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The No. 2 cooperative principle of the credit union movement states that cooperatives are democratic organizations owned and controlled by their members, with each member getting one vote, with equal opportunity for participating in setting policies and making decisions.
But four credit union members recently said the industry's democratic principle at the $4.9 billion Virginia Credit Union failed them, claiming that the North Chesterfield-based credit union board election process allegedly rigged the election in favor of incumbents.
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"We respectfully disagree with the claims questioning the credit union election procedures," VACU Director of Public Relations Glenn Birch said in a prepared statement. "The board followed its established process."
The four members, Frank Moseley, Kati Hornung, Richard Walker and Tori Jones, said even though VACU acknowledged they are qualified to run for a board seat, they questioned why they were not even called in for an interview with the nominating committee. Their concerns grew when none of them received any update after they sent in their nomination applications and had to contact VACU about their application status only to find out they would not be allowed to run. Concerned and disappointed about VACU's board election process, the four members said they felt ignored, disrespected and disillusioned, noting they weren't even allowed to have their voice heard at VACU's annual meeting held last week.
Even though two VACU board incumbents and an associate director were re-elected during the annual meeting on March 23, the four members said they are not giving up their fight to address the credit union's election process. They filed a formal complaint with Virginia's Bureau of Financial Institutions and said they plan to pursue other options if the state declines to take any action.
Moseley, Hornung, Walker and Jones filed their paperwork in September 2021 to run for three board seats for the spring election that was set for VACU's annual meeting.
Board candidates were required to file their paperwork to run for the board by Sept. 30 so that the board's nominating committee would have enough time to interview the candidates.
"After filing our paperwork, instead of receiving a prompt request for an interview, the four of us heard nothing," Moseley said. "Not one of the candidates was contacted. Finally, on Feb. 1, 2022, after months of silence, I emailed Ms. [Vicki)] Frankenburger [executive assistant to VACU President/CEO Christopher M. Shockley] to request an update, along with the chair of the board nominating committee, Brian Jackson. Ms. Frankenburger wrote back on Feb. 2, confirming that, while the nominating committee agreed that I was qualified, it would not be nominating me to appear on the ballot. I would not be allowed to run for the board."
According to Moseley, the other candidates received the same response after contacting VACU. He questioned how the nominating committee could decide which members to nominate without even interviewing them.
Frank Moseley While members are offered the opportunity to submit an application for review by the nominating committee, not all applicants are guaranteed an interview, Birch said. The board governance committee reviewed materials for nine individuals, including the two incumbents, who were recommended for re-election. It conducted an interview with candidate Kimberly Baine, he said.
When asked what criteria the nominating committee uses to determine what members get nominated for the board, Birch said it is a "multi-faceted criteria based on maintaining diverse professional and community experience in order to achieve a well-rounded board of directors."
At VACU's annual meeting, incumbents Bob B. Jones Jr. and Tracy McCabe were re-elected, and Baine, who was serving as an associate director, was elected to the board. Members voted via Zoom.
Hornung, one of the four VACU members questioning VACU's election process, attended the annual meeting.
"The vote was conducted in 30 seconds after a 12-minute prerecorded video," Hornung said. "No ability to ask questions. No ability to dissent. No ability to make a motion from the floor using Robert's Rules. There was no ballot ahead of time [or some] way to submit a vote for [members] unable to attend."
According to Moseley, the VACU board changed the credit union's bylaws so that members, at their own annual member meeting, cannot nominate candidates from the floor; cannot petition with signatures to be a candidate; and cannot offer an amendment to the bylaws or vote on one.
"The only way for a member to run for election is to be nominated by the board nominating committee, which based on my experience and that of the three other member-owners who filed to run, is clearly just a vehicle for incumbents to retain control of the board," Moseley said. "For at least the past five years for which online records are available, the board nominating committee has only nominated incumbents or hand-picked associate directors; and it has only nominated three candidates for three open seats, so that no election has actually been held at Virginia Credit Union in at least five years - and I suspect much longer."
Jones is the board chair responsible for choosing the board nominating committee members. In February, Moseley said he requested to speak with Jones about his concerns, but he never heard back from him.
Birch did not respond to CU Times' request to interview Jones, Jackson or Shockley.
The four members submitted a formal complaint with the NCUA in early March. NCUA Regional Director John Kutchey responded in a letter that because VCU is a state-chartered credit union, the federal agency has no specific authority over this issue.
However, Kutchey forwarded the complaint to Virginia's Bureau of Financial Institutions.
In his letter, Kutchey said the NCUA considers the right to participate in the director election process a fundamental, material right for members of a federally chartered credit union.
"The FCU Bylaws provisions that implement this right include, but are not limited to, a requirement that the FCU's nominating committee interview each interested member that 'meets any qualifications established by the nominating committee,'" Kutchey wrote. "Also, the FCU Bylaws provide alternative processes to run for a board seat for members interested in serving on the FCU's board who are not selected by the FCU's nominating committee."
Andy Farmer, interim director for the division of information resources for the Virginia State Corporation Commission under which the BFI operates, said every complaint filed goes through an information-gathering process. The information is then reviewed to determine if further actions are appropriate.
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Peter Strozniak
Credit Union Times reporter covering credit union operations, fraud, M&As, leagues, business continuity, and breaking news.
