSA account. In that case, it gets
> messier: ExComm meeting minutes indicate that Johnson, Miller selected
> the lawyer in Hobbs that SSA engaged. This attorney quickly recommended
> that SSA give Johnson, Miller "carte blanche to do what they needed
> with the SSA financial records."
>
> On the other hand, if FinComm did not retain Johnson, Miller, then
> FinComm itself may (again, "may") have some culpability, perhaps shared
> by ExComm and the Board (although directors could argue they acted in
> reliance on FinComm) and there is an inherent conflict with their
> playing a key role in this investigation.
>
> It's very important to reiterate that competence and trustworthiness
> are irrelevant to this discussion. It doesn't matter whether the CPA or
> FinComm or ExComm did anything wrong, intentionally or otherwise. And
> I'm not suggesting they did. On the contrary, I've been generally
> impressed with the work done by ExComm so far. What matters is that
> people who may have legal liability and therefore a vested interest in
> the outcome are deeply involved in this investigation. That's a classic
> conflict of interest. And it's a recipe for losing the confidence of
> SSA members at a time when we need it most.
>
> One remedy for conflict of interest is disclosure. Depending on your
> point of view, disclosure to date has been adequate but sometimes
> reluctant.
>
> Another remedy is bringing in new people to do the investigative and
> remediation work. This is risky. Those who know the most about SSA and
> are in the best position to help are probably already involved. It's
> difficult enough to get competent volunteers, much less to work for
> free in Hobbs going through accounting records and meeting with
> attorneys, bankers, the IRS, etc.
>
> A third and, I believe, best remedy is an independent group to monitor
> the actions of ExComm, the accountants, the attorney(s), staff, and
> others involved. This is where the discussions with the concerned
> directors quickly arrived. Ultimately this resulted in a formal
> proposal for an Oversight Task Force (OTF). Four SSA members were
> prevailed upon by these directors to serve on the OTF: myself and three
> other individuals--a highly experienced accountant, an attorney, and a
> successful businessman. Because of my prior Board service, I initially
> declined to serve on the OTF but was persuaded by the two concerned
> directors because of my knowledge of SSA, my business background, and
> the fact that my tenure ended in early 2002, prior to the Larry
> Sanderson affair.
>
> The OTF proposal was made to the full Board by one of these concerned
> directors approximately two weeks ago with, unfortunately, a generally
> negative reaction.
>
> How could this happen? Well, some directors had genuine questions about
> certain provisions in the OTF proposal but I believe the negative
> reaction was due in great part to misunderstanding the OTF's purpose.
> Instead of oversight (i.e., monitoring, not decision making), some saw
> this as an attempt to usurp power from the Board or ExComm. Some feared
> it could interfere with and/or delay the investigation or reveal
> confidential information. Others viewed it as a no-confidence vote. In
> frustration, I "recused" myself from participation on the OTF and made
> a direct appeal to the Board explaining OTF's purpose in more detail
> and arguing that it was the Board's fiduciary duty to take action to
> oversee the activities of ExComm, FinComm, and others who were
> conflicted.
>
> With this clarification, responses to our proposal were gratifyingly
> more favorable. In fact, ExComm subsequently expressed their support
> for the OTF. To be fair, at least some ExComm members (including Dianne
> Black-Nixon) had voiced support all along.
>
> That was nearly two weeks ago. Since then, nothing much has happened.
> ExComm continues to manage the investigation and to make decisions. My
> sense is that there may be debate even within ExComm on how to proceed.
> More than a week ago, one ExComm member emailed me to say it would be
> not be practical to hold a tele-conference special Board meeting for
> all 26 directors and suggested delaying action on the OTF until the
> scheduled Board meeting at the end of this month. My response was that
> with every passing day, decisions were being made that could be
> criticized by SSA members and should be overseen by an independent
> body. I often participate in conference calls with at least that many
> people dispersed over the U.S. and India and do not think a properly
> managed special meeting--with one agenda item--would be terribly
> difficult. Rightly or wrongly, I interpreted this as foot dragging. If
> ExComm had supported the OTF with the same admirable alacrity with
> which they jumped on the initial disclosure of the tax problems, the
> OTF would already be at work and I would not be writing what some will
> doubtless interpret as a disloyal or disruptive public posting.
>
> ExComm believes it would be inappropriate for them to charter the OTF
> without full Board approval. They have a point, but this reasoning
> leads inexorably to the conclusion that, absent oversight, ExComm
> should not be making major decisions about the investigation or
> corrective action, either.
>
> Ironically, with one troubling exception (see below), I'm less
> concerned with what ExComm is actually doing in Hobbs than with how SSA
> members may come to perceive or question their actions. To date, ExComm
> has moved decisively to manage a tough problem and it's difficult to
> quarrel with their actions.
>
> But many members still have a sense that a previous ExComm attempted to
> cover up the Larry Sanderson expense account scandal three years ago.
> We cannot afford the same cynicism, or worse, now. While most members
> understand that some things must remain confidential for legal reasons,
> they are uncomfortable or angry if they suspect they are not getting
> the real story. And on that score, ExComm's inaction is troubling.
>
> I mentioned an exception, and it's a big one: how responsibility for
> this problem is being assigned. ExComm's communications have emphasized
> the ED's failure to inform the Board of the non-filing of tax
> information returns. At the same time, however, ExComm has minimized
> the "errors of omission" of the ExComm/FinComm/Board in not retaining
> the CPA to examine the SSA's annual financial statements.
>
> In fact, both lapses are errors of omission. Yet my impression is that
> the ED is being positioned as the one most responsible for allowing
> this crisis while FinComm's failure to act is being dismissed. For that
> matter, ExComm admits that the CFAO reported directly to the Board, not
> the ED, until mid 2005 so there is ample reason to share responsibility
> for this. While I do not have the facts available to ExComm, the
> questions raised are precisely the reason that independent oversight is
> needed over those who find themselves in conflicted positions, for
> their sake as well as the members'. And it is needed immediately, not
> next week or the week after that or after the next major staff or
> organizational decision is made.
>
> If this were a public corporation, plaintiffs' attorneys would already
> be circling like vultures with the prospect that directors could be
> sued and found guilty of breach of their fiduciary duty, in particular
> those on FinComm and, likely, ExComm. But there's not enough money here
> to interest them. Nor do I believe we should necessarily seek to punish
> whomever may have contributed to this debacle. This was a failure,
> albeit a predictable one, of a flawed system. Yet I don't think we
> ought to sweep anything under the rug, either. I believe most SSA
> members would readily forgive the unwitting errors of volunteer
> directors so long as they believe they are being dealt with
> forthrightly.
>
> I apologize to those I know and respect on the Board and ExComm who are
> dedicated, well intentioned, and working hard in thankless positions.
> But I fear that some of them do not fully understand the danger that
> their inaction will increase the cynicism and apathy already evident in
> many SSA members. The lack of urgency and reluctance to initiate
> oversight by ExComm and the directors alike suggest that some of them
> still don't "get it."
>
> Despite protestations to the contrary, there is a tendency in times
> like this for ExComm and the Board to "circle the wagons." It's a
> natural human response to threats, both from the original problem and
> from outraged SSA members who want someone, anyone, to pay in blood. It
> is a tendency against which we must fight hard if we are to maintain
> the trust of our members.
>
> Sadly, at this point individuals who generously agreed to serve on the
> OTF weeks ago are growing cynical about the willingness of SSA to
> address its problems. Clearly I am, too.
>
> On a positive note, I see this unfortunate crisis as a wonderful
> opportunity to make major changes to SSA to improve its financial
> position and increase its effectiveness. The current Board structure is
> indeed cumbersome and ineffective. It also makes sense to examine which
> functions the SSA should perform and whether some of these should be
> outsourced. And I agree with those who believe we should explore
> locations other than Hobbs. We have a chance to "start over" with a
> clean sheet of paper...without losing those elements of SSA that are
> critical. Yet what I have seen in the past 3+ weeks leaves me worried
> that we will squander this opportunity.
>
> ACTION ITEM: Please contact your directors and, while offering your
> continuing support and trust, urge them to demand the Oversight Task
> Force or something like it be put in place immediately. All of
> us--members, directors, ExComm, and staff alike--need the clarity and
> assurance that only an independent observer can provide.
>
> In the meantime, please maintain the degree of civility on this forum
> that I hope you would if the discussion were taking place in person.
> Ironically, the offensive and irresponsible behavior of some
> participants on rec.aviation.soaring alienates most SSA members and
> encourages our leadership, with some justification, to dismiss these
> critics as just a bunch of loudmouth idiots. Those who insist on
> popping off indiscriminately with wild allegations, accusations, and
> statements of opinion-as-fact serve no one but their own egos. Their
> actions--presuming they actually care about the future of SSA and the
> great things it has and can still do for soaring pilots in this
> country--are counterproductive.
>
> Chip Bearden
> SSA Member since 1965
>

[5-BG]

brian;

you wrote "get off the boards back and let them do what we elected
them to do. Have trust in them.

THEY DID NOT DO WHAT WE ELECTED THEM TO DO!!! They did not supervise the ed or the cfo adequately. They made some very bad choices ( in DECIDING to forgo the audit for several years). They are digging their collective holes deeper by continuing to try to MANAGE this problem. Well intentioned and "above reproach" as they may be, they are responsible, legally, morally and ethically.

you wrote "The board and the Excomm are only as good as the
people who work and report to them.

NOT SO!! A board is only as good as its individual and collective members choose to make it by diligent exercise of their responsibilities, as defined by the bylaws, to the members who elected them. This board FAILED, as did the previous board and evidently several prior boards, to exercise their authority and to live up to the expectations of management oversight by the members who voted for them and required by the bylaws under which they serve.

Your statement re the insurance company coming after those who voted for a director is naive at best and a diversion at worst.
The question really will be, at the outset, was the DECISION to forgo the audit made in direct violation of the bylaws, a material contributory part of the alleged misappropriation of funds over a period of time. This will be argued in court if the insurance company is asked to reimburse the missing funds because of misconduct by officers and (maybe ) directors).
the next question will be, were subsequent decisions by the board to "borrow " funds from the foundation and to cause the foundation to lend the funds done in the interests of the society or in the interest of members of the board?? CONFLICT OF INTEREST and coverups go hand in hand.
Ask yourself WHY did the board immediatly tap into the foundation funds??? The IRS and the State would have waited for an insurance settlement. Why have we heard nothing about this??? Perhaps the BOARD DECIDED to save money and not to insure the society against misconduct??? That is a truely troubling thought. Perhaps the cfo decided not to pay the insurance premiums..
The point is that we are NOT BEING TOLD anything.
Stop whining and stop trying to blame everyone you suggest... Well what should we do??? remain silent while the same group who presided over this mess that threatens the very organization meets in closed session with an attorney recommended by the accountants who should have blown the whistle several years ago? Should we stand by in silence and not make suggestions ( mine remains to have a court appoint a master to sort things out) ?? Should we stand by silently should the board make the decision not to ask the insurance company to reimburse the society? Should we stand by in silence while the attorney hired with our dues reviews and spins information given to the membership? should we maintain our trust in the board that failed to do its job to actually come up with a program that is actually in the best interests of the SSA while the attorney is probably scaring the hell out of them in terms of potential personal liability??

Under these circumstances, transparancy is an illusion. Even assuming 100% good intentions, the APPEARANCE of conflict will poison any meaningful conclusions/suggestions put out by the board going forward.

you wrote "Have trust in them. They are us. Members, elected by us, who
have NO REASON to purposely mismanage their OWN money"
I do NOT TRUST THEM. they have individually and collectively mismanaged the ssa into a potential disaster. They are continuing their basic mismanagement by not resigning immediatly. They are, by staying in power, in basic conflict with the interests of the general membership. Well meaning as they are, the current board is learning a very tough lesson in board governance and responsibility.
The lesson from Nixon trying to coverup watergate, to Scooter libby covering for Cheney and all of the scandals in between is that the coverup digs the hole deeper. The further lesson is that when a scandal erupts in washington, an INDEPENDENT ( ok sometimes not so unbaised and independent!!) investigation is called. Another lesson most politicians have not learned is that MANAGING a scandal rarely works. recent history is repleat with failed attempts to stonewall or to spin a problem.
5bg
"Brian Glick" > wrote in message ink.net...
Chip

I could not agree with you more. No stone should be left unturned in getting
to the bottom of this. Unfortunately, the only way to use a 'broad brush"
and clean this mess up would be to sweep out the "insiders" and replace them
with people that will eventually become insiders. We seem to elect our
directors now, so I am at a loss to tell you if we are all misinformed when
we vote, or we have been all lead astray. I repeat what I said in an earlier
post, and that is, the people that I know on the Excomm and the board are
above reproach. That being said, does that make every member that voted for
their directors culpable in this situation? If that is so, what is to stop
an insurance company from coming after all of us. The answer: NOTHING! I did
indeed vote for my current director, and have every confidence that the job
being done by this person is in the best interests of all of us in the
society. Hindsight is really 20\20 and we are all going blind trying to say
what should have been done differently. It is too late to cry over spilled
milk. That being said, I need to point out, in light of the Sanderson
problem, the computer problem, and now this, we seem to be an organization
that takes 3 steps forward, and 2 back. Somehow, we must solve this. Do I
have all the answers, no, but all of us together can make it work. I also
said this earlier, but it bears repeating as well. Everyone elected to run
the SSA need to vote for the good of the society, and not their
buddies\clubs best interests. This is most times harder than it seems, just
look at Congress. SSA caters to a lot of different facets of soaring. All
will be worse off if we don't stop this type of thing for good. Many people
have done a lot of good for us over the years, many have also looked good
while quietly serving their own agenda. It is time to think of the big
picture, and the big agenda. I think you have done that. I applaud that! Now
let's all do that. Stop whining, stop trying to blame everyone. Figure out
where the money went, who misused it, and put in place a real and lasting
sytem of checks and balances. Someone has already been sent packing over
improper financials and the like. More should follow. This clearly did not
start OR end with the CFO. The board and the Excomm are only as good as the
people who work and report to them. If we can not trust those people, then
new ones that we can trust should be hired. Until then (and this is not
aimed at you Chip) get off the boards back and let them do what we elected
them to do. Have trust in them. They are us. Members, elected by us, who
have NO REASON to purposely mismanage their OWN money. After all, these
people care as much about soaring as we all do. Action will be had soon.
This situation did not happen overnight, and will not be solved by one
conference call. Rome was not built in a day, nor did this situation take
only a month or so to build. This started years ago. One phone call among
the board will not make that much difference. Until then, we all need to
contact our directors and offer to help. Who knows, one of us could make all
the difference.

Brian Glick

Mifflin, PA
> wrote in message
ups.com...
> (with apologies to non-U.S. readers)
>
> Most of the postings on this subject follow a predictable pattern:
> "what a bunch of stupid/unethical/indifferent (pick one) idiots we have
> at SSA; why don't they just [fill in the blank with your favorite
> brilliant solution]" A few (including mine) urge patience, support, and
> a chance to let the process work.
>
> Reluctantly I'm now changing my position from "be patient" to "do
> something." For the specifics, skip to the ACTION ITEM at the end. The
> rest of this is just a long-winded description of a discouraging
> journey the past few weeks.
>
> My new stance may seem like heresy given my past support of SSA. But
> after more than three weeks of working with and communicating with SSA
> directors, including the Executive Committee (ExComm), I confess I no
> longer have complete confidence that the current organization can deal
> properly with this crisis.
>
> Like most, I learned about SSA's tax filing/remittance problems from
> Dianne Black-Nixon's letter 3 1/2 weeks ago. While publicly urging
> patience, I also offered help to directors I know, including ExComm
> members. I agreed with most of their decisions but nevertheless had
> concerns. Soon I found myself working behind the scenes with several
> directors who shared these concerns, which were centered around
> maintaining the confidence and trust of SSA members during a time when
> their faith in SSA would be tested.
>
> Disclosures by ExComm implied that certain SSA funds were
> misappropriated by SSA's Chief Financial & Administrative Officer
> (CFAO), who has since been fired. But even if the CFAO were guilty,
> others may share responsibility for allowing this to happen. And as
> ExComm continued their investigation, the primary reason for our
> concern was conflict of interest.
>
> In the corporate (and non-profit) world, a conflict of interest exists
> whenever there is an incentive for people in positions of power and
> trust to take actions contrary to the best interests of those who have
> placed their trust in these individuals. It does not matter whether
> said individuals are trustworthy or competent or even whether they
> yield to these temptations. If there's an incentive for them to do the
> wrong thing, they are said to be conflicted and those conflicts must be
> properly addressed.
>
> The conflicts of interest with SSA's crisis relate to the fact that
> those working to resolve it--i.e., ExComm, the Budget and Finance
> Committee (FinComm), and SSA's accounting firm--potentially share
> responsibility for allowing it to occur. I would include SSA Executive
> Director Dennis Wright (ED) in this group but ExComm has been careful
> to give the impression that they are managing this situation, not the
> ED.
>
> Much outcry on this forum has focused on the decision to forgo annual
> audits. In my opinion, this misses the mark. To the best of my
> recollection as a former director (for nine years in the mid 1990s
> through early 2002, including service on ExComm), previous FinComms
> elected to have annual reviews performed by Johnson, Miller, SSA's
> public accounting firm (CPA) because they were much less expensive than
> a full audit (if I recall correctly, on the order of $20,000 less) yet
> provided some assurance that material problems would be uncovered.
>
> For those of you without financial backgrounds, there are three levels
> of involvement by a CPA with a client. For a "compilation," the CPA
> simply cranks out standard-format statements using the client's books
> and records. If the numbers add up, the CPA doesn't do much checking;
> they just make it look pretty. For a "review," (which is what I believe
> SSA had in prior years), the CPA goes a step further and attempts to
> uncover material problems. They offer no guarantees but at least the
> accountants look under the hood, so to speak. An "audit" (called for by
> the By-Laws) involves many more tests and checks based on which the CPA
> expresses an opinion as to whether the results conform to generally
> accepted accounting principles. An audit provides the highest level of
> assurance but, of course, costs the most, because of the extra work
> involved and also the liability assumed when expressing an opinion.
>
> In the past, the annual review plus the close relationship between the
> CPA and FinComm--who played a very active role in the SSA's finances at
> that time--plus performing an occasional full audit made the question
> one of economics as well as the By-Laws. In effect, FinComm made the
> decision to self insure, judging that an occasional loss, though
> unlikely, would still be less than the accumulated added cost of doing
> an audit every year. I suspect that may still turn out to be true
> despite the magnitude of the potential loss. I recall that the Board
> was made aware of this policy (but not asked to approve it, per se) on
> at least one occasion while I was a director but I cannot be certain.
>
> In my opinion, then, the critical question is whether FinComm retained
> Johnson, Miller to continue preparing SSA's annual financial
> statements, and more specifically to do annual reviews. ExComm's
> disclosures indicate they did not.
>
> Here's where the potential conflicts arise. Good governance calls for
> FinComm to retain the CPA, who would report directly to them (not to
> the CFAO or the ED or ExComm or Board), to prepare the annual financial
> statements (with a review or, under the By-Laws, an audit). ExComm
> meeting minutes note that Johnson, Miller appears not to have been
> retained to do any such work after 2002. If FinComm did retain them, in
> writing or orally, then Johnson, Miller may (and I emphasize the word
> "may") have some culpability and there is an inherent conflict with
> their continuing to work on the SSA account. In that case, it gets
> messier: ExComm meeting minutes indicate that Johnson, Miller selected
> the lawyer in Hobbs that SSA engaged. This attorney quickly recommended
> that SSA give Johnson, Miller "carte blanche to do what they needed
> with the SSA financial records."
>
> On the other hand, if FinComm did not retain Johnson, Miller, then
> FinComm itself may (again, "may") have some culpability, perhaps shared
> by ExComm and the Board (although directors could argue they acted in
> reliance on FinComm) and there is an inherent conflict with their
> playing a key role in this investigation.
>
> It's very important to reiterate that competence and trustworthiness
> are irrelevant to this discussion. It doesn't matter whether the CPA or
> FinComm or ExComm did anything wrong, intentionally or otherwise. And
> I'm not suggesting they did. On the contrary, I've been generally
> impressed with the work done by ExComm so far. What matters is that
> people who may have legal liability and therefore a vested interest in
> the outcome are deeply involved in this investigation. That's a classic
> conflict of interest. And it's a recipe for losing the confidence of
> SSA members at a time when we need it most.
>
> One remedy for conflict of interest is disclosure. Depending on your
> point of view, disclosure to date has been adequate but sometimes
> reluctant.
>
> Another remedy is bringing in new people to do the investigative and
> remediation work. This is risky. Those who know the most about SSA and
> are in the best position to help are probably already involved. It's
> difficult enough to get competent volunteers, much less to work for
> free in Hobbs going through accounting records and meeting with
> attorneys, bankers, the IRS, etc.
>
> A third and, I believe, best remedy is an independent group to monitor
> the actions of ExComm, the accountants, the attorney(s), staff, and
> others involved. This is where the discussions with the concerned
> directors quickly arrived. Ultimately this resulted in a formal
> proposal for an Oversight Task Force (OTF). Four SSA members were
> prevailed upon by these directors to serve on the OTF: myself and three
> other individuals--a highly experienced accountant, an attorney, and a
> successful businessman. Because of my prior Board service, I initially
> declined to serve on the OTF but was persuaded by the two concerned
> directors because of my knowledge of SSA, my business background, and
> the fact that my tenure ended in early 2002, prior to the Larry
> Sanderson affair.
>
> The OTF proposal was made to the full Board by one of these concerned
> directors approximately two weeks ago with, unfortunately, a generally
> negative reaction.
>
> How could this happen? Well, some directors had genuine questions about
> certain provisions in the OTF proposal but I believe the negative
> reaction was due in great part to misunderstanding the OTF's purpose.
> Instead of oversight (i.e., monitoring, not decision making), some saw
> this as an attempt to usurp power from the Board or ExComm. Some feared
> it could interfere with and/or delay the investigation or reveal
> confidential information. Others viewed it as a no-confidence vote. In
> frustration, I "recused" myself from participation on the OTF and made
> a direct appeal to the Board explaining OTF's purpose in more detail
> and arguing that it was the Board's fiduciary duty to take action to
> oversee the activities of ExComm, FinComm, and others who were
> conflicted.
>
> With this clarification, responses to our proposal were gratifyingly
> more favorable. In fact, ExComm subsequently expressed their support
> for the OTF. To be fair, at least some ExComm members (including Dianne
> Black-Nixon) had voiced support all along.
>
> That was nearly two weeks ago. Since then, nothing much has happened.
> ExComm continues to manage the investigation and to make decisions. My
> sense is that there may be debate even within ExComm on how to proceed.
> More than a week ago, one ExComm member emailed me to say it would be
> not be practical to hold a tele-conference special Board meeting for
> all 26 directors and suggested delaying action on the OTF until the
> scheduled Board meeting at the end of this month. My response was that
> with every passing day, decisions were being made that could be
> criticized by SSA members and should be overseen by an independent
> body. I often participate in conference calls with at least that many
> people dispersed over the U.S. and India and do not think a properly
> managed special meeting--with one agenda item--would be terribly
> difficult. Rightly or wrongly, I interpreted this as foot dragging. If
> ExComm had supported the OTF with the same admirable alacrity with
> which they jumped on the initial disclosure of the tax problems, the
> OTF would already be at work and I would not be writing what some will
> doubtless interpret as a disloyal or disruptive public posting.
>
> ExComm believes it would be inappropriate for them to charter the OTF
> without full Board approval. They have a point, but this reasoning
> leads inexorably to the conclusion that, absent oversight, ExComm
> should not be making major decisions about the investigation or
> corrective action, either.
>
> Ironically, with one troubling exception (see below), I'm less
> concerned with what ExComm is actually doing in Hobbs than with how SSA
> members may come to perceive or question their actions. To date, ExComm
> has moved decisively to manage a tough problem and it's difficult to
> quarrel with their actions.
>
> But many members still have a sense that a previous ExComm attempted to
> cover up the Larry Sanderson expense account scandal three years ago.
> We cannot afford the same cynicism, or worse, now. While most members
> understand that some things must remain confidential for legal reasons,
> they are uncomfortable or angry if they suspect they are not getting
> the real story. And on that score, ExComm's inaction is troubling.
>
> I mentioned an exception, and it's a big one: how responsibility for
> this problem is being assigned. ExComm's communications have emphasized
> the ED's failure to inform the Board of the non-filing of tax
> information returns. At the same time, however, ExComm has minimized
> the "errors of omission" of the ExComm/FinComm/Board in not retaining
> the CPA to examine the SSA's annual financial statements.
>
> In fact, both lapses are errors of omission. Yet my impression is that
> the ED is being positioned as the one most responsible for allowing
> this crisis while FinComm's failure to act is being dismissed. For that
> matter, ExComm admits that the CFAO reported directly to the Board, not
> the ED, until mid 2005 so there is ample reason to share responsibility
> for this. While I do not have the facts available to ExComm, the
> questions raised are precisely the reason that independent oversight is
> needed over those who find themselves in conflicted positions, for
> their sake as well as the members'. And it is needed immediately, not
> next week or the week after that or after the next major staff or
> organizational decision is made.
>
> If this were a public corporation, plaintiffs' attorneys would already
> be circling like vultures with the prospect that directors could be
> sued and found guilty of breach of their fiduciary duty, in particular
> those on FinComm and, likely, ExComm. But there's not enough money here
> to interest them. Nor do I believe we should necessarily seek to punish
> whomever may have contributed to this debacle. This was a failure,
> albeit a predictable one, of a flawed system. Yet I don't think we
> ought to sweep anything under the rug, either. I believe most SSA
> members would readily forgive the unwitting errors of volunteer
> directors so long as they believe they are being dealt with
> forthrightly.
>
> I apologize to those I know and respect on the Board and ExComm who are
> dedicated, well intentioned, and working hard in thankless positions.
> But I fear that some of them do not fully understand the danger that
> their inaction will increase the cynicism and apathy already evident in
> many SSA members. The lack of urgency and reluctance to initiate
> oversight by ExComm and the directors alike suggest that some of them
> still don't "get it."
>
> Despite protestations to the contrary, there is a tendency in times
> like this for ExComm and the Board to "circle the wagons." It's a
> natural human response to threats, both from the original problem and
> from outraged SSA members who want someone, anyone, to pay in blood. It
> is a tendency against which we must fight hard if we are to maintain
> the trust of our members.
>
> Sadly, at this point individuals who generously agreed to serve on the
> OTF weeks ago are growing cynical about the willingness of SSA to
> address its problems. Clearly I am, too.
>
> On a positive note, I see this unfortunate crisis as a wonderful
> opportunity to make major changes to SSA to improve its financial
> position and increase its effectiveness. The current Board structure is
> indeed cumbersome and ineffective. It also makes sense to examine which
> functions the SSA should perform and whether some of these should be
> outsourced. And I agree with those who believe we should explore
> locations other than Hobbs. We have a chance to "start over" with a
> clean sheet of paper...without losing those elements of SSA that are
> critical. Yet what I have seen in the past 3+ weeks leaves me worried
> that we will squander this opportunity.
>
> ACTION ITEM: Please contact your directors and, while offering your
> continuing support and trust, urge them to demand the Oversight Task
> Force or something like it be put in place immediately. All of
> us--members, directors, ExComm, and staff alike--need the clarity and
> assurance that only an independent observer can provide.
>
> In the meantime, please maintain the degree of civility on this forum
> that I hope you would if the discussion were taking place in person.
> Ironically, the offensive and irresponsible behavior of some
> participants on rec.aviation.soaring alienates most SSA members and
> encourages our leadership, with some justification, to dismiss these
> critics as just a bunch of loudmouth idiots. Those who insist on
> popping off indiscriminately with wild allegations, accusations, and
> statements of opinion-as-fact serve no one but their own egos. Their
> actions--presuming they actually care about the future of SSA and the
> great things it has and can still do for soaring pilots in this
> country--are counterproductive.
>
> Chip Bearden
> SSA Member since 1965
>

[Don Johnstone]

I was suggesting what Bill has said but I did so without
any knowledge of the availability of such a person.

Looking at your problem dispassionately as I can, I
see that you are faced with a paradox. Those best able
to fix your current problems may be those who have
taken you there in the first place if this is the case
it is purely a matter of trust and credibility. If
that trust and credibility can be sufficiently restored
in the short term by an independent outsider, an honest
broker, then this could be a way forward to solve your
short term problem.

One thing that all the members have to decide is what
action are they calling for, one the one hand punishment
and retribution or on the other a speedy resolution
to the problem. The first will take for ever and you
will still at the end have a problem to fix because
while you tear an organisation apart it becomes disfunctional.
My suggestion may keep in place a functioning organisation,
perhaps a flawed one, but that can be corrected when
the immediate problems are overcome. It really does
come down to trust and credibility and that decision
can only be made by the members of the organisation.
No organisation functions well when everyone is looking
over their shoulder trying to cover their own back.
Perhaps it is worth considering where you would be
if the entire management of the SSA resigned today.
I would suggest that this would not move you forward
in a practical sense so perhaps you should be careful
what you wish for.

