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CECC spokeswoman Nancy Plagge had no comment on the lawsuit because it has not yet been reviewed by the CECC attorney. The complaint by Joe Capps, of Siloam Springs, individually and on behalf of all other present and former coop members, said as a non-profit corporation, CECC cannot earn a profit.
$170 million
"The cooperative is obligated to pay by credits to a capital account for each patron, all such amounts in excess of operating costs and expenses," the complaint filed in Benton County Circuit Court states. "Carroll Electric possess over $170 million of 'patronage capital' or 'capital credits.' Carroll Electric pays neither interest nor dividends for use or on account of the patronage capitol ... the cooperative does not return patronage capital to former members, or excess capital to current members."
The complaint states that since being formed in 1937, Carroll Electric has expanded substantially and is now a large business operation with more than $325 million in assets. The company has 81,500 meters in Arkansas and Missouri, 90 percent of which are residential meters.
The complaint said the coop's bylaws require that revenues not needed for operating costs and reserves are to be returned from time to time to members on a pro rata basis according to the amount of business done during the period, either in cash, reduction of electric bills or a general rate reduction.
Money 'hoarding' alleged
"Carroll Electric does not return its capital 'from time to time' in any form," states the complaint, which represents only one side of the dispute. "Carroll Electric indefinitely hoards its current and former members' money."
The complaint states that while CECC fails to return patronage capital, Carroll Electric managers and board of directors use the cooperative's funds "as a private till. The bylaws provide that directors should not obtain a salary or work for the cooperative. Yet, according to public filings, Carroll Electric's directors are compensated more than $30,000 per year. This is in exchange for attending 12 meetings per year, assuming that they even do that. Carroll Electric does not disclose the perquisites and other benefits that it provides to its directors and managers.
"According to its auditors, the cooperative's corporate controls are inadequate and fraught with potential for abuse. This lack of disclosure and corporate control suggests that the cooperatives' management and board of directors have wasted the cooperative's assets through illicit perquisites and benefits."
$8 million a year
The lawsuit said CECC's policy provides the cooperative return five percent of outstanding capital credits per year. But CECC has not returned credits in a decade. The lawsuit states Carroll Electric should be returning $8 million in capital credits yearly to members.
"If Carroll Electric had stood by its representations, since 1999 it would have retired about $50 million in patronage capital," the complaint said.
The lawsuit alleges the board has irresponsibly endangered the coop's tax-exempt status by retaining the capital credits.
The complaint asks for return of the money to present and former members including interest, punitive damages as appropriate, and attorney and legal fees.
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For those concerned about their rights, the environment, their health, their property values, etc. the CCEC/ herbicide issue was paramount in the beginning but now we see it was just the tip of the iceberg.
This is much bigger than most of us realized.
The lyrics from the famous Frank Zappa song keep going through my head."It's important that you believe me, because it can't happen here!"
I'll bet like me, most folks thought the scandals involving major CEOs and mismanagement of funds in large corporations couldn't have anything to do with Carroll County Electric Cooperative's current controversies. But I realize now this is not just a local problem.
It may be difficult at this stage for us CCEC members to realize, but information at some of the following links might help to bring it all home.
As it turns out, CCEC is not the only Cooperative which is under litigation. See the list at:
http://coop-litigation.com/litigation.as...
Included there is a summary of the facts about the current litigation in the Circuit Court of Benton County, Arkansas of Capps v. Carroll Electric Cooperative Corporation
To understand more about the "changing energy playing field" for Co-ops and how the system has broken down see:
http://www.co-opconversations.org/Member...
An excerpt follows:
"How Members Have Affected Change
A Change for the Better
Many electric cooperatives do not appear to fully appreciate the rapidly-changing situation utilities find themselves in, with global warming, energy efficiency, and clean energy issues. Cooperative members have begun to notice that the system has broken down, not only around energy issues but financial management issues as well. Read the stories below to learn how co-op mismanagement and denial of the changing energy playing field have affected co-op members. then scroll down and learn how co-op members are taking charge to protect their present and future interests" etc....
There is a list there as well of other Co-ops with similar problems and a link to the article by Shawn Porter in the Lovely Citizen about the relatively new CCEC case, which presumably will soon be on that main National list.
At a recent meeting of local CCEC members who are concerned about the herbicide issue, the issue of loss of democracy in Co-op proceedings, and the CCEC litigation over mismanaged funds, there was agreement by all attending that their sincere hope is that peaceful resolution can be achieved and animosity can be avoided. However, if other recent and current similar cases are any indication, it may not be such a pleasant or smooth process, so perhaps we all need to be prepared, as well as hoping and praying for the best.
"Keeping the Peace" at the expense of justice, fairness and safety for the people and the ecosystem of the Ozarks may not be an option if things are really as serious as they are appearing.
On the other hand, if the "Good Old Boy" system continues to prevail in Arkansas in the Legislature and among transactions between lobbyists and policy makers, and if an apathetic wish for "business as usual" rules, the "Peace" we will have may be much harder to bear further down the road than any upcoming fracas we may be facing now. These issues are not going to just go away.
I certainly hope for peaceful resolution, and I will certainly pray about it, because I was one of the 150 or so CCEC members at the last annual meeting. It felt to me as if the Board really did not want the members there on ANY terms or to hear from us about our concerns, which was certainly not what one would expect from what is supposed to be a Co-operative, and it certainly didn't feel like cooperation. I hope the Board will prove to us that that is not going to continue to be the case.