Posted by Laura Hagen, HWFC Member-Owner
REMINDER: Meet the Candidates, today, Monday November 30, 2015 from 4:30 – 6:00pm at St. Sophia’s Church, 440 Whitehall Road, Albany; this is just prior to the emergency Special Membership Meeting at St. Sophia’s which starts at 6:00pm. See the meeting announcement here.
READ YESTERDAY’S Times Union article by Chris Churchill, At Honest Weight, Ruffled Feathers Amid the Kale and Tofu.
READ THANKSGIVING DAY’S Times Union article by Tim O’Brien, Co-op Coup: Turmoil at Honest Weight Food Co-op Leads to Attempt to Oust Board.
READ THURSDAY’S Times Union and Tim O’Brien’s The Buzz: Business News, Vote Monday Seeks to Remove Honest Weight Board.
As a follow-up to the post Board Messages Don’t Add Up: Part I, I’d like to look at two more issues concerning the current leadership of the Honest Weight Food Co-op (HWFC):
1. Lack of separation of powers between the board & management
2. Outside, national influences on American, locally-owned, community food co-operatives, being wielded by nationally-based groups (including CDS Consulting Co-op (CDSCC), with whom the HWFC board contracts)
CHECKS AND BALANCES EXIST FOR A REASON
1. Simply by utilizing the information we have about the October 20, 2015 board meeting – with its secret 2 ½+ hour executive session  – and the board’s secret October 24, 2015 letter to the NYS Department of Labor (DOL) , it is crystal clear that there is a lack of separation of powers between the board and management.
Separation of powers is a term we all learned about in civics or social studies classes in high school. In our own government there are clear powers which each branch of the government controls: those branches being the executive, the legislative and the judicial. There are clear mechanisms by which each branch watches over (checks) the power the other two branches’ control, to make sure that each branch doesn’t overstep its bounds. We call this checks & balances.
In the business and nonprofit world, under GAAP (generally accepted accounting principles), a term similar to checks & balances is “internal controls.” If refers not only to financial checks & balances and compliance with laws & regulations, but also to the structures of governance. An internal controls’ audit will look at checks & balances which should be embedded into the organization and functioning at peak efficiency. It seeks to make sure the corporation’s resources are being protected, that there is a segregation of duties, and that safeguards are securely in place. It will identify areas with a lack of compliance and the risks to an organization if its governance, policies, and way of doing business are threatened by a lack of strong internal controls.
In its simplest terms: internal controls are the internal watchdog mechanisms which serve to keep an organization strong, resilient, honest, true to its mission, efficient, robust, and free from conflict of interest and undue influence.
It is clear that certain checks & balances & internal controls’ mechanisms at HWFC are non-functional. The board has not only stepped over the line, as regards to power, it continues to abuse the power entrusted to it by the member-owners. Worse, this board has formed an alliance with management (the Leadership Team or LT), to the exclusion of the owners of our co-operative.
THE PUBLIC MEETING:
EMERGENCY SPECIAL MEMBERSHIP MEETING
The only mechanism by which the member-owners of our co-operative can rein in an out-of-control board is to call an emergency Special Membership Meeting (SMM). This is a right guaranteed to owners in our current bylaws (a check). This is the reason why we are having an emergency SMM on Monday, November 30, 2015.
This emergency Special Membership Meeting is not a “coup,” as some are calling it. We are using the checks & balances legitimately available to us through our bylaws, to stop a board run amok.
THE SECRET MEETING:
The 2 ½+ hour executive session held on 10/20/15 was the board’s meeting; its nine (9) invited guests were:
• all three (3) members of the Leadership Team (LT) (management)
• three (3) attorneys representing two (2) different law firms:
Alexis Clement of Couch White LLP
John Vero of Couch White LLP
Joanmarie Dowling of Dowling Law PLLC
• two (2) consultants:
(Note: these consultants’ affiliations were not listed in the board
minutes. Given that this important data was withheld from the
minutes, it is assumed that Shem Cohen was representing Change
Events, Inc. It is unknown whom Josh Poupore was representing.)
