Four longtime directors of South Kentucky Rural Electric Cooperative Corp. quit

Four longtime directors of the state's largest rural electric cooperative quit Thursday in the face of employee dissatisfaction and an attempt to boot the chairman from the board.

Richard Stephens, Charles Gore, Bill Shearer and John T. Pruitt Jr. had a combined 100 years of experience on the board of the South Kentucky Rural Electric Cooperative Corp.

The four issued a statement through the co-op's attorney, Darrell Saunders, on Thursday saying they were retiring immediately immediately.

Saunders said he was resigning as well.

Several businessmen in the co-op's service area recently began pushing a petition to remove Stephens as chairman of the seven-member board, a position he has held for 12 years.

Stephens, of McCreary County, has been on the board for 36 years.

The petition alleges that Stephens has engaged in conflicts of interest and malfeasance.

For instance, it says that he pressured co-op employees to buy auto parts from a store he owned, and that he had a conflict of interest in relation to co-op property in McCreary County.

The petition also complained about the purchase of land for new headquarters for the co-op, which is headquartered in Somerset and has more than 66,000 customers in 11 Kentucky counties, as well as a few customers in Tennessee

The co-op bought 83.6 acres in Pulaski County in 2003 for the building at a cost of just over $1 million — almost double what a company called Speculative Ventures had paid for the land just months earlier.

The Kentucky Public Service Commission denied South Kentucky's request to build an $18 million office at the site in 2009, saying the price was too high.

The petition also said that the co-op board has taken retreats that have resulted in excessive or unreasonable expenses while co-op customers are facing higher rates.

The board went to New Orleans last year for a retreat, according to John Tuttle, a Somerset businessman who helped spearhead the effort to remove Stephens.

Stephens said he had done nothing wrong. The decisions cited in the petition were approved by the entire board, he said.

The statement the four retiring directors issued Thursday said the board has tried to be conservative with financial decisions, has acted in the best interests of its customers, and has done nothing improper.

In the case of purchases from Stephens' auto-parts store, for example, the contract was awarded through competitive bidding, the statement said.

As for the purchase of land for new headquarters, the land was appraised and the full board approved the purchase based on the recommendation of co-op management, the statement said.

The outgoing directors noted that the board has not given employees annual salary increases in recent years because of the economic downturn.

"This has apparently created significant strife within the organization," the statement said.

Employees were actively involved in an election this year in which an incumbent board member was defeated.

The retiring directors said in their statement that employees improperly took part in election activities on company time.

However, Allen Anderson, president and CEO of the co-op, said later Thursday that he cautioned employees not to engage in election activities on work time and that he was not aware of any case in which an employee did anything improper.

Anderson said he asked board members to give him information about employees doing anything improper in the election, and none did.

Tuttle has said the effort to remove Stephens from the South Kentucky RECC board grew out of a concern the board was going to fire Anderson, whom Tuttle and others said has done a good job.

As he and others worked to support Anderson, they began to hear about the allegations cited in the petition and decided to try to remove Stephens, Tuttle said.

The statement from the retiring directors said it was an inaccurate assumption that the board intended to fire Anderson.

Directors have faced considerable pressure in recent weeks, the statement noted.

The statement said the directors felt they could no longer be effective.

Anderson said the three remaining board members will carry out a process of choosing new members to replace the four who resigned.

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