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Opinion: The Checkoff – Apologies Issued; Let's Move On (Corrected Version)

The Executive Committee (EC) of the Cattlemen’s Beef Board (CBB) issued a memo this week answering several issues of ethical breeches conducted by CBB leadership and staff. Here is the EC’s resolution on four allegations of unethical behavior and wrongdoing charged by the National Cattlemen’s Beef Association (NCBA):

  • Regarding the charges of improper conduct in the monitoring and recording of conference calls without the participants’ knowledge, it was determined that such behaviors did occur. And that Tom Jones, current CBB chairman, and Dan Dierschke, past CBB chairman, were aware of the plans by CEO Tom Ramey to engage in this activity yet failed to dissuade him.

    The EC determined that the evidence that Ramey listened in on calls arranged by NCBA on numerous occasions was compelling, given that a trail of emails proved the planning and conduct of these eavesdropping tactics. Ramey subsequently admitted his actions and apologized to the CBB and the EC, upon which the EC sanctioned Ramey. The sanctions include the requirement of a public written apology specifying his errors of judgment, a private letter of reprimand, and an employment probation period of six months. Ramey assured the EC that he recognizes his actions were improper, constituted a breach of ethical standards, and promised never to do so again.

    In addition, Dierschke and Jones admitted their prior knowledge of Ramey’s plans to listen in on the conference calls and failed to direct him not to do so. Both agreed to make public written apologies.

  • The second allegation was that Jones, Dierschke and Ramey breached their fiduciary duties to the CBB and acted insubordinately by “disregarding and actively undermining the direction of the full CBB board of directors on the matter of separation.”

    The response here was kind of difficult to follow, but involving essentially a semantic distinction on whether “independence” and “housed inside the NCBA umbrella” were actually different policies.

    Obviously, the CBB voted to keep the Federation of State Beef Councils under NCBA when the leadership was pursuing separation. But given the serious nature of this charge, the EC basically said that while current policy doesn’t favor separation, complete separation of funding and activities is required.
    For even casual observers, there’s a huge disconnect between full board policy and the actions of the EC. But it would even be more surprising for the EC to rule any differently than it did. Not finding a breach of fiduciary duty or insubordination, would have required a substantive action that they clearly were not prepared to take.

  • The third allegation – that Ramey, Dierschke and Jones aggressively lobbied USDA – was determined to be unsubstantiated. The supporting documentation referred to the Act and whether such behavior crossed policy lines or was a normal part of the CBB conducting business with USDA. In essence, whether these actions were politically motivated, they were determined to not be a breach of the Act and Order.

    This issue, especially as it relates to lobbying for appointments (lobbying for appointments wasn’t specifically addressed), is likely to remain a point of contention and frustration. Virtually everyone is aware that these actions aren’t looked on favorably and won’t recur.

    Producers have always overwhelmingly supported the checkoff because of its producer control, rather than the greater centralized government control that is the case with some other checkoff programs. Obviously, the issue over whether the consolidation of power should be with producers or USDA and its appointments will continue to be a major issue relative to the support of the checkoff. Producers, however, have made it clear they want a say in the program’s governance and how the dollars are spent.

    It was also determined that the discussions with historical opponents of NCBA and the checkoff weren’t improper. Again, many will consider such political maneuvering and alliances unseemly at best, though not specifically prohibited. I do think producers have made it clear that the process should be inclusive, dialogue should be open and fair, and the backroom meetings and plots must decrease if not stop entirely.

  • The fourth charge alleged that Ramey provided confidential information to a New York Times reporter regarding the financial audit on the checkoff. It appears, however, that this allegation was based in large part on the misinterpretation of a single email. In response to an email that included the New York Times article, Ramey responded, “All that work and that’s all he wrote?” While Ramey confirmed that he sent the email, he rejected the idea that the phrase, “all that work” referred to work he or anyone else had done in talking to the New York Times. Rather, he said, it referred to the work CBB did on the review itself.

    “Thus, Ramey was saying that CBB did ‘all that work’ on the AUP review which disclosed some substantial problems and issues with how NCBA was handling checkoff dollars, and all the reporter focused on were the things he wrote about in the piece,” the report says.

    The EC thus determined that Ramey’s explanation both plausible, reasonable and a commonsense reaction by someone in his position to the published article.

    "The other characterization of Ramey’s words is offered by those who are simply not in a position to know what Ramey actually meant by that phrase because they are not Ramey. In addition, to the extent the story reflected adversely on the checkoff itself, the EC is of the opinion that the responsibility for that lies solely on those who failed to properly handle the checkoff funds in the first place and certainly not on those who uncovered the wrongdoing. Moreover, it is not unethical to speak to reporters. It appears that leaders from the CBB and NCBA talked to the New York Times reporter who wrote the story in question and no one is accusing NCBA leaders of being unethical simply because they talked to the reporter,” the report says.

    In addition it was alleged that Ramey sent a confidential document on the resolution of the audit to a South Dakota Beef Industry Council executive before the resolution was made public 12 days later. Ramey admitted he had shared a confidential document “for the sole purpose of sharing information which demonstrated the progress made on this significant issue,” the report says, and acknowledged he was wrong to do that.

    Thus, the EC substantiated this allegation and found that Ramey was wrong to release this document prior to USDA’s approval and public release. The EC factored in this error in judgment, it says, in deciding Ramey’s penalty of requiring a specific, written public apology, a private letter of reprimand, and a six-month probation.*

So where does that leave us? Certainly, some will say written apologies and letters of reprimand aren’t sufficient given the actions committed. And, there are questions about rebuilding trust. Ultimately we have to act in good faith and believe the checkoff will regain its focus on building beef demand.

While many of the issues weren’t addressed, and some addressed unsatisfactorily, the bottom line is that both sides have now taken either full or part ownership in the mistakes made. What’s more, everyone agrees that what’s needed is to move forward and focus on building demand for beef products.

Producers will have to be very vigilant to ensure that the political games and power struggles are stifled, and the checkoff returns to its important mission. Sure, all the old players and all the old passion are still in place, and some of the wordings in the document make it clear that the animosity created via this sustained effort remains. But if the full board accepts the EC’s view that these were simply honest mistakes, then it seems the wisest choice for the industry to assume they are right and to move forward.

Perhaps we can again begin working as an industry, dealing with issues openly, honestly, ethically and inclusively. We can all agree that every single producer benefits from building beef demand, and we want to do it as efficiently and effectively as possible.

Grassroots producers have done a great job of making it known that the political games must stop. That’s a positive step in regaining forward momentum; let’s hope future debates regarding the checkoff are focused on ways to better and more effectively build demand.

Such discussions are positive. Despite the fact that differences of opinion will exist; that’s healthy and productive. We need those types of discussions on the policy side, as well.

We’ve gone to the brink, and hopefully everyone now will take a step back. If nothing else, hopefully these actions are a recognition that the attempts to make the checkoff the battleground for political positions must cease, and that differences will be dealt with in an ethical manner going forward.

To read the entire report from the law firm of McLeod, Watkinson & Miller, click here.