September 7, 2018
“RD again put to the Chair that he was in violation of section 15 (of the Anti-Corruption Law) and that it would be appropriate for RD (Ronnie Dunn, Deputy Chair) to report the Chair to the Anti-Corruption Commission. The Chair replied that RD was impugning his reputation and could be sued and threatened to ‘box’ RD in the head. RD threatened to return the punch. The Chair indicated that RD would not be physically able to return the punch as RD would be knocked out by the Chair’s punch.”
Any sensible reader would assume these words were extracted from the latest best seller fictional novel. Instead, you may be shocked to know that they are part of the recorded but still unapproved board minutes from a meeting held on Monday August 20th of the Utility Regulation and Competition Office (“OfReg”) board.
More shocking is the accusation that threats of violence during official board meetings are only a small snippet of the dysfunctional environment presently at the OfReg offices Staff apparently are shocked and dismayed at the corporate toxicity that has taken over since the new board was appointed in January 2017. Allegations are being levied that the situation has further deteriorated since the previous CEO’s departure in early August.
Sources claim that a flurry of press releases and internal communications are indicative of a dysfunctional entity now launched into complete chaos and steps are allegedly underway to hide or attempt to replace these minutes from getting into the public domain. However, CMR lead investigators have obtained copies of the minutes attached below.
For some time now reports have been reaching Cayman Marl Road that OfReg is in a state of turmoil with no state of calm in sight because of board interference and alleged mismanagement by the Chair. As the details emerged at how the OfReg board came to the unusual and questionably decision to appoint two separate CEO’s over the course of two months we now understand that it’s a clear sign of an agency in crisis.
One well-placed source stated:
“The joining of various regulatory entitles into one has had the usual growing pains but has now culminated into complete chaos as board members appear to not comprehend their roles policy makes and instead engaged in operational decisions meant for the CEO.”
By many accounts the previous CEO created no waves because of a forty-year friendship with the current Chair. However, what was once a simmering dysfunctionality has now begun to boil.
Cayman Marl Road has received unsigned copies of minutes from various “Special Meetings” in August. Sources informed us that these documents appear to paint a picture of not only corporate toxicity but also a total disregard for the law. These special meetings were called by the board Chair and center around his decision to put himself forward as interim CEO.
One board member expressed to us their overall dismay at the situation:
“What is evident is that over the course of these three special meetings a picture is painted of an apparently dysfunctional board held captive by a single rogue chair who does as he wishes with little to no impunity. Anyone that dares speak out against him is subjected to threats of violence or being removed.”
Statutory obligation to hire
Despite having had a clear indication that the previous CEO, J. Paul Morgan, had no intentions of remaining in his post beyond the 18-month contracted period the Chair did not make any provisions in advance of his departure to find a replacement.
It has been argued that this is in direct contravention of the both The Public Authorities Law, 2017 (PAL) and the Utilities Regulation and Competition Law – which dictates the remit of the Boards for recruiting CEOs.
Instead of a planned and methodical recruitment process we instead see a crisis being created that some have argued was deliberate. In a letter dated 15th August 2018 the Chair revokes his appointment of Mr. Alee Fa’amoe as Acting CEO. The letter states this appointment was made the day after the previous CEO’s contracted ended; seeming supporting the contention that the board chair was acting in a rather ad hoc recruitment manner.
Part 4 of PAL states, among other things, the advertising requirements for the CEO post even where there’s a vacancy or IMPENDING vacancy.
CMR consulted with an overseas lawyer who’s well versed with the Public Authorities Law and he shared with us the necessity for board chairs to adhere to their legal remit:
“When someone accepts the position of Board Chair they are required to also be well versed with the governing legislation for the entity as they are creatures of statute. What that means is that they are duty bound to abide by the letter of the law even if they think someone else makes sense in the moment. Otherwise they may be seen to be operating ultra vires and subject to various actions including judicial review.”
There’s now a position being put forward that Fa’amoe’s appointment was not legal in the first place.
Continued State of Confusion
The revocation then took place a day before the first of a series of special meetings through the month of August.
During the first meeting on 16 August, the Chairman, Pierson, indicated that he was going to resign as Board Chair and seek to be appointed as Acting CEO. In an odd set of disclosures it appeared to be a fait accompli with mention of Cabinet already seeming pre-approving the appointment of Melissa Lim as the next board chair. A medical certificate was produced to prove fitness given his age is well past the customary retirement age of 65.
This would require the recruitment process to be “delayed for the time being”. He further asserted he “would not leave the room until he was assured of the support of all the NEDs (non-executive directors) and that the process of his appointment would go ahead at that time.”
He relied upon an email from Cabinet Secretary, Samuel Rose, dated 2 August 2018 to demonstrate Rose’s support of this decision and appears to suggest that Rose actually was the originator of the idea. However, during the course of the special meetings this was called into question by various board members. In fact, we have been reliably informed that the Chair initiated the meeting with Rose and planted the idea that the recruitment process should be delayed for his own benefit. A careful examination of Rose’s response does indicate his belief that the Premier could be in favor of a delay but does not exactly state that it was a done deal.
In addition to the reliance of the email from the Cabinet Secretary the Chair also indicated that the current government had ongoing concerns about the management of OfReg that needed to be addressed. This sparked a bit of a firestorm with Alee Fa’amoe who wanted to know the precise nature of the concerns and why they had not been received via the traditional means of communicating such matters with OfReg.
