SAG moderates argued strenuously for months that what I called a “governance crisis” at the SAG Pension and Health Plan was nothing much to worry about.
“Move along, nothing to see here,” was the essential refrain.
In fact, things were clearly far worse than has been reported (or admitted by the moderates) and now the CEO of the fund has been ousted. [NOTE: Variety reports Dow is down but not out – reporting that the CEO is on a health related leave for 60 days with an intent to return. The LA Times has also now confirmed this version. It remains to be seen if this is genuine or a way of ushering the embattled CEO gently into that good night.]
The LA Times also confirms my suspicion that there is increased scrutiny over financial controls at the $2 billion fund, including an active investigation by the Department of Labor.
The question that will immediately arise is why the Pension Plan board issued what amounted to a defense of the CEO only a few days ago and argued that they had resolved the allegations made by ousted fund executive Craig Simmons. Instead of a genuinely independent investigation that was “above suspicion” they clearly made Mistake 101 in corporate governance: they circled the wagons engaging as an investigator someone the anti-merger activists charged was a crony of SAG NED and Fund Trustee David White.
As a result they have now handed anti-merger activists a huge propaganda victory. One immediate question likely to arise is whether the SAG board members or staff who are also Pension Fund trustees will face any liability for failure to exercise their fiduciary obligations.
The only other major news in the last few days in SAG-land was the oddly timed public reporting that White’s contract with SAG was quietly extended until 2014 – last spring! That may have been a not so subtle reminder to White opponents that while dumping Dow under the bus may be feasible dumping White because of his role in the Pension Fund’s problems would be very expensive.
This is breaking and I will convey details as they are reported.