‘Unprofessionalism’ drives Hawaii State FCU head to resign

The president of the Hawaii State Federal Credit Union has abruptly resigned, the latest sign that the governance of the state’s second-largest credit union continues to be beset by controversy and turmoil.

The resignation of Deborah Kim, who had been with the institution for nearly 20 years, brought to an end a sometimes contentious relationship between her and her bosses, the volunteer board of directors, that had caught the attention of federal regulators.

Kim emailed her resignation notice to the board Nov. 8, saying that would be her final day on the job.

Through a representative she declined comment.

But in her resignation email, obtained independently by the Star-Advertiser, Kim cited what she called unprofessional treatment and retaliation directed at her.

"I have worked in the best interest of the credit union and its members for 19 years, only to end my tenure with your volunteer officials spitting in my face," Kim wrote. "I deserved better."

A spokeswoman for the credit union confirmed that Kim no longer works there. But Marcy Arifuku said in a written statement that the organization’s policy was to not discuss details of an employee’s departure.

Arifuku said Rachael Sasaki, senior vice president, is now acting president as a result of a management succession plan that Kim helped develop. "The company will continue to operate as normal, and operations will not be affected by the departure," Arifuku said.

Amy Motooka, the board chairwoman, did not respond to a call seeking comment.

Kim’s resignation came seven months after then-board Chairwoman Beverly Lee Ing was ousted by a wide margin in an annual vote of credit union members to elect three directors. Two first-time candidates, Lowell Kalapa and Bill Milks, were the top vote-getters, supported by dissident members pushing for reforms. An incumbent, David Shimabukuro, received the third most votes.

The election was held amid growing controversy over the institution’s governance, including criticisms of the seven-member board after a Star-Advertiser article in January revealed that the directors had given themselves unusually generous benefits over the years. Several days after the article was published, the board agreed to reduce the benefits.

Dissident credit union members at the time described the board as power-hungry and dysfunctional.

The article also disclosed that federal regulators in confidential reports from 2008 and 2009 had questioned governance decisions by the board and raised concerns about potential conflicts of interest.

According to people with knowledge of Kim’s resignation, her decision to quit came after a volunteer committee that oversees the board disregarded an outside attorney’s advice that the committee hire an independent, third party to investigate Kim’s complaint of a hostile work environment.

Instead, the committee did its own investigation, concluded that the evidence was inconsistent and dismissed Kim’s complaint without taking action, according to those familiar with the resignation. They asked not to be named because of fear of retaliation or because they weren’t authorized to speak about confidential matters.

This isn’t the first time dissension and acrimony at the credit union have come to light.

In December 2009 regulators noted a serious division between the board and senior executives of Kim’s management team.

"Questions have been raised regarding the competency of the board and the intentions of management," regulators wrote at the time. "This examination does not presently see this as a safety and soundness issue; however, it easily could affect the future safety of the credit union."

Despite the internal turmoil, the 75-year-old organization has enjoyed stellar growth. Its membership has increased by about 50 percent since 2001, and its assets have doubled to slightly more than $1 billion.

In January an HSFCU spokeswoman said such numbers were compelling evidence that the board and executive team were strong and "successful at running a high-performance credit union."

But when asked about the latest development, Warren Hamamoto, one of the credit union members who campaigned for reforms, called for the resignation of the five directors from the old board or for an investigation into why Kim suddenly resigned.

"The safety and credibility of our credit union is at stake," Hamamoto said.