Polish And Slavic Board Race Has Conversion Overtones; Credit Union, CUNA Mutual Rebuked by Court

BROOKLYN, N.Y. – Controversy appears to have touched the $1 billion Polish and Slavic Credit Union once again as a New York judge has ordered the CU to reinstate a previously ousted board member and the possibility of a conversion windfall appears to drive an active board election. The controversy with the board member, Marcin Sars, dates back to one of the final acts of the former CEO Danuta Sieminski. According to the findings of the court, in the period before the credit union declined to renew her contract, the long-time CEO told CUNA Mutual that Sars had violated a credit union policy by showing certain financial documents to Bear Stearns, a financial consultant firm with which the credit union had a contracted relationship already. CUNA Mutual in turn, the Court found, removed Sars from its bond protection and, since all credit union board members must be bondable, in effect gave the credit union cause to remove him from the board. In effect, the court found that CUNA Mutual had removed Sars from the board as a favor to the credit union. “No fair reading of the supporting affidavits and the numerous court appearances can support the conclusion that the Executive Director in sending the information to CUMIS had no interest in the outcome,” Judge Lewis Douglas wrote in the order. “The fact that Sars conferred with Bear Stearns did not impact CUMIS’s risk under the bond. The reality is that the CUMIS broker was accommodating his client’s desire to get rid of Sars, who had gotten on the Board, not through a regular nominating process, but through a petition drive.” The judge was particularly acidic in noting that in showing the documents to the Bear Stearn’s analysts, Sars was trying to follow a course of action recommended to him as part of his duties as a board member. “Neither the executive director nor a board majority can use the bonding company as a tool to gain leverage in an internal dispute,” Douglas added. Myles Edwards, general counsel for the credit union, said that Polish and Slavic had only recently received the order and had not decided whether or not to appeal the decision. He also said that Sars had not been seated at the credit union’s August 4 board meeting, which took place only a few days after the decision had been revealed. It appears that even if the credit union decides to appeal the ruling, it would still have to seat Sars as a board member for the remainder of his term while the appeal moves forward. CUNA Mutual said it would not appeal the decision and declined to comment further on the case. Sieminski, who wound up as the branch manager of a new branch of the Independent Community Bank located about two blocks from the credit union, was unavailable for comment. Meanwhile, the credit union has 13 people running for three or four board seats, at least a few possibly motivated by a possible windfall should the credit union decide to change its charter to that of a mutual bank. “It feels like everyone in Polonia is running,” said Derek Michalski, an organizer with the Forum Organized to Protect Poles and a frequent credit union board critic who is involved in several legal cases with the credit union. “But so far, none of them has signed our pledge that says they will not benefit if the credit union demutualizes.” Michalski said rumors about a possible conversion are widespread in the tight-knit Polish community of Greenpoint, Brooklyn, and that he suspected the number of those running were doing so “because of the dollar signs.” But Edwards downplayed the chance that that Poles and Slavs would convert its charter anytime soon. “Of course, there are always rumors, but none of the board meetings I have attended have addressed it,” Edwards said. “I really don’t believe it is anything the credit union is considering.” Edwards added that the credit union’s nominating committee had approved seven candidates, three of them sitting board members who are seeking to retain their seats, but said that he knew of at least 8 other people trying to collect enough petitions to get themselves on the ballot. It is unclear whether this coming election will fill the seat of Dariusz Czoch, the former Chairman, who resigned his seat unexpectedly in July due to job conflicts, nor had the credit union provided any official explanation for why the Board removed the board Treasurer and Secretary while allowing them to keep their board positions. -