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December 17th, 2008
PEC board passes ethics policies, receives Navigant report

From Pedernales Electric Cooperative

At a public meeting held Dec. 16 at Pedernales Electric headquarters in Johnson City, Navigant Consulting, Inc., presented the findings of its eight-month-long investigation of PEC business practices to the Cooperative’s Board of Directors and gave an overview of the report to the public.

PEC’s Board heard the report after passing conflict-of-interest and whistleblower policies earlier in the meeting.

A cross-disciplinary team of 10 to 12 consultants worked on the report, including those with electric utility, operations and accounting expertise. Navigant director Todd Lester presented the report to the Board in executive session, and then gave a brief summary of the scope of the report to members, media and employees attending the meeting. “Our efforts focused on performing a comprehensive, independent investigation into various PEC transactions, business processes and expense items, as well as new areas that we were able to identify during the course of the investigation,” Lester remarked. “Our process has been completely independent of the Board throughout this whole investigation.”

The 391-page report, along with several hundred pages of accompanying appendices and exhibits, is available on PEC’s web site at http://www.pec.coop/CorpProfile/NavigantReport.aspx. The report, which covers the period from Jan. 1, 1998 to Dec. 31, 2007, will also be available for review by members at all PEC offices.

“I want to be clear that this report will be of great benefit to us as we continue to chart our new and different course for this great company,” commented PEC General Manager Juan Garza. “The report appears to endorse the reforms in governance and business practices that we have made over the past year and provides solid direction and recommendations for PEC to continue to make significant reforms at the Cooperative.”

After reviewing the document and giving staff time to make recommendations on how to implement the changes it suggests, PEC’s Board will hold a special meeting Jan. 15, at 10 a.m., at PEC headquarters to further discuss the report and form an action plan.

“We will need time to study the specifics of this report, and I promise to every member that this staff is PEC Board passes ethics policies, receives Navigant report setting about the task of studying this report and formulating plans of action,” Garza continued. “We have just begun to make the changes we need to make. The actions of this Board of Directors in adopting ethics policies are another indication of its commitment to moving us forward.”

Garza and PEC management met immediately following the release of the report to discuss its findings. “This report is quite critical, for sure,” he said. “We will be addressing many issues, and we will continue to make substantive reforms to policies and procedures. But I hope that this report and it being made public demonstrates to our members and employees one of the significant changes in how we are going about our business at PEC — with openness and transparency. We’re spending other people’s money, and therefore, we have a responsibility to always have the appropriate checks and balances.”

A few members in attendance called for the resignations of long-standing Directors and questioned the cost of the report, while another member commented that PEC’s rates and service are good and thanked the Board for their dedication to the members.

PEC’s Board also unanimously passed conflict-of-interest and whistleblower policies, which were developed in consultation with attorneys at the National Rural Electric Cooperative Association. The policies apply to PEC officials, including Board members, PEC managers and other key employees, and takes into account state laws, PEC bylaws and the Internal Revenue Code.

Included among the items the conflict-of-interest policy prohibits or discourages are employment of Directors by PEC or a subsidiary, employment by the Cooperative of persons related to Board members and “using inside information for financial gain.” Compliance and enforcement clauses in the policy require officials to voluntarily disclose conflicts of interest and to annually sign a “Conflict-of-Interest Certification and Disclosure Form.” The policy allows for potential removal of officers for violations. The whistleblower policy “is designed to ensure PEC has an effective mechanism for employees and others to raise concerns about potentially unlawful or unethical behavior within the organization,” and also states “that no retaliation shall occur for an individual’s internal reporting of potentially unlawful or unethical conduct.”

“The PEC Board of Directors and key employees must act at all times in the best interests of the organization and not for personal or third-party gain or financial enrichment,” said PEC District 7 Director Dr. Patrick Cox. “These policies will help to ensure members of the Board of Directors, Advisory Board members and key employees conduct the business affairs of PEC in good faith and with honesty, integrity, due diligence and competence.”

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2 thoughts on “PEC board passes ethics policies, receives Navigant report

  1. Prosecute them – and if it takes PEC money to do that I am good with that.
    If convicted – send them to jail – and I do not care how old they are.

  2. Today (Sunday) I read the expanded article in the Austin Statesman about the PEC Navigant report. If Fuelberg & Felps & the rest of those pirates don’t go to jail and if their ill-gotten assets are not reclaimed to the coop I will be very disappointed. Somewhere I read that Fuelberg couldn’t be located to be served with a subpoena. Surely he could be served if a serious attempt were made to do so – and I don’t care if he is on some ranch in New Mexico. Go get him..

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