Please do not think that I am in any way telling you
what to do, I am only too aware that I do not have
the right to do that, but it may be helpful if everyone
searches within themselves and decides what is best
for the organisation because at the end of the day
this is what will be best for the many glider pilot
members. As I have said previously anything has to
be better than having glider pilots at each others
throats with all the negativity that such actions bring.


I hope that what I have said is taken in the spirit
in which it was intended, to help fellow glider pilots,
there is no intention of critisising any individual
or point of view.

Don
ASW17401 in a wet Scotland waiting for wave, but at
least the malt whisky is good :-)

At 23:06 26 September 2006, Bill Daniels wrote:
>Well, no. I think Don is politely suggesting that
>other national
>soaring clubs like the BGA and perhaps the DAeC could
>offer useful
>outside views in the spirit of a concerned friend and
>neighbor.
>
>
>If this is the case, I would take it as a good idea.
> An outsider can
>sometimes offer new perspectives and, having no ultimate
>stake in the
>matter at hand, may even be heard over the noise.
>
>
>It would be nice if there were a forum less public
>than this one where
>internal matters of the SSA could be discussed by the
>membership. That
>there isn't such a forum is perhaps a small part of
>the problem.
>
>Bill Daniels
> '5-BG' wrote in message
...
> don.. you wrote 'It seems
> to me as an outsider that every few years the SSA
>tries
> to tear itself to bits on a public forum and this
>is
> not very attractive.
>
> it is the only forum we have.
>
>
> I believe that a court appointed master is along
>the lines of what
>you are suggesting.
>
> 'Don Johnstone' wrote in
>message ...
>
> I apologise for responding to this at the top but
>if
> I put it where I should it's a long scoll. As a
>complete
> outsider I have to say that the biggest problem
>the
> management of SSA face is one of credibility. It
>seems
> to me as an outsider that every few years the SSA
>tries
> to tear itself to bits on a public forum and this
>is
> not very attractive. I can only hazard a guess
>as to
> the feelings of the ordinary members.
> Whichever way you look at this the only way to
>restore
> credibility is to have the problem looked at by
>an
> independent body who's credibility is unimpeachable.
> This may prove to be a difficult task as those
>who
> are most qualified could also be thought to be
>too
> close to the organisation. Perhaps it might be
>considered
> appropriate to second into the independent body
>a complete
> outsider, a senior executive from a foreign gliding
> or similar USA based GA organisation, not to judge
> the detail or make pronouncements on USA law, but
>to
> provide a completely independent person with no
>conflict
> of interest or indeed interest in the outcome.
> You may feel that as an outsider it is none of
>my damm
> business and of course you would be right, it isn't,
> but anything is better that seeing glider pilots
>at
> each others throats. Right now perception is more
>important
> than truth to many.
> Of course there will be those who will never be
>satisfied
> and that has to be accepted, you can only do the
>best
> you can.
>
> At 20:18 26 September 2006, wrote:
> >(with apologies to non-U.S. readers)
> >
> >Most of the postings on this subject follow a predictable
> >pattern:
> >'what a bunch of stupid/unethical/indifferent (pick
> >one) idiots we have
> >at SSA; why don't they just [fill in the blank
>>with
> >your favorite
> >brilliant solution]' A few (including mine) urge
>>patience,
> >support, and
> >a chance to let the process work.
> >
> >Reluctantly I'm now changing my position from 'be
>>patient'
> >to 'do
> >something.' For the specifics, skip to the ACTION
>>ITEM
> >at the end. The
> >rest of this is just a long-winded description
>>of a
> >discouraging
> >journey the past few weeks.
> >
> >My new stance may seem like heresy given my past
>>support
> >of SSA. But
> >after more than three weeks of working with and
>>communicating
> >with SSA
> >directors, including the Executive Committee (ExComm),
> >I confess I no
> >longer have complete confidence that the current
>>organization
> >can deal
> >properly with this crisis.
> >
> >Like most, I learned about SSA's tax filing/remittance
> >problems from
> >Dianne Black-Nixon's letter 3 1/2 weeks ago. While
> >publicly urging
> >patience, I also offered help to directors I know,
> >including ExComm
> >members. I agreed with most of their decisions
>>but
> >nevertheless had
> >concerns. Soon I found myself working behind the
>>scenes
> >with several
> >directors who shared these concerns, which were
>>centered
> >around
> >maintaining the confidence and trust of SSA members
> >during a time when
> >their faith in SSA would be tested.
> >
> >Disclosures by ExComm implied that certain SSA
>>funds
> >were
> >misappropriated by SSA's Chief Financial & Administrative
> >Officer
> >(CFAO), who has since been fired. But even if the
>>CFAO
> >were guilty,
> >others may share responsibility for allowing this
>>to
> >happen. And as
> >ExComm continued their investigation, the primary
>>reason
> >for our
> >concern was conflict of interest.
> >
> >In the corporate (and non-profit) world, a conflict
> >of interest exists
> >whenever there is an incentive for people in positions
> >of power and
> >trust to take actions contrary to the best interests
> >of those who have
> >placed their trust in these individuals. It does
>>not
> >matter whether
> >said individuals are trustworthy or competent or
>>even
> >whether they
> >yield to these temptations. If there's an incentive
> >for them to do the
> >wrong thing, they are said to be conflicted and
>>those
> >conflicts must be
> >properly addressed.
> >
> >The conflicts of interest with SSA's crisis relate
> >to the fact that
> >those working to resolve it--i.e., ExComm, the
>>Budget
> >and Finance
> >Committee (FinComm), and SSA's accounting firm--potentially
> >share
> >responsibility for allowing it to occur. I would
>>include
> >SSA Executive
> >Director Dennis Wright (ED) in this group but ExComm
> >has been careful
> >to give the impression that they are managing this
> >situation, not the
> >ED.
> >
> >Much outcry on this forum has focused on the decision
> >to forgo annual
> >audits. In my opinion, this misses the mark. To
>>the
> >best of my
> >recollection as a former director (for nine years
>>in
> >the mid 1990s
> >through early 2002, including service on ExComm),
>>previous
> >FinComms
> >elected to have annual reviews performed by Johnson,
> >Miller, SSA's
> >public accounting firm (CPA) because they were
>>much
> >less expensive than
> >a full audit (if I recall correctly, on the order
>>of
> >$20,000 less) yet
> >provided some assurance that material problems
>>would
> >be uncovered.
> >
> >For those of you without financial backgrounds,
>>there
> >are three levels
> >of involvement by a CPA with a client. For a 'compilation,'
> >the CPA
> >simply cranks out standard-format statements using
> >the client's books
> >and records. If the numbers add up, the CPA doesn't
> >do much checking;
> >they just make it look pretty. For a 'review,'
>>(which
> >is what I believe
> >SSA had in prior years), the CPA goes a step further
> >and attempts to
> >uncover material problems. They offer no guarantees
> >but at least the
> >accountants look under the hood, so to speak. An
>>'audit'
> >(called for by
> >the By-Laws) involves many more tests and checks
>>based
> >on which the CPA
> >expresses an opinion as to whether the results
>>conform
> >to generally
> >accepted accounting principles. An audit provides
>>the
> >highest level of
> >assurance but, of course, costs the most, because
>>of
> >the extra work
> >involved and also the liability assumed when expressing
> >an opinion.
> >
> >In the past, the annual review plus the close relationship
> >between the
> >CPA and FinComm--who played a very active role
>>in the
> >SSA's finances at
> >that time--plus performing an occasional full audit
> >made the question
> >one of economics as well as the By-Laws. In effect,
> >FinComm made the
> >decision to self insure, judging that an occasional
> >loss, though
> >unlikely, would still be less than the accumulated
> >added cost of doing
> >an audit every year. I suspect that may still turn
> >out to be true
> >despite the magnitude of the potential loss. I
>>recall
> >that the Board
> >was made aware of this policy (but not asked to
>>approve
> >it, per se) on
> >at least one occasion while I was a director but
>>I
> >cannot be certain.
> >
> >In my opinion, then, the critical question is whether
> >FinComm retained
> >Johnson, Miller to continue preparing SSA's annual
> >financial
> >statements, and more specifically to do annual
>>reviews.
> >ExComm's
> >disclosures indicate they did not.
> >
> >Here's where the potential conflicts arise. Good
>>governance
> >calls for
> >FinComm to retain the CPA, who would report directly
> >to them (not to
> >the CFAO or the ED or ExComm or Board), to prepare
> >the annual financial
> >statements (with a review or, under the By-Laws,
>>an
> >audit). ExComm
> >meeting minutes note that Johnson, Miller appears
>>not
> >to have been
> >retained to do any such work after 2002. If FinComm
> >did retain them, in
> >writing or orally, then Johnson, Miller may (and
>>I
> >emphasize the word
> >'may') have some culpability and there is an inherent
> >conflict with
> >their continuing to work on the SSA account. In
>>that
> >case, it gets
> >messier: ExComm meeting minutes indicate that Johnson,
> >Miller selected
> >the lawyer in Hobbs that SSA engaged. This attorney
> >quickly recommended
> >that SSA give Johnson, Miller 'carte blanche to
>>do
> >what they needed
> >with the SSA financial records.'
> >
> >On the other hand, if FinComm did not retain Johnson,
> >Miller, then
> >FinComm itself may (again, 'may') have some culpability,
> >perhaps shared
> >by ExComm and the Board (although directors could
>>argue
> >they acted in
> >reliance on FinComm) and there is an inherent conflict
> >with their
> >playing a key role in this investigation.
> >
> >It's very important to reiterate that competence
>>and
> >trustworthiness
> >are irrelevant to this discussion. It doesn't matter
> >whether the CPA or
> >FinComm or ExComm did anything wrong, intentionally
> >or otherwise. And
> >I'm not suggesting they did. On the contrary, I've
> >been generally
> >impressed with the work done by ExComm so far.
>>What
> >matters is that
> >people who may have legal liability and therefore
>>a
> >vested interest in
> >the outcome are deeply involved in this investigation.
> >That's a classic
> >conflict of interest. And it's a recipe for losing
> >the confidence of
> >SSA members at a time when we need it most.
> >
> >One remedy for conflict of interest is disclosure.
> >Depending on your
> >point of view, disclosure to date has been adequate
> >but sometimes
> >reluctant.
> >
> >Another remedy is bringing in new people to do
>>the
> >investigative and
> >remediation work. This is risky. Those who know
>>the
> >most about SSA and
> >are in the best position to help are probably already
> >involved. It's
> >difficult enough to get competent volunteers, much
> >less to work for
> >free in Hobbs going through accounting records
>>and
> >meeting with
> >attorneys, bankers, the IRS, etc.
> >
> >A third and, I believe, best remedy is an independent
> >group to monitor
> >the actions of ExComm, the accountants, the attorney(s),
> >staff, and
> >others involved. This is where the discussions
>>with
> >the concerned
> >directors quickly arrived. Ultimately this resulted
> >in a formal
> >proposal for an Oversight Task Force (OTF). Four
>>SSA
> >members were
> >prevailed upon by these directors to serve on the
>>OTF:
> >myself and three
> >other individuals--a highly experienced accountant,
> >an attorney, and a
> >successful businessman. Because of my prior Board
>>service,
> >I initially
> >declined to serve on the OTF but was persuaded
>>by the
> >two concerned
> >directors because of my knowledge of SSA, my business
> >background, and
> >the fact that my tenure ended in early 2002, prior
> >to the Larry
> >Sanderson affair.
> >
> >The OTF proposal was made to the full Board by
>>one
> >of these concerned
> >directors approximately two weeks ago with, unfortunately,
> >a generally
> >negative reaction.
> >
> >How could this happen? Well, some directors had
>>genuine
> >questions about
> >certain provisions in the OTF proposal but I believe
> >the negative
> >reaction was due in great part to misunderstanding
> >the OTF's purpose.
> >Instead of oversight (i.e., monitoring, not decision
> >making), some saw
> >this as an attempt to usurp power from the Board
>>or
> >ExComm. Some feared
> >it could interfere with and/or delay the investigation
> >or reveal
> >confidential information. Others viewed it as a
>>no-confidence
> >vote. In
> >frustration, I 'recused' myself from participation
> >on the OTF and made
> >a direct appeal to the Board explaining OTF's purpose
> >in more detail
> >and arguing that it was the Board's fiduciary duty
> >to take action to
> >oversee the activities of ExComm, FinComm, and
>>others
> >who were
> >conflicted.
> >
> >With this clarification, responses to our proposal
> >were gratifyingly
> >more favorable. In fact, ExComm subsequently expressed
> >their support
> >for the OTF. To be fair, at least some ExComm members
> >(including Dianne
> >Black-Nixon) had voiced support all along.
> >
> >That was nearly two weeks ago. Since then, nothing
> >much has happened.
> >ExComm continues to manage the investigation and
>>to
> >make decisions. My
> >sense is that there may be debate even within ExComm
> >on how to proceed.
> >More than a week ago, one ExComm member emailed
>>me
> >to say it would be
> >not be practical to hold a tele-conference special
> >Board meeting for
> >all 26 directors and suggested delaying action
>>on the
> >OTF until the
> >scheduled Board meeting at the end of this month.
>>My
> >response was that
> >with every passing day, decisions were being made
>>that
> >could be
> >criticized by SSA members and should be overseen
>>by
> >an independent
> >body. I often participate in conference calls with
> >at least that many
> >people dispersed over the U.S. and India and do
>>not
> >think a properly
> >managed special meeting--with one agenda item--would
> >be terribly
> >difficult. Rightly or wrongly, I interpreted this
>>as
> >foot dragging. If
> >ExComm had supported the OTF with the same admirable
> >alacrity with
> >which they jumped on the initial disclosure of
>>the
> >tax problems, the
> >OTF would already be at work and I would not be
>>writing
> >what some will
> >doubtless interpret as a disloyal or disruptive
>>public
> >posting.
> >
> >ExComm believes it would be inappropriate for them
> >to charter the OTF
> >without full Board approval. They have a point,
>>but
> >this reasoning
> >leads inexorably to the conclusion that, absent
>>oversight,
> >ExComm
> >should not be making major decisions about the
>>investigation
> >or
> >corrective action, either.
> >
> >Ironically, with one troubling exception (see below),
> >I'm less
> >concerned with what ExComm is actually doing in
>>Hobbs
> >than with how SSA
> >members may come to perceive or question their
>>actions.
> >To date, ExComm
> >has moved decisively to manage a tough problem
>>and
> >it's difficult to
> >quarrel with their actions.
> >
> >But many members still have a sense that a previous
> >ExComm attempted to
> >cover up the Larry Sanderson expense account scandal
> >three years ago.
> >We cannot afford the same cynicism, or worse, now.
> >While most members
> >understand that some things must remain confidential
> >for legal reasons,
> >they are uncomfortable or angry if they suspect
>>they
> >are not getting
> >the real story. And on that score, ExComm's inaction
> >is troubling.
> >
> >I mentioned an exception, and it's a big one: how
>>responsibility
> >for
> >this problem is being assigned. ExComm's communications
> >have emphasized
> >the ED's failure to inform the Board of the non-filing
> >of tax
> >information returns. At the same time, however,
>>ExComm
> >has minimized
> >the 'errors of omission' of the ExComm/FinComm/Board
> >in not retaining
> >the CPA to examine the SSA's annual financial statements.
> >
> >In fact, both lapses are errors of omission. Yet
>>my
> >impression is that
> >the ED is being positioned as the one most responsible
> >for allowing
> >this crisis while FinComm's failure to act is being
> >dismissed. For that
> >matter, ExComm admits that the CFAO reported directly
> >to the Board, not
> >the ED, until mid 2005 so there is ample reason
>>to
> >share responsibility
> >for this. While I do not have the facts available
>>to
> >ExComm, the
> >questions raised are precisely the reason that
>>independent
> >oversight is
> >needed over those who find themselves in conflicted
> >positions, for
> >their sake as well as the members'. And it is needed
> >immediately, not
> >next week or the week after that or after the next
> >major staff or
> >organizational decision is made.
> >
> >If this were a public corporation, plaintiffs'
>>attorneys
> >would already
> >be circling like vultures with the prospect that
>>directors
> >could be
> >sued and found guilty of breach of their fiduciary
> >duty, in particular
> >those on FinComm and, likely, ExComm. But there's
>>not
> >enough money here
> >to interest them. Nor do I believe we should necessarily
> >seek to punish
> >whomever may have contributed to this debacle.
>>This
> >was a failure,
> >albeit a predictable one, of a flawed system. Yet
>>I
> >don't think we
> >ought to sweep anything under the rug, either.
>>I believe
> >most SSA
> >members would readily forgive the unwitting errors
> >of volunteer
> >directors so long as they believe they are being
>>dealt
> >with
> >forthrightly.
> >
> >I apologize to those I know and respect on the
>>Board
> >and ExComm who are
> >dedicated, well intentioned, and working hard in
>>thankless
> >positions.
> >But I fear that some of them do not fully understand
> >the danger that
> >their inaction will increase the cynicism and apathy
> >already evident in
> >many SSA members. The lack of urgency and reluctance
> >to initiate
> >oversight by ExComm and the directors alike suggest
> >that some of them
> >still don't 'get it.'
> >
> >Despite protestations to the contrary, there is
>>a tendency
> >in times
> >like this for ExComm and the Board to 'circle the
>>wagons.'
> >It's a
> >natural human response to threats, both from the
>>original
> >problem and
> >from outraged SSA members who want someone, anyone,
> >to pay in blood. It
> >is a tendency against which we must fight hard
>>if we
> >are to maintain
> >the trust of our members.
> >
> >Sadly, at this point individuals who generously
>>agreed
> >to serve on the
> >OTF weeks ago are growing cynical about the willingness
> >of SSA to
> >address its problems. Clearly I am, too.
> >
> >On a positive note, I see this unfortunate crisis
>>as
> >a wonderful
> >opportunity to make major changes to SSA to improve
> >its financial
> >position and increase its effectiveness. The current
> >Board structure is
> >indeed cumbersome and ineffective. It also makes
>>sense
> >to examine which
> >functions the SSA should perform and whether some
>>of
> >these should be
> >outsourced. And I agree with those who believe
>>we should
> >explore
> >locations other than Hobbs. We have a chance to
>>'start
> >over' with a
> >clean sheet of paper...without losing those elements
> >of SSA that are
> >critical. Yet what I have seen in the past 3+ weeks
> >leaves me worried
> >that we will squander this opportunity.
> >
> >ACTION ITEM: Please contact your directors and,
>>while
> >offering your
> >continuing support and trust, urge them to demand
>>the
> >Oversight Task
> >Force or something like it be put in place immediately.
> >All of
> >us--members, directors, ExComm, and staff alike--need
> >the clarity and
> >assurance that only an independent observer can
>>provide.
> >
> >In the meantime, please maintain the degree of
>>civility
> >on this forum
> >that I hope you would if the discussion were taking
> >place in person.
> >Ironically, the offensive and irresponsible behavior
> >of some
> >participants on rec.aviation.soaring alienates
>>most
> >SSA members and
> >encourages our leadership, with some justification,
> >to dismiss these
> >critics as just a bunch of loudmouth idiots. Those
> >who insist on
> >popping off indiscriminately with wild allegations,
> >accusations, and
> >statements of opinion-as-fact serve no one but
>>their
> >own egos. Their
> >actions--presuming they actually care about the
>>future
> >of SSA and the
> >great things it has and can still do for soaring
>>pilots
> >in this
> >country--are counterproductive.
> >
> >Chip Bearden
> >SSA Member since 1965
> >
> >
>
>
>

[[email protected]]

Wow some really long winded and good comments on this subject.
Simple answer: The CEO, Excom and the CPA were all either sleeping at
the switch or are all incompitent (that may be one and the same). It's
obvious that the CFO was not being honest and possibly criminal. But
the deligator (CEO & EXCOM), the overseers (CEO & EXCOM) and the tax
prepairers (CPA) were difinetally not doing there jobs.

About 25 days after every quarter my in house book-keeper (she's my CFO
although that's actually my title along with CEO) prepairs our
quartely payroll tax reports. I look at them sign them and she sends
them off. At the end of our tax year she does an annual pay roll
report and the same happens.

Once a year my CPA who costs us about 5k-6k a year to prep my corprate
tax returns comes to our (trucking) terminal and spends about 8-12 hrs
( @ $200 per hour) going over our figures (and he buys us lunch, we
feel special). He's intimant with my company's numbers and operation.
He recognises and asks questions about our payroll & workmans comp and
all other aspects of our operations.

CHECKS & BALANCES

I've been doing this for 16 yrs now. I've survived an IRS audit with
the help of my CPA but that's his job also ( @ $200 an hour).

Don't let the SSA die because of mis-management disease.

[[email protected]]

Chip,

You make many valid points but the idea of going to the courts or doing
a BK is not a good solution. I have 25 years of experience in the
finalcial world and have seen many BK events. The primary action of
any court appointed Boss or BK Trustee is to get the thing done not
take the care or time that an owner would hope for. A big issue is
that the time it takes for one of these to do anything would be
messured in months not days and weeks. If we go BK that would be the
end- at a minimum - of the group insurance, relationship with all the
various alphabet organizations not only in the USA but internationally
( a court appointed Master would have no influence with any of these
organizations ). Further, if the Foundation is not a separate 501-3c
organization those funds become controlled by the BK trustee. All
members would fall into the class of unsecured creditors and would have
no influence in the actions of the contolling entity and would get
nothing!! Trying to restart the SSA or some new organization would be
a mess. ( Even if we did a Re-organization BK we would be ineffective
for a long time going through the legal process and outsiders would be
making decisions for us in the interim.) Just look at the various
opinions of the individuals that have commented on this subject and
imagine how many splinter groups would like be the BOSS.
Yes, this is a mess but lets keep working on overcoming it nd creating
a better SSA from the organization we have. I stronly agree with the
formation of an independent oversight taskforce. To give this group
credibility it should be completely "independent" of any relationship
with present and past Boards. It should be comprised of individuals
with backgrounds in business, finacial, legal, acounting and management
practices.

Tom Dixon
Idaho

[[email protected]]

Tom,

There have been many misrepresentations in this discussion over the
past few weeks that I have let go by but because this one has my name
on it, I must respond! :) Owing to the length of my original posting
and its inclusion in subsequent responses, it can be difficult to
determine who said what. For the record, please note that I am NOT
advocating recourse to the courts, much less bankruptcy!! (that was
another poster's suggestion)

On the contrary, I believe there is ample opportunity not only to
resolve the current problems without these actions but to move forward
with an even more effective SSA, perhaps in a modified form. But a
critical pre-requisite is having the trust of our members. For that, as
you reiterate, independent oversight is required.

There are actually two steps: 1) resolve the current crisis, and 2)
explore future alternatives for SSA. These are two distinct, albeit
related activities most probably calling for separate efforts. The
Oversight Task Force (or something like it) is necessary, I believe,
for the first. A Restructuring Task Force (or something of this sort)
is necessary for the second. Both groups must be staffed by respected
people who are competent, independent-minded [though I wouldn't exclude
members from either group simply because of past or current association
with SSA], conceptual, organized, and able to think creatively. Don
Johnstone's suggestion to seek membership from outside the SSA, even
from outside the U.S., is a worthy idea that we should pursue.

Chip Bearden

[5-BG]

tom;
you make some good points re the court appointed master in normal bk events. I believe that it is possible to petition a court to appoint a master with a charter that is to reorganize the membership and the society and not to liquidate. It will take time.. If properly defined at the outset, the master could identify several possible strategies and possible structures. There are NOT that many. He could carefull lay out the options to the membership for discussion and a vote.
The point is that a 26 member decision making body is dysfunctional and has proven itself to be unable to carry out its responsibilities. several times.
A strict time line for presenting possible association models.. say 2 to 3 months, followed by a discussion period of a month then a vote and the ssa would be ready to hold general elections for new governing body, whatever that may be. This is possible and feasable. I do not believe that current board is going to do it any faster or better than a single competent master who works full time on the project. it will be expensive.
Re insurance.. what we have now is a very good group policy. As I have said before, it is the main reason that i belong to ssa and the primary benefit that i recieve from membership. Costello could easily set up a group that is SEPERATE from the SSA. Look at what credit unions have done recently. it used to be that you had to belong to a narrow group to belong.. now just having a pulse qualifies you for membership.. point is that a group of "donors to the foundation" could easily replace the ssa as the soaring group for insurance purposes. That could be done out of costello's office with a simple PC and perhaps one extra staff. basically a very narrow special interest group that does nothing but seek the best deal for the group on glider insurance.
hopefully, pat costello will read this and maybe consider it.. maybe some other insurance agent will jump on the idea..
take away the insurance aspect of ssa membership and the association will be back to real basics and need to focus on what the members really want. imho this would be positive.

5bg
> wrote in message ups.com...
Chip,

You make many valid points but the idea of going to the courts or doing
a BK is not a good solution. I have 25 years of experience in the
finalcial world and have seen many BK events. The primary action of
any court appointed Boss or BK Trustee is to get the thing done not
take the care or time that an owner would hope for. A big issue is
that the time it takes for one of these to do anything would be
messured in months not days and weeks. If we go BK that would be the
end- at a minimum - of the group insurance, relationship with all the
various alphabet organizations not only in the USA but internationally
( a court appointed Master would have no influence with any of these
organizations ). Further, if the Foundation is not a separate 501-3c
organization those funds become controlled by the BK trustee. All
members would fall into the class of unsecured creditors and would have
no influence in the actions of the contolling entity and would get
nothing!! Trying to restart the SSA or some new organization would be
a mess. ( Even if we did a Re-organization BK we would be ineffective
for a long time going through the legal process and outsiders would be
making decisions for us in the interim.) Just look at the various
opinions of the individuals that have commented on this subject and
imagine how many splinter groups would like be the BOSS.
Yes, this is a mess but lets keep working on overcoming it nd creating
a better SSA from the organization we have. I stronly agree with the
formation of an independent oversight taskforce. To give this group
credibility it should be completely "independent" of any relationship
with present and past Boards. It should be comprised of individuals
with backgrounds in business, finacial, legal, acounting and management
practices.

Tom Dixon
Idaho

[[email protected]]

Brian Glick wrote:
> Chip
>
> I could not agree with you more. No stone should be left unturned in getting
> to the bottom of this. Unfortunately, the only way to use a 'broad brush"
> and clean this mess up would be to sweep out the "insiders" and replace them
> with people that will eventually become insiders. We seem to elect our
> directors now, so I am at a loss to tell you if we are all misinformed when
> we vote, or we have been all lead astray. I repeat what I said in an earlier
> post, and that is, the people that I know on the Excomm and the board are
> above reproach. That being said, does that make every member that voted for
> their directors culpable in this situation? If that is so, what is to stop
> an insurance company from coming after all of us. The answer: NOTHING! I did
> indeed vote for my current director, and have every confidence that the job
> being done by this person is in the best interests of all of us in the
> society. Hindsight is really 20\20 and we are all going blind trying to say
> what should have been done differently. It is too late to cry over spilled
> milk.

Brian,

You are not a director and DO NOT have the liability that the directors
have. PERIOD.

Directors DO have a LEGAL LIABILITY (except in the 3 states that have
laws providing immunity from STATE LAW, not FEDERAL). To say that "we
had good intentions, but screwed things up" IS NOT A DEFENSE. Directors
are OBLIGATED to follow the Bylaws of the organization; not doing so
opens them up to personal liability, as it should. This is directly out
of the SSA's Bylaws:

SECTION 2 - Annually, after the close of the fiscal year, the books and
accounts shall be audited by an independent accounting firm and the
findings and opinions of the firm published and distributed to the
Directors, and to others requesting same.

It says "shall", not "may be" or "if we feel like it". If the directors
feel that the by laws are antiquated or inappropriate they have to
change them, which requires a two thirds vote by all of the Directors.
There is nothing that is "hindsight" or "20/20" here (unless you are
blind and can't read the Bylaws).

Without actually reading the D&O (directors and officers) liability
policy it is impossible to say what it covers, but it probably excludes
taxes, fines, penalties and interest. That is if the SSA even HAS a D&O
policy.

I contacted my regional director after the last fiasco, asking some
pointed questions about finances. After some prodding I got a copy of a
recent finance statement; it was PATHETIC! There was very little detail
(the whole thing was less than a page long). He said the Board's
intention was to post financials on-line, but that never happened.

Anyone who is even THINKING about becoming a director should start by
googling "non-profit director duties and responsibilities"; you will
get an eye full. I do speak with some experience; I have been on the
board of a $10M non-profit for over 10 years.

