Board response to letter to the editor – April AR magazine

Dear Peter,
Chris Chapman raises a number of issues
concerning WIA governance and financial
practices. He also highlights potential conflicts
of interest in appointing Director Fred Swainston
as a paid contractor for a limited period, and the
rental of some warehouse space to another WIA
Director, Robert Broomhead.

Firstly, in addressing Chris’s issues, it must
be noted that Paul Simmonds, appointed as a
Director on 5 January 2016, was not part of
the events outlined and is not party to this reply.
Secondly, we must provide some background so
members can put things into context.
By mid-2015, the Directors were receiving
many adverse member comments about delays
and diffi culties in dealing with the National
Office, and the number was increasing. Directors
expressed the opinion that fundamental change
was necessary to improve customer service and
prepare for the possibility of increasing workloads
resulting from the Spectrum Review.

In May the Board commissioned a report
into office operations. Prepared by Silverdale
Training and Development, it identified some
key deficiencies. A Board meeting was then
convened at Melbourne’s Tullamarine Airport in
August 2015, and a summary of the fi ndings
was presented. The Board resolved to restructure
the WIA Office, replacing the existing Office
Manager position with a higher level Executive
Administrator. Subsequently, the existing
Office Manager position was made redundant.
Consequent on that, the Board decided to task
WIA Director Fred Swainston with improving the
offi ce processes, procedures and work-flow in
preparation for a new Executive Administrator
appointment, and to ensure continuity of service
to members.

The process of appointing Fred Swainston has
been raised as a conflict of interest in that he
was a WIA Director, and the Board did not seek
competitive quotations on the open market.
The Board viewed that, as the role was
highly specialised, required key knowledge,
and that seeking outside quotes would critically
delay action, engaging an unknown person
was potentially a higher risk. Fred had intimate
knowledge of the Office and its very specialist
work, was immediately available, and could work
for the WIA for a limited period of time at a very
reasonable rate, the cost of which was already
provisioned in the WIA accounts for the total cost
of the Office Manager.

As required of all Directors where a conflict
of interest may exist, Fred Swainston was
absent from the vote at Tullamarine when his
appointment was decided. No concerns or
objections were raised by other Board members
or the Treasurer. In September, Treasurer John
Longayroux resigned unexpectedly. Fred, assisted
by Robert Broomhead, then had to embark on
a “mission of discovery”, without benefit of any
hand-over period from the ex-Treasurer, having to
learn all the WIA’s various banking, membership
and fi nancial systems from scratch, requiring
many, many man-hours. Necessarily, there was a
short period when the accounts took a back seat
to the day-to-day business.

Regrettably, the task was found to be
more complex and took longer than expected.
Over about a five-month period, Fred was
successful in making the Office more effi cient
and responsive to members. He established
improved, written procedures for enquiries and
the general office workflow, introduced new
office security measures, and caught up with the
accounting entries. The Offi ce now works much
better from a customer service and business
systems perspective, we are now receiving much
improved feedback from members, and revenue
has increased.

The reality is that, in small volunteer
organisations like the WIA where Directors are
also doers, sometimes things need to get done
expeditiously. In retrospect, it may have been a
better ‘look’ to seek competitive quotations, but
this weighed against the greater risks identifi ed,
and it is doubtful the outcome would have been
as successful.

Fred’s work was completed at the end of
February, allowing for a two-week handover to
our new Executive Administrator, Bruce Deefholts.
Fred continues to provide support to the Office in
his capacity as a WIA Director.

Members were kept informed of the key
changes through WIA News.

Regarding the circumstances behind the
rental of factory space, Robert Broomhead
approached the Board in September 2015 with
an offer of $2200 per year to tenant a vehicle
space within the WIA factory space on a casual
basis to provide the WIA an additional income
source. The rent offered being similar to other
comparative rentals in the area. Robert stepped
back whilst the matter was discussed and
resolution passed by the Board which approved
the rental arrangement. However, in order to
avoid any possible perception of a conflict of
interest, Robert has agreed to end the rental and
relocate the vehicle, a refund will be provided for
the remaining rental period.

