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REMC board fires CEO after internal audit investigating allegations of corruption

Governance, Risk & Compliance Monitor Worldwide

The Utilities District of Western Indiana Rural Electric Membership Cooperative`s board of directors fired the cooperative`s chief executive officer Thursday, following an internal audit investigating allegations of corruption.

In April, three candidates for the co-operative`s board of directors ran on a campaign to address alleged misconduct and the electric utility`s ranking as having the highest rates in the state in 2016.

The election resulted in a sweep, with all three challengers taking seats. Board members voted May 1 to place then-CEO Brian Sparks on paid leave while the utility conducted a third-party financial audit.

Thursday`s vote to fire Sparks was announced on the UDWI REMC website early Friday evening. The search for a new CEO began immediately.

"Upon our review of the information from the internal audit, and after much thoughtful deliberation, we determined that Mr. Sparks did not fulfill management expectations for UDWI," the release states. "Mr. Sparks is relieved of all duties and responsibilities effective immediately."

Sparks worked for the cooperative for 33 years, starting his career as a lineman and working his way up. He spent the last 10 years serving as CEO of the cooperative.

Since Sparks was placed on leave, Manager of Human Resources and Compliance Mike Chapman and Manager of Operations and Engineering Shane Smith have served in the interim CEO position.

The Federal Bureau of Investigation will neither confirm nor deny it is conducting an investigation into the UDWI REMC or any of its affiliated contractors.

The Utilities District of Western Indiana Rural Electric Membership Cooperative, or UDWI REMC, serves 19,000 customers in Clay, Daviess, Greene, Knox, Lawrence, Martin, Monroe, Owen, Putnam, Sullivan and Vigo counties through a 1,500-mile transmission network, according to the cooperative`s website.

Data from the U.S. Energy Information Administration show that the UDWI REMC`s rate of 16.38 cents per kilowatt hour in 2015 was the highest of Hoosier Energy`s 18 co-ops. The next-highest, South Central Indiana REMC, had a rate of 15.62 cents per kilowatt hour. A more recent study produced by the Indiana Electric Cooperatives organization in July 2016 concluded UDWI REMC had the highest electricity rate in the state last year.

A news release from UDWI REMC stated members of the cooperative will receive a summary report of the financial audit and details on actions the board of directors plans to take to strengthen the cooperative.

"The findings of the audit did not reveal any specific problems or incorrect information on our members accounts or bills," the release states. "Information from the audit pertaining to individual staff members will not be released, based on UDWI employment policies."

Union leadership also spoke out about the UDWI REMC environment on Friday. Robert Fox, business manager and financial secretary of the International Brotherhood of Electrical Workers Local 1393, represents 25 union workers who perform lineman duties for the cooperative. According to Fox, the union has filed an unfair labor practice complaint against the utility, saying it has violated federal law.

Fox said the cooperative is not bargaining in good faith on matters regarding the CEO`s ability to terminate employees without a third-party overview. Fox said a contract between the union and UDWI REMC was set to expire at midnight on June 30 past the deadline for this story. Fox said if the UDWI REMC doesn`t agree to the union-approved contract, union employees will initiate a "work stoppage."

Calls to acting CEO Mike Chapman and board member Todd Carpenter were not returned by deadline.


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