Tom Seim
2G
Richland, WA

[[email protected]]

I still think people are missing the point regarding SSA's financials.
When I was on the Board in the late 1990s, I raised the issue of the
annual audit. I learned that the difference in cost of an audit over
the review we had done most years was on the order of $20,000 to
$30,000 per year (it's probably more now). And the Budget and Finance
Committee (FinComm) at that time kept in close touch with the
bookkeeper and the CPA firm. FinComm's rationale for not ordering an
audit every year was that it didn't make economic sense, as I noted in
my posting. And they were right...economically. We long ago saved more
in audit fees than this debacle will cost us. The other side of that
coin is that SSA would be much worse off economically now if audits had
been done every year.

As Tom Seim notes, the proper way would have been to change the ByLaws.
I'm not sure why that wasn't attempted except that any change in the
ByLaws was a monumental undertaking and this one would have been
controversial. So FinComm exercised their business judgment.

People have popped off about it being illegal to ignore the ByLaws. I'm
no lawyer but I suspect that's not strictly true. There may well be
civil liability. But for that, one must prove damages. And now we're
back to SSA being better off having not paid for all those audits even
after losing a bunch of money this time.

The REAL issue is why the Budget & Finance Committee (FinComm) chose to
stop doing reviews and took a much more hands-off approach to SSA
finances. The second half of that question is answered by "SSA hired a
CFO who did that." But prudence should have required FinComm to
maintain a close watch on the finances while continuing to engage the
CPA every year for at least a review. As it was, there appears to have
been no CPA engaged and relatively less oversight by FinComm, leaving
SSA totally dependent on the CFO. We know where that led.

And to return to my posting again, either FinComm or the accountants
(or both) must bear responsibility for letting this happen. Perhaps
ExComm. Yet all those parties are still deeply involved in
investigating and remedying it. That's a conflict of interest. That's
why independent oversight is needed...immediately.

ExComm is meeting tomorrow (29 Sep). The Board meeting is this Saturday
(30 Sep). Let your directors know how you feel. They do react to
rationale pressure.

Chip Bearden

[5-BG]

Chip;
I still don't think that you GET IT!!!

what the board did was to ignore the bylaws which govern the association and their actions. Illigal??? maybe, depending if any benefitted from these actions which i doubt. Civil liability.. YES there is plenty.
As i have said before, IF the society has insurance, and if the board collects on it, you can bet that each and every member will be in court defending himself at his own expense for the next several years against the insurance company which will almost surely look for a deep pocket or two to get its money back.. thats the way insurance companies work.

THIS IS WHY THE BOARD HAS A CONFLICT OF INTEREST!!!

The fin com DID NOT HAVE THE AUTHORITY TO EXERCISE JUDGEMENT in this case. it could have raised the issue and changed the bylaws. but it simply did not have the authority to unilaterially ignore its mandate.. no matter how good the reason.

We are now going to be treated to the results of a closed door meeting(s) during which these same people are going to be making judgements and decisions. I certainly hope that they have a copy of the bylaws and an attorney handy.

You say that "we saved more in audit fees than this will cost us".. I wonder.. how easy is it going to be to get new directors? will the membership simply leave?? will ssa survive???

Look, this matter has, by admission of excom, been referred to police and D.A. That implies money was stolen. that is illigal and grounds for collecting on officer insurance.

THIS BOARD IS BROKEN and anything that they do is subject to challange and controversy.. I certainly hope that their resignation en masse is the outcome of this weekend.

lessons have been put up on the board... i certainly hope that future directors will take them to heart.

The board note of the 25th did not mention the ED... what is that all about??? he is a hired hand who screwed up at best, or was in on the deal at worst.. why is he still on the payroll???




> wrote in message oups.com...
I still think people are missing the point regarding SSA's financials.
When I was on the Board in the late 1990s, I raised the issue of the
annual audit. I learned that the difference in cost of an audit over
the review we had done most years was on the order of $20,000 to
$30,000 per year (it's probably more now). And the Budget and Finance
Committee (FinComm) at that time kept in close touch with the
bookkeeper and the CPA firm. FinComm's rationale for not ordering an
audit every year was that it didn't make economic sense, as I noted in
my posting. And they were right...economically. We long ago saved more
in audit fees than this debacle will cost us. The other side of that
coin is that SSA would be much worse off economically now if audits had
been done every year.

As Tom Seim notes, the proper way would have been to change the ByLaws.
I'm not sure why that wasn't attempted except that any change in the
ByLaws was a monumental undertaking and this one would have been
controversial. So FinComm exercised their business judgment.

People have popped off about it being illegal to ignore the ByLaws. I'm
no lawyer but I suspect that's not strictly true. There may well be
civil liability. But for that, one must prove damages. And now we're
back to SSA being better off having not paid for all those audits even
after losing a bunch of money this time.

The REAL issue is why the Budget & Finance Committee (FinComm) chose to
stop doing reviews and took a much more hands-off approach to SSA
finances. The second half of that question is answered by "SSA hired a
CFO who did that." But prudence should have required FinComm to
maintain a close watch on the finances while continuing to engage the
CPA every year for at least a review. As it was, there appears to have
been no CPA engaged and relatively less oversight by FinComm, leaving
SSA totally dependent on the CFO. We know where that led.

And to return to my posting again, either FinComm or the accountants
(or both) must bear responsibility for letting this happen. Perhaps
ExComm. Yet all those parties are still deeply involved in
investigating and remedying it. That's a conflict of interest. That's
why independent oversight is needed...immediately.

ExComm is meeting tomorrow (29 Sep). The Board meeting is this Saturday
(30 Sep). Let your directors know how you feel. They do react to
rationale pressure.

Chip Bearden

[Mike Schumann]

If the board felt that an audit was not cost effective, then the bylaws
should have been changed, not just ignored.

Mike Schumann

> wrote in message
oups.com...
>I still think people are missing the point regarding SSA's financials.
> When I was on the Board in the late 1990s, I raised the issue of the
> annual audit. I learned that the difference in cost of an audit over
> the review we had done most years was on the order of $20,000 to
> $30,000 per year (it's probably more now). And the Budget and Finance
> Committee (FinComm) at that time kept in close touch with the
> bookkeeper and the CPA firm. FinComm's rationale for not ordering an
> audit every year was that it didn't make economic sense, as I noted in
> my posting. And they were right...economically. We long ago saved more
> in audit fees than this debacle will cost us. The other side of that
> coin is that SSA would be much worse off economically now if audits had
> been done every year.
>
> As Tom Seim notes, the proper way would have been to change the ByLaws.
> I'm not sure why that wasn't attempted except that any change in the
> ByLaws was a monumental undertaking and this one would have been
> controversial. So FinComm exercised their business judgment.
>
> People have popped off about it being illegal to ignore the ByLaws. I'm
> no lawyer but I suspect that's not strictly true. There may well be
> civil liability. But for that, one must prove damages. And now we're
> back to SSA being better off having not paid for all those audits even
> after losing a bunch of money this time.
>
> The REAL issue is why the Budget & Finance Committee (FinComm) chose to
> stop doing reviews and took a much more hands-off approach to SSA
> finances. The second half of that question is answered by "SSA hired a
> CFO who did that." But prudence should have required FinComm to
> maintain a close watch on the finances while continuing to engage the
> CPA every year for at least a review. As it was, there appears to have
> been no CPA engaged and relatively less oversight by FinComm, leaving
> SSA totally dependent on the CFO. We know where that led.
>
> And to return to my posting again, either FinComm or the accountants
> (or both) must bear responsibility for letting this happen. Perhaps
> ExComm. Yet all those parties are still deeply involved in
> investigating and remedying it. That's a conflict of interest. That's
> why independent oversight is needed...immediately.
>
> ExComm is meeting tomorrow (29 Sep). The Board meeting is this Saturday
> (30 Sep). Let your directors know how you feel. They do react to
> rationale pressure.
>
> Chip Bearden
>

[Greg Arnold]

5-BG wrote:

>
> THIS BOARD IS BROKEN and anything that they do is subject to
> challange and controversy.. I certainly hope that their resignation en
> masse is the outcome of this weekend.

If they do, who will run the SSA? Is 5-BG volunteering to help out?

[Eric Greenwell]

Mike Schumann wrote:
> If the board felt that an audit was not cost effective, then the bylaws
> should have been changed, not just ignored.

Sure, but I don't see how that would have prevented the present
situation. They still didn't do the review that was deemed
cost-effective. If the whole board suffers brain fade at the same time,
the best bylaws won't prevent a disaster.

--
Eric Greenwell - Washington State, USA
Change "netto" to "net" to email me directly

"Transponders in Sailplanes" on the Soaring Safety Foundation website
www.soaringsafety.org/prevention/articles.html

"A Guide to Self-launching Sailplane Operation" at www.motorglider.org

[5-BG]

NO I AM NOT VOLUNTEERING TO HELP OUT.

What I am trying to do is to point out that the association is broken and needs fixing. that task in itself has met with a whole lot of resistance on this forum.. so much so that i have grave concerns about the outcome.

This whole problem stems from the allocation of resources (money!!!). we have a nice color glossy monthly magazine in which i find little of interest. it cost about 1/2 million per year. . The board decided to "save" 30 grand by foregoing the required audit. Which pet project ate up that 30 grand??? it was an asset allocation decision that proved to be unwise and is now biting them in the ass.

I think that we should adopt the zero based budgeting concept. start with a fresh piece of paper and on one side project dues. on the other, make a list of projects. First on that project is to HIRE SOMEONE to analyze and define options for the members. Total options.. Outsourcing most of the functions sounds good to me. Perhaps having a small one person PR office at, or close to, a major air museum to provide a presence and to distribute literature would be a cost effective way to eliminate major office overhead. Hiring a lobbyist who specializes in avaition would probably be more cost ewffective than having the ED do that task. There are MANY MANY options available on a blank page. Start over. poll the membership. HIRE A PRO who is expert at starting and running non profit special interest associations. PAY HIM WELL.. I am not competent, nor are the "volunteers" from what i have read to do this major restructuring. If the society is important to the foundation, then the foundation should make a project out of the restructuring. it will cost money. Sacred cows will be sacrificed. As it stands, the entire thing is going down the tubes. \

one more thought re "legality, responsibility etc."

As pilots in command we do NOT have the right to determine which FARS we obey or decide not to obey. It is Illigal to run a cloud street with your canopy in the cloud. It is illigal to stick a wing tip into the vertical face of the rotor cloud . it is illigal to fly after taking a drink or two. it is illigal to fly after sunset unless your plane is equipped properly. It is illigal to bust 18,000 feet without a clearance. Everytime we "choose" decide to ignore one of these "laws" we do so at the risk of legal as well as civil penality. If our actions hurt someone we are civilly liable.

byLAWS are the FARS of a corporation or orginazation. those who chose to violate them did so knowingly and are subject to the consequences. They are taking the society down with their actions and it is a shame.

I stand ready to discuss or to debate any of the points i have made in this and prior posts. Your response to my post is typical of bull**** put out by those who do not have a clue about how things work and are unable to express a coherent thought. So far I have been attacked, but not on matters of substance. Again, i stand ready to debate the issues. I have offered opinion and some choices.. What have you offered???

5bg

"Greg Arnold" > wrote in message news:8J0Tg.1011$La2.397@fed1read08...
5-BG wrote:

>
> THIS BOARD IS BROKEN and anything that they do is subject to
> challange and controversy.. I certainly hope that their resignation en
> masse is the outcome of this weekend.

If they do, who will run the SSA? Is 5-BG volunteering to help out?

[[email protected]]

Eric Greenwell wrote:
> Mike Schumann wrote:
> > If the board felt that an audit was not cost effective, then the bylaws
> > should have been changed, not just ignored.
>
> Sure, but I don't see how that would have prevented the present
> situation. They still didn't do the review that was deemed
> cost-effective. If the whole board suffers brain fade at the same time,
> the best bylaws won't prevent a disaster.

A change of this sort to the Bylaws would have been a HUGE RED FLAG to
the rest of the membership (at least SOME of the membership who are
experienced in this area). To operate as they did - behind closed doors
w/o communication to the membership as a whole - permitted the
situation to worsen to the point it presently is: a crisis of major
proportion to the organization.

Audits are a fundamental check and balance that ensures compliance with
all relevent rules, regulations and laws. Just as you would never get
on an airliner whose pilot decided to cancel IFR and fly VFR thru
controlled airspace, you never leave one person in control of an
organizations finances by himself. I am frankly surprised that I have
to state this; this should be basic common sense to all adults with an
8th grade education. The Bylaws are not just some nuisance formality;
they are fundamental guidance to operation of the organization.

I also disagree with the cost estimate Chip gave for doing the audit.
Where did you get that, Chip? The non-profit whose board I am on has
annual audits done for about $15,000, and that is a $10M operation with
400 employees. I would expect SSA's audit to cost half that.

Tom Seim
2G
Richland, WA

[[email protected]]

I'm getting as frustrated with some of our RAS "experts" as I am by
some of our SSA directors.

Come on, folks, use your brains. The board is no more a monolithic
bunch of indifferent, asleep-at-the-switch incompetents than are the
participants on this forum a bunch of careless, abusive loudmouths. OK,
maybe that's a bad argument to make given some of the simplistic
garbage that's gotten shoveled out recently. Some of you guys have
posted two dozen times and have yet to get it right or add value, even
when you do have the nerve to use your own names when you question
someone's integrity. If I sound a little less temperate than usual,
it's because I'm fed up.

In truth, there are many faces among the board today, with varying
skill sets and levels of competence. Some are scared. Some are
bewildered, wondering what they got themselves into. Some are very
frustrated and angry, not only at the apparent violation of trust by
one staffer over a long period but the way certain directors may have
let the organization down. All of them, I'm convinced, have SSA's
interests at heart although I am concerned about potential conflicts
and the effects those can have even on good people.

I haven't read the minutes of every prior meeting but I suspect it's
true that the board didn't elect to omit doing reviews or to forgo
doing audits. I don't ever recall such a vote when I was a director,
and I raised the audit issue fairly loudly. That decision is something
the Board was fully within their rights to delegate to the Budget &
Finance Committee (FinComm) so long as they had no reason to believe
the finances weren't under control. It's true, as one poster keeps
yammering, that the ByLaws are similar to the FARs, at least in some
ways. But just like a pilot in command who is allowed to ignore the
FARs during an emergency if, at his or her judgment, to comply would
put the pilot(s), passenger(s), or aircraft at risk, so directors are
expected to exercise business judgment as part of their duty of care.
In this case, an argument can be made that the duty of care conflicted
with the duty of obedience (to reference two of a director's duties)
calling for business judgment.

True, the right way would have been to seek a change in the ByLaws. But
nothing is simple in the real world. Let's say the ByLaws only called
for a review. How many treasurers or FinComms do you think would
recommend spending $30,000 (or more) in a given year just because
they're not sure they did a good job of minding the store? We might
never have an audit again. It's called the rule of unintended
consequences. I'm not saying what multiple FinComms did was technically
right. But SSA would have spent more than $500,000 on audits in the
past 15 years if they'd stuck to the ByLaws. As is patently clear now,
that's money SSA didn't have. Best case is if FinComm had continued its
previous policy of annual reviews by a CPA plus close supervision. No
one can say, but we might not be where we are now.

One person apparently caused this problem. Yet one of the loudest
voices on RAS now wants to give the power to completely restructure SSA
to...one guy: a special master. Great. Our record for picking one guy
isn't very good. Nor, for that matter, does it make sense.

There are no easy answers or quick solutions. So quit offering
everything from mass firings to zero-based budgeting as a panacea.

My biggest concerns relate to conflicts of interest, not throwing out
every single officer and director we have. You don't fire everyone
because a few people make mistakes, at least not if there are
alternatives.

I believe the way to deal with conflict of interest is putting a truly
independent party in place to perform their own investigation and
monitor what is being done by ExComm, the board, the staff, etc.,
during this transition. We have, or can get, the experts we need to get
through this and, in a separate step, to make the necessary changes for
a new SSA. We just need to remove the cloud of cynicism and suspicion
and mistrust.

I'm uncomfortable with the current situation, as I have said publicly.
But I'm also amazed to see how easily some posters make snap judgments
based on the information released by ExComm. That information has been
helpful in some ways and I applaud ExComm for releasing it. But, in my
opinion, it is being spun; e.g., to shift blame to the Executive
Director and away from FinComm and ExComm. Speaking of information,
though, a couple of posters have observed that the ExComm meeting
minutes are on the SSA Web site. They've been there, updated from time
to time, at least since the first week this news broke. How many of you
have read them? On the Internet, unlike in 3rd grade, it's apparently
easier to write than to read.

Is the ED guilty of something? I don't know. And none of you do,
either. Several of you keep mouthing off with "if there's a good reason
why the ED didn't report the tax problem to the Board, I'd like to know
what it is." This is what passes for enlightened thinking these days.

OK, here's one explanation. I have no idea if it's true, but it's
plausible. The ED was hired after the CFO and told that the CFO
reported to the Board. That was mistake #1 by SSA but they didn't want
another Larry Sanderson incident. FinComm apparently never engaged the
CPA to prepare the annual financial statements after that point
(Mistake #2). I can hear it now, with the CFO explaining to the CPA
partner how the work was being brought in-house to save money now that
SSA had a fulltime CFO instead of a bookkeeper. Maybe the CPAs drop by
SSA once in a while, maybe they even do a little work, though it
appears there was no formal engagement after 2002. Periodically the CPA
reminds the CFO of the necessity to file annual information returns. He
agrees but offers excuses: certain information isn't yet available; the
computer system is down; files have been corrupted; etc.

Anyway, SSA is not the CPA's account anymore so all they can do is
watch. To risk going over the head of the CFO is to risk any chance of
a future re-engagement. The CFO is the only person communicating
financial info to FinComm, and they have no reason to doubt him. The ED
is out of the loop. Until 2005. Now the CFO nominally reports to the
ED. About that same time, or maybe later, the CPA partner mentions to
the ED at a Rotary Club meeting about the information returns. The ED,
startled, asks the CFO, who tells him not to worry, it's just a
paperwork delay, this is done all the time, he's filed for extensions,
he's talking to FinComm about it, no big deal, etc. The ED shuts up; he
knows FinComm still talks to the CFO so he doesn't want to annoy anyone
or, worse, be perceived as trying to make the CFO look bad. And so on.
Finally, this summer, he happens to mention it to FinComm and the
manure hits the rotating propellor blades.

I'm just making this up. The point is, it could be true. Or the ED
could be incompetent (I doubt it; I've met him and seen him work). Or
he and the CFO could have concocted this scheme together and be
planning even now to escape to Bermuda to live happily ever after with
a couple of barmaids...on their $300,000 of ill-gotten gains split two
ways. :)

It's easy to publish to this forum and say the first thing that comes
into your mind. It's easy to come up with pithy questions to which no
one yet has answers to burnish your image. It's easy to make flat
statements of fact...that are no more than opinions.

I was too diplomatic before so let me try something else. If you don't
have something constructive to say, just shut up. As I said before,
your yammering just makes it tougher to convince our leadership that
it's not just the loudmouths on RAS who are upset, it's the many
rank-and-file SSAers, with cooler heads, the ones who "lurk" but don't
post.

I've got nearly 250 emails in my Outlook folder since 1 Sep. and a huge
number of cellphone calls during the same time all relating to our
attempt to get independent oversight set up for SSA. I imagine several
conscientious directors I worked with have nearly as many. Numerous
other directors, including some on ExComm, have communicated to us to
express their strong support. I've risked my reputation and the respect
of people I know to push for change, even as I've been accused in this
forum of "blind devotion" to the SSA leadership [I'm sure ExComm had a
good laugh about that one; it made me want to cry]. We're trying to do
something about it. If you really want to help and not just see your
name on the Internet, contact your directors before the end of today
and tell them to insist on a truly independent oversight body. Tell
them it's the LONG (of course) legalistic-sounding, detailed charter,
not the shorter, easier-to-read, watered down version.

With apologies for losing my temper,
Chip Bearden

[5-BG]

Jim; you wrote"Yet one of the loudest
voices on RAS now wants to give the power to completely restructure SSA
to...one guy: a special master."

The job of a special master would be to first stop the bleeding and second to identify and to present possible ALTERNATIVES to the membership. And to do it in an impartial manner.

you wrote "I believe the way to deal with conflict of interest is putting a truly
independent party in place to perform their own investigation and
monitor what is being done by ExComm, the board, the staff, etc.,"

How is this different than a special master??? I suggested a court appointed master as a means of assuring the membership of impartiality and to give the master legal cover.

You wrote " I don't ever recall such a vote when I was a director,
and I raised the audit issue fairly loudly. That decision is something
the Board was fully within their rights to delegate to the Budget &
Finance Committee (FinComm) so long as they had no reason to believe
the finances weren't under control."
"True, the right way would have been to seek a change in the ByLaws"
"But just like a pilot in command who is allowed to ignore the
FARs during an emergency if, at his or her judgment, to comply would
put the pilot(s), passenger(s), or aircraft at risk, so directors are
expected to exercise business judgment as part of their duty of care."

OK.. when a pilot DECLAIRS AN EMERGENCY he is allowed to make certain decisions. This decision making authority during an emergency does not extend for YEARS and requires a formal emergency call. If the lack of money for an audit was truely an emergency it should have been flagged as such and a serious discussion of what alternatives were available held ( ZERO BASED BUDGETING!!!) in any event, the board did NOT have the right to ignore the bylaws ever.. and certainly not for years.. chosing not to fund an audit which is mandated because other non mandated programs were in need is what happened.
if you, as a director, loudly raised the question, I would be interested in the board response. Someone(you???) posted comments that a read of the minutes of the board reveals no discussion of the question. As a director, you had the opportunity to move for a motion directing the audit. Why didn't you make such a motion? As a director, elected by members in your district, you had the responsibility to raise the issue outside of the boardroom. Making loud noises behind closed doors which are never reflected in the minutes is not good enough.

you wrote"But SSA would have spent more than $500,000 on audits in the
past 15 years if they'd stuck to the ByLaws. "
not so... The year 2002 was the first year from what i have read that the audit was not done. Are you saying that we never had an audit???

you wrote" My biggest concerns relate to conflicts of interest, not throwing out
every single officer and director we have"

I too am concerned about conflict of interest. it has been one of the points i have been "yammering" about.
the situation, as i see it has the ENTIRE BOARD IN CONFLICT, as well as the ED. So what is your suggestion for dealing with a board that is in conflict.? I assume that you do not accept the fact that the entire board is conflicted. They may be well meaning volunteers, BUT i believe that they are all conflicted... refer to my past comments re insurance co seeking deep pockets.

you wrotte, among other abusive comments "Some of you guys have
posted two dozen times and have yet to get it right or add value, even
when you do have the nerve to use your own names when you question
someone's integrity. If I sound a little less temperate than usual,
it's because I'm fed up."

Well I am fed up with the simplistic reasoning and personal attacks that you spew . Your rebuttals to discussion points are internally inconsistant and you resort to personal attacks when frustrated by logic. The mindset that you represent so clearly IS THE PROBLEM. Going along with bad policy and an action outside of the scope of authority vested in the board by the bylaws represents a basic FAILURE, on your part as a director, to understand and to carry out the duties you accepted upon election as a director. So what you are essentially doing is offering up excuses for your own lack of diligence, as a director, and by so doing offering excuses for current directors.
The SSA is clearly FRAGMENTED. A 300k loss is survivable, the fragmentation is not. Beginning with a zero based budget, a new business model needs to be found, discussed and adopted. otherwise the membership will decline dramatically.

My guess is that the board is going to suspend publication of the mag ( or at least radically downsize) AND seek a special dues assessment. My guess is that we will see immediate resignations from board and have a difficult time filling the vacancies.
we will see..

I suggest that you lay off of the personal attacks and devote your energy to crafting rebuttals which are logically consistant and in touch with the real world.


> wrote in message oups.com...
I'm getting as frustrated with some of our RAS "experts" as I am by
some of our SSA directors.

Come on, folks, use your brains. The board is no more a monolithic
bunch of indifferent, asleep-at-the-switch incompetents than are the
participants on this forum a bunch of careless, abusive loudmouths. OK,
maybe that's a bad argument to make given some of the simplistic
garbage that's gotten shoveled out recently. Some of you guys have
posted two dozen times and have yet to get it right or add value, even
when you do have the nerve to use your own names when you question
someone's integrity. If I sound a little less temperate than usual,
it's because I'm fed up.

In truth, there are many faces among the board today, with varying
skill sets and levels of competence. Some are scared. Some are
bewildered, wondering what they got themselves into. Some are very
frustrated and angry, not only at the apparent violation of trust by
one staffer over a long period but the way certain directors may have
let the organization down. All of them, I'm convinced, have SSA's
interests at heart although I am concerned about potential conflicts
and the effects those can have even on good people.

I haven't read the minutes of every prior meeting but I suspect it's
true that the board didn't elect to omit doing reviews or to forgo
doing audits. I don't ever recall such a vote when I was a director,
and I raised the audit issue fairly loudly. That decision is something
the Board was fully within their rights to delegate to the Budget &
Finance Committee (FinComm) so long as they had no reason to believe
the finances weren't under control. It's true, as one poster keeps
yammering, that the ByLaws are similar to the FARs, at least in some
ways. But just like a pilot in command who is allowed to ignore the
FARs during an emergency if, at his or her judgment, to comply would
put the pilot(s), passenger(s), or aircraft at risk, so directors are
expected to exercise business judgment as part of their duty of care.
In this case, an argument can be made that the duty of care conflicted
with the duty of obedience (to reference two of a director's duties)
calling for business judgment.

True, the right way would have been to seek a change in the ByLaws. But
nothing is simple in the real world. Let's say the ByLaws only called
for a review. How many treasurers or FinComms do you think would
recommend spending $30,000 (or more) in a given year just because
they're not sure they did a good job of minding the store? We might
never have an audit again. It's called the rule of unintended
consequences. I'm not saying what multiple FinComms did was technically
right. But SSA would have spent more than $500,000 on audits in the
past 15 years if they'd stuck to the ByLaws. As is patently clear now,
that's money SSA didn't have. Best case is if FinComm had continued its
previous policy of annual reviews by a CPA plus close supervision. No
one can say, but we might not be where we are now.

One person apparently caused this problem. Yet one of the loudest
voices on RAS now wants to give the power to completely restructure SSA
to...one guy: a special master. Great. Our record for picking one guy
isn't very good. Nor, for that matter, does it make sense.

There are no easy answers or quick solutions. So quit offering
everything from mass firings to zero-based budgeting as a panacea.

My biggest concerns relate to conflicts of interest, not throwing out
every single officer and director we have. You don't fire everyone
because a few people make mistakes, at least not if there are
alternatives.

I believe the way to deal with conflict of interest is putting a truly
independent party in place to perform their own investigation and
monitor what is being done by ExComm, the board, the staff, etc.,
during this transition. We have, or can get, the experts we need to get
through this and, in a separate step, to make the necessary changes for
a new SSA. We just need to remove the cloud of cynicism and suspicion
and mistrust.

I'm uncomfortable with the current situation, as I have said publicly.
But I'm also amazed to see how easily some posters make snap judgments
based on the information released by ExComm. That information has been
helpful in some ways and I applaud ExComm for releasing it. But, in my
opinion, it is being spun; e.g., to shift blame to the Executive
Director and away from FinComm and ExComm. Speaking of information,
though, a couple of posters have observed that the ExComm meeting
minutes are on the SSA Web site. They've been there, updated from time
to time, at least since the first week this news broke. How many of you
have read them? On the Internet, unlike in 3rd grade, it's apparently
easier to write than to read.

Is the ED guilty of something? I don't know. And none of you do,
either. Several of you keep mouthing off with "if there's a good reason
why the ED didn't report the tax problem to the Board, I'd like to know
what it is." This is what passes for enlightened thinking these days.

OK, here's one explanation. I have no idea if it's true, but it's
plausible. The ED was hired after the CFO and told that the CFO
reported to the Board. That was mistake #1 by SSA but they didn't want
another Larry Sanderson incident. FinComm apparently never engaged the
CPA to prepare the annual financial statements after that point
(Mistake #2). I can hear it now, with the CFO explaining to the CPA
partner how the work was being brought in-house to save money now that
SSA had a fulltime CFO instead of a bookkeeper. Maybe the CPAs drop by
SSA once in a while, maybe they even do a little work, though it
appears there was no formal engagement after 2002. Periodically the CPA
reminds the CFO of the necessity to file annual information returns. He
agrees but offers excuses: certain information isn't yet available; the
computer system is down; files have been corrupted; etc.

