SEC Releases Independent Audit Report
Article was added on Saturday, October 29, 2011
KINGSTREE, SC -- Santee Electric Cooperative, Inc. today
released an independent report on the cooperative's management and
Smith and Christensen, a Charlotte law firm specializing in
cooperative governance, spent several weeks preparing the review
after the cooperative's board of trustees hired the firm to conduct
a comprehensive internal audit of Santee Electric's management and
board practices. The board's action came in response to questions
raised by a group of Santee members who sued the cooperative
concerning corporate governance.
As part of their investigation, the law firm was encouraged to
communicate with the member-plaintiffs in the lawsuit and to
solicit input from the general public. The cooperative placed no
limitations on the firm's access or investigative authority. To
ensure objectivity, the firm retained the right to withdraw from
the work if they did not receive complete cooperation.
The investigators' report criticized the cooperative's actions
in some areas while commending it in others.
The investigators suggested that Santee Electric alter its board
election bylaws and procedures to make it easier for candidates to
appear on the ballot. They also recommended that the cooperative
take steps to make it easier for members to exercise their right to
vote. The investigators further suggested that the cooperative's
membership should reduce and clarify board compensation and
benefits. In terms of general governance, they recommended greater
transparency and member access to the board. Finally, they
recommended less micro-management by the board.
The report validates other Santee practices while refuting
recent allegations. The investigators found no basis for
allegations that the cooperative has been charging inflated rates.
According to their analysis of the cooperative's data, Santee's
rates are justifiable and within the appropriate range. They also
investigated claims that the cooperative spent lavishly on
facilities, but ultimately reached the opposite conclusion by
approving the cooperative's analytical approach to architectural,
engineering and construction planning. Regarding capital credits,
the investigators recommended a more formal board policy but found
no fault with Santee's history of capital credit retirements.
Finally, they uncovered no evidence to support allegations that
Santee's management is overcompensated or guilty of misconduct.
Santee's leadership reacted favorably and has begun to work on a
plan to address issues raised by the report. "We appreciate the
hard work that went into this process," said Billy L. Morris, Jr.,
chairman of the cooperative's board of trustees. "We look forward
to the opportunity to sit down with the plaintiffs in this lawsuit
to discuss the report's recommendations."
Floyd Keels, the cooperative's president and chief executive
officer, acknowledged that parts of the report are not favorable.
"The facts are what they are. Our next step is to explore the
report's recommendations for ways to improve the cooperative's
operations and responsiveness to the membership."
Santee has yet to file a formal answer in the lawsuit, and
Morris expressed hope that the parties could quickly meet to
discuss an amicable resolution. "We've made the audit findings very
public, and now we just need to get together and talk about what is
best for the cooperative."
Keels echoed his chairman's sentiment. "We are ready to meet
with the plaintiffs to address their concerns. In the meantime, we
will begin working on our own reformation plan based on the
independent report," Keels said.
"If everyone is reasonable and dedicated to the best interests
of Santee Electric, we will have a positive outcome," Morris said.
"I'm confident of it."
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