With some growers questioning financial expenditures by the Hass Avocado Board and its staff, the board held two meetings last week in which it removed its chairman from that position, and passed several governance motions that seemingly were addressing fiscal concerns.
Over the past six months, several growers — who call themselves “reformers” — have been questioning what they consider to be lavish spending by HAB staff and the board. Individually, these growers have filed dozens of freedom of information act requests asking to see credit card statements and other financial data generated by staff and board spending. They are still waiting for the Agricultural Marketing Services division of the U.S. Department of Agriculture to respond to most of those requests. However, they have received some redacted responses which they claim point to fiscal improprieties. In fact, grower John Cornell circulated a letter in the spring to California avocado growers claiming that “tens and perhaps hundreds of thousands of dollars” were spent at lavish resorts, on upgraded airline seats and limousine services, and at liquor and department stores.
Several anonymous sources told The Produce News that HAB Chairman Ohannes Karaoghlanian seemed to have thrown the weight of his position behind the reformers as the initial agenda for the July 17 meeting of HAB included several extensive opportunities for the detractors to discuss their FOIA requests as well as operational activities and policies of HAB including its return on investment.
However, seven members of the 12-member board called a meeting of the board on July 16 with the expressed intent of removing Chairman Karaoghlanian from his position. Previously, this group had asked the chairman for his resignation. While several reformers questioned the legality of that meeting, in an email to The Produce News, a USDA spokesperson revealed that the HAB bylaws do allow a majority of the board to call for a board meeting at any time.
That meeting was held with the chairman being removed and replaced by Vice Chairman Jorge Hernandez. The new chairman called the July 17 meeting to order with a new agenda that did not include several of the controversial topics that were on the first agenda. Karaoghlanian did retain his seat on the board, and in fact, apologized to the board, staff and the USDA prior to the official HAB meeting on July 17, promising to be a helpful board member as HAB moves forward to accomplish its mission of increasing avocado demand in the United States. As a point of fact, the Hass Avocado Board meeting is typically preceded by a meeting of the Hass Avocado Committee (HAC). This is a HAB committee that includes all the board members as well as representatives from the various countries that produce the avocados that are subject to HAB assessment. Discussion and vote recommendations typically takes place at the HAC meeting with the board following those recommendations at the HAB meeting that follows. HAB created HAC to allow for more thorough discussions of issues from all stakeholders. Hernandez replaced Karaoghlanian as chairman of both HAC and HAB.
While the controversial items were off the new agenda for the HAC meeting, Hernandez did have a 15-minute public comment period (which stretched to 25 minutes) on the new agenda in which a handful of industry members did have the opportunity to address the board. Prior to that, a USDA spokesperson revealed that the agency is conducting an investigation based on the complaints of these growers. She said 40 interviews have taken place, financial records are being audited and 60 FOIA requests are being responded to.
Avocado growers Ben Holtz, Joanne Robles and Cornell did address the board and vociferously reported that their own audits of HAB records reveal luxurious and inappropriate spending by staff and the board. Holtz asked to include a 76-page letter detailing his findings into the record. Robles and Cornell tried to read their recommendations into the record, which called for greater oversight and transparency, elimination of lavish spending and potential removal of staff members. This group of growers were stymied by the relatively little amount of time given for public comment. Robles said she and the others spent thousands of hours on their analyses and believed it was wholly inadequate that they were only given a few minutes to present their findings.
Several industry members also spoke during the public comment period offering their support for HAB and the work it does, but also noting that if there are improprieties they should be investigated. California grower Rick Shade, who was the chairman of the board of the California Avocado Commission when it was involved in a similar situation that led to the resignation of its CEO more than a decade ago, told HAB “to listen to your critics.” He urged them to investigate the accusations and take action if it is needed. He said the industry needs HAB and the work it does, but urged the board to get ahead of this issue as CAC did in 2008.
Mike Brown of the Mexican Hass Avocado Importers Association agreed. He said Mexico’s pays about 80 percent of the HAB budget through assessments so it is keenly interested in the board operating properly. He did note that avocado consumption and good prices are both very strong indicators that HAB is clearly doing something right. But he added that if policy changes need to be made “let’s fix things from the inside.”
After the opening fireworks, HAC, and ultimately HAB, did make some changes and propose some fixes to how it does business. Chairman Hernandez announced that he was forming three new committees to help navigate some of the issues that are before the board. They are a Finance Committee chaired by Treasurer Laurie Luschei, a Corporate Governance Committee chaired by Salvador Dominguez and an Executive Compensation Committee chaired by Hernandez. He invited board members to join those committees as they see fit.
Luschei revealed that the USDA redaction policy is greatly limiting her ability to offer the proper oversight of HAB expenditures that she is expected to give. While she reviews all the spending, she noted that in the last check register report about half of the 70 entries were redacted. During the meeting, it was agreed that USDA would work with the new Finance Committee to determine how it could offer more transparency with regard to staff and board expenditures, allowing for better oversight. Luschei said conversations with treasurers from other marketing order programs revealed that they look at check registers and other financial data with far fewer redactions.
The meeting also revealed a relatively new policy that eliminated company credit cards and replaced them with an expense report system requiring staff to use their own credit cards and ask for reimbursement after the fact. The board also passed a new per diem meal spending limit of $120 for both staff and board members on official HAB business.
The board also discussed establishing a new grievance procedure allowing for a “fair and efficient way” for HAC and HAB to deal with complaints.
While the reformers were clearly unhappy that they did not have sufficient time to air their complaints, Chairman Hernandez did appear to be pleased with the results of his first meeting at the helm. He started the meeting by indicating that the removal of the previous chairman was initiated in an effort to “get the board back on track.” He ended the HAC meeting stating that it was a “good meeting” and a lot was accomplished.
