Members to decide fate of co-op president
What amounts to a referendum on the governance of Socorro Electric Cooperative will take place tonight at a special meeting in District 2 to consider recalling co-op President Paul Bustamante as a trustee.
Bustamante has represented the district, which includes Alamillo, Lemitar, Polvadera, San Acacia and parts of Escondida, as a member of the co-op’s board of trustees for 10 years, the last five as president.
The special meeting was called by member-owners who signed a petition last November to have Bustamante removed for breach of fiduciary duty and no confidence. The petition containing more than 100 signatures was turned in by Richard “Arf” Epstein, who lost the district election to Bustamante in 2008.
Epstein said Bustamante should be removed because the board of trustees engaged in reckless spending and has continued to conduct business under a shroud of secrecy under his leadership.
“Trustees have taken too much money and have refused to say what those expenses are, or justify them,” Epstein said. “Paul, being the president, is the most responsible of those who have spent the co-op’s money badly and who have tried to keep all the decisions of the trustees secret.”
Expenses for Socorro Electric’s 11-member board of trustees totaled $493,000 in 2009. The co-op operated at a $417,000 loss that year and was $212,500 in the red in 2010.
The co-op has declined to release financial information that would reveal trustee expenses for 2010 and the financial and statistical report the co-op files annually with the USDA Rural Utilities Service has yet to be submitted.
At the annual meeting last April, member-owners of the co-op voted to curb expenses incurred by the board. They first voted to reduce the number of trustees to five, then passed a resolution to limit annual expenses for each one to $10,000 — $15,000 for the board president.
Bustamante, whose term expires at the end of 2012, called the petition that led to the special meeting “misleading,” in that it accuses him of wrongdoing but without basis.
“There are no specific charges,” he said.
He also said that misinformation is being spread around the community by people who are trying to oust him.
“You go out and talk to people and have to set the record straight,” he said.
But others claim the board of trustees hasn’t been straight with members. As an example, even though members passed a new bylaw to allow them access to co-op audits, records and financial data, that information is not being provided. Epstein and others who have requested such information are being told that because a lawsuit has been filed against current and former board members, no records will be released without a court order.
Trials and Tribulations
Bustamante took an advertisement in today’s and last Saturday’s edition of El Defensor Chieftain that says he’s essentially being put on trial, and, indeed, the special meeting may have elements of a trial. According to the co-op bylaws, the trustee being considered for removal may be represented by counsel and can present evidence in respect to the charges and the people bringing the charges will have the same opportunity.
Bustamante said he doesn’t plan on enlisting counsel.
“I can’t afford an attorney,” he said. “I’ll represent myself and explain to the people.”
Epstein said he wouldn’t utilize legal counsel either.
“I will make a presentation, because I was the one who circulated the petition. I don’t know if other people will want to talk or not,” he said.
Epstein said his presentation may include some evidence to support his stance but didn’t say what.
In the newspaper ad, Bustamante says the accusations against him are an attack on his integrity. He claims the majority of his critics live outside District 2 and have been members of the co-op for a short time.
He said those people obviously don’t know him.
“I was born and raised in this community, and for those who know me, know me as being loyal and honest,” Bustamante said. “I have always tried to keep the interest of the entire SEC Cooperative in the decision-making processes while I have been involved as President of the Cooperative.”
The jury, in this case, will be members of District 2, who will decide by majority vote to either retain or remove Bustamante as their representative. Voting will be conducted by secret ballot and a voting machine will count the votes.
A Turbulent Year
Socorro Electric suffered through a turbulent year in 2010, beginning with an overwhelming victory for member-owners who rallied to “take back” their co-op by passing a bevy of bylaws calling for reform.
Among the newly adopted bylaws were directives requiring districts to be realigned for more equitable representation, the board of trustees to be reduced from 11 to five members, limits be placed on trustees’ expenses, the co-op follow open meetings guidelines and allow members to inspect records so long as it’s not for a commercial purpose or in violation of the Privacy Act.
In what was perceived by many member-owners as an act of hubris, the board of trustees voted to challenge in court the validity of three bylaws aimed at increasing transparency. In order to do so, the co-op filed a lawsuit against all of its approximately 10,000 members.
In response to public outcry, the board later voted to dismiss the lawsuit but by then several answers had been filed, including a countersuit requesting class-action certification. The case is now being handled by a New Mexico Supreme Court-appointed judge, who will conduct a hearing in May to address the merits of the original complaint.
Meanwhile, the co-op’s financial situation is in a state of stress. The public, non-profit corporation failed to turn a profit for the second year in a row and is now in technical default on federal loans.
A rate increase designed to recover the margins will go into effect next month.
In addition, two separate audits conducted last year were critical of the co-op’s accounting practices and policies, and an investigation into financial irregularities led to the firing of two co-op managers, the general manager, Polo Pineda Jr., and the head accountant, Kathy Torres, last summer.
Bustamante has denied accusations that he was involved in cover-up in an effort to protect the managers. He said those allegations are coming from District 5 Trustee Charlie Wagner, a leader in the movement to reform the co-op.
Keeping it Civil
Another leader in the movement to change the way the co-op goes about its business is Charlene West, chairwoman of the Socorro Electric Cooperative Reform Group.
West, who lives in Lemitar, is a defendant in two lawsuits the co-op filed. One resulted in a restraining order that prevents her from attending board of trustees meetings. She was also the only individual named in the co-op’s lawsuit against its member-owners.
West signed the petition to remove Bustamante, but said it’s more about the board of trustees’ apparent reluctance to accept what members voted for last April. That makes it a matter of the co-op not following the democratic principles the co-op is supposed to be following, she said.
“This is about the co-op as a whole; this has never been personal,” she said. “I did not want a recall. I believed once we passed the new bylaws the trustees would understand that the people wanted reform.”
But West said the message members sent last April hasn’t gotten through.
“No matter what the people ask for, we get the same response. Yes, (the trustees) were elected, but they need to adhere to the bylaws and the people’s voices,” she said. “No matter what happens Wednesday, the people want a voice.”
Bustamante said what he’s heard is that people are fed up with the bickering.
“There’s a lot of people angry. They are tired of arguments,” he said. “There are a lot of people who don’t like these lawsuits and are tired of reading about it in the newspaper.”
Tensions between trustees and members have at times run high. Bustamante said he hopes everyone keeps their cool at tonight’s meeting.
“I just want this thing to be civil. This is not a debate; there shouldn’t be any arguments,” he said. “I just hope everything goes well and it doesn’t turn into a dogfight.”
Epstein said he’ll do his best to keep things civil on his side.
“If it’s disagreeable at the meeting, I will do my utmost to assure that it’s not due to us. I intend to be polite and calm,” he said.
But Epstein said members in District 2 shouldn’t be afraid to have their voices heard, even if they do it by casting a ballot.
“I think it’s our duty to show up, make a decision and vote,” he said.
Wednesday’s special meeting in District 2 will be held at Midway Elementary School in Lemitar. Registration takes place from 5:30 to 7 p.m., and the business meeting will begin at 7 p.m.
Contact T.S. Last