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