Chris Chapman became the new Treasurer on
5 January 2016. After a few weeks and four or
five visits to the office, Chris delivered a Report to
the Board’s February teleconference, his second
Board meeting, expressing concerns about
accounting processes and raising the various
governance issues.
Chris is unhappy that the Board only
addressed part of his report at that February
teleconference. The priority was to address the
most immediate issue – the ability of the WIA
to present accurate accounts to the Auditor at
the upcoming financial review, and those were
the items discussed from Chris’s report. Chris
also requested, and was given, authority to use
the previous Treasurer as his assistant. Chris
resigned on 23 February 2016.

Monthly Board teleconferences are time constrained
and each needs to address many
issues. The other items in Chris’ Report, not
being time-critical, were discussed at the Board
meeting on 1 March, after his resignation. The
Board views Chris’s statement that his advice
was ignored does not accurately describe what
occurred.
Other corporate governance issues Chris
raises include not removing his access to
the computer systems for four days after his
resignation, the absence of risk management
especially when key people resign, and security
of computer passwords. We did consider
removing Chris’ computer access, but, as we
are a volunteer organisation that still believes in
the concept of goodwill, we decided to maintain
Chris’ computer access for a few days in case
of unforeseen events during the handover to
the new Administrator. His access was revoked
probably around the time he wrote the letter.

Chris rightly points out that corporate
governance issues are important, and that
includes succession planning and risk
management. The Board agrees, and we
could have done better. However, volunteer
organisations constantly struggle with succession
planning and the loss of key personnel. The WIA
is no different.

The Board has resolved to instigate a full
review of WIA corporate governance and
procedures over the coming year, which would
naturally include risk assessment.

Determined to get to the bottom of the state
of the accounts following Chris’s resignation,
President Phil Wait called a meeting at the
National Offi ce with Fred Swainston, new
Executive Administrator Bruce Deefholts, our
accountant and the Auditor.

They spent several hours analysing the
accounting system and the fi nancial records,
determining that the WIA did not appear to
have any major accounting issues. Accounting
processes and record keeping has been vastly
improved and major problems with the WIA’s
upcoming annual fi nancial review are not
anticipated. On information available at the time
of writing, the WIA has no major financial issues.
We expect the Auditor’s review to go smoothly
and the financial result for 2015 will be available
after that.

The WIA’s professional accountant, Murray
Leadbetter, has agreed to act as an independent
paid Treasurer for as long as required, and
was appointed by the Board at the 1 March
teleconference. The Board considers this is the
best course of action to remove any suggestion
of bias or impropriety.

In summary, is Chris correct that the WIA
needs to improve its governance? Yes, no doubt.
The President has directed that all WIA Directors
will be required to attend a short course on
corporate governance. Remember, WIA Directors
are elected and come from diverse backgrounds.

Are there any serious issues concerning the
WIA’s finances and accounting practices? On all
the information currently available, no.

Was the travel expenditure for the August
Board meeting justified? Has the WIA achieved
the best operational outcome by the actions of
the Board? We believe, emphatically, yes.
The WIA Board of Directors

Letter to the Editor – published in April AR magazine

Dear Peter,

As many members will already be aware, I resigned as Treasurer of the Wireless Institute of Australia on 23rd February 2016, after a short six week tenure.  During this time I identified major areas of concern and presented the board with a path to fix these problems.

The Board ignored my advice and, as such, I was unable to perform my responsibilities in the best interests of the Institute or its members.  I have ethical and professional concerns about how our Institute and its finances are being managed.   Members should rightly be concerned about the state of the WIA, and should be asking questions.   I am not suggesting any fraudulent or criminal activity, but members should be concerned about good business practice and independent, impartial decision making.

I am bound to a level of confidentiality by the Corporations Act.  So to those people who have contacted me asking for details, I thank you for your interest (and support) and I apologise for not being able to share specific details.  It is the Board’s decision as to what information they share (or don’t share) between themselves and with the broader membership base.

The WIA is a Public Company limited by guarantee.  The Board is voted in by us, the members, and they have an obligation and responsibility to operate in accordance with the Constitution and the Corporations Act.  They are also expected to make good business decisions and operate with sound business practices.

