December 15, 1997
Michele Patterson Ahrens, Esq.
Tredway, Lumsdaine & Doyle
10841 Paramount Boulevard
Downey, California 90241
Dear Ms. Ahrens:
You have asked whether a conflict of interest arises if two federal
credit union directors participate in discussions and vote on
the recognition of a labor union in which they also hold management
positions. Under the Article XIX, �of the NCUA Federal
Credit Union Bylaws, this situation would present a conflict of
interest.
You state that the credit union's board of directors has been
asked to "recognize" a labor union for the purpose of
collective bargaining on behalf of the credit union's employees.
The board of directors are to sign a Recognition Agreement and
negotiate a Collective Bargaining Agreement with the labor union.
The Collective Bargaining Agreement will establish the wages
and work conditions of all the credit union's non-management employees
and the amount of union dues that will be withheld from the employees
paychecks. Two of the credit union's directors are also management
level employees of the labor union.
Neither the Federal Credit Union Act nor the NCUA Rules and Regulations
address the type of conflict of interest situation you presented.
However, Article XIX, �of the NCUA Federal Credit Union
Bylaws provides:
No director. . . shall in any manner, directly or indirectly,
participate in the deliberation upon or the determination of any
question affecting his pecuniary interest or the pecuniary interest
of any corporation, partnership, or association (other than this
credit union) in which he is directly or indirectly interested.
In the event of the disqualification of any director respecting
any matter presented to the board for deliberation or determination,
such director shall withdraw from such deliberation or determination.
Our opinion is that this bylaw requires both directors, who are
also part of the labor union's management, to recuse themselves
from participating in any discussions or voting on any matters
concerning the credit union's dealings with the labor union.
The directors' dual positions create an inherent conflict of interest,
namely, trying to negotiate the best agreement for the credit union
while at the same time representing the interests of their employer, the labor
union.
You may also wish to consider whether this situation constitutes
a conflict of interest for the two directors under federal labor
laws or state law.
Sincerely,
Sheila A. Albin
Associate General Counsel
GC/NSW:bhs
SSIC 3700
97-1009