I believe that any
compromise involving a reduction of the COLAs applied to the TVARS pension and
supplemental pension benefit would assure their eventual elimination. Please allow me to explain.
TVA's lawyers argued in the
lawsuit that the TVARS board must think that TVARS COLAs are not vested because
we voted to reduce them in 2009. In
March of 2015, the TVARS board filed documents with the court explaining that
we did not have time to consider the vesting issue before the vote in
2009. We also did not have independent
legal counsel. We explained that after
we examined the arguments in the court documents filed by TVA and the
plaintiffs, and discussed the vesting issue with independent legal counsel, we
determined that the COLAs were and are vested benefits. We explained that we should not have reduced
them in 2009. This brings up two points:
- If the TVARS board votes to reduce COLAs again, TVA's lawyers could make the same argument, and TVA could be able to eliminate COLAs entirely if a court agrees. This is why I believe that voting for any COLA reduction, even a very small one, would likely turn out to be a vote to eliminate COLAs altogether.
- The system’s rules say that the TVARS Board makes the
determination as to what benefits are to be paid, and the TVARS Board has
determined that COLAs are vested.
This is why I believe that TVA’s offer to vest COLAs is worthless.
As a layman (non-lawyer), I see a couple of other potential problems. Section 21 of the TVA Acts reads:
ReplyDelete"Sec. 21. (a) All general penal statutes relating to the larceny, embezzlement, conversion, or to the improper handling, retention, use, or disposal of public moneys or property of the United States, shall apply to the moneys and property of the Corporation and to moneys and properties of the United States entrusted to the Corporation.
(b) Any person who, with intent to defraud the Corporation, or to deceive any director, officer, or employee of the Corporation or any officer or employee of the United States (1) makes any false entry in any book of the Corporation, or (2) makes any false report or statement for the Corporation, shall, upon conviction thereof, be fined not more
than $10,000 or imprisoned not more than five years, or both."
In my view, the funds in the TVA retirement system and the debt TVA owes the retirement systems are "public moneys" of the United States and/or moneys of the United States entrusted to the Corporation.
Should any Board member of the TVA or the member of the TVARS Board vote for to give up the clearly vested COLA they could stand accused of: "unlawful conversion" or the with "improper handling, retention, use, or disposal of public moneys". Where, conversion is defined as of "exerting unauthorized use or control of someone else's property".
In the 2009 case, it could be argued that while the TVARS acted outside the bounds of its authority, was not a case of unlawful conversion because the reduced COLA was exchanged for cash. Hence, it could be argued that the TVARS board was simply weighing present value of the COLA reduction in exchange for the present value of the moneys offered... and made a financial choice to take money as having the higher perceived present value. (Keep in mind I'm not saying this was a good or lawful choice, only that a argument can be made that it was not a criminal act to the statue cited above).
In the present case, however, the TVARS Board would be reducing a vested benefits (i.e., the moneys of United States & TVA retirees being held in trust for TVA's retirees by the United States) in exchange for nothing of value. In other words, the TVARS Board would be surrendering retirees "property" in exchange for nothing.
In the current circumstances, I believed an effective legal argument could be made that a current member of TVARS Board who is both an active TVA employee and votes to reduce the COLA could be accused of engaging in an unlawful scheme designed to relive the TVA's of its debt obligations thru the seizer of moneys owed the TVARS system.
I would also like to point out that, as TVARS Board as already declared to the Courts of the United States that the COLA was a vested benefit, that treating the COLA as a non-vested benefit now could be construed as a violation of Section 12 (b) as:
"Any person who, with intent... to deceive any officer or employee of the United States... (2) makes any false report or statement for the Corporation, shall, upon conviction thereof, be fined not more than $10,000 or imprisoned not more than five years, or both."
On the one hand if the TVAR's Board statement to the Officers of the U.S. Courts was false then the statement was a violation of the criminal law cited above.
Conversely, if the TVARS Board turns around and arbitrarily declares (or treats) the declared vested benefit to be a non-vested benefit then this could be construed as an attempt to deceive "employees of the United States" (i.e. active or retired members of the TVARS)and U.S. Court Officers by making "a false report or statement for the Corporation". Again a statement or act in violation of criminal statue cited above.
If I were a TVARS Board member considering reducing the COLA, I'd carefully consult with legal counsel before voting.
Regards, David Kelly