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Byron Shire
June 16, 2021

Board defends its management of Mullum Rural Co-op

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Members of the Mullumbimby Rural Co-op board preparing to address the shareholders meeting. Photo Aslan Shand

The issue of potential fraud and financial mismanagement was a key part of the response from Mullumbimby Rural Co-op board, and Chair Ross Tucker, when they responded to shareholder concerns over the current management of the Co-op.

Over 60 shareholders attended a meeting, called by shareholders, last Wednesday April 28. Tensions, at times, ran high as the board attempted to address a range of concerns. These included: the recent failure of the new management to send out the April monthly invoices, questions regarding the boards management of staff, particularly manager Tony Neclerio, and why a community-based Co-op now required staff to sign none-disclosure agreements (NDA).

The board defended its management of staff by raising issues around discrepancies in relation to stocktake of over $100,000, failure of the computer system to reconcile with the bank accounts, serious issues raised by multiple qualified auditors’ reports, and blank cheques found in the office.

It was pointed out by some attendees that the computer system had had issues from the time it was installed. The board recognised this by acknowledging that they are currently in the process of making changes to resolve this.

Other attendees, who asked not to be named, have pointed out that the police have not been called in in relation to the accusations of fraud, and that it used to be fairly standard practice to keep a few blank cheques to hand to pay suppliers, particularly before computerisation of banking as we see it today.

Over 60 people attended the shareholder called meeting on 28 April, 2021. Photo Aslan Shand

NDAs

Several shareholders questioned the validity of the need for NDAs at a community-based Co-op which is primarily used by the shareholders. The board’s Chair, Ross Tucker, responded by saying NDAs had been put in place ‘because staff aren’t there to disclose Co-op business. We don’t want staff making comments on social media or to the media. That messaging should come from the board’. However, some shareholders once again pointed out that the organisation was a co-op not a major corporation

The meeting drew mixed responses from shareholders and former employees. ‘There were many mistruths put forward,’ former employee of 15 years Madeline Holemes told The Echo.

The issues raised in the qualified opinion section of the 2019/20 independent auditor’s report, contained in the Co-op’s financial report, outlined that the computer systems and annual stocktake did not leave a ‘suitable audit trail. Controls within this environment were considered inadequate, during the financial years. There are risks that stock could be misappropriated or transactions deleted without detection.’

However, others were relieved to hear that the business, which has a turnover of about $7m a year, remains in profit.

Resolution

‘I did some mediation for them [the board] and they have come to an arrangement with Tony and I believe it will work itself out in time,’ said former Chair, Maurie Mahr, who was a member of the board for 23 years and Chair for ten.

‘The Co-op is in a very sound financial position. I was pleased to help them out. Everyone will walk away happy I think.’

Wayne Gardiner, who was one of the shareholders who called the meeting, told The Echo, ‘I was so relieved to hear from the board members how well the Co-op was going as I was led to believe it was in crisis. In saying that, there needs to be more transparency so members can monitor its, hopefully continued, success.


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