To: U.S. Cattle Producers
From: Jon Wooster, U.S. Cattlemen's Association President
On July 1 the United States Cattlemen's Association (USCA) formally requested that the Secretary of Agriculture initiate a full investigation into circumstances surrounding the expanding contractor financial irregularities within the national mandatory beef checkoff as well as those circumstances surrounding the resignation of the Cattlemen's Beef Board (CBB) CEO. Since then, unfortunately, circumstances have grown even more serious with the resignation of the CBB Chairman, Tom Jones. It is unprecedented in beef checkoff history for the CBB chairman and chief executive officer to have been driven out of office. As USCA president, I want cattle producers to understand what USCA has discovered and what is behind USCA's decision to ask for the Secretary's intervention. Please become engaged in this very important process because what happens in the next few weeks will directly impact the future of the beef checkoff.
Several things have emerged that have caused USCA to call for a federal investigation and intervention. Evidence emanating from an on-going contractor compliance review appears to show further financial abuses of checkoff funds by the National Cattlemen's Beef Association (NCBA). The Clifton-Gunderson review conducted last year resulted in NCBA paying back more than $200,000 in misappropriated funds. An internal audit review currently underway has uncovered more financial irregularities bringing the total to $305,000. The financial review process is far from over as a federal audit of the beef checkoff by the OIG was initiated earlier this year.
Checkoff funds are held in trust by the CBB to be used for the benefit of cattle producers. One would expect that when disclosures of financial irregularities were reported that the leadership of both the CBB and the Federation would express outrage at the misuse of funds. Unfortunately the responses of some CBB and Federation board members was disappointing as they expressed more indignation over the disclosure of the misappropriations than outrage that checkoff funds had apparently been used for the benefit of NCBA . Reportedly, CBB leadership was actually chastised by NCBA for their transparency, when you would think NCBA would be busy apologizing.
Many people believe that NCBA thinks the checkoff is theirs. What NCBA needs to remember is that checkoff dollars come from all cattle producers and those checkoff dollars need to benefit all cattle producers. Each year the checkoff has an industry meeting and NCBA has a trade show and convention in conjunction with it. If you were not careful reading the literature you would think it was only a convention for NCBA. As a cattle producer you may not even realize that this gathering includes a beef industry meeting put on for cattle producers that every cattle producer can attend, or that there is also a summer CBB meeting you can attend. This year NCBA's original plan was to have their summer meeting held in conjunction with the CBB meeting at a Gaylord Properties hotel in Washington D.C., which many felt would give NCBA's policy side a huge presence to promote NCBA policy issues. However, the Washington D.C. site was cost prohibitive for the checkoff budget. By having the checkoff meetings in conjunction with NCBA meetings the checkoff would have been billed for most of the expense and NCBA's expenses would have been negligible. NCBA staff was explicitly directed not to commit checkoff funds to have a meeting in Washington D.C. Also, under these circumstances NCBA staff was given a clear directive to include CBB staff in all convention site negotiations with Gaylord Properties. From what USCA has discovered, NCBA staff subordinated CBB authority by committing checkoff funds under contract to Gaylord Properties without approval from the CBB; in fact, meeting minutes show that NCBA clearly ignored that directive. The penalties alone for breaking the Gaylord contract would have amounted to $200,000 if the CBB had not agreed to an alternate meeting site in Florida at another Gaylord property and two additional future meetings at Gaylord properties.
These continuing problems are mounting and now, NCBA affiliates appear to be conducting a premeditated and orchestrated attempt to overthrow current CBB leadership. So far this has resulted in the resignation of the CBB CEO, Tom Ramey, and CBB Chairman Tom Jones, a critical blow to the checkoff. NCBA affiliates continue to call for the resignations or removal of the CBB immediate past chairman in what appears to be a form letter format. Interestingly, all of this disapproval of the CBB leadership comes on the heels of the public disclosure by the CBB executive team of NCBA financial abuses and on the heels of the CBB's Executive Committee's efforts to get board approval to implement proposed CBB roles and responsibilities changes in an effort to rein in the influence of NCBA. That these tactics could be construed as retaliatory measures made to divert attention from the very serious matters of checkoff abuse and subordination of the CBB's authority seems reasonable. And to make matters worse, these actions have extracted huge financial resources from the checkoff's annual budget which has already decreased 20 percent in the last five years.
We believe the CBB proposed roles and responsibilities changes will set the stage for shoring up the beef checkoff and disentangling it from the heavy-handed influence of its majority contractor. NCBA maintains a high level of influence over checkoff planning, budgeting, allocations and evaluations through what's known as joint committees. The facts show that NCBA's policy division is guaranteed seats on both the joint budget and evaluation committees to the exclusion of all other policy groups and contractors.
NCBA affiliates also have tremendous influence on the nominating committee, which is a committee that largely determines who the next leaders will be for the Federation and the CBB. In the past, NCBA's control over the nominating committee has provided the path by which NCBA members are selected for leadership positions. It is this joint committee process, where all other contractors and policy groups except NCBA are excluded, where the most change is needed. In the last couple of years the CBB has addressed the undue influence problem by not having NCBA and the Federation nominating committee members participate in the selection of CBB leadership and Executive and Operating committee nominees. Evidence shows that a centralized resistance to the proposed policy changes is emanating from NCBA affiliates, including state beef councils. Most NCBA affiliates oppose the proposed changes and indicate that they are satisfied with the status quo. The fact that NCBA affiliates and NCBA members are resisting these changes should come as no surprise because of the role the checkoff plays in paying for NCBA's total overhead costs.
USCA has weighed carefully all the facts and evidence at its disposal. A buttress of the checkoff has always been producer confidence and trust. That confidence and trust is now compromised. The problems must be addressed before the entire program has been gutted. USCA believes that the circumstances are so serious and the magnitude of the problems so great that the Secretary of Agriculture must step in and investigate the issues and outline the remedies.
USCA's member-driven policy supports the Beef Checkoff Program. What USCA's policy does NOT support is the undue influence over the checkoff by any contractor. USCA's policy calls for checkoff governance reform, and today we're poised on the cusp of seeing that reform happen. USCA invites you to become involved in the public debate by contacting your CBB representatives, your state beef council representatives, and your Congressional delegation to advocate for checkoff reform. It is particularly important at this time that you make contact with your Congressional delegation asking them to urge the Secretary of Agriculture to become involved. The USCA web site is a good source for the latest information (www.uscattlemen.org). Please feel free to contact me with any questions or comments. Every checkoff-paying producer in the nation will be affected by the decisions made in the coming weeks. USCA will continue working to monitor events and provide you with as much transparency as possible.