“It happened on my watch”

Every night for the past week or so my wife and I have been watching episodes of Bewitched on Netflix. It doesn’t have anything to do with anything. I just thought you might like to know.

What I really wanted to say in this piece is this: if we’re going to undertake a CEF clean-up/reclamation project, then those who made the mess shouldn’t be the ones to clean it up. There are afew good reasons why those in the administration of district and CEF need to step aside: optics, their own protection, and the protection of investors interests. At first these might seem contradictory, even mutually exclusive, but they do make sense.

District President Don Schiemann said in his pastoral letter and to the CBC today, “(the CEF insolvency) happened on my watch.” “It happened on my watch” is a fantastic construction. It hearkens back to old ships and mates on watch, listening for the ships bells every 30 minutes (I love ships clocks and bells). For some it conjures a lonely shepherd keeping watch over his flocks by night…and then these angels came, made a huge racket, woke him up, freaked him out, and the next thing you know there’s a baby in a stable and wise men and what the heck is with all the TV specials and mulled wine? Like that.

“It happened on my watch,” can be phrased a few different ways. The implication is that “while I was at the helm (to stay with the maritime theme), something went wrong.” The first thing I’m going to point out is that “It happened on my watch” is passive language. “I was just standing there and >WHAM< did someone get the number of that truck?” It’s an acknowledgement of presence, but not an admission of failure. The failure just “happened.” Here are a few different versions and implications of “It happened on my watch.”

“It happened while I was watching,” or “I watched it happen,” implies that the problem was known, but no action was taken. Not good.

“I was watching, but missed it,” suggests they didn’t recognize the problem, so didn’t take action. Uh oh.

“It was my watch, but I wasn’t watching,” supposes they were responsible but weren’t attentive to the problem for any number of reasons. Oy.

“It happened on my watch” isn’t an answer or a response. It’s, “Hello, my name is District President.” Weirdly, it’s one of the few things we already knew.

I’ve been on the phone a lot over the last few of days. I’ve spoken with stock brokers, CGAs, CMAs, and financial advisors. What strikes me about the conversations is that they’re all the same. First, the experts ask the same questions as investors. The exact…same…questions. Then, when they hear there are no audits, no statements, no plan, and little communication, they ask who the trustee or receiver is. When I tell them it’s business as usual, all I hear on the phone is silence, followed by a slight escape of air.

Bearing all this in mind, the reasons for change at the helm are clear…

Wile E Coyote
Stopping a hail of boulders with a little umbrella. Never a good strategy.

The first reason is the most basic and barely worth mentioning: the optics are just really really bad. Bad Bad Leroy Brown bad. It’s Wile E. Coyote trying to stop an avalanche of boulders with a little umbrella.

Secondly, by stepping aside, the administration protects itself from further entanglements. Entanglements is a word used by accountants and lawyers which really means, “it’s a mess…don’t make it worse for yourself or anyone else.”

Finally, and most importantly, the administrators need to act aggressively to protect the investors. It’s their actual job. It’s their fiduciary duty. A commitment to “get to the bottom of this” isn’t a matter of answering questions on a Q&A section of a website, and it’s definitely not trying to fix the problem you’re in the middle of. Just step away and let experts sort it out.

If we really want to get to the bottom of the issue, the administrators and board members ought to surrender all documentation to independent auditors (or trustee) for a full discovery of the facts, district office operations should be suspended to accommodate the investigation, and for the time being Synod should assume administration of ABC congregations (call process, services to congregations etc).

To restore trust someone else has to take the watch.

3 thoughts on ““It happened on my watch”

  1. ANO

    “Comments to hope that congregations who have both an investment and a loan in CEF might use a 100% investment trade for part or all of the loan seems unfair. ”

    My expectation in such cases is the investment would be “lost” or “impaired” at whatever level all investors funds are impaired.

    The loan, amount, however, would be considered an asset of the fund, and the balance due in full.

    In such cases, an investor with both a deposit and an loan in a bank that went under would be hit from both sides – they’d lose their deposit and still have to make payments on the loan.

  2. susan

    Lexicographer or philosopher… whichever you enjoy most, Andreas, interesting points and (is it?) interpretations or translations.

    Many comments on the three (that I’ve found) information sites related to the Church Extension Fund (CEF) discuss two strategies or forces needing attention. Variously named, they are the financial decisions and the spiritual affairs and decisions related to same.

    Many pieces of refer to both and often together. I’m sure the parishioners will create an administrative structure to do the work of conversation between congregations and with the Lutheran Church of Canada. Pastors will already have both formal and informal paths for similar cooperation, sharing and synergistic work. Of the human resources available, time, energy, new donations or earned money and human creativity will be available and used. Prayer will increase the value of all four, I’m sure.

    On the financial side, I agree that the body that ‘cleans up the mess’ must protect the investors. There are other bodies to clean up the mess makers, if that is necessary. Thank goodness we live in a country of laws. The skills/responsibilities for finding possible past mess making might augment (finding hidden assets, for instance) dissolution of assets for investors but I’m thinking the skills in making good future financial decisions are quite different from forensic investigations.

    My questions include:
    • A ‘point in time’, will need to be chosen from which all financials will be valued. If it can be set in the past, the conversation on date choice will be interesting. If the ‘law’ requires it be set at a certain ‘now’, then we’d better get that job done soon. I am delighted that the ‘emergency fund’ exists but it too is a drain on the pot for others who have not applied, some of whom might actually need to and all investors. My hope is that, for the sake of anyone whose bank accounts were being touched for automatic withdrawals at any time after ‘the date’ chosen, that money would be returned ‘off the top’. Then all accounts would be assigned their dollar number and then the accountants start working for individuals on loss statements.
    • I see no difference in the pro-rated value of accounts past that. Comments to hope that congregations who have both an investment and a loan in CEF might use a 100% investment trade for part or all of the loan seems unfair. It flags that there may be other issues to deliberate.
    • Time forward from here needs to be considered in light of what people can’t do because they have no dollars to invest in something else, be it food, an RV or a secured investment at zero or .5% (fill in the number or amount of certainty required.) I am fairly certain that additional interest past the ‘point in time’ above will certainly be zero, even if 100% of the ‘assigned their dollar number’ were eventually received by each investor.
    • Decisions on how fast to do what with each CEF asset should be constrained with a healthy dose of how much gain in how much time? It doesn’t make much sense to me to waiting 25 years for 100% which would be a near doubling of the November 30, 2014 Estimated Net Realizable Value in a Liquidation Scenario (http://abcdistrict.ca/sites/default/files/Revised%20Final%20CEF%20ESR%20as%20at%2011_30_14.pdf)

    This is my first post and in the interest of transparency I add here that we inherited the assets in the fund from loyal parishioner parents and have not invested ourselves. We appreciate the angst of investors and interested non-investors and especially feel for all those who ‘did their best’ and those who continue to advise, whether they be pastors, advisors, staff or board members. This ‘mess’ will remind me to inventory my skills and speak up when asked for opinions or to do work for which I am not competent, qualified or even comfortable.

  3. mywatch

    Maybe we should look to the secular business world for guidance here …

    If $40 MM vaporized from a Royal Bank Branch, do you think the Branch manager, Assistant branch manager, or any employee in a position of responsibility would be allowed to go in to work to help find it?

Comments are closed.