Gov. Donald L. Carcieri officially acted Thursday to remove George Nee and Henry Boeniger from the board of directors of The Beacon Mutual Insurance Co., Rhode Island’s largest workers’ compensation insurer.
In letters sent to Nee and Boeniger, the governor said his decision was based on numerous findings of the recent Almond Review Committee. Carcieri is also asking a third board member, John Holmes, to meet to discuss Holmes’ involvement in Beacon’s management problems.
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Carcieri noted that Holmes had not been on the board while much of the mismanagement had occurred, and that Holmes has supported a management change since the Almond report was released. Holmes has been on the board since 2002.
Both Nee and Boeniger have been members of the Beacon board since the company’s formation in 1994. The board consists of four members appointed by the governor, three representing policyholders, the director of the Department of Labor and Training, and the chief executive officer.
Nee, Boeniger and Holmes were appointed by former governors. The only appointment made directly by Carcieri is Brendan Doherty, whom he appointed in February.
Beacon’s bylaws provide the governor with the power to remove for cause any members of the board for whom the governor is the appointing authority, even if they were actually appointed by previous governors. Carcieri acted on the members of the Beacon board who are within his authority to remove, except for Doherty, who was only recently appointed.
“I regret that I was forced to remove both George Nee and Henry Boeniger from the Beacon Mutual board of directors,” Carcieri said in a statement. “I had hoped that they would have acceded to my earlier requests by supporting a management change at Beacon and by voluntarily resigning from the board of directors. Unfortunately, it is my understanding that they did neither.”
“There is no doubt that Beacon’s decision to terminate the CEO and the vice president of underwriting for cause is the right thing to do, and is a good first step toward reforming Beacon Mutual,” Carcieri continued. “But it is just the beginning. For the good of the company, the policyholders and the people of Rhode Island, Beacon board members who refused to support this change must go.”
“As I have said before, these board members were either complicit in the company’s mismanagement or they were incompetent. In either case, they violated their fiduciary duty and cannot be allowed to preside over Beacon Mutual’s future,” he added.
Carcieri also reiterated his call for Beacon to cooperate with the forensic audit being conducted by the R.I. Department of Business Regulation.
“Beacon Mutual must immediately start cooperating with the Department of Business Regulation,” Carcieri said. “The fact that Beacon’s management continues to actively impede the state’s forensic audit is completely unacceptable. Beacon cannot continue to hide information they want to keep secret from the state. While the results of the Almond report were alarming, we still don’t have the information we need to ensure that these aren’t the only management irregularities. The Almond report does not relieve Beacon Mutual from its legal obligations to comply with an investigation being conducted by its regulator. For the benefit of Beacon’s policyholders – and of the people of Rhode Island – we must get to the bottom of what was going on at Beacon.”
“My only purpose is to preserve Beacon Mutual as an asset for its policyholders and for the people of Rhode Island,” he added. “Beacon is a strong company with a bright future. I intend to keep it that way.”
