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Bald: ‘Mistakes were made’ at LGC, and new legal strategy is in the works

Last modified: 2/24/2013 12:25:43 PM
The Local Government Center’s interim executive director acknowledges that the group has “gotten off track” in recent years, and says he’ll soon approach the group’s board with a possible corporate reorganization and a new legal strategy as he looks to resolve the LGC’s ongoing battle with state regulators.

“We don’t want to continue fighting,” George Bald said during an interview Friday at the organization’s Concord headquarters. “We really want to get ourselves in a position where we have a much better relationship with the regulator and that we continue to do the good work we’re doing.”

Bald broadly acknowledged that “mistakes were made” at the LGC in recent years. He said LGC leaders ran afoul of the state law that regulates it and similar groups, and in the process may have come off as secretive and self-interested.

“Sometimes, you may have good intention, but you do the wrong thing. . . . From my observations, it wasn’t with malicious intent, but it still was contrary to RSA 5-B,” Bald said, referring to the state law. “And so, again, what we need to do is make sure that we don’t slide away from that. And I think that’s what happened, is that over time, they were doing things that they really believed were in the best interests of the organization and the members, but it almost appeared that it was sliding more to the organization.”

Bald, 62, whose second stint as state commissioner of resources and economic development ended last fall, was hired to run the LGC for six months after the embattled group’s board asked Executive Director Maura Carroll to resign. He started the job Feb. 6.

The LGC, which operates public risk pools that provide insurance coverage to local governments in the state, has been under fire from the Bureau of Securities Regulation, which is part of the secretary of state’s office, over its business practices and a 2003 corporate reorganization. Last August an administrative-hearing officer ordered the group to reorganize, change some business practices and return more than $52 million in improperly retained surplus money to its members.

The LGC has long denied any wrongdoing and vowed to fight the case. The group appealed to the Supreme Court, which hasn’t yet heard arguments in the case, and its leaders and state regulators have continued to snipe at each other in public.

But Bald said Friday that the LGC’s leaders, while well-intentioned, went astray.

He said the group hasn’t always been transparent with its members or the public. The Professional Fire Fighters of New Hampshire twice in recent years went to the Supreme Court to force the group to release documents under New Hampshire’s right-to-know law.

“Broadly, I would like to put the organization in a position where we readily give out information that people ask (for). I know that that’s been an issue, of people thinking that we’re hiding things or not being forthcoming, and I want to make sure that we do that, that we make it easy for people to have access, that as many things are online as possible so people don’t have to ask,” Bald said. “And if they do, they just have to ask; they don’t have to do a right-to-know request.”

Regulators complained that the 2003 reorganization that created the Local Government Center as an umbrella group for the New Hampshire Municipal Association and its risk pools was improper. In a bid to comply with the August order, the LGC in November divided its board members onto two separate boards for the two risk pools.

But Bald said he hopes to bring a recommendation to the LGC’s board to further reorganize the group. That could include a more defined structure for the municipal association, its lobbying and training arm, which he said was “a little bit pushed aside” in 2003.

“My hope is that I can make a recommendation to the board on something that’s simpler, that’s very easy for our members to identify,” Bald said. “Again, I think the thought was to make LGC like a parent company that would help to make things a little bit smoother, but it didn’t work out that way.”

Bald also said he hopes to discuss a new legal strategy with the board. There are elements of the August order that he said he needs clarification on, such as the mechanism for returning surplus money to members and the proper level of reserves for the group to retain as a hedge against a potential spike in claims.

But, he said, “If we could work this out where we didn’t have to have an appeal, then I certainly would feel more comfortable in that direction. . . . I really believe that there’s a way to put us both – to meet the requirements of the order, but also to make sure that the organization continues to operate in a healthy manner.”

Bald said he needs “to go back to the board, to get further direction from them or at least to discuss with them what I’d like to do.” But, he said, he hopes to have results “within weeks, not months.”

A few days after Carroll’s departure was announced Feb. 1, Dave Lang, president of the state firefighters union and a longtime LGC critic, said board members’ statements that they hoped to build a better relationship with regulators via Bald’s appointment “leads us to believe this to be more window dressing than honest change.”

But Bald said he has a real mandate to lead the LGC on a new path.

“It’s not window dressing,” he said. “I think the board has given me a fair amount of room to initiate some changes and to put us back on track. I think we’ve gotten off track, and it’s important to get back on track.”

Shelagh Connolly, an LGC board member, said the board is confident that Bald’s creditability, connections and long experience – he was elected to the first of three terms as Somersworth’s mayor at the age of 27 – can help the group get back on track.

“Part of the appeal of having a leadership change was to have someone come in completely fresh, review all the operations, all the internal operations . . . and to really look with fresh eyes at the whole organization, 360,” Connolly said. “And we are confident that he will make recommendations for change . . . and to work cooperatively with our regulator.”

(Ben Leubsdorf can be reached at 369-3307 or bleubsdorf@cmonitor.com or on Twitter @BenLeubsdorf.)


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