COSBOA chairman quits alleging board misconduct and legal breaches

The Council of Small Business of Australia has been dealt a blow, with chairman Andrew Conway and two other directors resigning, alleging “potentially serious breaches of the law”.

Conway, the current chief executive of the Institute of Public Accountants, is alleging some COSBOA directors used their position to gain financial advantage, questioned the solvency of the organisation and says there have been “numerous examples of non-compliance”.

In a letter sent to members yesterday, obtained by SmartCompany, Conway says he was unable to effect change because he was met with continual resistance from COSBOA directors and members, including executive director Peter Strong.

“My sole intention has been to ensure COSBOA adheres to its objectives in the [organisation] Constitution and within the confines of the law. I have encountered numerous examples of non-compliance on both fronts,” Conway wrote in the letter.

“From ignorance of the Constitution right through to a Director, in my view acting improperly by obstructing the business of the Board with the intention of preserving their personal financial contract with the entity.”

Conway says the concerns are not “minutiae or trivial; they go to the very heart of the compliance, governance and the viability of COSBOA as a business.”

“This is not only improper it offends any test of reasonableness and any sense of professional ethics.”

Conway has reported his concerns to the Australian Securities and Investments Commission and says he explained to members the behaviour of some directors, especially executive director Peter Strong, could not be tolerated, “let alone validated”.

“I am specifically referring to the actions taken by the executive officer to act to protect his position,” the letter says.

“This is not proper conduct of a Director and I believe it warrants investigation. COSBOA has suffered too much as a result.”

COSBOA directors Yolanda Vega and Jackie Zelinsky also resigned from the organisation yesterday.

Vega, the chief executive of the Australian Women Chamber of Commerce and Industry, told members she couldn’t be part of an organisation which “deliberately ignores ASIC regulation and its own constitution”.

She also says COSBOA “consciously fails to establish policy objectives” and “knowingly supports an executive officer that refuses to be accountable: fails to deliver financial documentation and board meeting minutes, is incapable of writing reports and deliberately ignores his fiduciary duties”.

COSBOA executive director Peter Strong campaigned for small business in the lead up to the election, particularly on the issues of penalty rates and red tape.

Strong told SmartCompany Conway wanted to take COSBOA in a “new direction”.

“A general meeting of members was held and we expressed confidence in the current activities of COSBOA,” he says.

“The issues around governance are appalling and wrong and we contacted ASIC some time ago and informed them of his accusations.”

Strong says in reporting the concerns he and the other directors followed their duties.

“ASIC has registered the issue and they’ll assess them; it’s fine. The big point is we’re not worried, we know there are no big problems.”

“It’s a matter of a chairman not getting his way.”

Strong says there was a COSBOA treasurer for two or three years who was an IPA director.

“We don’t believe there is a problem, but when there are accusations like this you have to follow your duties. From here ASIC will do what ASIC does.”

SmartCompany has contacted ASIC, but received no response prior to publication.

Conway was unavailable to comment this morning, but IPA general manager of media and communications Wayne Debernardi told SmartCompany Conway entered into the role with the “full intention of driving the focus of small business” but discovered a “whole range of things impeding the mission”.

“Andrew saw strong synergies between the IPA and COSBOA because we also represent the interests of small business, but Andrew has a lot of integrity on the basis that when he enters a role he looks at the fabric of the organisation’s integrity and what he discovered was unpalatable,” he says.

“He has sent a report to ASIC and I assume the regulator will take due action… Andrew has not taken the role flippantly and his decision to stand down was very heartfelt because he wanted to help COSBOA be the driving force for small business.”

Debernardi says Conway encountered “too much resistance” to change within the organisation.

In November 2012 former COSBOA chairman Ken Phillips also resigned when the council’s accounts could not be signed off at the organisation’s annual general meeting, raising questions over COSBOA’s accounts.