Anyway, SSA is not the CPA's account anymore so all they can do is
watch. To risk going over the head of the CFO is to risk any chance of
a future re-engagement. The CFO is the only person communicating
financial info to FinComm, and they have no reason to doubt him. The ED
is out of the loop. Until 2005. Now the CFO nominally reports to the
ED. About that same time, or maybe later, the CPA partner mentions to
the ED at a Rotary Club meeting about the information returns. The ED,
startled, asks the CFO, who tells him not to worry, it's just a
paperwork delay, this is done all the time, he's filed for extensions,
he's talking to FinComm about it, no big deal, etc. The ED shuts up; he
knows FinComm still talks to the CFO so he doesn't want to annoy anyone
or, worse, be perceived as trying to make the CFO look bad. And so on.
Finally, this summer, he happens to mention it to FinComm and the
manure hits the rotating propellor blades.

I'm just making this up. The point is, it could be true. Or the ED
could be incompetent (I doubt it; I've met him and seen him work). Or
he and the CFO could have concocted this scheme together and be
planning even now to escape to Bermuda to live happily ever after with
a couple of barmaids...on their $300,000 of ill-gotten gains split two
ways. :)

It's easy to publish to this forum and say the first thing that comes
into your mind. It's easy to come up with pithy questions to which no
one yet has answers to burnish your image. It's easy to make flat
statements of fact...that are no more than opinions.

I was too diplomatic before so let me try something else. If you don't
have something constructive to say, just shut up. As I said before,
your yammering just makes it tougher to convince our leadership that
it's not just the loudmouths on RAS who are upset, it's the many
rank-and-file SSAers, with cooler heads, the ones who "lurk" but don't
post.

I've got nearly 250 emails in my Outlook folder since 1 Sep. and a huge
number of cellphone calls during the same time all relating to our
attempt to get independent oversight set up for SSA. I imagine several
conscientious directors I worked with have nearly as many. Numerous
other directors, including some on ExComm, have communicated to us to
express their strong support. I've risked my reputation and the respect
of people I know to push for change, even as I've been accused in this
forum of "blind devotion" to the SSA leadership [I'm sure ExComm had a
good laugh about that one; it made me want to cry]. We're trying to do
something about it. If you really want to help and not just see your
name on the Internet, contact your directors before the end of today
and tell them to insist on a truly independent oversight body. Tell
them it's the LONG (of course) legalistic-sounding, detailed charter,
not the shorter, easier-to-read, watered down version.

With apologies for losing my temper,
Chip Bearden

[Mike Schumann]

I wasn't suggesting that changing the bylaws was a good idea. Just a
bettter idea than ignoring them.

Mike Schumann

> wrote in message
ups.com...
>
> Eric Greenwell wrote:
>> Mike Schumann wrote:
>> > If the board felt that an audit was not cost effective, then the bylaws
>> > should have been changed, not just ignored.
>>
>> Sure, but I don't see how that would have prevented the present
>> situation. They still didn't do the review that was deemed
>> cost-effective. If the whole board suffers brain fade at the same time,
>> the best bylaws won't prevent a disaster.
>
> A change of this sort to the Bylaws would have been a HUGE RED FLAG to
> the rest of the membership (at least SOME of the membership who are
> experienced in this area). To operate as they did - behind closed doors
> w/o communication to the membership as a whole - permitted the
> situation to worsen to the point it presently is: a crisis of major
> proportion to the organization.
>
> Audits are a fundamental check and balance that ensures compliance with
> all relevent rules, regulations and laws. Just as you would never get
> on an airliner whose pilot decided to cancel IFR and fly VFR thru
> controlled airspace, you never leave one person in control of an
> organizations finances by himself. I am frankly surprised that I have
> to state this; this should be basic common sense to all adults with an
> 8th grade education. The Bylaws are not just some nuisance formality;
> they are fundamental guidance to operation of the organization.
>
> I also disagree with the cost estimate Chip gave for doing the audit.
> Where did you get that, Chip? The non-profit whose board I am on has
> annual audits done for about $15,000, and that is a $10M operation with
> 400 employees. I would expect SSA's audit to cost half that.
>
> Tom Seim
> 2G
> Richland, WA
>

[Tony Verhulst]

Mike Schumann wrote:
> I wasn't suggesting that changing the bylaws was a good idea. Just a
> bettter idea than ignoring them.

I really don't give a dang what the bylaws say or whether they were
ignored or not. To me, it boils down to this: No tax returns were filed
since 2002. We got a new "professional" Executive Director in 2003 who,
supposedly, arrived with a "clean slate". How hard is it to figure out
that no taxes had been paid - when he first walked in the door, or
since? If he didn't figure it out, that's bad. If he figured it out and
ignored it, that's really bad. The former may be incompetence, the
latter may be criminal - I don't know.

Tony V.

[5-BG]

Tony V..

Post ENRON, laws were enacted in the corporate world which REQUIRE the CEO to PERSONALLY sign and to attest to the validity of tax returns. I believe that the Chairman of the board must also personally attest to the validity of the returns. This has caused much concern in corporate world and many returns from BIG companies have been delayed because executives were making sure that what the accountants presented was defensible. As for the unpaid employee taxes, the CEO (ED) and the chairman have personal liability for unpaid taxes that were withheld from paychecks.. as well as for matching funds ( social security). This is an area in which the IRS does NOT screw around. It is beyond reason that the IRS did NOT formally contact the association re unpaid employee taxes for 3 to 4 years.. Normally they would be well into the lien process and making substantial personal financial threats to the responsible persons ( chair and ED.) within this time period.
People do go to jail for willfully not filing tax returns.

Anyone competent enough to hold the position of ED should have been aware. ITS REALLY BAD!!!..

I believe that you should " give a dang" about the bylaws. Saving the ssa will require a thorough review and perhaps some changes in the bylaws. they are important.

by the way, the ED has a dedicated seat, as does the chair of the SSA on the board of the foundation ( where the money is stashed). Our current board comprise the membership of the foundation. this is per the bylaws of the foundation. The loan of about 300k to bail the ssa out was authorized by the board of the foundation, which is heavily influenced by the board and ED of the ssa, which is in a major conflict of interest and faced with personal liability. The purpose of the foundation is to promote soaring, not to bail directors out of a jam. but they ARE the foundation, so what can we say???
this will get worse before it gets better.
5bg

"Tony Verhulst" > wrote in message . ..
Mike Schumann wrote:
> I wasn't suggesting that changing the bylaws was a good idea. Just a
> bettter idea than ignoring them.

I really don't give a dang what the bylaws say or whether they were
ignored or not. To me, it boils down to this: No tax returns were filed
since 2002. We got a new "professional" Executive Director in 2003 who,
supposedly, arrived with a "clean slate". How hard is it to figure out
that no taxes had been paid - when he first walked in the door, or
since? If he didn't figure it out, that's bad. If he figured it out and
ignored it, that's really bad. The former may be incompetence, the
latter may be criminal - I don't know.

Tony V.

[[email protected]]

Tony Verhulst wrote:

> I really don't give a dang what the bylaws say or whether they were
> ignored or not. To me, it boils down to this: No tax returns were filed
> since 2002. We got a new "professional" Executive Director in 2003 who,
> supposedly, arrived with a "clean slate". How hard is it to figure out
> that no taxes had been paid - when he first walked in the door, or
> since? If he didn't figure it out, that's bad. If he figured it out and
> ignored it, that's really bad. The former may be incompetence, the
> latter may be criminal - I don't know.

Responses to Tony and others:

1. As I understand it, it might have been rather difficult to figure
out the taxes weren't paid unless you suspected something was wrong.
Electronic transfers may have been made but to the wrong accounts. I'm
told this was no simple hand-in-the-cookie-jar snatch of a few bucks;
it was a very carefully orchestrated, rather well concealed effort to
siphon out money over some years. The IRS did notify SSA on numerous
occasions of the withholding tax non-payments...but the person who
received said notifications was the CFO.

2. As for Sarbanes-Oxley (i.e., the post-Enron changes requiring, for
example, CEOs to sign tax returns), that doesn't apply to non-profits
although many CPAs are advising their clients to implement some of the
provisions voluntarily. This must absolutely be one of the
recommendations coming out of this debacle.

3. Yes, the IRS can go after individuals for non-payment of withholding
taxes ("trust fund" taxes), and not just the taxes owed but stiff
penalties, as well, but only from "responsible persons" who "wilfully
failed" to cause the organization to pay them. The burden of proof is
on the individual to prove he or she did not meet these conditions, but
it's easier for unpaid volunteers (e.g., directors) of non-profits to
avoid this liability than in the corporate world. I assume it's easier
still in situations involving fraud (implied from the ExComm's
announcement that law enforcement was now involved). Based on the
ExComm meeting minutes, I also understand that the IRS could probably
have grabbed the Foundation assets anyway if they wanted. At least this
way there's formal loan documentation and the interest is being paid
internally, not to an outside party. Were there potential conflicts?
Sure, in abundance. Would an impartial observer have agreed this was a
reasonable thing for SSA and the Foundation to have done? We'll only
know if such an impartial body is chartered and staffed.

4. Again it's important to distinguish between (a) the lack of filing
information returns each year (a paperwork problem, albeit not trivial)
which could have been caught by the ED if he were looking for it and if
he were in the financial chain of command (neither of which were
apparently true, at least until the CFO began reporting partially to
him in mid 2005) from (b) non-payment of payroll taxes, which is a much
more serious problem but one that, apparently, was well concealed. It's
also worth noting that the tax non-payment problem wasn't discovered
until after the ED notified the Board of the non-filing problem. It's
incomprehensible to me that the IRS wasn't swarming over SSA years ago
but apparently not.

5. To the best of my recollection, SSA's financials were audited only
once while I was on the board (and that one time partly, I believe, due
to the noise I made about it, and with absolutely no problems found, by
the way; all other years involved reviews). I'm told they were audited
at least once again, after the Larry Sanderson affair. When I performed
an extensive financial analysis of SSA a year or so before I landed on
the board, I recall learning that all the financial statements from the
mid 1980s to the early 1990s were reviewed, not audited, and that this
had been the practice for some time. These financial reports were
published in Soaring magazine each year in those days so it wasn't
exactly a secret.

6. Tom Seim's comment about the cost of an audit is of great interest.
My numbers are based on what I believe I was told by FinComm in the
early 1990s when, after I joined the board, I started "yammering" :)
for an audit. I could be mistaken, though I know the difference in cost
between a review and an audit was quite high. Although SSA financials
involve some complexities--e.g., accounting for deferred subscription
income and merchandise sales (i.e., inventory costing)--the annual
reveues are only about $1 million, a very small organization. This is
clearly an area that should be explored by the new financial team.

I hope this information will help all to understand that this situation
is a lot more complex than it has been described by some. Although I
believe some fundamental mistakes were made (that's an understatement),
there's no quick solution now, although the approach to a better,
stronger SSA is straightforward given the right people. That's why I
continue to plead, nag, encourage, and promote the idea of a small
group of independent, skilled overseers/monitors to work in parallel
with the directors still in place, especially ExComm--whomever remains
on that body after the SSA Board meeting tomorrow--to restore
confidence among SSA members and insure that good decisions are made. I
don't want to see the organization I have belonged to since 1965
implode. But I do want to see some significant changes made, and very
soon.

And for those who are wondering: yes, I can occasionally write very
brief, to-the-point postings. This subject doesn't lend itself to that,
however.

Chip Bearden

[5-BG]

to chip;
you seem to be in possession of more information than the rest of us... here is a straight question for you.. one of import.

Does the SSA have in force an insurance policy that covers the type of fraud you allude to?

were the premiums paid up?

HAS THE BOARD SOUGHT PAYMENT FROM THE INSURANCE COMPANY??

Are board actions covered by a simlar policy and have claims been made?

thank you in advance for any answers you might have.
5bg
> wrote in message ups.com...
Tony Verhulst wrote:

> I really don't give a dang what the bylaws say or whether they were
> ignored or not. To me, it boils down to this: No tax returns were filed
> since 2002. We got a new "professional" Executive Director in 2003 who,
> supposedly, arrived with a "clean slate". How hard is it to figure out
> that no taxes had been paid - when he first walked in the door, or
> since? If he didn't figure it out, that's bad. If he figured it out and
> ignored it, that's really bad. The former may be incompetence, the
> latter may be criminal - I don't know.

Responses to Tony and others:

1. As I understand it, it might have been rather difficult to figure
out the taxes weren't paid unless you suspected something was wrong.
Electronic transfers may have been made but to the wrong accounts. I'm
told this was no simple hand-in-the-cookie-jar snatch of a few bucks;
it was a very carefully orchestrated, rather well concealed effort to
siphon out money over some years. The IRS did notify SSA on numerous
occasions of the withholding tax non-payments...but the person who
received said notifications was the CFO.

2. As for Sarbanes-Oxley (i.e., the post-Enron changes requiring, for
example, CEOs to sign tax returns), that doesn't apply to non-profits
although many CPAs are advising their clients to implement some of the
provisions voluntarily. This must absolutely be one of the
recommendations coming out of this debacle.

3. Yes, the IRS can go after individuals for non-payment of withholding
taxes ("trust fund" taxes), and not just the taxes owed but stiff
penalties, as well, but only from "responsible persons" who "wilfully
failed" to cause the organization to pay them. The burden of proof is
on the individual to prove he or she did not meet these conditions, but
it's easier for unpaid volunteers (e.g., directors) of non-profits to
avoid this liability than in the corporate world. I assume it's easier
still in situations involving fraud (implied from the ExComm's
announcement that law enforcement was now involved). Based on the
ExComm meeting minutes, I also understand that the IRS could probably
have grabbed the Foundation assets anyway if they wanted. At least this
way there's formal loan documentation and the interest is being paid
internally, not to an outside party. Were there potential conflicts?
Sure, in abundance. Would an impartial observer have agreed this was a
reasonable thing for SSA and the Foundation to have done? We'll only
know if such an impartial body is chartered and staffed.

4. Again it's important to distinguish between (a) the lack of filing
information returns each year (a paperwork problem, albeit not trivial)
which could have been caught by the ED if he were looking for it and if
he were in the financial chain of command (neither of which were
apparently true, at least until the CFO began reporting partially to
him in mid 2005) from (b) non-payment of payroll taxes, which is a much
more serious problem but one that, apparently, was well concealed. It's
also worth noting that the tax non-payment problem wasn't discovered
until after the ED notified the Board of the non-filing problem. It's
incomprehensible to me that the IRS wasn't swarming over SSA years ago
but apparently not.

5. To the best of my recollection, SSA's financials were audited only
once while I was on the board (and that one time partly, I believe, due
to the noise I made about it, and with absolutely no problems found, by
the way; all other years involved reviews). I'm told they were audited
at least once again, after the Larry Sanderson affair. When I performed
an extensive financial analysis of SSA a year or so before I landed on
the board, I recall learning that all the financial statements from the
mid 1980s to the early 1990s were reviewed, not audited, and that this
had been the practice for some time. These financial reports were
published in Soaring magazine each year in those days so it wasn't
exactly a secret.

6. Tom Seim's comment about the cost of an audit is of great interest.
My numbers are based on what I believe I was told by FinComm in the
early 1990s when, after I joined the board, I started "yammering" :)
for an audit. I could be mistaken, though I know the difference in cost
between a review and an audit was quite high. Although SSA financials
involve some complexities--e.g., accounting for deferred subscription
income and merchandise sales (i.e., inventory costing)--the annual
reveues are only about $1 million, a very small organization. This is
clearly an area that should be explored by the new financial team.

I hope this information will help all to understand that this situation
is a lot more complex than it has been described by some. Although I
believe some fundamental mistakes were made (that's an understatement),
there's no quick solution now, although the approach to a better,
stronger SSA is straightforward given the right people. That's why I
continue to plead, nag, encourage, and promote the idea of a small
group of independent, skilled overseers/monitors to work in parallel
with the directors still in place, especially ExComm--whomever remains
on that body after the SSA Board meeting tomorrow--to restore
confidence among SSA members and insure that good decisions are made. I
don't want to see the organization I have belonged to since 1965
implode. But I do want to see some significant changes made, and very
soon.

And for those who are wondering: yes, I can occasionally write very
brief, to-the-point postings. This subject doesn't lend itself to that,
however.

Chip Bearden

[[email protected]]

Don't let the SSA die because of mis-management
disease.

This is an email I recieved from a nameless RAS contributer who just
made my spam list

Seems I cant spell and some one's figured out my email address. I
apoligize to all who've figured out that 7 years of catholic school
only wasted my parents money and I made 9 spelling errors. I'll try
and do better next time.

Russ Barry (shameless)
p.s. All the bickering and and finger pointing doesn't solve the
problems.

--- gschubert > wrote:

> You might want to check your spelling errors(9)
> before posting on ras to
> avoid embarrassment. Use your Spellcheck.

This was my reply

>
Sorry my spelling might have offended you. I'm not nearly as
embarrassed as the people that started this SSA cluster ****.

[[email protected]]

5-BG wrote:
> to chip;
> you seem to be in possession of more information than the rest of us... here is a straight question for you.. one of import.
>
> Does the SSA have in force an insurance policy that covers the type of fraud you allude to?
>
> were the premiums paid up?
>
> HAS THE BOARD SOUGHT PAYMENT FROM THE INSURANCE COMPANY??
>
> Are board actions covered by a simlar policy and have claims been made?
>
> thank you in advance for any answers you might have.

The information I've discussed is based on what the SSA has released,
what's published in the ExComm meeting minutes on the Web site (a
amazing amount more than is in the official releases), my own
experience as a director and a businessman, and a few comments made by
non-director SSA members that may or may not be true. Yes, I probably
do know more than some members by virtue of what I've heard from
directors themselves but I've tried hard not to violate the trust I
hope they still have in me by revealing anything told to me in
confidence. I can honestly say that I know of nothing to indicate
anyone within SSA has acted unethically, with the obvious possible
exception of our former CFO.

On the subject of insurance, SSA has already disclosed they have
Employee Dishonesty insurance. I don't know the terms of it, or whether
any discussions have occurred with the insurer. I believe D&O insurance
also exists though I can't recall where I learned this or if it's true,
and I certainly don't know the terms of it either. The points you have
made about an insurer potentially seeking to recover claims paid to SSA
from officers or directors are interesting, but I don't know if there's
any validity. Since employee dishonesty is what is alleged (or at least
implied) here, the insurance policy may yet be a factor. I'm not a
lawyer but I'm not sure I see how an insurer could make a case that the
ED or anyone else would be liable simply because someone who worked for
the SSA stole money, unless the ED or other persons cooperated in some
way, or--big stretch--if gross negligence could be established. I
imagine that's spelled out in the policy somewhere. Yes, I'd like to
know more myself but I can see good reasons why that information
shouldn't be broadcast to the world right now. I would be more
comfortable with all of this if I knew the obvious conflicts had been
addressed through adequate oversight. I hope that's what comes out of
tomorrow's meeting.

Now I suggest we all (including me) quit talking about it for a while.
We've thrashed this thing to death several times over. It's the
weekend. Go fly gliders!

Chip Bearden

[Pete Reinhart]

All,
This (the original post in this thread) is the most reasoned approach I
have read so far. Having now gone to the SSA website under "governance" and
read all of the last several months of excomm minutes, I am firmly in the
camp of give them your support and the time to get things fixed. I am
convinced they are working very hard to get this situation under control,"
fixed as soon as possible", with the least damage to the organization as
possible, and to do it as openly as prudence makes possible. We owe the
board of directors our confidence.
Sincere apologies for previous negative posts.
Cheers!, Pete
> wrote in message
ups.com...
> (with apologies to non-U.S. readers)
>
> Most of the postings on this subject follow a predictable pattern:
> "what a bunch of stupid/unethical/indifferent (pick one) idiots we have
> at SSA; why don't they just [fill in the blank with your favorite
> brilliant solution]" A few (including mine) urge patience, support, and
> a chance to let the process work.
>
> Reluctantly I'm now changing my position from "be patient" to "do
> something." For the specifics, skip to the ACTION ITEM at the end. The
> rest of this is just a long-winded description of a discouraging
> journey the past few weeks.
>
> My new stance may seem like heresy given my past support of SSA. But
> after more than three weeks of working with and communicating with SSA
> directors, including the Executive Committee (ExComm), I confess I no
> longer have complete confidence that the current organization can deal
> properly with this crisis.
>
> Like most, I learned about SSA's tax filing/remittance problems from
> Dianne Black-Nixon's letter 3 1/2 weeks ago. While publicly urging
> patience, I also offered help to directors I know, including ExComm
> members. I agreed with most of their decisions but nevertheless had
> concerns. Soon I found myself working behind the scenes with several
> directors who shared these concerns, which were centered around
> maintaining the confidence and trust of SSA members during a time when
> their faith in SSA would be tested.
>
> Disclosures by ExComm implied that certain SSA funds were
> misappropriated by SSA's Chief Financial & Administrative Officer
> (CFAO), who has since been fired. But even if the CFAO were guilty,
> others may share responsibility for allowing this to happen. And as
> ExComm continued their investigation, the primary reason for our
> concern was conflict of interest.
>
> In the corporate (and non-profit) world, a conflict of interest exists
> whenever there is an incentive for people in positions of power and
> trust to take actions contrary to the best interests of those who have
> placed their trust in these individuals. It does not matter whether
> said individuals are trustworthy or competent or even whether they
> yield to these temptations. If there's an incentive for them to do the
> wrong thing, they are said to be conflicted and those conflicts must be
> properly addressed.
>
> The conflicts of interest with SSA's crisis relate to the fact that
> those working to resolve it--i.e., ExComm, the Budget and Finance
> Committee (FinComm), and SSA's accounting firm--potentially share
> responsibility for allowing it to occur. I would include SSA Executive
> Director Dennis Wright (ED) in this group but ExComm has been careful
> to give the impression that they are managing this situation, not the
> ED.
>
> Much outcry on this forum has focused on the decision to forgo annual
> audits. In my opinion, this misses the mark. To the best of my
> recollection as a former director (for nine years in the mid 1990s
> through early 2002, including service on ExComm), previous FinComms
> elected to have annual reviews performed by Johnson, Miller, SSA's
> public accounting firm (CPA) because they were much less expensive than
> a full audit (if I recall correctly, on the order of $20,000 less) yet
> provided some assurance that material problems would be uncovered.
>
> For those of you without financial backgrounds, there are three levels
> of involvement by a CPA with a client. For a "compilation," the CPA
> simply cranks out standard-format statements using the client's books
> and records. If the numbers add up, the CPA doesn't do much checking;
> they just make it look pretty. For a "review," (which is what I believe
> SSA had in prior years), the CPA goes a step further and attempts to
> uncover material problems. They offer no guarantees but at least the
> accountants look under the hood, so to speak. An "audit" (called for by
> the By-Laws) involves many more tests and checks based on which the CPA
> expresses an opinion as to whether the results conform to generally
> accepted accounting principles. An audit provides the highest level of
> assurance but, of course, costs the most, because of the extra work
> involved and also the liability assumed when expressing an opinion.
>
> In the past, the annual review plus the close relationship between the
> CPA and FinComm--who played a very active role in the SSA's finances at
> that time--plus performing an occasional full audit made the question
> one of economics as well as the By-Laws. In effect, FinComm made the
> decision to self insure, judging that an occasional loss, though
> unlikely, would still be less than the accumulated added cost of doing
> an audit every year. I suspect that may still turn out to be true
> despite the magnitude of the potential loss. I recall that the Board
> was made aware of this policy (but not asked to approve it, per se) on
> at least one occasion while I was a director but I cannot be certain.
>
> In my opinion, then, the critical question is whether FinComm retained
> Johnson, Miller to continue preparing SSA's annual financial
> statements, and more specifically to do annual reviews. ExComm's
> disclosures indicate they did not.
>
> Here's where the potential conflicts arise. Good governance calls for
> FinComm to retain the CPA, who would report directly to them (not to
> the CFAO or the ED or ExComm or Board), to prepare the annual financial
> statements (with a review or, under the By-Laws, an audit). ExComm
> meeting minutes note that Johnson, Miller appears not to have been
> retained to do any such work after 2002. If FinComm did retain them, in
> writing or orally, then Johnson, Miller may (and I emphasize the word
> "may") have some culpability and there is an inherent conflict with
> their continuing to work on the SSA account. In that case, it gets
> messier: ExComm meeting minutes indicate that Johnson, Miller selected
> the lawyer in Hobbs that SSA engaged. This attorney quickly recommended
> that SSA give Johnson, Miller "carte blanche to do what they needed
> with the SSA financial records."
>
> On the other hand, if FinComm did not retain Johnson, Miller, then
> FinComm itself may (again, "may") have some culpability, perhaps shared
> by ExComm and the Board (although directors could argue they acted in
> reliance on FinComm) and there is an inherent conflict with their
> playing a key role in this investigation.
>
> It's very important to reiterate that competence and trustworthiness
> are irrelevant to this discussion. It doesn't matter whether the CPA or
> FinComm or ExComm did anything wrong, intentionally or otherwise. And
> I'm not suggesting they did. On the contrary, I've been generally
> impressed with the work done by ExComm so far. What matters is that
> people who may have legal liability and therefore a vested interest in
> the outcome are deeply involved in this investigation. That's a classic
> conflict of interest. And it's a recipe for losing the confidence of
> SSA members at a time when we need it most.
>
> One remedy for conflict of interest is disclosure. Depending on your
> point of view, disclosure to date has been adequate but sometimes
> reluctant.
>
> Another remedy is bringing in new people to do the investigative and
> remediation work. This is risky. Those who know the most about SSA and
> are in the best position to help are probably already involved. It's
> difficult enough to get competent volunteers, much less to work for
> free in Hobbs going through accounting records and meeting with
> attorneys, bankers, the IRS, etc.
>
> A third and, I believe, best remedy is an independent group to monitor
> the actions of ExComm, the accountants, the attorney(s), staff, and
> others involved. This is where the discussions with the concerned
> directors quickly arrived. Ultimately this resulted in a formal
> proposal for an Oversight Task Force (OTF). Four SSA members were
> prevailed upon by these directors to serve on the OTF: myself and three
> other individuals--a highly experienced accountant, an attorney, and a
> successful businessman. Because of my prior Board service, I initially
> declined to serve on the OTF but was persuaded by the two concerned
> directors because of my knowledge of SSA, my business background, and
> the fact that my tenure ended in early 2002, prior to the Larry
> Sanderson affair.
>
> The OTF proposal was made to the full Board by one of these concerned
> directors approximately two weeks ago with, unfortunately, a generally
> negative reaction.
>
> How could this happen? Well, some directors had genuine questions about
> certain provisions in the OTF proposal but I believe the negative
> reaction was due in great part to misunderstanding the OTF's purpose.
> Instead of oversight (i.e., monitoring, not decision making), some saw
> this as an attempt to usurp power from the Board or ExComm. Some feared
> it could interfere with and/or delay the investigation or reveal
> confidential information. Others viewed it as a no-confidence vote. In
> frustration, I "recused" myself from participation on the OTF and made
> a direct appeal to the Board explaining OTF's purpose in more detail
> and arguing that it was the Board's fiduciary duty to take action to
> oversee the activities of ExComm, FinComm, and others who were
> conflicted.
>
> With this clarification, responses to our proposal were gratifyingly
> more favorable. In fact, ExComm subsequently expressed their support
> for the OTF. To be fair, at least some ExComm members (including Dianne
> Black-Nixon) had voiced support all along.
>
> That was nearly two weeks ago. Since then, nothing much has happened.
> ExComm continues to manage the investigation and to make decisions. My
> sense is that there may be debate even within ExComm on how to proceed.
> More than a week ago, one ExComm member emailed me to say it would be
> not be practical to hold a tele-conference special Board meeting for
> all 26 directors and suggested delaying action on the OTF until the
> scheduled Board meeting at the end of this month. My response was that
> with every passing day, decisions were being made that could be
> criticized by SSA members and should be overseen by an independent
> body. I often participate in conference calls with at least that many
> people dispersed over the U.S. and India and do not think a properly
> managed special meeting--with one agenda item--would be terribly
> difficult. Rightly or wrongly, I interpreted this as foot dragging. If
> ExComm had supported the OTF with the same admirable alacrity with
> which they jumped on the initial disclosure of the tax problems, the
> OTF would already be at work and I would not be writing what some will
> doubtless interpret as a disloyal or disruptive public posting.
>
> ExComm believes it would be inappropriate for them to charter the OTF
> without full Board approval. They have a point, but this reasoning
> leads inexorably to the conclusion that, absent oversight, ExComm
> should not be making major decisions about the investigation or
> corrective action, either.
>
> Ironically, with one troubling exception (see below), I'm less
> concerned with what ExComm is actually doing in Hobbs than with how SSA
> members may come to perceive or question their actions. To date, ExComm
> has moved decisively to manage a tough problem and it's difficult to
> quarrel with their actions.
>
> But many members still have a sense that a previous ExComm attempted to
> cover up the Larry Sanderson expense account scandal three years ago.
> We cannot afford the same cynicism, or worse, now. While most members
> understand that some things must remain confidential for legal reasons,
> they are uncomfortable or angry if they suspect they are not getting
> the real story. And on that score, ExComm's inaction is troubling.
>
> I mentioned an exception, and it's a big one: how responsibility for
> this problem is being assigned. ExComm's communications have emphasized
> the ED's failure to inform the Board of the non-filing of tax
> information returns. At the same time, however, ExComm has minimized
> the "errors of omission" of the ExComm/FinComm/Board in not retaining
> the CPA to examine the SSA's annual financial statements.
>
> In fact, both lapses are errors of omission. Yet my impression is that
> the ED is being positioned as the one most responsible for allowing
> this crisis while FinComm's failure to act is being dismissed. For that
> matter, ExComm admits that the CFAO reported directly to the Board, not
> the ED, until mid 2005 so there is ample reason to share responsibility
> for this. While I do not have the facts available to ExComm, the
> questions raised are precisely the reason that independent oversight is
> needed over those who find themselves in conflicted positions, for
> their sake as well as the members'. And it is needed immediately, not
> next week or the week after that or after the next major staff or
> organizational decision is made.
>
> If this were a public corporation, plaintiffs' attorneys would already
> be circling like vultures with the prospect that directors could be
> sued and found guilty of breach of their fiduciary duty, in particular
> those on FinComm and, likely, ExComm. But there's not enough money here
> to interest them. Nor do I believe we should necessarily seek to punish
> whomever may have contributed to this debacle. This was a failure,
> albeit a predictable one, of a flawed system. Yet I don't think we
> ought to sweep anything under the rug, either. I believe most SSA
> members would readily forgive the unwitting errors of volunteer
> directors so long as they believe they are being dealt with
> forthrightly.
>
> I apologize to those I know and respect on the Board and ExComm who are
> dedicated, well intentioned, and working hard in thankless positions.
> But I fear that some of them do not fully understand the danger that
> their inaction will increase the cynicism and apathy already evident in
> many SSA members. The lack of urgency and reluctance to initiate
> oversight by ExComm and the directors alike suggest that some of them
> still don't "get it."
>
> Despite protestations to the contrary, there is a tendency in times
> like this for ExComm and the Board to "circle the wagons." It's a
> natural human response to threats, both from the original problem and
> from outraged SSA members who want someone, anyone, to pay in blood. It
> is a tendency against which we must fight hard if we are to maintain
> the trust of our members.
>
> Sadly, at this point individuals who generously agreed to serve on the
> OTF weeks ago are growing cynical about the willingness of SSA to
> address its problems. Clearly I am, too.
>
> On a positive note, I see this unfortunate crisis as a wonderful
> opportunity to make major changes to SSA to improve its financial
> position and increase its effectiveness. The current Board structure is
> indeed cumbersome and ineffective. It also makes sense to examine which
> functions the SSA should perform and whether some of these should be
> outsourced. And I agree with those who believe we should explore
> locations other than Hobbs. We have a chance to "start over" with a
> clean sheet of paper...without losing those elements of SSA that are
> critical. Yet what I have seen in the past 3+ weeks leaves me worried
> that we will squander this opportunity.
>
> ACTION ITEM: Please contact your directors and, while offering your
> continuing support and trust, urge them to demand the Oversight Task
> Force or something like it be put in place immediately. All of
> us--members, directors, ExComm, and staff alike--need the clarity and
> assurance that only an independent observer can provide.
>
> In the meantime, please maintain the degree of civility on this forum
> that I hope you would if the discussion were taking place in person.
> Ironically, the offensive and irresponsible behavior of some
> participants on rec.aviation.soaring alienates most SSA members and
> encourages our leadership, with some justification, to dismiss these
> critics as just a bunch of loudmouth idiots. Those who insist on
> popping off indiscriminately with wild allegations, accusations, and
> statements of opinion-as-fact serve no one but their own egos. Their
> actions--presuming they actually care about the future of SSA and the
> great things it has and can still do for soaring pilots in this
> country--are counterproductive.
>
> Chip Bearden
> SSA Member since 1965
>

[5-BG]

Pete.. and chip
I too have read the excom draft minutes.

