Letter to Editor | A cascade of management failures

||| FROM MICHAEL RIORDAN, FRED KLEIN, and ROBERT AUSTIN ||| 

On Saturday EWUA members received yet another in a long chain of email letters purportedly written by Board President Teri Nigretto, claiming to absolve General Manager Dan Burke of his unauthorized misappropriation of over $10,000 in member funds. Upon closer examination, however, it underscores the appalling state of EWUA “management” that is the core reason for the impending recall of four current board members.

Closely parroting statements made earlier by Burke in his personal website (since closed to outsiders), this letter was obviously drafted by him for Nigretto’s signature. It includes a copy of the same letter from EWUA bookkeeper Dan Vierthaler that supposedly absolved him from his misdeed, saying that he (Vierthaler) was the one who — along with Caselle consultant Jamie White — pointed out that Burke’s payroll record showed unused “paid time off” that he could cash out. Thus he issued himself two checks, one in October 2022 for $6,071 and the other in December for $4,262.

But Burke apparently did not bother to ask EWUA Secretary/Treasurer Joe Cohen whether these payouts were in fact valid — including one check for well over his signature authority limit of $5,000. Instead, he signed the checks himself and immediately cashed them. What on earth were two EWUA contractors doing approving such huge payments? And why didn’t Burke double-check their validity with a responsible board member?? This was the first EWUA oversight failure in what was to become a cascading series of failures.

It was only in January 2023 that Tenar Hall, who had recently succeeded Cohen as Secretary/Treasurer, discovered these unauthorized self-payments while reviewing 2022 bank statements. When she brought this questionable matter to the attention of Board President Clyde Duke and Vice President Jim Nelson, however, she met stiff opposition. In a “Combined Report” presented to the board in mid-February, they rationalized the payouts as occurring “for accrued vacation-pay disbursements.”

But this excusal fails on two counts. For one, salaried employees like Burke do not receive cash payouts for unused time off according to the EWUA employee handbook; this is standard practice in almost all businesses. “Compensation will be awarded as time off,” it stated, “and no other compensation is available.” In addition, Burke had in fact used plenty of his time off and sick leave in 2022 — as one of us (MR)thoroughly documented in a confidential report given Nigretto in December 2023 (which she soon dismissed). Yet he didn’t deduct even a single hour from his total allotted leave time, which Duke and Nelson apparently neglected to review. This was the second major failure of board oversight.

After Hall resigned in March 2023 due to a lawsuit Burke's attorney had threatened, the EWUA board decided to hire CPA Tiffany Couch of the firm Acuity Forensics LLC to do a forensic analysis of its 2021 and 2022 financial records and assess whether Hall’s charges were valid. In her June 19 report to the board, Couch largely verified Hall’s claims of Burke’s excess payments, stating, “During my engagement, Mr. Burke’s cash out of PTO [paid time off] appeared to be non-compliant with the employee handbook and also appeared to be non-compliant with the check-writing procedures for EWUA.” In her recommendations at the end of the report, she added that “An audit of the General Manager’s time off in 2021 and 2022 should be conducted and deductions from his personal time bank should be considered. If the General Manager was overpaid on the payroll payout, those amounts should be reimbursed.”

But did the EWUA board follow this recommendation? Although they claimed to have done so in an Orcasonian article, there is absolutely no concrete evidence of that ever happening. Instead, the majority agreed to a Burke demand two days later and removed Steve Smith — the only other board member who had vigorously supported Hall’s claims. This was another major failure of board oversight.

The following August, we are told, the board caved in to the rest of Burke’s threats and reached a settlement agreement, reportedly reimbursing his attorney’s fees of about $25,000. And according to his email to one of us (RA) in April 2024, almost $71,390 in legal fees were spent in 2023 on “employment-related claims” — largely “due to considerable time that was spent during the second half of the year resolving an employment dispute. Perceptive readers can easily surmise which employee was the focus of that dispute.

Ever since abdicating its fiduciary responsibility to the members in this affair, the EWUA board has effectively become captive to the wishes of the general manager instead of providing the guidance and oversight normally expected in non-profit governance. In essence, the tail is wagging the EWUA dog — and we members suffer the consequences.

When the newly elected Secretary/Treasurer Carol Ann Anderson requested full access to the EWUA financial records in early 2024, as Hall had done a year earlier, she was rebuffed by Burke. And the compliant board majority removed her from that position in April, to be replaced by Leith Templin. Yet another failure of board oversight, but this time due to the actions of only the dominant board faction presently being recalled.

And EWUA members have recently had to endure a steady stream of emails from Nigretto, many of them obviously drafted by Burke, spreading misinformation and attacking the motives and character of Steve Smith. In normal non-profit governance, the president is the principal line of communication from board to general manager and therefore needs to maintain a certain objectivity about and distance from the staff leader — who should report to her, not vice versa. But that has clearly not been happening recently at Eastsound Water. Yet another major failure of board oversight.

In the fall of 2023, the three of us supported the election of Anderson and Nigretto as the best way to change the old-businessmen’s culture that had led Eastsound Water Users Association astray. We regret to admit that we were only partially right — and wrong about Teri Nigretto, who has overwhelmingly disappointed us. We have therefore called for her to resign or be recalled on September 28.

But the cascade of EWUA management failures began with Jim Nelson’s refusal to acknowledge what should have been obvious to him: that Dan Burke’s unauthorized self-payments were not allowed by standard employee policy and should have been refunded. He seems not to understand this simple fact. Thus we call for his resignation or recall, too.

Only by their removal — and of Leith Templin and Michael Cleveland, who support their decisions and actions — can a genuine renewal of Eastsound Water begin. If you have not already, please be sure to give former EWUA President Brian Ehrmantraut your proxy.