• one (1) board administrator: Vicky Saraceni
There is no question that management was present at this 2 ½+ hour secret meeting and there is no question that member-owners were excluded.
The board saw nothing wrong in conducting a 2 ½+ hour secret meeting with two (2) law firms and two (2) consultants and management (LT), to the exclusion of the member-owners of this co-operative.
In this secret meeting, both the board and LT apparently saw nothing wrong in meeting for 2 ½+ hours in secret to the exclusion of the member-owners of this co-operative. If they had, member-owners would have been included. Member-owners to this day have no idea what was discussed in this secret meeting: it is a secret.
The length of the meeting, itself, is noteworthy. An executive session meeting this long – with this particular list of invited guests – is bound to raise eyebrows. Just what was discussed & decided that required 160 minutes and not one but two law firms – one with Washington, D.C. offices – and not one but two consultants, one whose affiliation remains unknown?
TWO RATIFIED MOTIONS
Immediately upon exiting this private, secret meeting, two public motions were ratified by the board. Member-owners were not consulted before the vote took place:
Consistent with the Bylaws Task Force recommendation, the Board will end member labor on the floor and administration by January 1, 2016. The Board will make a good faith effort to engage the membership in the process. 
The Board authorizes the Co-op’s attorneys (Couch White and Dowling Law, PLLC), in consultation with the Leadership Team and the Executive Committee, to interface with the New York State Department of Labor and entities in connection with ending member labor on the floor and administration by January 1, 2016. 
THE FIRST MOTION states “…the Board will end member labor...” Right there we’ll stop. The board has absolutely no authority to either alter in any way or eliminate our member-owner labor program (MLP). That power rests with and belongs unambiguously to the member-owners, per our current bylaws. Despite that fact, the board grabbed for this power.
This first motion would have significantly altered member-owners’ ability and right to work. Here is the critical fact: hand-in-hand with our right to work goes our right to vote. Per our bylaws, if a member-owner is not current in his or her work requirements he or she cannot vote. Put another way: if the board reduces or eliminates member-owners’ ability to work (by “ending member labor on the floor and administration”), it is also, de facto, reducing or eliminating member-owners’ right to vote.
Therefore, upon inspection, this ratified motion appears to be a backdoor way for the board to disenfranchise the member-owner voting bloc. Read another way: if a vote to approve new (secret) bylaws came up to membership (on, say, January 24, 2016 at the next regularly-scheduled membership meeting) many member-owners would be unable to exercise their right to vote, the power of their vote would be diluted, and a successful vote, in favor of the board’s agenda (new bylaws), is much more likely.
Finally, let’s pay attention to the way in which the board communicated motion #1 to the membership. This small yet oh-so-significant fact speaks volumes: it was via a small piece of paper tacked to a bulletin board …on a Friday afternoon. (Go here to read about more communication problems)
There was tremendous public outcry at the board’s attempt to “end member labor” and, de facto, our right to vote:
• an impromptu gathering of 70+ angry, irate member-owners confronted the board the morning after the motion was tacked up;
• a successful member-owner petition, signed by 65+ member-owners, called for an emergency Special Membership Meeting;
• two Times Union articles were published;
• two member-owner letters-to-the-editor in the Times Union were published;
• the Governance Review Council (GRC) of HWFC found, unanimously, that the board had overstepped its authority – per the bylaws – and asked the board to rescind its motion. 
Its back to the wall, the board rescinded motion #1 …with a promise to revisit it in the future. 
THE SECOND MOTION directs the executive committee to work with management (LT) and two (2) law firms to “interface” with the NYS Department of Labor (DOL). This “interface” took the form of a letter, dated 10/24/15 and hand-couriered to NYS DOL on 10/26/15. (We do not know if other letters or inquiries went out to other “entities.”) Member-owners were excluded from participation. We know the “interface” involved “…ending member labor…”
Since the board usurped authority in passing motion #1 (“end member labor”) their actions in motion #2 – bringing in a state regulatory agency and “entities” “…in connection with ending member labor…” – are, again, a clear grab for power to which it has no right.
The board did not ever rescind motion #2.