I do not and have never questioned their working hard.. What i have brought up was the very akward position they are operating from.. namely that of being in major conflict of interest. Further i have raised the question of transparancy.

Chip wrote " But
> after more than three weeks of working with and communicating with SSA
> directors, including the Executive Committee (ExComm), I confess I no
> longer have complete confidence that the current organization can deal
> properly with this crisis."

I found ONLY ONE REFERENCE TO CHIP in the minutes of the past 10 excom minutes. This reference was to his being approached to act as an interested outside party to review actions etc.

What I did NOT find in any minutes of the excom meeting was ANY REFERENCE to any discussion of Chip's suggestions/proposal;s or decision to withdraw from the proceedings. Perhaps these discussions were held before meetings of the excom or during executive sessions ( of thich there have been several). In any event, reading the minutes does not shed any light whatsover on the boards thoughts re conflict of interest. Are we to seriously believe that they have not discussed this?? Is this not a subject that members have a right to understand.?
I also picked up a statement in minutes that Costello had informed the board that a notice to the D&O insurance company of a pending claim must be filed and they ACTUALLY discussed not making such a notice or claim.. In the end, i guess that they did give notice. Are we to believe that the attorney retained did not discuss the possible ramifications with the excom? But I guess that that is something that members do not need to know,.
I also found it interesting that the directors of ssa who also serve on the foundation board were seeking indemnity by ssa for actions as foundation board members on the loan. This is, imho, the result of a discussion among themselves and the attorney about the conflict of interest.

bottom line.. The excom is operating as a unit that has taken upon itself the responsibility for cleaning up the mess and developing a new business plaN ( REFERENCED IN MINUTES). They are doing so, probably with good intentions, but basically withholding essential elements of their discussion, all the while claiming transparancy.
Chip's frustration and decision to go public is another CLEAR WARNING FLAG to the membership .

It is evident to me that a revised business model is being put into place as an evolutionary process. Basically tweaking policies and proceedures. If there has been any serious discussion of a major overhaul it has not shown up in the minutes.

Perhaps it would be appropriate for a "constitutional ( charter) convention" . Perhaps the foundation should fund a professional analysis of existing model and provide the membership with a series of options for change. This could be presented at the annual convention for discussion and then put to a vote of the entire membership.

Pete.. the issue remains conflict of interest. No matter what they do the excom is tainted. The fact that they did not disclose discussions ( which i ASSUME) that they must have had re this issue is telling. I would love to know what pat costello told the excom re their d&O policy and coverage... I suspect that he might have told them that their personal coverage did not extend to willful acts in that were outside the charter of the bylaws. But we will never know will we???

For an insider like chip to become frustrated to the point of going public is also very telling.
I do not share your faith in this system.
Chip... I make it A POINT to fly my glider 3 to 5 times a week!!!




Chip
"Pete Reinhart" > wrote in message ...
All,
This (the original post in this thread) is the most reasoned approach I
have read so far. Having now gone to the SSA website under "governance" and
read all of the last several months of excomm minutes, I am firmly in the
camp of give them your support and the time to get things fixed. I am
convinced they are working very hard to get this situation under control,"
fixed as soon as possible", with the least damage to the organization as
possible, and to do it as openly as prudence makes possible. We owe the
board of directors our confidence.
Sincere apologies for previous negative posts.
Cheers!, Pete
> wrote in message
ups.com...
> (with apologies to non-U.S. readers)
>
> Most of the postings on this subject follow a predictable pattern:
> "what a bunch of stupid/unethical/indifferent (pick one) idiots we have
> at SSA; why don't they just [fill in the blank with your favorite
> brilliant solution]" A few (including mine) urge patience, support, and
> a chance to let the process work.
>
> Reluctantly I'm now changing my position from "be patient" to "do
> something." For the specifics, skip to the ACTION ITEM at the end. The
> rest of this is just a long-winded description of a discouraging
> journey the past few weeks.
>
> My new stance may seem like heresy given my past support of SSA. But
> after more than three weeks of working with and communicating with SSA
> directors, including the Executive Committee (ExComm), I confess I no
> longer have complete confidence that the current organization can deal
> properly with this crisis.
>
> Like most, I learned about SSA's tax filing/remittance problems from
> Dianne Black-Nixon's letter 3 1/2 weeks ago. While publicly urging
> patience, I also offered help to directors I know, including ExComm
> members. I agreed with most of their decisions but nevertheless had
> concerns. Soon I found myself working behind the scenes with several
> directors who shared these concerns, which were centered around
> maintaining the confidence and trust of SSA members during a time when
> their faith in SSA would be tested.
>
> Disclosures by ExComm implied that certain SSA funds were
> misappropriated by SSA's Chief Financial & Administrative Officer
> (CFAO), who has since been fired. But even if the CFAO were guilty,
> others may share responsibility for allowing this to happen. And as
> ExComm continued their investigation, the primary reason for our
> concern was conflict of interest.
>
> In the corporate (and non-profit) world, a conflict of interest exists
> whenever there is an incentive for people in positions of power and
> trust to take actions contrary to the best interests of those who have
> placed their trust in these individuals. It does not matter whether
> said individuals are trustworthy or competent or even whether they
> yield to these temptations. If there's an incentive for them to do the
> wrong thing, they are said to be conflicted and those conflicts must be
> properly addressed.
>
> The conflicts of interest with SSA's crisis relate to the fact that
> those working to resolve it--i.e., ExComm, the Budget and Finance
> Committee (FinComm), and SSA's accounting firm--potentially share
> responsibility for allowing it to occur. I would include SSA Executive
> Director Dennis Wright (ED) in this group but ExComm has been careful
> to give the impression that they are managing this situation, not the
> ED.
>
> Much outcry on this forum has focused on the decision to forgo annual
> audits. In my opinion, this misses the mark. To the best of my
> recollection as a former director (for nine years in the mid 1990s
> through early 2002, including service on ExComm), previous FinComms
> elected to have annual reviews performed by Johnson, Miller, SSA's
> public accounting firm (CPA) because they were much less expensive than
> a full audit (if I recall correctly, on the order of $20,000 less) yet
> provided some assurance that material problems would be uncovered.
>
> For those of you without financial backgrounds, there are three levels
> of involvement by a CPA with a client. For a "compilation," the CPA
> simply cranks out standard-format statements using the client's books
> and records. If the numbers add up, the CPA doesn't do much checking;
> they just make it look pretty. For a "review," (which is what I believe
> SSA had in prior years), the CPA goes a step further and attempts to
> uncover material problems. They offer no guarantees but at least the
> accountants look under the hood, so to speak. An "audit" (called for by
> the By-Laws) involves many more tests and checks based on which the CPA
> expresses an opinion as to whether the results conform to generally
> accepted accounting principles. An audit provides the highest level of
> assurance but, of course, costs the most, because of the extra work
> involved and also the liability assumed when expressing an opinion.
>
> In the past, the annual review plus the close relationship between the
> CPA and FinComm--who played a very active role in the SSA's finances at
> that time--plus performing an occasional full audit made the question
> one of economics as well as the By-Laws. In effect, FinComm made the
> decision to self insure, judging that an occasional loss, though
> unlikely, would still be less than the accumulated added cost of doing
> an audit every year. I suspect that may still turn out to be true
> despite the magnitude of the potential loss. I recall that the Board
> was made aware of this policy (but not asked to approve it, per se) on
> at least one occasion while I was a director but I cannot be certain.
>
> In my opinion, then, the critical question is whether FinComm retained
> Johnson, Miller to continue preparing SSA's annual financial
> statements, and more specifically to do annual reviews. ExComm's
> disclosures indicate they did not.
>
> Here's where the potential conflicts arise. Good governance calls for
> FinComm to retain the CPA, who would report directly to them (not to
> the CFAO or the ED or ExComm or Board), to prepare the annual financial
> statements (with a review or, under the By-Laws, an audit). ExComm
> meeting minutes note that Johnson, Miller appears not to have been
> retained to do any such work after 2002. If FinComm did retain them, in
> writing or orally, then Johnson, Miller may (and I emphasize the word
> "may") have some culpability and there is an inherent conflict with
> their continuing to work on the SSA account. In that case, it gets
> messier: ExComm meeting minutes indicate that Johnson, Miller selected
> the lawyer in Hobbs that SSA engaged. This attorney quickly recommended
> that SSA give Johnson, Miller "carte blanche to do what they needed
> with the SSA financial records."
>
> On the other hand, if FinComm did not retain Johnson, Miller, then
> FinComm itself may (again, "may") have some culpability, perhaps shared
> by ExComm and the Board (although directors could argue they acted in
> reliance on FinComm) and there is an inherent conflict with their
> playing a key role in this investigation.
>
> It's very important to reiterate that competence and trustworthiness
> are irrelevant to this discussion. It doesn't matter whether the CPA or
> FinComm or ExComm did anything wrong, intentionally or otherwise. And
> I'm not suggesting they did. On the contrary, I've been generally
> impressed with the work done by ExComm so far. What matters is that
> people who may have legal liability and therefore a vested interest in
> the outcome are deeply involved in this investigation. That's a classic
> conflict of interest. And it's a recipe for losing the confidence of
> SSA members at a time when we need it most.
>
> One remedy for conflict of interest is disclosure. Depending on your
> point of view, disclosure to date has been adequate but sometimes
> reluctant.
>
> Another remedy is bringing in new people to do the investigative and
> remediation work. This is risky. Those who know the most about SSA and
> are in the best position to help are probably already involved. It's
> difficult enough to get competent volunteers, much less to work for
> free in Hobbs going through accounting records and meeting with
> attorneys, bankers, the IRS, etc.
>
> A third and, I believe, best remedy is an independent group to monitor
> the actions of ExComm, the accountants, the attorney(s), staff, and
> others involved. This is where the discussions with the concerned
> directors quickly arrived. Ultimately this resulted in a formal
> proposal for an Oversight Task Force (OTF). Four SSA members were
> prevailed upon by these directors to serve on the OTF: myself and three
> other individuals--a highly experienced accountant, an attorney, and a
> successful businessman. Because of my prior Board service, I initially
> declined to serve on the OTF but was persuaded by the two concerned
> directors because of my knowledge of SSA, my business background, and
> the fact that my tenure ended in early 2002, prior to the Larry
> Sanderson affair.
>
> The OTF proposal was made to the full Board by one of these concerned
> directors approximately two weeks ago with, unfortunately, a generally
> negative reaction.
>
> How could this happen? Well, some directors had genuine questions about
> certain provisions in the OTF proposal but I believe the negative
> reaction was due in great part to misunderstanding the OTF's purpose.
> Instead of oversight (i.e., monitoring, not decision making), some saw
> this as an attempt to usurp power from the Board or ExComm. Some feared
> it could interfere with and/or delay the investigation or reveal
> confidential information. Others viewed it as a no-confidence vote. In
> frustration, I "recused" myself from participation on the OTF and made
> a direct appeal to the Board explaining OTF's purpose in more detail
> and arguing that it was the Board's fiduciary duty to take action to
> oversee the activities of ExComm, FinComm, and others who were
> conflicted.
>
> With this clarification, responses to our proposal were gratifyingly
> more favorable. In fact, ExComm subsequently expressed their support
> for the OTF. To be fair, at least some ExComm members (including Dianne
> Black-Nixon) had voiced support all along.
>
> That was nearly two weeks ago. Since then, nothing much has happened.
> ExComm continues to manage the investigation and to make decisions. My
> sense is that there may be debate even within ExComm on how to proceed.
> More than a week ago, one ExComm member emailed me to say it would be
> not be practical to hold a tele-conference special Board meeting for
> all 26 directors and suggested delaying action on the OTF until the
> scheduled Board meeting at the end of this month. My response was that
> with every passing day, decisions were being made that could be
> criticized by SSA members and should be overseen by an independent
> body. I often participate in conference calls with at least that many
> people dispersed over the U.S. and India and do not think a properly
> managed special meeting--with one agenda item--would be terribly
> difficult. Rightly or wrongly, I interpreted this as foot dragging. If
> ExComm had supported the OTF with the same admirable alacrity with
> which they jumped on the initial disclosure of the tax problems, the
> OTF would already be at work and I would not be writing what some will
> doubtless interpret as a disloyal or disruptive public posting.
>
> ExComm believes it would be inappropriate for them to charter the OTF
> without full Board approval. They have a point, but this reasoning
> leads inexorably to the conclusion that, absent oversight, ExComm
> should not be making major decisions about the investigation or
> corrective action, either.
>
> Ironically, with one troubling exception (see below), I'm less
> concerned with what ExComm is actually doing in Hobbs than with how SSA
> members may come to perceive or question their actions. To date, ExComm
> has moved decisively to manage a tough problem and it's difficult to
> quarrel with their actions.
>
> But many members still have a sense that a previous ExComm attempted to
> cover up the Larry Sanderson expense account scandal three years ago.
> We cannot afford the same cynicism, or worse, now. While most members
> understand that some things must remain confidential for legal reasons,
> they are uncomfortable or angry if they suspect they are not getting
> the real story. And on that score, ExComm's inaction is troubling.
>
> I mentioned an exception, and it's a big one: how responsibility for
> this problem is being assigned. ExComm's communications have emphasized
> the ED's failure to inform the Board of the non-filing of tax
> information returns. At the same time, however, ExComm has minimized
> the "errors of omission" of the ExComm/FinComm/Board in not retaining
> the CPA to examine the SSA's annual financial statements.
>
> In fact, both lapses are errors of omission. Yet my impression is that
> the ED is being positioned as the one most responsible for allowing
> this crisis while FinComm's failure to act is being dismissed. For that
> matter, ExComm admits that the CFAO reported directly to the Board, not
> the ED, until mid 2005 so there is ample reason to share responsibility
> for this. While I do not have the facts available to ExComm, the
> questions raised are precisely the reason that independent oversight is
> needed over those who find themselves in conflicted positions, for
> their sake as well as the members'. And it is needed immediately, not
> next week or the week after that or after the next major staff or
> organizational decision is made.
>
> If this were a public corporation, plaintiffs' attorneys would already
> be circling like vultures with the prospect that directors could be
> sued and found guilty of breach of their fiduciary duty, in particular
> those on FinComm and, likely, ExComm. But there's not enough money here
> to interest them. Nor do I believe we should necessarily seek to punish
> whomever may have contributed to this debacle. This was a failure,
> albeit a predictable one, of a flawed system. Yet I don't think we
> ought to sweep anything under the rug, either. I believe most SSA
> members would readily forgive the unwitting errors of volunteer
> directors so long as they believe they are being dealt with
> forthrightly.
>
> I apologize to those I know and respect on the Board and ExComm who are
> dedicated, well intentioned, and working hard in thankless positions.
> But I fear that some of them do not fully understand the danger that
> their inaction will increase the cynicism and apathy already evident in
> many SSA members. The lack of urgency and reluctance to initiate
> oversight by ExComm and the directors alike suggest that some of them
> still don't "get it."
>
> Despite protestations to the contrary, there is a tendency in times
> like this for ExComm and the Board to "circle the wagons." It's a
> natural human response to threats, both from the original problem and
> from outraged SSA members who want someone, anyone, to pay in blood. It
> is a tendency against which we must fight hard if we are to maintain
> the trust of our members.
>
> Sadly, at this point individuals who generously agreed to serve on the
> OTF weeks ago are growing cynical about the willingness of SSA to
> address its problems. Clearly I am, too.
>
> On a positive note, I see this unfortunate crisis as a wonderful
> opportunity to make major changes to SSA to improve its financial
> position and increase its effectiveness. The current Board structure is
> indeed cumbersome and ineffective. It also makes sense to examine which
> functions the SSA should perform and whether some of these should be
> outsourced. And I agree with those who believe we should explore
> locations other than Hobbs. We have a chance to "start over" with a
> clean sheet of paper...without losing those elements of SSA that are
> critical. Yet what I have seen in the past 3+ weeks leaves me worried
> that we will squander this opportunity.
>
> ACTION ITEM: Please contact your directors and, while offering your
> continuing support and trust, urge them to demand the Oversight Task
> Force or something like it be put in place immediately. All of
> us--members, directors, ExComm, and staff alike--need the clarity and
> assurance that only an independent observer can provide.
>
> In the meantime, please maintain the degree of civility on this forum
> that I hope you would if the discussion were taking place in person.
> Ironically, the offensive and irresponsible behavior of some
> participants on rec.aviation.soaring alienates most SSA members and
> encourages our leadership, with some justification, to dismiss these
> critics as just a bunch of loudmouth idiots. Those who insist on
> popping off indiscriminately with wild allegations, accusations, and
> statements of opinion-as-fact serve no one but their own egos. Their
> actions--presuming they actually care about the future of SSA and the
> great things it has and can still do for soaring pilots in this
> country--are counterproductive.
>
> Chip Bearden
> SSA Member since 1965
>

[Roger Worden]

There is a middle ground between a $20K audit and a total lack of review. An
annual review could be achieved at a lower cost, and a full audit performed
every 4-5 years. But that would require a By-Laws change. If the Board
believed that the cost of an annual audit was too high, they could have
campaigned for a By-Laws change through the proper procedures... BUT they
had the responsibility to spend the money on an annual audit UNTIL such a
change was adopted.

I have the same problem with a smaller nonprofit for which I have been on
and off the board. If you don't like what the By-Laws demand, change the
By-Laws - with proper approval of your constituents! Until then, do what the
By-Laws say.

[Pete Reinhart]

All,
The newest update says a lot.
Patience and forebearance will be rewarded.
Cheers!
"5-BG" <5-bghatesspam @ fake.com> wrote in message ...
Pete.. and chip
I too have read the excom draft minutes.

I do not and have never questioned their working hard.. What i have brought up was the very akward position they are operating from.. namely that of being in major conflict of interest. Further i have raised the question of transparancy.

Chip wrote " But
> after more than three weeks of working with and communicating with SSA
> directors, including the Executive Committee (ExComm), I confess I no
> longer have complete confidence that the current organization can deal
> properly with this crisis."

I found ONLY ONE REFERENCE TO CHIP in the minutes of the past 10 excom minutes. This reference was to his being approached to act as an interested outside party to review actions etc.

What I did NOT find in any minutes of the excom meeting was ANY REFERENCE to any discussion of Chip's suggestions/proposal;s or decision to withdraw from the proceedings. Perhaps these discussions were held before meetings of the excom or during executive sessions ( of thich there have been several). In any event, reading the minutes does not shed any light whatsover on the boards thoughts re conflict of interest. Are we to seriously believe that they have not discussed this?? Is this not a subject that members have a right to understand.?
I also picked up a statement in minutes that Costello had informed the board that a notice to the D&O insurance company of a pending claim must be filed and they ACTUALLY discussed not making such a notice or claim.. In the end, i guess that they did give notice. Are we to believe that the attorney retained did not discuss the possible ramifications with the excom? But I guess that that is something that members do not need to know,.
I also found it interesting that the directors of ssa who also serve on the foundation board were seeking indemnity by ssa for actions as foundation board members on the loan. This is, imho, the result of a discussion among themselves and the attorney about the conflict of interest.

bottom line.. The excom is operating as a unit that has taken upon itself the responsibility for cleaning up the mess and developing a new business plaN ( REFERENCED IN MINUTES). They are doing so, probably with good intentions, but basically withholding essential elements of their discussion, all the while claiming transparancy.
Chip's frustration and decision to go public is another CLEAR WARNING FLAG to the membership .

It is evident to me that a revised business model is being put into place as an evolutionary process. Basically tweaking policies and proceedures. If there has been any serious discussion of a major overhaul it has not shown up in the minutes.

Perhaps it would be appropriate for a "constitutional ( charter) convention" . Perhaps the foundation should fund a professional analysis of existing model and provide the membership with a series of options for change. This could be presented at the annual convention for discussion and then put to a vote of the entire membership.

Pete.. the issue remains conflict of interest. No matter what they do the excom is tainted. The fact that they did not disclose discussions ( which i ASSUME) that they must have had re this issue is telling. I would love to know what pat costello told the excom re their d&O policy and coverage... I suspect that he might have told them that their personal coverage did not extend to willful acts in that were outside the charter of the bylaws. But we will never know will we???

For an insider like chip to become frustrated to the point of going public is also very telling.
I do not share your faith in this system.
Chip... I make it A POINT to fly my glider 3 to 5 times a week!!!




