Petition asks for recall of co-op president
A petition to recall Socorro Electric Cooperative President Paul Bustamante was presented at the co-op’s board of trustees meeting Monday night.
The petition, containing 115 signatures, was turned in by Richard “Arf” Epstein during the public comment period of the meeting.
Epstein said he was bringing the action against the co-op president and District 2 trustee for “breach of fiduciary duty and no confidence.”
“This petition serves also as a request for a special meeting for District 2 to vote on the recall of Mr. Bustamante,” said Epstein, who said the signatures were obtained between Nov. 3-22.
Epstein, who lost to Bustamante in district elections two years ago, read excerpts from a letter he distributed to the trustees and other co-op officials. The letter cites the recall process outlined in the co-op bylaws.
Though the bylaws require that 10 percent of members in a district sign for it to be a valid petition for a recall, Epstein said the 115 people who signed his petition represented approximately 18.5 percent of District 2 members.
The letter states that it’s expected that an independent auditor be hired to verify the signatures within 30 days.
“Should trustees or employees of the SEC or most particularly Mr. Bustamante call on members to verify that they really signed the petition, this will be considered an act of intimidation to try to get members to withdraw their signature,” the letter warned.
If the signatures are verified, a special meeting would be called within another 30 days for the purpose of conducting a vote by secret ballot to recall Bustamante.
“If verification of the signatures takes more than 30 days, and, if the petition is verified, and a district meeting is not called within 30 more days, that will be a clear indication that the trustees are unwilling to abide by the bylaws of the SEC,” Epstein wrote.
The letter goes on to note that if the recall is approved, the bylaws provide that a new representative be elected at that same meeting.
When Epstein was finished, co-op attorney Dennis Francish brought up the matter that one of the new bylaws calls for the board to be reduced from 11 to five and the method to do that is by attrition.
“There’s a good chance that you won’t be able to replace him,” Francish said. “Once they’re gone, you can’t replace them.”
When Epstein began to respond, Bustamante cut him off.
“I’m not going to have a debate here. Your two minutes are up,” Bustamante said.
Bustamante is two years into his third four-year term on the board. He has served as president for five years.
A Rough Year
Socorro Electric is in the midst of a turbulent year. Member-owners overwhelmingly passed a bevy of reform related bylaws aimed at increasing transparency and reducing expenses incurred by the board at the annual meeting last spring.
In an effort to keep three new bylaws addressing increased transparency from being imposed upon them, the board voted to challenge the validity of bylaws in district court. In order to do so, the co-op filed a lawsuit against all of its approximately 13,000 member-owners last summer. Though the board later took action to have the lawsuit dismissed, by then several answers and counter claims were filed and the case remains active (see story Page 7).
Two other lawsuits were filed against the co-op last month. They were entered on behalf of two former co-op managers who were fired in August in the wake of an investigation into financial irregularities.
The problem first came to light in May when auditors reported numerous material weaknesses with the audit for the 2009-10 fiscal year. While Bustamante was made aware of the problem, the entire board wasn’t notified until more than two months later when a whistleblower sent an anonymous letter alleging that the managers were misusing co-op funds. Only then was the investigation into the financial issues initiated.
District 5 trustee Charlie Wagner, a leader in the movement to reform the co-op, then accused Bustamante of being involved in a cover up in an effort to protect the managers.
In addition, USDA officials informed the board in August that Socorro Electric was in danger of defaulting on federal loans because the public, non-profit corporation wasn’t turning a profit. Expenses incurred by the board, which totaled nearly $500,000 in 2009, were cited as an area where the co-op should cut costs.
On the heels of that news came the revelation that the co-op had been overcharging customers for the past four years. Approximately $1.6 million in overcharges are to be paid back to customers in the coming months.
Last month, the co-op’s board heard a report from an independent auditing firm that called into question co-op policies and spending practices.
Contact T.S. Last