THE “INTERFACE” BECOMES A LETTER
The board delegated its power to the executive committee, which included three individuals: Deb Dennis, acting president; Erin Walsh, secretary; and Leif Hartmark, treasurer. (It was just prior to this executive session that Bill Frye resigned as president and Deb Dennis was voted in as acting president. This left the vice-president seat vacant and only three people on the executive committee, as opposed to the usual four.)
Management (LT) was tasked by the board to consult with the two (2) law teams and the executive committee to “interface” with the NYS DOL “and entities.” Management did not register any public complaints that member-owners were not a part of this board request. Therefore, management and board are, in this endeavor, acting as one, to the exclusion of member-owners.
The six people from HWFC tasked with “…interfac[ing] with the New York State Department of Labor and entities in connection with ending member labor…” were: Lily Bartels, Duke Bouchard, Lexa Juhre, Deb Dennis, Leif Hartmark and Erin Walsh.
Power had been further consolidated by reducing executive committee involvement to just three individuals: certainly faster & more efficient, if not quite so democratic.
The executive committee took the unusual step of hand-couriering this letter to NYS DOL. A board member has since publicly stated his frustration at the letter going out before it had the approval of the full Board. 
The executive committee sent the letter out after it had in its possession member-owners’ petition for an emergency Special Membership Meeting; that fully-executed petition was placed in acting-president Deb Dennis’s hands on Saturday, October 24, 2015. The letter was hand-couriered two days’ later, on Monday, October 26, 2015.
The three-person executive committee ignored the express, written, legally-executed wishes of the membership.
On November 2, 2015, Erin Walsh resigned from the board; her resignation was ratified by the board on November 3. John Serio was elected secretary and joined the executive committee. The vice-president seat remained vacant.
This HWFC board of directors’ letter – written by two law firms employed by the board – is so egregious I don’t know where to start:
1. “We write on behalf of … HWFC…” (this letter was not written on behalf of member-owners)
2. The letter states the number of employees HWFC has (it is silent on status of – even the existence of member-owners)
3. “Honest Weight has determined to transition certain aspects of its business…” (who at HWFC has determined to transition what by which authority?)
4. “The transition away from members contributing labor…” (This is the first time that member-owners were informed that there was such a transition plan in place. When was there a membership vote?)
5. “Honest Weight’s Board of Directors has committed to this transition.” (The board has assumed power it does not have. The board secretly committed itself to this transition and informed the NYS DOL without ever securing membership’s vote and without even informing membership of its plans. The board took unilateral action, ignoring its own co-operative corporation in the process.)
6. “…the Board of Directors is now operating under new leadership. Under this new leadership, the Board of Directors has directed Honest Weight’s management team to commence the transition with all deliberate speed” [emphases added].
(I am left utterly speechless by this last sentence.)
The only new leadership to whom this letter could be referring is Deb Dennis, acting board president. Therefore, it was Deb Dennis’s board which instructed the LT to “commence the transition with all deliberate speed.”
Since management’s supervisors are the board of directors; it is doubtful that management would ignore or delay a directive of the boss.
The contents of this letter were kept secret from member-owners for 26 days. Requests to secure a copy of the letter were denied by the board. Members had to petition outside of their own co-operative corporation with a FOIL, or freedom of information law letter to the NYS DOL, initiated and publicized by a member of HWFC, Julie Harrell.
This letter’s very existence was based upon power which the board usurped, that is, it did not own (“end member labor”).
The board did rescind motion #1 on 11/03/15. However, this was a paper-tiger rescind. The damage had already been done by motion #2, which they did not rescind and, in fact, got the “interface” out the HWFC door as fast as greased lightning on 10/26/15. The letter remained in active play, with the board still refusing to share a copy or speak about the contents.
The board never informed member-owners there was a plan to “end member labor” (“transition”) “with all deliberate speed;” a plan which included management. Member-owners learned of management’s involvement in (“commenc[ing] the transition with all deliberate speed”) only after securing the FOIL response (and finally receiving the letter through the board’s belated & restrictive release: it came attached with its very own”gag request“).