Chip
"Pete Reinhart" > wrote in message ...
All,
This (the original post in this thread) is the most reasoned approach I
have read so far. Having now gone to the SSA website under "governance" and
read all of the last several months of excomm minutes, I am firmly in the
camp of give them your support and the time to get things fixed. I am
convinced they are working very hard to get this situation under control,"
fixed as soon as possible", with the least damage to the organization as
possible, and to do it as openly as prudence makes possible. We owe the
board of directors our confidence.
Sincere apologies for previous negative posts.
Cheers!, Pete
> wrote in message
ups.com...
> (with apologies to non-U.S. readers)
>
> Most of the postings on this subject follow a predictable pattern:
> "what a bunch of stupid/unethical/indifferent (pick one) idiots we have
> at SSA; why don't they just [fill in the blank with your favorite
> brilliant solution]" A few (including mine) urge patience, support, and
> a chance to let the process work.
>
> Reluctantly I'm now changing my position from "be patient" to "do
> something." For the specifics, skip to the ACTION ITEM at the end. The
> rest of this is just a long-winded description of a discouraging
> journey the past few weeks.
>
> My new stance may seem like heresy given my past support of SSA. But
> after more than three weeks of working with and communicating with SSA
> directors, including the Executive Committee (ExComm), I confess I no
> longer have complete confidence that the current organization can deal
> properly with this crisis.
>
> Like most, I learned about SSA's tax filing/remittance problems from
> Dianne Black-Nixon's letter 3 1/2 weeks ago. While publicly urging
> patience, I also offered help to directors I know, including ExComm
> members. I agreed with most of their decisions but nevertheless had
> concerns. Soon I found myself working behind the scenes with several
> directors who shared these concerns, which were centered around
> maintaining the confidence and trust of SSA members during a time when
> their faith in SSA would be tested.
>
> Disclosures by ExComm implied that certain SSA funds were
> misappropriated by SSA's Chief Financial & Administrative Officer
> (CFAO), who has since been fired. But even if the CFAO were guilty,
> others may share responsibility for allowing this to happen. And as
> ExComm continued their investigation, the primary reason for our
> concern was conflict of interest.
>
> In the corporate (and non-profit) world, a conflict of interest exists
> whenever there is an incentive for people in positions of power and
> trust to take actions contrary to the best interests of those who have
> placed their trust in these individuals. It does not matter whether
> said individuals are trustworthy or competent or even whether they
> yield to these temptations. If there's an incentive for them to do the
> wrong thing, they are said to be conflicted and those conflicts must be
> properly addressed.
>
> The conflicts of interest with SSA's crisis relate to the fact that
> those working to resolve it--i.e., ExComm, the Budget and Finance
> Committee (FinComm), and SSA's accounting firm--potentially share
> responsibility for allowing it to occur. I would include SSA Executive
> Director Dennis Wright (ED) in this group but ExComm has been careful
> to give the impression that they are managing this situation, not the
> ED.
>
> Much outcry on this forum has focused on the decision to forgo annual
> audits. In my opinion, this misses the mark. To the best of my
> recollection as a former director (for nine years in the mid 1990s
> through early 2002, including service on ExComm), previous FinComms
> elected to have annual reviews performed by Johnson, Miller, SSA's
> public accounting firm (CPA) because they were much less expensive than
> a full audit (if I recall correctly, on the order of $20,000 less) yet
> provided some assurance that material problems would be uncovered.
>
> For those of you without financial backgrounds, there are three levels
> of involvement by a CPA with a client. For a "compilation," the CPA
> simply cranks out standard-format statements using the client's books
> and records. If the numbers add up, the CPA doesn't do much checking;
> they just make it look pretty. For a "review," (which is what I believe
> SSA had in prior years), the CPA goes a step further and attempts to
> uncover material problems. They offer no guarantees but at least the
> accountants look under the hood, so to speak. An "audit" (called for by
> the By-Laws) involves many more tests and checks based on which the CPA
> expresses an opinion as to whether the results conform to generally
> accepted accounting principles. An audit provides the highest level of
> assurance but, of course, costs the most, because of the extra work
> involved and also the liability assumed when expressing an opinion.
>
> In the past, the annual review plus the close relationship between the
> CPA and FinComm--who played a very active role in the SSA's finances at
> that time--plus performing an occasional full audit made the question
> one of economics as well as the By-Laws. In effect, FinComm made the
> decision to self insure, judging that an occasional loss, though
> unlikely, would still be less than the accumulated added cost of doing
> an audit every year. I suspect that may still turn out to be true
> despite the magnitude of the potential loss. I recall that the Board
> was made aware of this policy (but not asked to approve it, per se) on
> at least one occasion while I was a director but I cannot be certain.
>
> In my opinion, then, the critical question is whether FinComm retained
> Johnson, Miller to continue preparing SSA's annual financial
> statements, and more specifically to do annual reviews. ExComm's
> disclosures indicate they did not.
>
> Here's where the potential conflicts arise. Good governance calls for
> FinComm to retain the CPA, who would report directly to them (not to
> the CFAO or the ED or ExComm or Board), to prepare the annual financial
> statements (with a review or, under the By-Laws, an audit). ExComm
> meeting minutes note that Johnson, Miller appears not to have been
> retained to do any such work after 2002. If FinComm did retain them, in
> writing or orally, then Johnson, Miller may (and I emphasize the word
> "may") have some culpability and there is an inherent conflict with
> their continuing to work on the SSA account. In that case, it gets
> messier: ExComm meeting minutes indicate that Johnson, Miller selected
> the lawyer in Hobbs that SSA engaged. This attorney quickly recommended
> that SSA give Johnson, Miller "carte blanche to do what they needed
> with the SSA financial records."
>
> On the other hand, if FinComm did not retain Johnson, Miller, then
> FinComm itself may (again, "may") have some culpability, perhaps shared
> by ExComm and the Board (although directors could argue they acted in
> reliance on FinComm) and there is an inherent conflict with their
> playing a key role in this investigation.
>
> It's very important to reiterate that competence and trustworthiness
> are irrelevant to this discussion. It doesn't matter whether the CPA or
> FinComm or ExComm did anything wrong, intentionally or otherwise. And
> I'm not suggesting they did. On the contrary, I've been generally
> impressed with the work done by ExComm so far. What matters is that
> people who may have legal liability and therefore a vested interest in
> the outcome are deeply involved in this investigation. That's a classic
> conflict of interest. And it's a recipe for losing the confidence of
> SSA members at a time when we need it most.
>
> One remedy for conflict of interest is disclosure. Depending on your
> point of view, disclosure to date has been adequate but sometimes
> reluctant.
>
> Another remedy is bringing in new people to do the investigative and
> remediation work. This is risky. Those who know the most about SSA and
> are in the best position to help are probably already involved. It's
> difficult enough to get competent volunteers, much less to work for
> free in Hobbs going through accounting records and meeting with
> attorneys, bankers, the IRS, etc.
>
> A third and, I believe, best remedy is an independent group to monitor
> the actions of ExComm, the accountants, the attorney(s), staff, and
> others involved. This is where the discussions with the concerned
> directors quickly arrived. Ultimately this resulted in a formal
> proposal for an Oversight Task Force (OTF). Four SSA members were
> prevailed upon by these directors to serve on the OTF: myself and three
> other individuals--a highly experienced accountant, an attorney, and a
> successful businessman. Because of my prior Board service, I initially
> declined to serve on the OTF but was persuaded by the two concerned
> directors because of my knowledge of SSA, my business background, and
> the fact that my tenure ended in early 2002, prior to the Larry
> Sanderson affair.
>
> The OTF proposal was made to the full Board by one of these concerned
> directors approximately two weeks ago with, unfortunately, a generally
> negative reaction.
>
> How could this happen? Well, some directors had genuine questions about
> certain provisions in the OTF proposal but I believe the negative
> reaction was due in great part to misunderstanding the OTF's purpose.
> Instead of oversight (i.e., monitoring, not decision making), some saw
> this as an attempt to usurp power from the Board or ExComm. Some feared
> it could interfere with and/or delay the investigation or reveal
> confidential information. Others viewed it as a no-confidence vote. In
> frustration, I "recused" myself from participation on the OTF and made
> a direct appeal to the Board explaining OTF's purpose in more detail
> and arguing that it was the Board's fiduciary duty to take action to
> oversee the activities of ExComm, FinComm, and others who were
> conflicted.
>
> With this clarification, responses to our proposal were gratifyingly
> more favorable. In fact, ExComm subsequently expressed their support
> for the OTF. To be fair, at least some ExComm members (including Dianne
> Black-Nixon) had voiced support all along.
>
> That was nearly two weeks ago. Since then, nothing much has happened.
> ExComm continues to manage the investigation and to make decisions. My
> sense is that there may be debate even within ExComm on how to proceed.
> More than a week ago, one ExComm member emailed me to say it would be
> not be practical to hold a tele-conference special Board meeting for
> all 26 directors and suggested delaying action on the OTF until the
> scheduled Board meeting at the end of this month. My response was that
> with every passing day, decisions were being made that could be
> criticized by SSA members and should be overseen by an independent
> body. I often participate in conference calls with at least that many
> people dispersed over the U.S. and India and do not think a properly
> managed special meeting--with one agenda item--would be terribly
> difficult. Rightly or wrongly, I interpreted this as foot dragging. If
> ExComm had supported the OTF with the same admirable alacrity with
> which they jumped on the initial disclosure of the tax problems, the
> OTF would already be at work and I would not be writing what some will
> doubtless interpret as a disloyal or disruptive public posting.
>
> ExComm believes it would be inappropriate for them to charter the OTF
> without full Board approval. They have a point, but this reasoning
> leads inexorably to the conclusion that, absent oversight, ExComm
> should not be making major decisions about the investigation or
> corrective action, either.
>
> Ironically, with one troubling exception (see below), I'm less
> concerned with what ExComm is actually doing in Hobbs than with how SSA
> members may come to perceive or question their actions. To date, ExComm
> has moved decisively to manage a tough problem and it's difficult to
> quarrel with their actions.
>
> But many members still have a sense that a previous ExComm attempted to
> cover up the Larry Sanderson expense account scandal three years ago.
> We cannot afford the same cynicism, or worse, now. While most members
> understand that some things must remain confidential for legal reasons,
> they are uncomfortable or angry if they suspect they are not getting
> the real story. And on that score, ExComm's inaction is troubling.
>
> I mentioned an exception, and it's a big one: how responsibility for
> this problem is being assigned. ExComm's communications have emphasized
> the ED's failure to inform the Board of the non-filing of tax
> information returns. At the same time, however, ExComm has minimized
> the "errors of omission" of the ExComm/FinComm/Board in not retaining
> the CPA to examine the SSA's annual financial statements.
>
> In fact, both lapses are errors of omission. Yet my impression is that
> the ED is being positioned as the one most responsible for allowing
> this crisis while FinComm's failure to act is being dismissed. For that
> matter, ExComm admits that the CFAO reported directly to the Board, not
> the ED, until mid 2005 so there is ample reason to share responsibility
> for this. While I do not have the facts available to ExComm, the
> questions raised are precisely the reason that independent oversight is
> needed over those who find themselves in conflicted positions, for
> their sake as well as the members'. And it is needed immediately, not
> next week or the week after that or after the next major staff or
> organizational decision is made.
>
> If this were a public corporation, plaintiffs' attorneys would already
> be circling like vultures with the prospect that directors could be
> sued and found guilty of breach of their fiduciary duty, in particular
> those on FinComm and, likely, ExComm. But there's not enough money here
> to interest them. Nor do I believe we should necessarily seek to punish
> whomever may have contributed to this debacle. This was a failure,
> albeit a predictable one, of a flawed system. Yet I don't think we
> ought to sweep anything under the rug, either. I believe most SSA
> members would readily forgive the unwitting errors of volunteer
> directors so long as they believe they are being dealt with
> forthrightly.
>
> I apologize to those I know and respect on the Board and ExComm who are
> dedicated, well intentioned, and working hard in thankless positions.
> But I fear that some of them do not fully understand the danger that
> their inaction will increase the cynicism and apathy already evident in
> many SSA members. The lack of urgency and reluctance to initiate
> oversight by ExComm and the directors alike suggest that some of them
> still don't "get it."
>
> Despite protestations to the contrary, there is a tendency in times
> like this for ExComm and the Board to "circle the wagons." It's a
> natural human response to threats, both from the original problem and
> from outraged SSA members who want someone, anyone, to pay in blood. It
> is a tendency against which we must fight hard if we are to maintain
> the trust of our members.
>
> Sadly, at this point individuals who generously agreed to serve on the
> OTF weeks ago are growing cynical about the willingness of SSA to
> address its problems. Clearly I am, too.
>
> On a positive note, I see this unfortunate crisis as a wonderful
> opportunity to make major changes to SSA to improve its financial
> position and increase its effectiveness. The current Board structure is
> indeed cumbersome and ineffective. It also makes sense to examine which
> functions the SSA should perform and whether some of these should be
> outsourced. And I agree with those who believe we should explore
> locations other than Hobbs. We have a chance to "start over" with a
> clean sheet of paper...without losing those elements of SSA that are
> critical. Yet what I have seen in the past 3+ weeks leaves me worried
> that we will squander this opportunity.
>
> ACTION ITEM: Please contact your directors and, while offering your
> continuing support and trust, urge them to demand the Oversight Task
> Force or something like it be put in place immediately. All of
> us--members, directors, ExComm, and staff alike--need the clarity and
> assurance that only an independent observer can provide.
>
> In the meantime, please maintain the degree of civility on this forum
> that I hope you would if the discussion were taking place in person.
> Ironically, the offensive and irresponsible behavior of some
> participants on rec.aviation.soaring alienates most SSA members and
> encourages our leadership, with some justification, to dismiss these
> critics as just a bunch of loudmouth idiots. Those who insist on
> popping off indiscriminately with wild allegations, accusations, and
> statements of opinion-as-fact serve no one but their own egos. Their
> actions--presuming they actually care about the future of SSA and the
> great things it has and can still do for soaring pilots in this
> country--are counterproductive.
>
> Chip Bearden
> SSA Member since 1965
>

[Mike Schumann]

I wouldn't say that it was particularly illuminating. One addition that
would have been nice would have been a brief bio on the new accounting
person who was hired. Another issue that has never been discussed is
whether or not funds were actually diverted (i.e. stolen), or if the SSA
just failed to make the necessary tax deposit payments. There is an
implication that there may have been a diversion, but this has never been
clearly stated. At this point in time, I would expect that more details
would have been shared with the membership, if for no other reason than to
quell the speculation that is currently going on.

Mike Schumann

"Pete Reinhart" > wrote in message
...
All,
The newest update says a lot.
Patience and forebearance will be rewarded.
Cheers!
"5-BG" <5-bghatesspam @ fake.com> wrote in message
...
Pete.. and chip
I too have read the excom draft minutes.

I do not and have never questioned their working hard.. What i have
brought up was the very akward position they are operating from.. namely
that of being in major conflict of interest. Further i have raised the
question of transparancy.

Chip wrote " But
> after more than three weeks of working with and communicating with SSA
> directors, including the Executive Committee (ExComm), I confess I no
> longer have complete confidence that the current organization can deal
> properly with this crisis."

I found ONLY ONE REFERENCE TO CHIP in the minutes of the past 10 excom
minutes. This reference was to his being approached to act as an interested
outside party to review actions etc.

What I did NOT find in any minutes of the excom meeting was ANY REFERENCE
to any discussion of Chip's suggestions/proposal;s or decision to withdraw
from the proceedings. Perhaps these discussions were held before meetings of
the excom or during executive sessions ( of thich there have been several).
In any event, reading the minutes does not shed any light whatsover on the
boards thoughts re conflict of interest. Are we to seriously believe that
they have not discussed this?? Is this not a subject that members have a
right to understand.?
I also picked up a statement in minutes that Costello had informed the
board that a notice to the D&O insurance company of a pending claim must be
filed and they ACTUALLY discussed not making such a notice or claim.. In
the end, i guess that they did give notice. Are we to believe that the
attorney retained did not discuss the possible ramifications with the
excom? But I guess that that is something that members do not need to
know,.
I also found it interesting that the directors of ssa who also serve on
the foundation board were seeking indemnity by ssa for actions as
foundation board members on the loan. This is, imho, the result of a
discussion among themselves and the attorney about the conflict of
interest.

bottom line.. The excom is operating as a unit that has taken upon itself
the responsibility for cleaning up the mess and developing a new business
plaN ( REFERENCED IN MINUTES). They are doing so, probably with good
intentions, but basically withholding essential elements of their
discussion, all the while claiming transparancy.
Chip's frustration and decision to go public is another CLEAR WARNING FLAG
to the membership .

It is evident to me that a revised business model is being put into place
as an evolutionary process. Basically tweaking policies and proceedures. If
there has been any serious discussion of a major overhaul it has not shown
up in the minutes.

Perhaps it would be appropriate for a "constitutional ( charter)
convention" . Perhaps the foundation should fund a professional analysis of
existing model and provide the membership with a series of options for
change. This could be presented at the annual convention for discussion and
then put to a vote of the entire membership.

Pete.. the issue remains conflict of interest. No matter what they do the
excom is tainted. The fact that they did not disclose discussions ( which i
ASSUME) that they must have had re this issue is telling. I would love to
know what pat costello told the excom re their d&O policy and coverage... I
suspect that he might have told them that their personal coverage did not
extend to willful acts in that were outside the charter of the bylaws. But
we will never know will we???

For an insider like chip to become frustrated to the point of going public
is also very telling.
I do not share your faith in this system.
Chip... I make it A POINT to fly my glider 3 to 5 times a week!!!



Chip
"Pete Reinhart" > wrote in message
...
All,
This (the original post in this thread) is the most reasoned approach I
have read so far. Having now gone to the SSA website under "governance" and
read all of the last several months of excomm minutes, I am firmly in the
camp of give them your support and the time to get things fixed. I am
convinced they are working very hard to get this situation under control,"
fixed as soon as possible", with the least damage to the organization as
possible, and to do it as openly as prudence makes possible. We owe the
board of directors our confidence.
Sincere apologies for previous negative posts.
Cheers!, Pete
> wrote in message
ups.com...
> (with apologies to non-U.S. readers)
>
> Most of the postings on this subject follow a predictable pattern:
> "what a bunch of stupid/unethical/indifferent (pick one) idiots we have
> at SSA; why don't they just [fill in the blank with your favorite
> brilliant solution]" A few (including mine) urge patience, support, and
> a chance to let the process work.
>
> Reluctantly I'm now changing my position from "be patient" to "do
> something." For the specifics, skip to the ACTION ITEM at the end. The
> rest of this is just a long-winded description of a discouraging
> journey the past few weeks.
>
> My new stance may seem like heresy given my past support of SSA. But
> after more than three weeks of working with and communicating with SSA
> directors, including the Executive Committee (ExComm), I confess I no
> longer have complete confidence that the current organization can deal
> properly with this crisis.
>
> Like most, I learned about SSA's tax filing/remittance problems from
> Dianne Black-Nixon's letter 3 1/2 weeks ago. While publicly urging
> patience, I also offered help to directors I know, including ExComm
> members. I agreed with most of their decisions but nevertheless had
> concerns. Soon I found myself working behind the scenes with several
> directors who shared these concerns, which were centered around
> maintaining the confidence and trust of SSA members during a time when
> their faith in SSA would be tested.
>
> Disclosures by ExComm implied that certain SSA funds were
> misappropriated by SSA's Chief Financial & Administrative Officer
> (CFAO), who has since been fired. But even if the CFAO were guilty,
> others may share responsibility for allowing this to happen. And as
> ExComm continued their investigation, the primary reason for our
> concern was conflict of interest.
>
> In the corporate (and non-profit) world, a conflict of interest exists
> whenever there is an incentive for people in positions of power and
> trust to take actions contrary to the best interests of those who have
> placed their trust in these individuals. It does not matter whether
> said individuals are trustworthy or competent or even whether they
> yield to these temptations. If there's an incentive for them to do the
> wrong thing, they are said to be conflicted and those conflicts must be
> properly addressed.
>
> The conflicts of interest with SSA's crisis relate to the fact that
> those working to resolve it--i.e., ExComm, the Budget and Finance
> Committee (FinComm), and SSA's accounting firm--potentially share
> responsibility for allowing it to occur. I would include SSA Executive
> Director Dennis Wright (ED) in this group but ExComm has been careful
> to give the impression that they are managing this situation, not the
> ED.
>
> Much outcry on this forum has focused on the decision to forgo annual
> audits. In my opinion, this misses the mark. To the best of my
> recollection as a former director (for nine years in the mid 1990s
> through early 2002, including service on ExComm), previous FinComms
> elected to have annual reviews performed by Johnson, Miller, SSA's
> public accounting firm (CPA) because they were much less expensive than
> a full audit (if I recall correctly, on the order of $20,000 less) yet
> provided some assurance that material problems would be uncovered.
>
> For those of you without financial backgrounds, there are three levels
> of involvement by a CPA with a client. For a "compilation," the CPA
> simply cranks out standard-format statements using the client's books
> and records. If the numbers add up, the CPA doesn't do much checking;
> they just make it look pretty. For a "review," (which is what I believe
> SSA had in prior years), the CPA goes a step further and attempts to
> uncover material problems. They offer no guarantees but at least the
> accountants look under the hood, so to speak. An "audit" (called for by
> the By-Laws) involves many more tests and checks based on which the CPA
> expresses an opinion as to whether the results conform to generally
> accepted accounting principles. An audit provides the highest level of
> assurance but, of course, costs the most, because of the extra work
> involved and also the liability assumed when expressing an opinion.
>
> In the past, the annual review plus the close relationship between the
> CPA and FinComm--who played a very active role in the SSA's finances at
> that time--plus performing an occasional full audit made the question
> one of economics as well as the By-Laws. In effect, FinComm made the
> decision to self insure, judging that an occasional loss, though
> unlikely, would still be less than the accumulated added cost of doing
> an audit every year. I suspect that may still turn out to be true
> despite the magnitude of the potential loss. I recall that the Board
> was made aware of this policy (but not asked to approve it, per se) on
> at least one occasion while I was a director but I cannot be certain.
>
> In my opinion, then, the critical question is whether FinComm retained
> Johnson, Miller to continue preparing SSA's annual financial
> statements, and more specifically to do annual reviews. ExComm's
> disclosures indicate they did not.
>
> Here's where the potential conflicts arise. Good governance calls for
> FinComm to retain the CPA, who would report directly to them (not to
> the CFAO or the ED or ExComm or Board), to prepare the annual financial
> statements (with a review or, under the By-Laws, an audit). ExComm
> meeting minutes note that Johnson, Miller appears not to have been
> retained to do any such work after 2002. If FinComm did retain them, in
> writing or orally, then Johnson, Miller may (and I emphasize the word
> "may") have some culpability and there is an inherent conflict with
> their continuing to work on the SSA account. In that case, it gets
> messier: ExComm meeting minutes indicate that Johnson, Miller selected
> the lawyer in Hobbs that SSA engaged. This attorney quickly recommended
> that SSA give Johnson, Miller "carte blanche to do what they needed
> with the SSA financial records."
>
> On the other hand, if FinComm did not retain Johnson, Miller, then
> FinComm itself may (again, "may") have some culpability, perhaps shared
> by ExComm and the Board (although directors could argue they acted in
> reliance on FinComm) and there is an inherent conflict with their
> playing a key role in this investigation.
>
> It's very important to reiterate that competence and trustworthiness
> are irrelevant to this discussion. It doesn't matter whether the CPA or
> FinComm or ExComm did anything wrong, intentionally or otherwise. And
> I'm not suggesting they did. On the contrary, I've been generally
> impressed with the work done by ExComm so far. What matters is that
> people who may have legal liability and therefore a vested interest in
> the outcome are deeply involved in this investigation. That's a classic
> conflict of interest. And it's a recipe for losing the confidence of
> SSA members at a time when we need it most.
>
> One remedy for conflict of interest is disclosure. Depending on your
> point of view, disclosure to date has been adequate but sometimes
> reluctant.
>
> Another remedy is bringing in new people to do the investigative and
> remediation work. This is risky. Those who know the most about SSA and
> are in the best position to help are probably already involved. It's
> difficult enough to get competent volunteers, much less to work for
> free in Hobbs going through accounting records and meeting with
> attorneys, bankers, the IRS, etc.
>
> A third and, I believe, best remedy is an independent group to monitor
> the actions of ExComm, the accountants, the attorney(s), staff, and
> others involved. This is where the discussions with the concerned
> directors quickly arrived. Ultimately this resulted in a formal
> proposal for an Oversight Task Force (OTF). Four SSA members were
> prevailed upon by these directors to serve on the OTF: myself and three
> other individuals--a highly experienced accountant, an attorney, and a
> successful businessman. Because of my prior Board service, I initially
> declined to serve on the OTF but was persuaded by the two concerned
> directors because of my knowledge of SSA, my business background, and
> the fact that my tenure ended in early 2002, prior to the Larry
> Sanderson affair.
>
> The OTF proposal was made to the full Board by one of these concerned
> directors approximately two weeks ago with, unfortunately, a generally
> negative reaction.
>
> How could this happen? Well, some directors had genuine questions about
> certain provisions in the OTF proposal but I believe the negative
> reaction was due in great part to misunderstanding the OTF's purpose.
> Instead of oversight (i.e., monitoring, not decision making), some saw
> this as an attempt to usurp power from the Board or ExComm. Some feared
> it could interfere with and/or delay the investigation or reveal
> confidential information. Others viewed it as a no-confidence vote. In
> frustration, I "recused" myself from participation on the OTF and made
> a direct appeal to the Board explaining OTF's purpose in more detail
> and arguing that it was the Board's fiduciary duty to take action to
> oversee the activities of ExComm, FinComm, and others who were
> conflicted.
>
> With this clarification, responses to our proposal were gratifyingly
> more favorable. In fact, ExComm subsequently expressed their support
> for the OTF. To be fair, at least some ExComm members (including Dianne
> Black-Nixon) had voiced support all along.
>
> That was nearly two weeks ago. Since then, nothing much has happened.
> ExComm continues to manage the investigation and to make decisions. My
> sense is that there may be debate even within ExComm on how to proceed.
> More than a week ago, one ExComm member emailed me to say it would be
> not be practical to hold a tele-conference special Board meeting for
> all 26 directors and suggested delaying action on the OTF until the
> scheduled Board meeting at the end of this month. My response was that
> with every passing day, decisions were being made that could be
> criticized by SSA members and should be overseen by an independent
> body. I often participate in conference calls with at least that many
> people dispersed over the U.S. and India and do not think a properly
> managed special meeting--with one agenda item--would be terribly
> difficult. Rightly or wrongly, I interpreted this as foot dragging. If
> ExComm had supported the OTF with the same admirable alacrity with
> which they jumped on the initial disclosure of the tax problems, the
> OTF would already be at work and I would not be writing what some will
> doubtless interpret as a disloyal or disruptive public posting.
>
> ExComm believes it would be inappropriate for them to charter the OTF
> without full Board approval. They have a point, but this reasoning
> leads inexorably to the conclusion that, absent oversight, ExComm
> should not be making major decisions about the investigation or
> corrective action, either.
>
> Ironically, with one troubling exception (see below), I'm less
> concerned with what ExComm is actually doing in Hobbs than with how SSA
> members may come to perceive or question their actions. To date, ExComm
> has moved decisively to manage a tough problem and it's difficult to
> quarrel with their actions.
>
> But many members still have a sense that a previous ExComm attempted to
> cover up the Larry Sanderson expense account scandal three years ago.
> We cannot afford the same cynicism, or worse, now. While most members
> understand that some things must remain confidential for legal reasons,
> they are uncomfortable or angry if they suspect they are not getting
> the real story. And on that score, ExComm's inaction is troubling.
>
> I mentioned an exception, and it's a big one: how responsibility for
> this problem is being assigned. ExComm's communications have emphasized
> the ED's failure to inform the Board of the non-filing of tax
> information returns. At the same time, however, ExComm has minimized
> the "errors of omission" of the ExComm/FinComm/Board in not retaining
> the CPA to examine the SSA's annual financial statements.
>
> In fact, both lapses are errors of omission. Yet my impression is that
> the ED is being positioned as the one most responsible for allowing
> this crisis while FinComm's failure to act is being dismissed. For that
> matter, ExComm admits that the CFAO reported directly to the Board, not
> the ED, until mid 2005 so there is ample reason to share responsibility
> for this. While I do not have the facts available to ExComm, the
> questions raised are precisely the reason that independent oversight is
> needed over those who find themselves in conflicted positions, for
> their sake as well as the members'. And it is needed immediately, not
> next week or the week after that or after the next major staff or
> organizational decision is made.
>
> If this were a public corporation, plaintiffs' attorneys would already
> be circling like vultures with the prospect that directors could be
> sued and found guilty of breach of their fiduciary duty, in particular
> those on FinComm and, likely, ExComm. But there's not enough money here
> to interest them. Nor do I believe we should necessarily seek to punish
> whomever may have contributed to this debacle. This was a failure,
> albeit a predictable one, of a flawed system. Yet I don't think we
> ought to sweep anything under the rug, either. I believe most SSA
> members would readily forgive the unwitting errors of volunteer
> directors so long as they believe they are being dealt with
> forthrightly.
>
> I apologize to those I know and respect on the Board and ExComm who are
> dedicated, well intentioned, and working hard in thankless positions.
> But I fear that some of them do not fully understand the danger that
> their inaction will increase the cynicism and apathy already evident in
> many SSA members. The lack of urgency and reluctance to initiate
> oversight by ExComm and the directors alike suggest that some of them
> still don't "get it."
>
> Despite protestations to the contrary, there is a tendency in times
> like this for ExComm and the Board to "circle the wagons." It's a
> natural human response to threats, both from the original problem and
> from outraged SSA members who want someone, anyone, to pay in blood. It
> is a tendency against which we must fight hard if we are to maintain
> the trust of our members.
>
> Sadly, at this point individuals who generously agreed to serve on the
> OTF weeks ago are growing cynical about the willingness of SSA to
> address its problems. Clearly I am, too.
>
> On a positive note, I see this unfortunate crisis as a wonderful
> opportunity to make major changes to SSA to improve its financial
> position and increase its effectiveness. The current Board structure is
> indeed cumbersome and ineffective. It also makes sense to examine which
> functions the SSA should perform and whether some of these should be
> outsourced. And I agree with those who believe we should explore
> locations other than Hobbs. We have a chance to "start over" with a
> clean sheet of paper...without losing those elements of SSA that are
> critical. Yet what I have seen in the past 3+ weeks leaves me worried
> that we will squander this opportunity.
>
> ACTION ITEM: Please contact your directors and, while offering your
> continuing support and trust, urge them to demand the Oversight Task
> Force or something like it be put in place immediately. All of
> us--members, directors, ExComm, and staff alike--need the clarity and
> assurance that only an independent observer can provide.
>
> In the meantime, please maintain the degree of civility on this forum
> that I hope you would if the discussion were taking place in person.
> Ironically, the offensive and irresponsible behavior of some
> participants on rec.aviation.soaring alienates most SSA members and
> encourages our leadership, with some justification, to dismiss these
> critics as just a bunch of loudmouth idiots. Those who insist on
> popping off indiscriminately with wild allegations, accusations, and
> statements of opinion-as-fact serve no one but their own egos. Their
> actions--presuming they actually care about the future of SSA and the
> great things it has and can still do for soaring pilots in this
> country--are counterproductive.
>
> Chip Bearden
> SSA Member since 1965
>

[Vaughn Simon]

"Mike Schumann" > wrote in message
ink.net...
>... Another issue that has never been discussed is whether or not funds were
>actually diverted (i.e. stolen), or if the SSA just failed to make the
>necessary tax deposit payments. There is an implication that there may have
>been a diversion, but this has never been clearly stated. At this point in
>time, I would expect that more details would have been shared with the
>membership, if for no other reason than to quell the speculation that is
>currently going on.

I second that motion.

Vaughn

[5-BG]

Vaughn;
read the minutes of the last excon meeting... an 84,000 donation to the foundation was made but only 28,000 made it to fidelity bank account. There is roughly 50 grand MISSING... that seems to me to be diversion.

but the board decided not to tell the members about that in its last letter. wonder why???

The question really is what portion of the financial problems were the result of actual diversion and what portion from fiscal mismanagement ( spending more on pet projects than the dues would support)? this is a question that they surely must have some handle on.. I suspect that it is a combination of the two.
but the powers that run the show may not want to acknowledge that their pet projects were part of the problem.

"Mike Schumann" > wrote in message ink.net...
I wouldn't say that it was particularly illuminating. One addition that
would have been nice would have been a brief bio on the new accounting
person who was hired. Another issue that has never been discussed is
whether or not funds were actually diverted (i.e. stolen), or if the SSA
just failed to make the necessary tax deposit payments. There is an
implication that there may have been a diversion, but this has never been
clearly stated. At this point in time, I would expect that more details
would have been shared with the membership, if for no other reason than to
quell the speculation that is currently going on.

Mike Schumann

"Pete Reinhart" > wrote in message
...
All,
The newest update says a lot.
Patience and forebearance will be rewarded.
Cheers!
"5-BG" <5-bghatesspam @ fake.com> wrote in message
...
Pete.. and chip
I too have read the excom draft minutes.

I do not and have never questioned their working hard.. What i have
brought up was the very akward position they are operating from.. namely
that of being in major conflict of interest. Further i have raised the
question of transparancy.

Chip wrote " But
> after more than three weeks of working with and communicating with SSA
> directors, including the Executive Committee (ExComm), I confess I no
> longer have complete confidence that the current organization can deal
> properly with this crisis."