By the second meeting several days later Fa’amoe resigned from Acting CEO which and withdrew his application completely from the recruitment process. It was divulged that some 14 applications has been received for the CEO vacancy. There was some contention about his ability to be able to resign as acting given the fact that the former CEO had delegated this role to him.
Under the heading of other business Fa’amoe, previous CEO of the ICTA, withdrew his application for the post of CEO one hour before the meeting occurred. CMR has been able to confirm via our sources that Fa’amoe actually withdrew his application to be considered for both the interim and permanent post. A source offered some insight into this:
“Whilst I cannot say with any degree of certainty it’s likely that given what transpired with Fa’amoe’s initial appointment as interim chair he is now being cautious. It could be subject to a question of legality I’m sure at this stage he must have been concerned about getting involved further with a Chair who may not appreciate his legal remit. This could have some far reaching legal implications and Fa’amoe is well aware of that.”
The Chair’s attempt to resign from board post and be voted in by remaining members as interim CEO was met with a firestorm of opposition that culminated in threats of physical violence during the 20 August meeting. The Deputy Chair, Ronnie Dunn outright states he believes that move was contrary to section 15 of the Anti-Corruption legislation and would be reporting Pierson for investigation.
Over the course of these meetings the Chair and various embers of the board can be seen apparently bickering and engaging in various allegations that the Chair was acting unlawful and not following correct procedure.
By the second meeting, Munroe and Anderson has expressed a desire to be Interim CEOs and Anderson indicated oddly he did not want local attorney and Assistant General Counsel/Assistant Secretary, Alison Maxwell present at that meeting – despite her customary attendance at other meetings. They were appointed with Pierson initially refusing to vote in favor of Anderson and Munroe with no explanation and then changing his mind at the last minute. It was at this meeting that Anderson and Munroe were appointing to teach act as Interim CEO for different periods.
The Chair called into question his Deputy’s character and called him a troublemaker and not being able to ‘hold his tongue”. He also threatened to have him removed by Cabinet. Other board members were calling up the two men to remain calm and conduct themselves in a professional manner.
One source who reviewed the minutes expressed their utter surprise:
“I am shocked that mature men who claim to be professionals and board Chairs would engage in threats of physical violence”.
The Chair stated that other board members were not to call him; especially on a Saturday (his sabbath) but should put any concerns to him in writing. The discussion in this meeting escalated to threat of physical violence. At one stage, the Deputy Chair left the meeting to supposedly call the Anti-Corruption Commission.
The minutes demonstrate there were attempts to now expedite the recruitment process to find a new CEO despite the interim appointments. The Chair indicated he couldn’t commit to a timetable for this to be done despite being pressed to do so.
Additional contentious discussions occurred surrounding allegations that there had been complaints made against OfReg that were disclosed via the Chair. In fact, Fa’amoe indicated that this was not the proper procedure to fetter any issues with OfReg and he was concerned that “undocumented concerns that led to the suspension of the CEO recruitment process” could not be substantiated and violated the concepts of fairness, transparency and independence. Principles upon which OfReg was established. He eventually put his concerns in writing to the government minister.
There were ongoing discussions about the inappropriateness of a sitting chair seeking to be appointed as Interim CEO for at least one year. At one stage, the Chair was asked to remove himself from chairing the interview panel. Initially he resisted but eventually agreed to seek a replacement from the Cabinet Office.
As a result of the above the minutes indicate that other board members began to ask questions about the legality of a sitting chair being able to surreptitiously appoint himself as CEO.
The minutes support the contentious nature of the suggestion and that other board members wanted to have a directive from Cabinet that the recruitment process for the CEO should be now be terminated. Some members of the board also sought to reaffirm their commitment as public officers to “act in a lawful, rational and procedurally fair manner”.
One independent politician remarked:
“It seems awfully draconian for a meeting of this nature to take place supposedly addressing concerns that have never been relayed in writing to OfReg. If such grievous concerns existed that could change the entire course of how OfReg was being operated it would seem plausible to get those as a Cabinet directive in writing. That didn’t happen.”
By the third and final meeting on 23 August the parties had met privately and were back on good terms with the Chair tendering his apologies for his behavior from the previous meeting and referring to them as his “friends”.
He also accepted that given what had transpired he would no longer be able to act as Chair or the recruitment process. It is unclear if any of them will be seeking to be considered for the permanent CEO post.
As indicated the minutes below have not been formally adopted because the require the signature of the Chair. An ironic footnote in the last minutes that that “only Chair can sign minutes” pursuant to section 19 of PAL.
We have also been informed that there were measures afoot to produce alternative minutes to these meetings. However, our various sources indicated that board secretary, John Epp, a former lawyer and law school professor was adamant about maintaining records that accurately reflected what transpired. At one stage it was allegedly suggested that he could have left out the portion with the threats; but he refused.
Some are now wondering if the Premier will seek to remove any board members in light of these minutes, alleged actions and overall behavior of some parties involved.
CMR contacted Chairman, Dr. Linford Pierson for comment and received the following reply:
UPDATE: We understand that OfReg are planning to hold a press conference to address these matters.