The board revealed its secret plans to the NYS DOL – a state regulatory agency – without ever having shared those same secret plans with the member-owners of the Honest Weight Food Co-operative! The members of the Leadership Team (management) were in the loop on all this secrecy, as well. If they were not, they would have raised a hue & cry.
It certainly does appear that these secret plans were strategically revealed to a state regulatory agency (and strategically withheld from member-owners) in order to strengthen the board’s business wish: to “…end member labor…” “…with all deliberate speed…”
Secrecy can become a way of doing business, particularly when checks & balances and internal controls are no longer valued, are ignored, and are not rigorously operationalized & tested at every level of the business.
The member-owners of our co-operative corporation were never even invited to this table. We didn’t even know there was a table to be invited to.
Were there effective, functioning checks & balances and internal controls in place, the likelihood of this entire scheme gathering steam – let alone being kept secret for so long – would have been greatly reduced. The balance of power has cemented itself between the board and management (LT); that could never happen if a thorough internal control audit were conducted at HWFC every year. The responsibility for that having not been done rests squarely upon the shoulders of the board; the very entity which is now taking full advantage of missing, broken, non-functional internal controls.
Secrets and checks & balances are like oil & water. They just don’t mix well together.
When the contents of the Board & Leadership Team’s letter were finally made available to HWFC’s member-owners, they expressed outrage, shock, and anger.
LACK OF CHECKS & BALANCES OR INTERNAL CONTROLS
LOOKING AT JUST the October 20th executive session, the subsequent two public motions, and the LT/Board’s October 24th letter, where are the problems with checks & balances?
1. board and management are, together, behaving like one entity
2. board and management are, together, behaving like one entity, in secret
3. board and management are, together, working on a strategy which directly, immediately and negatively impacts member-owners, in secret
4. board and management are, together, acting like one entity to the exclusion of the member-owners of our co-operative corporation
5. the executive committee sent its NYS DOL letter, having full knowledge of member-owners’ legal petition voicing opposition to “end[ing] member labor.”
6. multiple bylaws have been ignored by the board
7. member-owners have been excluded from the decision-making process
8. secrecy as a means of decision-making has been utilized by the board and LT
9. given that we are a co-operative with a history of transparency in governance, a 2 ½+ hour executive session represents an abuse of the reasons for executive session
10. the highest seat of power on the board – its executive committee – was allowed to conduct a strategy (“interface”) without oversight from the entire board
11. the executive committee conducted this action while operating at 75% capacity
12. lines of communication appear to be non-existent or very selectively utilized
13. the board communicated with member-owners (piece of paper … bulletin board) via a means chosen for its ability to avoid public notice [NB: That didn’t work, thank goodness!]
14. corporate records (e.g. minutes) are missing vital information
15. corporate resources are being utilized to the detriment of both member-owners and the entire co-operative corporation. At least two (2) law firms & at least three (3) Strategic Consultants or consulting firms are being utilized by this board. We have no idea how much this is costing our co-operative
16. the board has built a firewall around itself, protecting itself from any scrutiny, as well as allowing it to conduct business behind closed doors
17. secrecy, not transparency, reigns
18. with the board behaving as if in partnership with management (LT), how can it – the board – effectively supervise (check) management?
19. with the LT behaving as if in partnership with the board, how can it effectively serve the needs and interests of the member-owners?
20. with the LT behaving as if in partnership with the board, how can it effectively supervise staff and fairly represent staffing issues – including member-owner staff – so staff is fully supported day-in and day-out
The needs of staff are being neglected by a Leadership Team less focused on day-to-day staffing needs, and more focused on following the politically-motivated & time-sensitive orders from its boss: the board. Remember, “…the Board of Directors has directed Honest Weight’s management team to commence the transition with all deliberate speed.”
How can any issues of member-owners ever be fairly resolved with such a gross imbalance of power?
The actions of this Board and Leadership Team – together – constitute willful neglect and subversion of the interests of the member-owners of our co-operative corporation.
This board, which is supposed to supervise the Leadership Team, has, instead, made them a partner, with the apparent goal of taking the knees out from under the member-owner power of our co-operative corporation.
This board is out of control.