I found ONLY ONE REFERENCE TO CHIP in the minutes of the past 10 excom
minutes. This reference was to his being approached to act as an interested
outside party to review actions etc.

What I did NOT find in any minutes of the excom meeting was ANY REFERENCE
to any discussion of Chip's suggestions/proposal;s or decision to withdraw
from the proceedings. Perhaps these discussions were held before meetings of
the excom or during executive sessions ( of thich there have been several).
In any event, reading the minutes does not shed any light whatsover on the
boards thoughts re conflict of interest. Are we to seriously believe that
they have not discussed this?? Is this not a subject that members have a
right to understand.?
I also picked up a statement in minutes that Costello had informed the
board that a notice to the D&O insurance company of a pending claim must be
filed and they ACTUALLY discussed not making such a notice or claim.. In
the end, i guess that they did give notice. Are we to believe that the
attorney retained did not discuss the possible ramifications with the
excom? But I guess that that is something that members do not need to
know,.
I also found it interesting that the directors of ssa who also serve on
the foundation board were seeking indemnity by ssa for actions as
foundation board members on the loan. This is, imho, the result of a
discussion among themselves and the attorney about the conflict of
interest.

bottom line.. The excom is operating as a unit that has taken upon itself
the responsibility for cleaning up the mess and developing a new business
plaN ( REFERENCED IN MINUTES). They are doing so, probably with good
intentions, but basically withholding essential elements of their
discussion, all the while claiming transparancy.
Chip's frustration and decision to go public is another CLEAR WARNING FLAG
to the membership .

It is evident to me that a revised business model is being put into place
as an evolutionary process. Basically tweaking policies and proceedures. If
there has been any serious discussion of a major overhaul it has not shown
up in the minutes.

Perhaps it would be appropriate for a "constitutional ( charter)
convention" . Perhaps the foundation should fund a professional analysis of
existing model and provide the membership with a series of options for
change. This could be presented at the annual convention for discussion and
then put to a vote of the entire membership.

Pete.. the issue remains conflict of interest. No matter what they do the
excom is tainted. The fact that they did not disclose discussions ( which i
ASSUME) that they must have had re this issue is telling. I would love to
know what pat costello told the excom re their d&O policy and coverage... I
suspect that he might have told them that their personal coverage did not
extend to willful acts in that were outside the charter of the bylaws. But
we will never know will we???

For an insider like chip to become frustrated to the point of going public
is also very telling.
I do not share your faith in this system.
Chip... I make it A POINT to fly my glider 3 to 5 times a week!!!



Chip
"Pete Reinhart" > wrote in message
...
All,
This (the original post in this thread) is the most reasoned approach I
have read so far. Having now gone to the SSA website under "governance" and
read all of the last several months of excomm minutes, I am firmly in the
camp of give them your support and the time to get things fixed. I am
convinced they are working very hard to get this situation under control,"
fixed as soon as possible", with the least damage to the organization as
possible, and to do it as openly as prudence makes possible. We owe the
board of directors our confidence.
Sincere apologies for previous negative posts.
Cheers!, Pete
> wrote in message
ups.com...
> (with apologies to non-U.S. readers)
>
> Most of the postings on this subject follow a predictable pattern:
> "what a bunch of stupid/unethical/indifferent (pick one) idiots we have
> at SSA; why don't they just [fill in the blank with your favorite
> brilliant solution]" A few (including mine) urge patience, support, and
> a chance to let the process work.
>
> Reluctantly I'm now changing my position from "be patient" to "do
> something." For the specifics, skip to the ACTION ITEM at the end. The
> rest of this is just a long-winded description of a discouraging
> journey the past few weeks.
>
> My new stance may seem like heresy given my past support of SSA. But
> after more than three weeks of working with and communicating with SSA
> directors, including the Executive Committee (ExComm), I confess I no
> longer have complete confidence that the current organization can deal
> properly with this crisis.
>
> Like most, I learned about SSA's tax filing/remittance problems from
> Dianne Black-Nixon's letter 3 1/2 weeks ago. While publicly urging
> patience, I also offered help to directors I know, including ExComm
> members. I agreed with most of their decisions but nevertheless had
> concerns. Soon I found myself working behind the scenes with several
> directors who shared these concerns, which were centered around
> maintaining the confidence and trust of SSA members during a time when
> their faith in SSA would be tested.
>
> Disclosures by ExComm implied that certain SSA funds were
> misappropriated by SSA's Chief Financial & Administrative Officer
> (CFAO), who has since been fired. But even if the CFAO were guilty,
> others may share responsibility for allowing this to happen. And as
> ExComm continued their investigation, the primary reason for our
> concern was conflict of interest.
>
> In the corporate (and non-profit) world, a conflict of interest exists
> whenever there is an incentive for people in positions of power and
> trust to take actions contrary to the best interests of those who have
> placed their trust in these individuals. It does not matter whether
> said individuals are trustworthy or competent or even whether they
> yield to these temptations. If there's an incentive for them to do the
> wrong thing, they are said to be conflicted and those conflicts must be
> properly addressed.
>
> The conflicts of interest with SSA's crisis relate to the fact that
> those working to resolve it--i.e., ExComm, the Budget and Finance
> Committee (FinComm), and SSA's accounting firm--potentially share
> responsibility for allowing it to occur. I would include SSA Executive
> Director Dennis Wright (ED) in this group but ExComm has been careful
> to give the impression that they are managing this situation, not the
> ED.
>
> Much outcry on this forum has focused on the decision to forgo annual
> audits. In my opinion, this misses the mark. To the best of my
> recollection as a former director (for nine years in the mid 1990s
> through early 2002, including service on ExComm), previous FinComms
> elected to have annual reviews performed by Johnson, Miller, SSA's
> public accounting firm (CPA) because they were much less expensive than
> a full audit (if I recall correctly, on the order of $20,000 less) yet
> provided some assurance that material problems would be uncovered.
>
> For those of you without financial backgrounds, there are three levels
> of involvement by a CPA with a client. For a "compilation," the CPA
> simply cranks out standard-format statements using the client's books
> and records. If the numbers add up, the CPA doesn't do much checking;
> they just make it look pretty. For a "review," (which is what I believe
> SSA had in prior years), the CPA goes a step further and attempts to
> uncover material problems. They offer no guarantees but at least the
> accountants look under the hood, so to speak. An "audit" (called for by
> the By-Laws) involves many more tests and checks based on which the CPA
> expresses an opinion as to whether the results conform to generally
> accepted accounting principles. An audit provides the highest level of
> assurance but, of course, costs the most, because of the extra work
> involved and also the liability assumed when expressing an opinion.
>
> In the past, the annual review plus the close relationship between the
> CPA and FinComm--who played a very active role in the SSA's finances at
> that time--plus performing an occasional full audit made the question
> one of economics as well as the By-Laws. In effect, FinComm made the
> decision to self insure, judging that an occasional loss, though
> unlikely, would still be less than the accumulated added cost of doing
> an audit every year. I suspect that may still turn out to be true
> despite the magnitude of the potential loss. I recall that the Board
> was made aware of this policy (but not asked to approve it, per se) on
> at least one occasion while I was a director but I cannot be certain.
>
> In my opinion, then, the critical question is whether FinComm retained
> Johnson, Miller to continue preparing SSA's annual financial
> statements, and more specifically to do annual reviews. ExComm's
> disclosures indicate they did not.
>
> Here's where the potential conflicts arise. Good governance calls for
> FinComm to retain the CPA, who would report directly to them (not to
> the CFAO or the ED or ExComm or Board), to prepare the annual financial
> statements (with a review or, under the By-Laws, an audit). ExComm
> meeting minutes note that Johnson, Miller appears not to have been
> retained to do any such work after 2002. If FinComm did retain them, in
> writing or orally, then Johnson, Miller may (and I emphasize the word
> "may") have some culpability and there is an inherent conflict with
> their continuing to work on the SSA account. In that case, it gets
> messier: ExComm meeting minutes indicate that Johnson, Miller selected
> the lawyer in Hobbs that SSA engaged. This attorney quickly recommended
> that SSA give Johnson, Miller "carte blanche to do what they needed
> with the SSA financial records."
>
> On the other hand, if FinComm did not retain Johnson, Miller, then
> FinComm itself may (again, "may") have some culpability, perhaps shared
> by ExComm and the Board (although directors could argue they acted in
> reliance on FinComm) and there is an inherent conflict with their
> playing a key role in this investigation.
>
> It's very important to reiterate that competence and trustworthiness
> are irrelevant to this discussion. It doesn't matter whether the CPA or
> FinComm or ExComm did anything wrong, intentionally or otherwise. And
> I'm not suggesting they did. On the contrary, I've been generally
> impressed with the work done by ExComm so far. What matters is that
> people who may have legal liability and therefore a vested interest in
> the outcome are deeply involved in this investigation. That's a classic
> conflict of interest. And it's a recipe for losing the confidence of
> SSA members at a time when we need it most.
>
> One remedy for conflict of interest is disclosure. Depending on your
> point of view, disclosure to date has been adequate but sometimes
> reluctant.
>
> Another remedy is bringing in new people to do the investigative and
> remediation work. This is risky. Those who know the most about SSA and
> are in the best position to help are probably already involved. It's
> difficult enough to get competent volunteers, much less to work for
> free in Hobbs going through accounting records and meeting with
> attorneys, bankers, the IRS, etc.
>
> A third and, I believe, best remedy is an independent group to monitor
> the actions of ExComm, the accountants, the attorney(s), staff, and
> others involved. This is where the discussions with the concerned
> directors quickly arrived. Ultimately this resulted in a formal
> proposal for an Oversight Task Force (OTF). Four SSA members were
> prevailed upon by these directors to serve on the OTF: myself and three
> other individuals--a highly experienced accountant, an attorney, and a
> successful businessman. Because of my prior Board service, I initially
> declined to serve on the OTF but was persuaded by the two concerned
> directors because of my knowledge of SSA, my business background, and
> the fact that my tenure ended in early 2002, prior to the Larry
> Sanderson affair.
>
> The OTF proposal was made to the full Board by one of these concerned
> directors approximately two weeks ago with, unfortunately, a generally
> negative reaction.
>
> How could this happen? Well, some directors had genuine questions about
> certain provisions in the OTF proposal but I believe the negative
> reaction was due in great part to misunderstanding the OTF's purpose.
> Instead of oversight (i.e., monitoring, not decision making), some saw
> this as an attempt to usurp power from the Board or ExComm. Some feared
> it could interfere with and/or delay the investigation or reveal
> confidential information. Others viewed it as a no-confidence vote. In
> frustration, I "recused" myself from participation on the OTF and made
> a direct appeal to the Board explaining OTF's purpose in more detail
> and arguing that it was the Board's fiduciary duty to take action to
> oversee the activities of ExComm, FinComm, and others who were
> conflicted.
>
> With this clarification, responses to our proposal were gratifyingly
> more favorable. In fact, ExComm subsequently expressed their support
> for the OTF. To be fair, at least some ExComm members (including Dianne
> Black-Nixon) had voiced support all along.
>
> That was nearly two weeks ago. Since then, nothing much has happened.
> ExComm continues to manage the investigation and to make decisions. My
> sense is that there may be debate even within ExComm on how to proceed.
> More than a week ago, one ExComm member emailed me to say it would be
> not be practical to hold a tele-conference special Board meeting for
> all 26 directors and suggested delaying action on the OTF until the
> scheduled Board meeting at the end of this month. My response was that
> with every passing day, decisions were being made that could be
> criticized by SSA members and should be overseen by an independent
> body. I often participate in conference calls with at least that many
> people dispersed over the U.S. and India and do not think a properly
> managed special meeting--with one agenda item--would be terribly
> difficult. Rightly or wrongly, I interpreted this as foot dragging. If
> ExComm had supported the OTF with the same admirable alacrity with
> which they jumped on the initial disclosure of the tax problems, the
> OTF would already be at work and I would not be writing what some will
> doubtless interpret as a disloyal or disruptive public posting.
>
> ExComm believes it would be inappropriate for them to charter the OTF
> without full Board approval. They have a point, but this reasoning
> leads inexorably to the conclusion that, absent oversight, ExComm
> should not be making major decisions about the investigation or
> corrective action, either.
>
> Ironically, with one troubling exception (see below), I'm less
> concerned with what ExComm is actually doing in Hobbs than with how SSA
> members may come to perceive or question their actions. To date, ExComm
> has moved decisively to manage a tough problem and it's difficult to
> quarrel with their actions.
>
> But many members still have a sense that a previous ExComm attempted to
> cover up the Larry Sanderson expense account scandal three years ago.
> We cannot afford the same cynicism, or worse, now. While most members
> understand that some things must remain confidential for legal reasons,
> they are uncomfortable or angry if they suspect they are not getting
> the real story. And on that score, ExComm's inaction is troubling.
>
> I mentioned an exception, and it's a big one: how responsibility for
> this problem is being assigned. ExComm's communications have emphasized
> the ED's failure to inform the Board of the non-filing of tax
> information returns. At the same time, however, ExComm has minimized
> the "errors of omission" of the ExComm/FinComm/Board in not retaining
> the CPA to examine the SSA's annual financial statements.
>
> In fact, both lapses are errors of omission. Yet my impression is that
> the ED is being positioned as the one most responsible for allowing
> this crisis while FinComm's failure to act is being dismissed. For that
> matter, ExComm admits that the CFAO reported directly to the Board, not
> the ED, until mid 2005 so there is ample reason to share responsibility
> for this. While I do not have the facts available to ExComm, the
> questions raised are precisely the reason that independent oversight is
> needed over those who find themselves in conflicted positions, for
> their sake as well as the members'. And it is needed immediately, not
> next week or the week after that or after the next major staff or
> organizational decision is made.
>
> If this were a public corporation, plaintiffs' attorneys would already
> be circling like vultures with the prospect that directors could be
> sued and found guilty of breach of their fiduciary duty, in particular
> those on FinComm and, likely, ExComm. But there's not enough money here
> to interest them. Nor do I believe we should necessarily seek to punish
> whomever may have contributed to this debacle. This was a failure,
> albeit a predictable one, of a flawed system. Yet I don't think we
> ought to sweep anything under the rug, either. I believe most SSA
> members would readily forgive the unwitting errors of volunteer
> directors so long as they believe they are being dealt with
> forthrightly.
>
> I apologize to those I know and respect on the Board and ExComm who are
> dedicated, well intentioned, and working hard in thankless positions.
> But I fear that some of them do not fully understand the danger that
> their inaction will increase the cynicism and apathy already evident in
> many SSA members. The lack of urgency and reluctance to initiate
> oversight by ExComm and the directors alike suggest that some of them
> still don't "get it."
>
> Despite protestations to the contrary, there is a tendency in times
> like this for ExComm and the Board to "circle the wagons." It's a
> natural human response to threats, both from the original problem and
> from outraged SSA members who want someone, anyone, to pay in blood. It
> is a tendency against which we must fight hard if we are to maintain
> the trust of our members.
>
> Sadly, at this point individuals who generously agreed to serve on the
> OTF weeks ago are growing cynical about the willingness of SSA to
> address its problems. Clearly I am, too.
>
> On a positive note, I see this unfortunate crisis as a wonderful
> opportunity to make major changes to SSA to improve its financial
> position and increase its effectiveness. The current Board structure is
> indeed cumbersome and ineffective. It also makes sense to examine which
> functions the SSA should perform and whether some of these should be
> outsourced. And I agree with those who believe we should explore
> locations other than Hobbs. We have a chance to "start over" with a
> clean sheet of paper...without losing those elements of SSA that are
> critical. Yet what I have seen in the past 3+ weeks leaves me worried
> that we will squander this opportunity.
>
> ACTION ITEM: Please contact your directors and, while offering your
> continuing support and trust, urge them to demand the Oversight Task
> Force or something like it be put in place immediately. All of
> us--members, directors, ExComm, and staff alike--need the clarity and
> assurance that only an independent observer can provide.
>
> In the meantime, please maintain the degree of civility on this forum
> that I hope you would if the discussion were taking place in person.
> Ironically, the offensive and irresponsible behavior of some
> participants on rec.aviation.soaring alienates most SSA members and
> encourages our leadership, with some justification, to dismiss these
> critics as just a bunch of loudmouth idiots. Those who insist on
> popping off indiscriminately with wild allegations, accusations, and
> statements of opinion-as-fact serve no one but their own egos. Their
> actions--presuming they actually care about the future of SSA and the
> great things it has and can still do for soaring pilots in this
> country--are counterproductive.
>
> Chip Bearden
> SSA Member since 1965
>

[Mike Schumann]

I assume that there was financial mismanagement. However, there is a big
difference between funds being misspent internally on SSA projects vs. being
embezzled. The frustrating thing is that we still don't have a clue on
whether we are talking about funds being taken for personal gain, or if we
are just dealing with internal incompetence.

Mike Schumann

"5-BG" <5-bghatesspam @ fake.com> wrote in message
...
Vaughn;
read the minutes of the last excon meeting... an 84,000 donation to the
foundation was made but only 28,000 made it to fidelity bank account. There
is roughly 50 grand MISSING... that seems to me to be diversion.

but the board decided not to tell the members about that in its last
letter. wonder why???

The question really is what portion of the financial problems were the
result of actual diversion and what portion from fiscal mismanagement (
spending more on pet projects than the dues would support)? this is a
question that they surely must have some handle on.. I suspect that it is a
combination of the two.
but the powers that run the show may not want to acknowledge that their
pet projects were part of the problem.

"Mike Schumann" > wrote in message
ink.net...
I wouldn't say that it was particularly illuminating. One addition that
would have been nice would have been a brief bio on the new accounting
person who was hired. Another issue that has never been discussed is
whether or not funds were actually diverted (i.e. stolen), or if the SSA
just failed to make the necessary tax deposit payments. There is an
implication that there may have been a diversion, but this has never been
clearly stated. At this point in time, I would expect that more details
would have been shared with the membership, if for no other reason than to
quell the speculation that is currently going on.

Mike Schumann

"Pete Reinhart" > wrote in message
...
All,
The newest update says a lot.
Patience and forebearance will be rewarded.
Cheers!
"5-BG" <5-bghatesspam @ fake.com> wrote in message
...
Pete.. and chip
I too have read the excom draft minutes.

I do not and have never questioned their working hard.. What i have
brought up was the very akward position they are operating from.. namely
that of being in major conflict of interest. Further i have raised the
question of transparancy.

Chip wrote " But
> after more than three weeks of working with and communicating with SSA
> directors, including the Executive Committee (ExComm), I confess I no
> longer have complete confidence that the current organization can deal
> properly with this crisis."

I found ONLY ONE REFERENCE TO CHIP in the minutes of the past 10 excom
minutes. This reference was to his being approached to act as an interested
outside party to review actions etc.

What I did NOT find in any minutes of the excom meeting was ANY REFERENCE
to any discussion of Chip's suggestions/proposal;s or decision to withdraw
from the proceedings. Perhaps these discussions were held before meetings of
the excom or during executive sessions ( of thich there have been several).
In any event, reading the minutes does not shed any light whatsover on the
boards thoughts re conflict of interest. Are we to seriously believe that
they have not discussed this?? Is this not a subject that members have a
right to understand.?
I also picked up a statement in minutes that Costello had informed the
board that a notice to the D&O insurance company of a pending claim must be
filed and they ACTUALLY discussed not making such a notice or claim.. In
the end, i guess that they did give notice. Are we to believe that the
attorney retained did not discuss the possible ramifications with the
excom? But I guess that that is something that members do not need to
know,.
I also found it interesting that the directors of ssa who also serve on
the foundation board were seeking indemnity by ssa for actions as
foundation board members on the loan. This is, imho, the result of a
discussion among themselves and the attorney about the conflict of
interest.

bottom line.. The excom is operating as a unit that has taken upon itself
the responsibility for cleaning up the mess and developing a new business
plaN ( REFERENCED IN MINUTES). They are doing so, probably with good
intentions, but basically withholding essential elements of their
discussion, all the while claiming transparancy.
Chip's frustration and decision to go public is another CLEAR WARNING FLAG
to the membership .

It is evident to me that a revised business model is being put into place
as an evolutionary process. Basically tweaking policies and proceedures. If
there has been any serious discussion of a major overhaul it has not shown
up in the minutes.

Perhaps it would be appropriate for a "constitutional ( charter)
convention" . Perhaps the foundation should fund a professional analysis of
existing model and provide the membership with a series of options for
change. This could be presented at the annual convention for discussion and
then put to a vote of the entire membership.

Pete.. the issue remains conflict of interest. No matter what they do the
excom is tainted. The fact that they did not disclose discussions ( which i
ASSUME) that they must have had re this issue is telling. I would love to
know what pat costello told the excom re their d&O policy and coverage... I
suspect that he might have told them that their personal coverage did not
extend to willful acts in that were outside the charter of the bylaws. But
we will never know will we???

For an insider like chip to become frustrated to the point of going public
is also very telling.
I do not share your faith in this system.
Chip... I make it A POINT to fly my glider 3 to 5 times a week!!!



Chip
"Pete Reinhart" > wrote in message
...
All,
This (the original post in this thread) is the most reasoned approach I
have read so far. Having now gone to the SSA website under "governance" and
read all of the last several months of excomm minutes, I am firmly in the
camp of give them your support and the time to get things fixed. I am
convinced they are working very hard to get this situation under control,"
fixed as soon as possible", with the least damage to the organization as
possible, and to do it as openly as prudence makes possible. We owe the
board of directors our confidence.
Sincere apologies for previous negative posts.
Cheers!, Pete
> wrote in message
ups.com...
> (with apologies to non-U.S. readers)
>
> Most of the postings on this subject follow a predictable pattern:
> "what a bunch of stupid/unethical/indifferent (pick one) idiots we have
> at SSA; why don't they just [fill in the blank with your favorite
> brilliant solution]" A few (including mine) urge patience, support, and
> a chance to let the process work.
>
> Reluctantly I'm now changing my position from "be patient" to "do
> something." For the specifics, skip to the ACTION ITEM at the end. The
> rest of this is just a long-winded description of a discouraging
> journey the past few weeks.
>
> My new stance may seem like heresy given my past support of SSA. But
> after more than three weeks of working with and communicating with SSA
> directors, including the Executive Committee (ExComm), I confess I no
> longer have complete confidence that the current organization can deal
> properly with this crisis.
>
> Like most, I learned about SSA's tax filing/remittance problems from
> Dianne Black-Nixon's letter 3 1/2 weeks ago. While publicly urging
> patience, I also offered help to directors I know, including ExComm
> members. I agreed with most of their decisions but nevertheless had
> concerns. Soon I found myself working behind the scenes with several
> directors who shared these concerns, which were centered around
> maintaining the confidence and trust of SSA members during a time when
> their faith in SSA would be tested.
>
> Disclosures by ExComm implied that certain SSA funds were
> misappropriated by SSA's Chief Financial & Administrative Officer
> (CFAO), who has since been fired. But even if the CFAO were guilty,
> others may share responsibility for allowing this to happen. And as
> ExComm continued their investigation, the primary reason for our
> concern was conflict of interest.
>
> In the corporate (and non-profit) world, a conflict of interest exists
> whenever there is an incentive for people in positions of power and
> trust to take actions contrary to the best interests of those who have
> placed their trust in these individuals. It does not matter whether
> said individuals are trustworthy or competent or even whether they
> yield to these temptations. If there's an incentive for them to do the
> wrong thing, they are said to be conflicted and those conflicts must be
> properly addressed.
>
> The conflicts of interest with SSA's crisis relate to the fact that
> those working to resolve it--i.e., ExComm, the Budget and Finance
> Committee (FinComm), and SSA's accounting firm--potentially share
> responsibility for allowing it to occur. I would include SSA Executive
> Director Dennis Wright (ED) in this group but ExComm has been careful
> to give the impression that they are managing this situation, not the
> ED.
>
> Much outcry on this forum has focused on the decision to forgo annual
> audits. In my opinion, this misses the mark. To the best of my
> recollection as a former director (for nine years in the mid 1990s
> through early 2002, including service on ExComm), previous FinComms
> elected to have annual reviews performed by Johnson, Miller, SSA's
> public accounting firm (CPA) because they were much less expensive than
> a full audit (if I recall correctly, on the order of $20,000 less) yet
> provided some assurance that material problems would be uncovered.
>
> For those of you without financial backgrounds, there are three levels
> of involvement by a CPA with a client. For a "compilation," the CPA
> simply cranks out standard-format statements using the client's books
> and records. If the numbers add up, the CPA doesn't do much checking;
> they just make it look pretty. For a "review," (which is what I believe
> SSA had in prior years), the CPA goes a step further and attempts to
> uncover material problems. They offer no guarantees but at least the
> accountants look under the hood, so to speak. An "audit" (called for by
> the By-Laws) involves many more tests and checks based on which the CPA
> expresses an opinion as to whether the results conform to generally
> accepted accounting principles. An audit provides the highest level of
> assurance but, of course, costs the most, because of the extra work
> involved and also the liability assumed when expressing an opinion.
>
> In the past, the annual review plus the close relationship between the
> CPA and FinComm--who played a very active role in the SSA's finances at
> that time--plus performing an occasional full audit made the question
> one of economics as well as the By-Laws. In effect, FinComm made the
> decision to self insure, judging that an occasional loss, though
> unlikely, would still be less than the accumulated added cost of doing
> an audit every year. I suspect that may still turn out to be true
> despite the magnitude of the potential loss. I recall that the Board
> was made aware of this policy (but not asked to approve it, per se) on
> at least one occasion while I was a director but I cannot be certain.
>
> In my opinion, then, the critical question is whether FinComm retained
> Johnson, Miller to continue preparing SSA's annual financial
> statements, and more specifically to do annual reviews. ExComm's
> disclosures indicate they did not.
>
> Here's where the potential conflicts arise. Good governance calls for
> FinComm to retain the CPA, who would report directly to them (not to
> the CFAO or the ED or ExComm or Board), to prepare the annual financial
> statements (with a review or, under the By-Laws, an audit). ExComm
> meeting minutes note that Johnson, Miller appears not to have been
> retained to do any such work after 2002. If FinComm did retain them, in
> writing or orally, then Johnson, Miller may (and I emphasize the word
> "may") have some culpability and there is an inherent conflict with
> their continuing to work on the SSA account. In that case, it gets
> messier: ExComm meeting minutes indicate that Johnson, Miller selected
> the lawyer in Hobbs that SSA engaged. This attorney quickly recommended
> that SSA give Johnson, Miller "carte blanche to do what they needed
> with the SSA financial records."
>
> On the other hand, if FinComm did not retain Johnson, Miller, then
> FinComm itself may (again, "may") have some culpability, perhaps shared
> by ExComm and the Board (although directors could argue they acted in
> reliance on FinComm) and there is an inherent conflict with their
> playing a key role in this investigation.
>
> It's very important to reiterate that competence and trustworthiness
> are irrelevant to this discussion. It doesn't matter whether the CPA or
> FinComm or ExComm did anything wrong, intentionally or otherwise. And
> I'm not suggesting they did. On the contrary, I've been generally
> impressed with the work done by ExComm so far. What matters is that
> people who may have legal liability and therefore a vested interest in
> the outcome are deeply involved in this investigation. That's a classic
> conflict of interest. And it's a recipe for losing the confidence of
> SSA members at a time when we need it most.
>
> One remedy for conflict of interest is disclosure. Depending on your
> point of view, disclosure to date has been adequate but sometimes
> reluctant.
>
> Another remedy is bringing in new people to do the investigative and
> remediation work. This is risky. Those who know the most about SSA and
> are in the best position to help are probably already involved. It's
> difficult enough to get competent volunteers, much less to work for
> free in Hobbs going through accounting records and meeting with
> attorneys, bankers, the IRS, etc.
>
> A third and, I believe, best remedy is an independent group to monitor
> the actions of ExComm, the accountants, the attorney(s), staff, and
> others involved. This is where the discussions with the concerned
> directors quickly arrived. Ultimately this resulted in a formal
> proposal for an Oversight Task Force (OTF). Four SSA members were
> prevailed upon by these directors to serve on the OTF: myself and three
> other individuals--a highly experienced accountant, an attorney, and a
> successful businessman. Because of my prior Board service, I initially
> declined to serve on the OTF but was persuaded by the two concerned
> directors because of my knowledge of SSA, my business background, and
> the fact that my tenure ended in early 2002, prior to the Larry
> Sanderson affair.
>
> The OTF proposal was made to the full Board by one of these concerned
> directors approximately two weeks ago with, unfortunately, a generally
> negative reaction.
>
> How could this happen? Well, some directors had genuine questions about
> certain provisions in the OTF proposal but I believe the negative
> reaction was due in great part to misunderstanding the OTF's purpose.
> Instead of oversight (i.e., monitoring, not decision making), some saw
> this as an attempt to usurp power from the Board or ExComm. Some feared
> it could interfere with and/or delay the investigation or reveal
> confidential information. Others viewed it as a no-confidence vote. In
> frustration, I "recused" myself from participation on the OTF and made
> a direct appeal to the Board explaining OTF's purpose in more detail
> and arguing that it was the Board's fiduciary duty to take action to
> oversee the activities of ExComm, FinComm, and others who were
> conflicted.
>
> With this clarification, responses to our proposal were gratifyingly
> more favorable. In fact, ExComm subsequently expressed their support
> for the OTF. To be fair, at least some ExComm members (including Dianne
> Black-Nixon) had voiced support all along.
>
> That was nearly two weeks ago. Since then, nothing much has happened.
> ExComm continues to manage the investigation and to make decisions. My
> sense is that there may be debate even within ExComm on how to proceed.
> More than a week ago, one ExComm member emailed me to say it would be
> not be practical to hold a tele-conference special Board meeting for
> all 26 directors and suggested delaying action on the OTF until the
> scheduled Board meeting at the end of this month. My response was that
> with every passing day, decisions were being made that could be
> criticized by SSA members and should be overseen by an independent
> body. I often participate in conference calls with at least that many
> people dispersed over the U.S. and India and do not think a properly
> managed special meeting--with one agenda item--would be terribly
> difficult. Rightly or wrongly, I interpreted this as foot dragging. If
> ExComm had supported the OTF with the same admirable alacrity with
> which they jumped on the initial disclosure of the tax problems, the
> OTF would already be at work and I would not be writing what some will
> doubtless interpret as a disloyal or disruptive public posting.
>
> ExComm believes it would be inappropriate for them to charter the OTF
> without full Board approval. They have a point, but this reasoning
> leads inexorably to the conclusion that, absent oversight, ExComm
> should not be making major decisions about the investigation or
> corrective action, either.
>
> Ironically, with one troubling exception (see below), I'm less
> concerned with what ExComm is actually doing in Hobbs than with how SSA
> members may come to perceive or question their actions. To date, ExComm
> has moved decisively to manage a tough problem and it's difficult to
> quarrel with their actions.
>
> But many members still have a sense that a previous ExComm attempted to
> cover up the Larry Sanderson expense account scandal three years ago.
> We cannot afford the same cynicism, or worse, now. While most members
> understand that some things must remain confidential for legal reasons,
> they are uncomfortable or angry if they suspect they are not getting
> the real story. And on that score, ExComm's inaction is troubling.
>
> I mentioned an exception, and it's a big one: how responsibility for
> this problem is being assigned. ExComm's communications have emphasized
> the ED's failure to inform the Board of the non-filing of tax
> information returns. At the same time, however, ExComm has minimized
> the "errors of omission" of the ExComm/FinComm/Board in not retaining
> the CPA to examine the SSA's annual financial statements.
>
> In fact, both lapses are errors of omission. Yet my impression is that
> the ED is being positioned as the one most responsible for allowing
> this crisis while FinComm's failure to act is being dismissed. For that
> matter, ExComm admits that the CFAO reported directly to the Board, not
> the ED, until mid 2005 so there is ample reason to share responsibility
> for this. While I do not have the facts available to ExComm, the
> questions raised are precisely the reason that independent oversight is
> needed over those who find themselves in conflicted positions, for
> their sake as well as the members'. And it is needed immediately, not
> next week or the week after that or after the next major staff or
> organizational decision is made.
>
> If this were a public corporation, plaintiffs' attorneys would already
> be circling like vultures with the prospect that directors could be
> sued and found guilty of breach of their fiduciary duty, in particular
> those on FinComm and, likely, ExComm. But there's not enough money here
> to interest them. Nor do I believe we should necessarily seek to punish
> whomever may have contributed to this debacle. This was a failure,
> albeit a predictable one, of a flawed system. Yet I don't think we
> ought to sweep anything under the rug, either. I believe most SSA
> members would readily forgive the unwitting errors of volunteer
> directors so long as they believe they are being dealt with
> forthrightly.
>
> I apologize to those I know and respect on the Board and ExComm who are
> dedicated, well intentioned, and working hard in thankless positions.
> But I fear that some of them do not fully understand the danger that
> their inaction will increase the cynicism and apathy already evident in
> many SSA members. The lack of urgency and reluctance to initiate
> oversight by ExComm and the directors alike suggest that some of them
> still don't "get it."
>
> Despite protestations to the contrary, there is a tendency in times
> like this for ExComm and the Board to "circle the wagons." It's a
> natural human response to threats, both from the original problem and
> from outraged SSA members who want someone, anyone, to pay in blood. It
> is a tendency against which we must fight hard if we are to maintain
> the trust of our members.
>
> Sadly, at this point individuals who generously agreed to serve on the
> OTF weeks ago are growing cynical about the willingness of SSA to
> address its problems. Clearly I am, too.
>
> On a positive note, I see this unfortunate crisis as a wonderful
> opportunity to make major changes to SSA to improve its financial
> position and increase its effectiveness. The current Board structure is
> indeed cumbersome and ineffective. It also makes sense to examine which
> functions the SSA should perform and whether some of these should be
> outsourced. And I agree with those who believe we should explore
> locations other than Hobbs. We have a chance to "start over" with a
> clean sheet of paper...without losing those elements of SSA that are
> critical. Yet what I have seen in the past 3+ weeks leaves me worried
> that we will squander this opportunity.
>
> ACTION ITEM: Please contact your directors and, while offering your
> continuing support and trust, urge them to demand the Oversight Task
> Force or something like it be put in place immediately. All of
> us--members, directors, ExComm, and staff alike--need the clarity and
> assurance that only an independent observer can provide.
>
> In the meantime, please maintain the degree of civility on this forum
> that I hope you would if the discussion were taking place in person.
> Ironically, the offensive and irresponsible behavior of some
> participants on rec.aviation.soaring alienates most SSA members and
> encourages our leadership, with some justification, to dismiss these
> critics as just a bunch of loudmouth idiots. Those who insist on
> popping off indiscriminately with wild allegations, accusations, and
> statements of opinion-as-fact serve no one but their own egos. Their
> actions--presuming they actually care about the future of SSA and the
> great things it has and can still do for soaring pilots in this
> country--are counterproductive.
>
> Chip Bearden
> SSA Member since 1965
>

