One R.I. Beacon Director Resigns; Two Others Fight to Stay on Board

May 4, 2006

One more director of Beacon Mutual Insurance Co. has resigned, while two others targeted for removal by Rhode Island Gov. Donald Carcieri have sued to challenge the governor’s authority to remove them.

John Holmes, who runs a government relations firm and is a past chairman of the state Republican Party, agreed to step down from his position on the Beacon board, despite the fact he was not on the board during most of the period of business practices criticized in a recent audit.

Carcieri, who has been pressing for an overhaul of the board of directors, thanked Holmes for stepping down at the same time he blasted two other directors, George Nee and Henry Boeniger, for resisting his move to fire them.

“I want to thank John Holmes for resigning from the Beacon Mutual board of directors,” Carcieri said in a statement. “As I have noted before, John has only served on the board since 2002, did not preside over much of the mismanagement that was identified in the Almond report, and voted to terminate the former CEO, Joseph Solomon, after that mismanagement came to light.”

“Despite these facts, I believe that it is important that the Beacon Mutual board of directors be reconstituted so that we can begin to rebuild the public’s trust in this important public institution,” Carcieri continued. “In that light, I agree with John’s decision to voluntarily step down and I have accepted his resignation.”

Carcieri said the voluntary resignation by Holmes “is in marked contrast to the decisions taken by George Nee and Henry Boeniger, who continue to selfishly cling to their positions on the Beacon Mutual board.”

Nee, a labor representative, and Boeniger, a teachers’ union lobbyist and former Democratic state representative, both of whom were appointed to the board by previous governors, feel they have a record they can defend.

“I feel a great deal of pride in the record and accomplishments of Beacon Mutual. We haven’t raised rates for 14 years, and we’ve returned $1 billion to the business community. I don’t believe our services have been anything but exemplary,” Nee told NBC 10 News recently.

Boeniger told the Westerly (R.I.) Sun that he disagrees with Gov. Carcieri. “My main concern is Beacon Mutual,” he told the local publication.

But the Carcieri Administration is impatient to overhaul the Beacon board.

Carcieri has accused Nee and Boeniger of caring more about the $20,000 stipend as directors than about the well-being of the company that insures an estimated 90 percent of the state’s employers.

Carcieri moved to terminate Nee and Boeniger following the release of an audit by the Almond Review Committee that alleged that the company gave favored pricing and treatment to certain policyholders, including some with ties to management and directors.

The Beacon board left it up to the individual directors to decide what to do, according to a Beacon spokesman.

The board consists of four members appointed by the governor, three representing policyholders, the director of the Department of Labor and Training, and the company’s chief executive officer.

Another board member, Edward Braks, resigned the day the Almond report was released. Braks is chief financial officer for Paul Arpin Van Lines, which the Almond report maintains received large credits and benefited from incorrect workers compensation classification despite an overall high loss ratio. He did not participate in the board meetings following release of the Almond report.

The former chairman of the board, Sheldon Sollosy, left the company late last year when an anonymous tipster raised questions about his company’s workers compensation account.

Carl I. Hayes, president of a Cranston furnace manufacturing company, took over as chairman after Sollosy’s resignation.

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