BYLAWS CHANGES IN THE WORKS
What if we member-owners were to vote in this board’s proposed (secret) bylaws at our membership meeting on January 24, 2016? The one and only means we have to stop an out-of-control board is the Special Membership Meeting, per our current bylaws.
Would those draft (secret) bylaws strip us of the right to call an emergency Special Membership Meeting?
Apparently, the likely answer to that question is, yes. Well, we could call a Special Membership Meeting, it’s just that the “Decisions made at any special meeting are advisory only.” 
Take a look at the CBLD ‘Fresh Start’ Bylaws Template, a promotion of a national organization called CDS Consulting Co-op (CDSCC), out of Putney, VT. The HWFC board has a current contract with CDSCC and they’ve been assisting the board with its recent (secret) bylaws’ rewrites.
CDSCC helps boards & management work well together through their Co-operative Board Leadership Development (CBLD) program. In fact, our board has contracted for CDSCC’s CBLD for – one assumes – training & guidance in implementing the principles of CBLD right here at Honest Weight Food Co-op.
There is not a lot of mention of member-owner power on the CDS Consulting Co-op’s website, however. In fact, real member-owner power & control appears to be actively discouraged.
What I find troubling is this: Mark Goehring & Thane Joyal of CDSSS created a brand new document just for the HWFC board and its “Bylaws Research Team” [sic], dated May 15, 2015, called “Member labor programs at comparable co-ops and related resources.”
We need to see this board document immediately; after all, our co-op paid for it.
Questions that come to mind:
1. Just how did this document effect the recommendations of the HWFC Bylaws Task Force?
2. Just how did the guidance and help of CDSCC effect the recommendations of the HWFC Bylaws Task Force?
3. Just who is the HWFC “Bylaws Research Team“?” We have a Bylaws Task Force. What is HWFC’s Bylaws Research Team and who’s on it?
4. Was it the recommendation of the CDSCC consultants that all members of our Bylaws Task Force sign a gag order?
5. Was it the recommendation of CDSCC consultants that the draft bylaws remain secret, to this very moment in time?
Just WHO is this HWFC Bylaws Research Team? Any why are the draft bylaws still secret?
The board even has a (secret) retreat scheduled with CDSCC’s Mark Goehring on December 5th: one week away.
Of course, there is an emergency Special Membership Meeting before that, planned for Monday, November 30, 2015.
Thank goodness for petitions, broadsides & town meetings, the time-honored way – in these our original Thirteen Colonies – of gathering the townspeople together, debating, and setting things to rights.
 HWFC member-owners, please go to the HWFC website and read the board minutes for the October 20, 2015 meeting, section 4 [2 hour 40 min. executive session, followed by two public votes].
 HWFC member-owners, please go to the HWFC website and read the GRC minutes for its emergency meeting on October 26, 2015. [NB: these minutes are missing].
 HWFC member-owners, please go to the HWFC website and read the board minutes for the November 3, 2015 meeting.
 See Ned Depew’s November 25, 2015 comments underneath Board Messages Don’t Add Up: Part I, dated November 25, 2015.
 See the CBLD ‘Fresh Start’ Bylaws Template, Article III: Member Meetings, 3.2 from CDS Consulting Co-op.
2. Outside, national influences on American, locally-owned, community food co-operatives, being wielded by nationally-based groups (including CDS Consulting Co-op (CDSCC), with whom the HWFC board contracts)
Let’s look at one of the consulting firms the board is currently using: the nationally-based CDS Consulting Co-op, based in Putney, VT. Very unsettling information (for those who love a traditional American co-operative with its strong, local member-owner base) has been uncovered about this company’s Co-operative Board Leadership Development (CBLD) program and its CBLD Fresh Start Bylaws Template.
Additionally, there appear to be many member-owned, locally-owned and operated food co-operatives across the United States which are also voicing concerns: they are being pushed in the direction of the “corporatization” of American food co-operatives: pushed away from member-owner control; pushed away from local control; pushed away from supporting local family farms which grow and/or produce real, organic, sustainable, high-quality foods for our tables…
…and pushed towards “co-ops” with a consolidation of power between board & management to the exclusion of local, member-owner control.
TO BE CONTINUED LATER TODAY…