[Pete Reinhart]

Mike, My guess is that there is an ongoing criminal investigation on the
part of the Hobbs police department and possibly the stae of NM and not much
can be said publicly so as not to taint the investigation.
Cheers! Pete R.
"Mike Schumann" > wrote in message
ink.net...
> I assume that there was financial mismanagement. However, there is a big
> difference between funds being misspent internally on SSA projects vs.
being
> embezzled. The frustrating thing is that we still don't have a clue on
> whether we are talking about funds being taken for personal gain, or if we
> are just dealing with internal incompetence.
>
> Mike Schumann
>
> "5-BG" <5-bghatesspam @ fake.com> wrote in message
> ...
> Vaughn;
> read the minutes of the last excon meeting... an 84,000 donation to the
> foundation was made but only 28,000 made it to fidelity bank account.
There
> is roughly 50 grand MISSING... that seems to me to be diversion.
>
> but the board decided not to tell the members about that in its last
> letter. wonder why???
>
> The question really is what portion of the financial problems were the
> result of actual diversion and what portion from fiscal mismanagement (
> spending more on pet projects than the dues would support)? this is a
> question that they surely must have some handle on.. I suspect that it is
a
> combination of the two.
> but the powers that run the show may not want to acknowledge that their
> pet projects were part of the problem.
>
> "Mike Schumann" > wrote in message
> ink.net...
> I wouldn't say that it was particularly illuminating. One addition that
> would have been nice would have been a brief bio on the new accounting
> person who was hired. Another issue that has never been discussed is
> whether or not funds were actually diverted (i.e. stolen), or if the SSA
> just failed to make the necessary tax deposit payments. There is an
> implication that there may have been a diversion, but this has never been
> clearly stated. At this point in time, I would expect that more details
> would have been shared with the membership, if for no other reason than to
> quell the speculation that is currently going on.
>
> Mike Schumann
>
> "Pete Reinhart" > wrote in message
> ...
> All,
> The newest update says a lot.
> Patience and forebearance will be rewarded.
> Cheers!
> "5-BG" <5-bghatesspam @ fake.com> wrote in message
> ...
> Pete.. and chip
> I too have read the excom draft minutes.
>
> I do not and have never questioned their working hard.. What i have
> brought up was the very akward position they are operating from.. namely
> that of being in major conflict of interest. Further i have raised the
> question of transparancy.
>
> Chip wrote " But
> > after more than three weeks of working with and communicating with SSA
> > directors, including the Executive Committee (ExComm), I confess I no
> > longer have complete confidence that the current organization can deal
> > properly with this crisis."
>
> I found ONLY ONE REFERENCE TO CHIP in the minutes of the past 10 excom
> minutes. This reference was to his being approached to act as an
interested
> outside party to review actions etc.
>
> What I did NOT find in any minutes of the excom meeting was ANY
REFERENCE
> to any discussion of Chip's suggestions/proposal;s or decision to withdraw
> from the proceedings. Perhaps these discussions were held before meetings
of
> the excom or during executive sessions ( of thich there have been
several).
> In any event, reading the minutes does not shed any light whatsover on the
> boards thoughts re conflict of interest. Are we to seriously believe that
> they have not discussed this?? Is this not a subject that members have a
> right to understand.?
> I also picked up a statement in minutes that Costello had informed the
> board that a notice to the D&O insurance company of a pending claim must
be
> filed and they ACTUALLY discussed not making such a notice or claim.. In
> the end, i guess that they did give notice. Are we to believe that the
> attorney retained did not discuss the possible ramifications with the
> excom? But I guess that that is something that members do not need to
> know,.
> I also found it interesting that the directors of ssa who also serve on
> the foundation board were seeking indemnity by ssa for actions as
> foundation board members on the loan. This is, imho, the result of a
> discussion among themselves and the attorney about the conflict of
> interest.
>
> bottom line.. The excom is operating as a unit that has taken upon
itself
> the responsibility for cleaning up the mess and developing a new business
> plaN ( REFERENCED IN MINUTES). They are doing so, probably with good
> intentions, but basically withholding essential elements of their
> discussion, all the while claiming transparancy.
> Chip's frustration and decision to go public is another CLEAR WARNING
FLAG
> to the membership .
>
> It is evident to me that a revised business model is being put into
place
> as an evolutionary process. Basically tweaking policies and proceedures.
If
> there has been any serious discussion of a major overhaul it has not shown
> up in the minutes.
>
> Perhaps it would be appropriate for a "constitutional ( charter)
> convention" . Perhaps the foundation should fund a professional analysis
of
> existing model and provide the membership with a series of options for
> change. This could be presented at the annual convention for discussion
and
> then put to a vote of the entire membership.
>
> Pete.. the issue remains conflict of interest. No matter what they do
the
> excom is tainted. The fact that they did not disclose discussions ( which
i
> ASSUME) that they must have had re this issue is telling. I would love to
> know what pat costello told the excom re their d&O policy and coverage...
I
> suspect that he might have told them that their personal coverage did not
> extend to willful acts in that were outside the charter of the bylaws. But
> we will never know will we???
>
> For an insider like chip to become frustrated to the point of going
public
> is also very telling.
> I do not share your faith in this system.
> Chip... I make it A POINT to fly my glider 3 to 5 times a week!!!
>
>
>
> Chip
> "Pete Reinhart" > wrote in message
> ...
> All,
> This (the original post in this thread) is the most reasoned approach I
> have read so far. Having now gone to the SSA website under "governance"
and
> read all of the last several months of excomm minutes, I am firmly in the
> camp of give them your support and the time to get things fixed. I am
> convinced they are working very hard to get this situation under control,"
> fixed as soon as possible", with the least damage to the organization as
> possible, and to do it as openly as prudence makes possible. We owe the
> board of directors our confidence.
> Sincere apologies for previous negative posts.
> Cheers!, Pete
> > wrote in message
> ups.com...
> > (with apologies to non-U.S. readers)
> >
> > Most of the postings on this subject follow a predictable pattern:
> > "what a bunch of stupid/unethical/indifferent (pick one) idiots we have
> > at SSA; why don't they just [fill in the blank with your favorite
> > brilliant solution]" A few (including mine) urge patience, support, and
> > a chance to let the process work.
> >
> > Reluctantly I'm now changing my position from "be patient" to "do
> > something." For the specifics, skip to the ACTION ITEM at the end. The
> > rest of this is just a long-winded description of a discouraging
> > journey the past few weeks.
> >
> > My new stance may seem like heresy given my past support of SSA. But
> > after more than three weeks of working with and communicating with SSA
> > directors, including the Executive Committee (ExComm), I confess I no
> > longer have complete confidence that the current organization can deal
> > properly with this crisis.
> >
> > Like most, I learned about SSA's tax filing/remittance problems from
> > Dianne Black-Nixon's letter 3 1/2 weeks ago. While publicly urging
> > patience, I also offered help to directors I know, including ExComm
> > members. I agreed with most of their decisions but nevertheless had
> > concerns. Soon I found myself working behind the scenes with several
> > directors who shared these concerns, which were centered around
> > maintaining the confidence and trust of SSA members during a time when
> > their faith in SSA would be tested.
> >
> > Disclosures by ExComm implied that certain SSA funds were
> > misappropriated by SSA's Chief Financial & Administrative Officer
> > (CFAO), who has since been fired. But even if the CFAO were guilty,
> > others may share responsibility for allowing this to happen. And as
> > ExComm continued their investigation, the primary reason for our
> > concern was conflict of interest.
> >
> > In the corporate (and non-profit) world, a conflict of interest exists
> > whenever there is an incentive for people in positions of power and
> > trust to take actions contrary to the best interests of those who have
> > placed their trust in these individuals. It does not matter whether
> > said individuals are trustworthy or competent or even whether they
> > yield to these temptations. If there's an incentive for them to do the
> > wrong thing, they are said to be conflicted and those conflicts must be
> > properly addressed.
> >
> > The conflicts of interest with SSA's crisis relate to the fact that
> > those working to resolve it--i.e., ExComm, the Budget and Finance
> > Committee (FinComm), and SSA's accounting firm--potentially share
> > responsibility for allowing it to occur. I would include SSA Executive
> > Director Dennis Wright (ED) in this group but ExComm has been careful
> > to give the impression that they are managing this situation, not the
> > ED.
> >
> > Much outcry on this forum has focused on the decision to forgo annual
> > audits. In my opinion, this misses the mark. To the best of my
> > recollection as a former director (for nine years in the mid 1990s
> > through early 2002, including service on ExComm), previous FinComms
> > elected to have annual reviews performed by Johnson, Miller, SSA's
> > public accounting firm (CPA) because they were much less expensive than
> > a full audit (if I recall correctly, on the order of $20,000 less) yet
> > provided some assurance that material problems would be uncovered.
> >
> > For those of you without financial backgrounds, there are three levels
> > of involvement by a CPA with a client. For a "compilation," the CPA
> > simply cranks out standard-format statements using the client's books
> > and records. If the numbers add up, the CPA doesn't do much checking;
> > they just make it look pretty. For a "review," (which is what I believe
> > SSA had in prior years), the CPA goes a step further and attempts to
> > uncover material problems. They offer no guarantees but at least the
> > accountants look under the hood, so to speak. An "audit" (called for by
> > the By-Laws) involves many more tests and checks based on which the CPA
> > expresses an opinion as to whether the results conform to generally
> > accepted accounting principles. An audit provides the highest level of
> > assurance but, of course, costs the most, because of the extra work
> > involved and also the liability assumed when expressing an opinion.
> >
> > In the past, the annual review plus the close relationship between the
> > CPA and FinComm--who played a very active role in the SSA's finances at

> > that time--plus performing an occasional full audit made the question
> > one of economics as well as the By-Laws. In effect, FinComm made the
> > decision to self insure, judging that an occasional loss, though
> > unlikely, would still be less than the accumulated added cost of doing
> > an audit every year. I suspect that may still turn out to be true
> > despite the magnitude of the potential loss. I recall that the Board
> > was made aware of this policy (but not asked to approve it, per se) on
> > at least one occasion while I was a director but I cannot be certain.
> >
> > In my opinion, then, the critical question is whether FinComm retained
> > Johnson, Miller to continue preparing SSA's annual financial
> > statements, and more specifically to do annual reviews. ExComm's
> > disclosures indicate they did not.
> >
> > Here's where the potential conflicts arise. Good governance calls for
> > FinComm to retain the CPA, who would report directly to them (not to
> > the CFAO or the ED or ExComm or Board), to prepare the annual financial
> > statements (with a review or, under the By-Laws, an audit). ExComm
> > meeting minutes note that Johnson, Miller appears not to have been
> > retained to do any such work after 2002. If FinComm did retain them, in
> > writing or orally, then Johnson, Miller may (and I emphasize the word
> > "may") have some culpability and there is an inherent conflict with
> > their continuing to work on the SSA account. In that case, it gets
> > messier: ExComm meeting minutes indicate that Johnson, Miller selected
> > the lawyer in Hobbs that SSA engaged. This attorney quickly recommended
> > that SSA give Johnson, Miller "carte blanche to do what they needed
> > with the SSA financial records."
> >
> > On the other hand, if FinComm did not retain Johnson, Miller, then
> > FinComm itself may (again, "may") have some culpability, perhaps shared
> > by ExComm and the Board (although directors could argue they acted in
> > reliance on FinComm) and there is an inherent conflict with their
> > playing a key role in this investigation.
> >
> > It's very important to reiterate that competence and trustworthiness
> > are irrelevant to this discussion. It doesn't matter whether the CPA or
> > FinComm or ExComm did anything wrong, intentionally or otherwise. And
> > I'm not suggesting they did. On the contrary, I've been generally
> > impressed with the work done by ExComm so far. What matters is that
> > people who may have legal liability and therefore a vested interest in
> > the outcome are deeply involved in this investigation. That's a classic
> > conflict of interest. And it's a recipe for losing the confidence of
> > SSA members at a time when we need it most.
> >
> > One remedy for conflict of interest is disclosure. Depending on your
> > point of view, disclosure to date has been adequate but sometimes
> > reluctant.
> >
> > Another remedy is bringing in new people to do the investigative and
> > remediation work. This is risky. Those who know the most about SSA and
> > are in the best position to help are probably already involved. It's
> > difficult enough to get competent volunteers, much less to work for
> > free in Hobbs going through accounting records and meeting with
> > attorneys, bankers, the IRS, etc.
> >
> > A third and, I believe, best remedy is an independent group to monitor
> > the actions of ExComm, the accountants, the attorney(s), staff, and
> > others involved. This is where the discussions with the concerned
> > directors quickly arrived. Ultimately this resulted in a formal
> > proposal for an Oversight Task Force (OTF). Four SSA members were
> > prevailed upon by these directors to serve on the OTF: myself and three
> > other individuals--a highly experienced accountant, an attorney, and a
> > successful businessman. Because of my prior Board service, I initially
> > declined to serve on the OTF but was persuaded by the two concerned
> > directors because of my knowledge of SSA, my business background, and
> > the fact that my tenure ended in early 2002, prior to the Larry
> > Sanderson affair.
> >
> > The OTF proposal was made to the full Board by one of these concerned
> > directors approximately two weeks ago with, unfortunately, a generally
> > negative reaction.
> >
> > How could this happen? Well, some directors had genuine questions about
> > certain provisions in the OTF proposal but I believe the negative
> > reaction was due in great part to misunderstanding the OTF's purpose.
> > Instead of oversight (i.e., monitoring, not decision making), some saw
> > this as an attempt to usurp power from the Board or ExComm. Some feared
> > it could interfere with and/or delay the investigation or reveal
> > confidential information. Others viewed it as a no-confidence vote. In
> > frustration, I "recused" myself from participation on the OTF and made
> > a direct appeal to the Board explaining OTF's purpose in more detail
> > and arguing that it was the Board's fiduciary duty to take action to
> > oversee the activities of ExComm, FinComm, and others who were
> > conflicted.
> >
> > With this clarification, responses to our proposal were gratifyingly
> > more favorable. In fact, ExComm subsequently expressed their support
> > for the OTF. To be fair, at least some ExComm members (including Dianne
> > Black-Nixon) had voiced support all along.
> >
> > That was nearly two weeks ago. Since then, nothing much has happened.
> > ExComm continues to manage the investigation and to make decisions. My
> > sense is that there may be debate even within ExComm on how to proceed.
> > More than a week ago, one ExComm member emailed me to say it would be
> > not be practical to hold a tele-conference special Board meeting for
> > all 26 directors and suggested delaying action on the OTF until the
> > scheduled Board meeting at the end of this month. My response was that
> > with every passing day, decisions were being made that could be
> > criticized by SSA members and should be overseen by an independent
> > body. I often participate in conference calls with at least that many
> > people dispersed over the U.S. and India and do not think a properly
> > managed special meeting--with one agenda item--would be terribly
> > difficult. Rightly or wrongly, I interpreted this as foot dragging. If
> > ExComm had supported the OTF with the same admirable alacrity with
> > which they jumped on the initial disclosure of the tax problems, the
> > OTF would already be at work and I would not be writing what some will
> > doubtless interpret as a disloyal or disruptive public posting.
> >
> > ExComm believes it would be inappropriate for them to charter the OTF
> > without full Board approval. They have a point, but this reasoning
> > leads inexorably to the conclusion that, absent oversight, ExComm
> > should not be making major decisions about the investigation or
> > corrective action, either.
> >
> > Ironically, with one troubling exception (see below), I'm less
> > concerned with what ExComm is actually doing in Hobbs than with how SSA
> > members may come to perceive or question their actions. To date, ExComm
> > has moved decisively to manage a tough problem and it's difficult to
> > quarrel with their actions.
> >
> > But many members still have a sense that a previous ExComm attempted to
> > cover up the Larry Sanderson expense account scandal three years ago.
> > We cannot afford the same cynicism, or worse, now. While most members
> > understand that some things must remain confidential for legal reasons,
> > they are uncomfortable or angry if they suspect they are not getting
> > the real story. And on that score, ExComm's inaction is troubling.
> >
> > I mentioned an exception, and it's a big one: how responsibility for
> > this problem is being assigned. ExComm's communications have emphasized
> > the ED's failure to inform the Board of the non-filing of tax
> > information returns. At the same time, however, ExComm has minimized
> > the "errors of omission" of the ExComm/FinComm/Board in not retaining
> > the CPA to examine the SSA's annual financial statements.
> >
> > In fact, both lapses are errors of omission. Yet my impression is that
> > the ED is being positioned as the one most responsible for allowing
> > this crisis while FinComm's failure to act is being dismissed. For that
> > matter, ExComm admits that the CFAO reported directly to the Board, not
> > the ED, until mid 2005 so there is ample reason to share responsibility
> > for this. While I do not have the facts available to ExComm, the
> > questions raised are precisely the reason that independent oversight is
> > needed over those who find themselves in conflicted positions, for
> > their sake as well as the members'. And it is needed immediately, not
> > next week or the week after that or after the next major staff or
> > organizational decision is made.
> >
> > If this were a public corporation, plaintiffs' attorneys would already
> > be circling like vultures with the prospect that directors could be
> > sued and found guilty of breach of their fiduciary duty, in particular
> > those on FinComm and, likely, ExComm. But there's not enough money here
> > to interest them. Nor do I believe we should necessarily seek to punish
> > whomever may have contributed to this debacle. This was a failure,
> > albeit a predictable one, of a flawed system. Yet I don't think we
> > ought to sweep anything under the rug, either. I believe most SSA
> > members would readily forgive the unwitting errors of volunteer
> > directors so long as they believe they are being dealt with
> > forthrightly.
> >
> > I apologize to those I know and respect on the Board and ExComm who are
> > dedicated, well intentioned, and working hard in thankless positions.
> > But I fear that some of them do not fully understand the danger that
> > their inaction will increase the cynicism and apathy already evident in
> > many SSA members. The lack of urgency and reluctance to initiate
> > oversight by ExComm and the directors alike suggest that some of them
> > still don't "get it."
> >
> > Despite protestations to the contrary, there is a tendency in times
> > like this for ExComm and the Board to "circle the wagons." It's a
> > natural human response to threats, both from the original problem and
> > from outraged SSA members who want someone, anyone, to pay in blood. It
> > is a tendency against which we must fight hard if we are to maintain
> > the trust of our members.
> >
> > Sadly, at this point individuals who generously agreed to serve on the
> > OTF weeks ago are growing cynical about the willingness of SSA to
> > address its problems. Clearly I am, too.
> >
> > On a positive note, I see this unfortunate crisis as a wonderful
> > opportunity to make major changes to SSA to improve its financial
> > position and increase its effectiveness. The current Board structure is
> > indeed cumbersome and ineffective. It also makes sense to examine which
> > functions the SSA should perform and whether some of these should be
> > outsourced. And I agree with those who believe we should explore
> > locations other than Hobbs. We have a chance to "start over" with a
> > clean sheet of paper...without losing those elements of SSA that are
> > critical. Yet what I have seen in the past 3+ weeks leaves me worried
> > that we will squander this opportunity.
> >
> > ACTION ITEM: Please contact your directors and, while offering your
> > continuing support and trust, urge them to demand the Oversight Task
> > Force or something like it be put in place immediately. All of
> > us--members, directors, ExComm, and staff alike--need the clarity and
> > assurance that only an independent observer can provide.
> >
> > In the meantime, please maintain the degree of civility on this forum
> > that I hope you would if the discussion were taking place in person.
> > Ironically, the offensive and irresponsible behavior of some
> > participants on rec.aviation.soaring alienates most SSA members and
> > encourages our leadership, with some justification, to dismiss these
> > critics as just a bunch of loudmouth idiots. Those who insist on
> > popping off indiscriminately with wild allegations, accusations, and
> > statements of opinion-as-fact serve no one but their own egos. Their
> > actions--presuming they actually care about the future of SSA and the
> > great things it has and can still do for soaring pilots in this
> > country--are counterproductive.
> >
> > Chip Bearden
> > SSA Member since 1965
> >
>

[MickiMinner]

To everyone, the $84,000 in donation (from an estate) that only $27,000
made it ot the foundation.....was only found out BETWEEN the last
letter and the board meeting in october. Amazing, how you all think
something is being hidden, when the board members themselves only found
out a day before you guys posted everything on RAS. Also, YES there
are legal ramifications to posting suspicions when there are criminal
activities. Micki

[Ian Cant]

According to the minutes, ExCom were officially informed
about the missing $57000 on September 22.

So conceivably it could have been mentioned in passing
on the letters of 25 September or 2 October.

Ian




At 04:24 04 October 2006, Mickiminner wrote:
>
>To everyone, the $84,000 in donation (from an estate)
>that only $27,000
>made it ot the foundation.....was only found out BETWEEN
>the last
>letter and the board meeting in october. Amazing,
>how you all think
>something is being hidden, when the board members themselves
>only found
>out a day before you guys posted everything on RAS.
> Also, YES there
>are legal ramifications to posting suspicions when
>there are criminal
>activities. Micki
>
>

[Ian Cant]

According to the minutes, ExCom were officially informed
about the missing $57000 on September 22.

So conceivably it could have been mentioned in passing
on the letters of 25 September or 2 October.

Ian




At 04:24 04 October 2006, Mickiminner wrote:
>
>To everyone, the $84,000 in donation (from an estate)
>that only $27,000
>made it ot the foundation.....was only found out BETWEEN
>the last
>letter and the board meeting in october. Amazing,
>how you all think
>something is being hidden, when the board members themselves
>only found
>out a day before you guys posted everything on RAS.
> Also, YES there
>are legal ramifications to posting suspicions when
>there are criminal
>activities. Micki
>
>

[Markus[_1_]]

Hi Todd,

If you are logged into the SSA web site (http://www.ssa.org) go on the
left menu to

The SSA > Governance

It links to:

Soaring Society of America Bylaws
SSA Four Year Strategic Plan; 2004-2007
SSA Board and Executive Committee meeting minutes
SSA, SSA Foundation and US Team Financial reporting

Hope this helps,

Markus


T o d d P a t t i s t wrote:
> Ian Cant > wrote:
>
> >According to the minutes........
>
> Does someone want to give me a hint as to where these
> minutes are hidden on the SSA web site? I know someone is
> going to show me they are in front of my nose, but I still
> can't find them.
> --
> T o d d P a t t i s t - "WH" Ventus C
> (Remove DONTSPAMME from address to email reply.)

[MickiMinner]

Yes, Ian, thank you for letting me know the exact date the Ex-comm was
informed. I merely knew about the General Board, not the Excomm.

You see, I like admitting I am wrong when the poster to RAS is
informed, intelligent, and not full of hyperbole. Thanks again, Ian!

Also, as I "heard', and tell me if you know any different, but the
recipient of the monies was Alan Gleeson himself...so if our suspicions
are accurate, then that might be why the money is missing....nest ce
pas? (one has to be careful to use words like alleged, suspicious,
etc.)....
micki