Board members need specific skills as well as a broad understanding of the regulations and industry in which they operate.  Being a keen hobbyist is not enough.  Running your own private business is also a different matter – it’s your business, your money and your decisions.  Sure, there are rules you need to abide by: Tax, Employment, Corporations, OH&S etc, but it’s still different to a Public Company.  There are clearly some similarities and overlaps that can make a business owner a good Board member.  But there are other critical skills.  One is a strong appreciation of governance and what this means in a practical sense.

Governance is the process of decision making and the process by which decisions are (or aren’t) implemented.   I refer to an article which in part, describes good governance in a Public Company environment.

“It is about considering the interests of the organisation and members before any personal interest.  Putting the interests of the organisation ahead of your own shouldn’t be that complicated.  Many people cannot see that their well-intentioned involvement puts their interests ahead of the organisations…..  Where a Board member has a direct financial relationship to the organisation, the other Board members should seek competing bids and document that the provider with the conflict is the best provider for the organisation, or ask the person to step off the Board.  This is not “firing” a Board member and should not imply any disgrace whatsoever.  It just means that sometimes the best way to serve the organisation you care about is not to be on the Board”

(financearts.com)

Given the recent resignations of 2 Treasurers (and one assistant Treasurer) and at least one Board member due to what is clearly a genuine concern over the operation of the Board and management of the National Office, I ask that the Board provide members with answers to the following:

  1. Has Risk Management been considered and implemented; it needs to cover key areas such as: financial, operational, strategic and regulatory management. After 5 months in office, should the paid Acting Executive Manager (and Director) have addressed the following and advised the Board:
    1. Are the skills required for each portfolio within the WIA’s business properly understood and resourced?
    2. Are all business critical systems and processes properly documented?
    3. Are there succession plans? What happens if a key person resigns or becomes unable to perform their role?  Think of areas like Financial Management, Web site Management, Management of the ACMA Contract Services (Exam Services and Callsign Recommendations).
    4. Is the WIA using appropriate technologies and processes to enable efficient and effective information sharing, service delivery and record keeping?
    5. System passwords are taped to computer monitors in an open office environment. Volunteers, contractors and staff can easily see these notes.  Has the National Office implemented a policy for security and user access to IT resources and online banking?  Are user logons shared?  Have documented security policies been communicated to volunteers and staff?
  2. Another very topical example as I write this letter: Why is it that 4 days after resigning I still have access to the Institute’s accounting system (MYOB) and online banking.  Why am I still receiving confidential reports from the Institutes business systems?   Should the Board be concerned that the National Office does not have knowledge or control over such important aspects of the business?
  3. Proper consideration to conflict of interest is given whenever a decision is made that has the perception of a conflict of interest. The most recent examples being the appointment of a Board member to the temporary role of Executive Manager at the National Office and the other being the rental of floor space for vehicle storage to another Director.  Can the Board illustrate to members that any possible conflict of interest was discussed and documented, and an appropriate strategy was adopted?  Has either of these arrangements been subjected to any competing bids and/or market assessment or skills assessment?
  4. Has the Board undertaken a proper and critical review of the operation of the National Office and the change process that has recently been implemented, given that these activities were performed by a Director being paid for the services?
  5. There have been claims that many processes and decisions are not transparent or readily available for review. Can the Board show members that it has investigated these claims and taken appropriate actions, if required?
  6. Has the Board assessed its own culture and conduct given the recent resignations/departures of Board members, staff and volunteers?
  7. Can the Board explain to members why its needs to spend a considerable sum of members’ money on external consultants, accountants, auditors and travel, when for years the Institute has been able to rely on the efforts of volunteers to manage its accounts and financial affairs?
  8. Has the Board considered Corporate Governance training for existing and new Board members?

I am a staunch supporter of the WIA and believe we need a strong Institute to represent us and our hobby.  It is the responsibility of the Board and its members to ensure those obligations are executed with professionalism, transparency and competence.  I welcome answers that put these matters to rest.

Sincerely,

 

Chris Chapman

WIA Member