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January 2003 Vol. 29, No. 1   RSS Feed for Undercurrent Issues
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DAN Founder Retires

amid controversy ... and serious questions

from the January, 2003 issue of Undercurrent   Subscribe Now

The Diver's Alert Network (DAN) has announced the resignation of Dr. Peter B. Bennett, founder, president, and chief executive officer. Bennett age 71, has made an enormous contribution to diving medicine, yet in the past few years his tenure at DAN has been controversial and 20 months ago resulted in legal action. Undercurrent has called or e-mailed several of DAN's current and past board members -- as well as Bennett -- to inquire about the legal actions, but few have been willing to talk and then only off the record. We believe discussing the issue is important because divers support DAN not only through purchasing insurance but also by making voluntary contributions. Yet divers have no authority in DAN matters and the DAN board is appointed from within, so there is no outside accountability. With that in mind, we decided to pull together this story, based on the public records we have obtained.

* * * * *

Since 1980, DAN has grown from a single telephone on Bennett's desk at Duke University Medical Center's Hyperbaric Center to become the second largest dive-related organization in the world. Bennett has been DAN's only president and chief executive officer since its incorporation. As a tenured professor and senior director of Duke's Hyperbaric Center, he's been largely responsible for DAN's close ties to the university. Many of DAN's personnel, including the staff of DAN's famous 24-hour hotline, are Duke employees. According to DAN's 2001 tax return, Bennett was paid $213,750 that year, with another $34,119 in employee benefit plan contributions. DAN claimed that Bennett averaged 50 hours a week in his responsibilities there, but at the same time he was employed as a professor of anesthesiology at Duke, with teaching responsibilities.

DAN's board should operate in good faith
with its members and donors and disclose the
terms of Peter Bennett's "Golden Parachute."

As we learned from court documents and off-the-record interviews, there has been a longsmoldering power struggle between Bennett and some DAN board members. According to one document, at the November 2000 board meeting, certain board members "attacked Dr. Bennett because of his alleged ineffective management of the Corporation." The board also inquired about Bennett's retirement plans and any plans for his succession as president and CEO. In January 2001, Michael Lang assumed the board chairmanship, and two new directors were elected. At that time, Bennett provided the board with endorsements from supporters throughout the country, and a survey of DAN's senior managers purportedly showed "overwhelming support by DAN's management for Dr. Bennett, high approval of his management style and effectiveness, and great loyalty to him."

When Bennett walked into a DAN board of directors meeting in May 2001, one agenda item was his retirement transition plan -- a plan that had been under discussion, inside and outside DAN's boardroom, for several months. Instead, five board members called for his immediate termination. The dissident directors (Chairman Michael Lang, William Ziefle, Karen Van Hoesen, and new directors Wolcott Henry and Dick Long) sought to take over day-to-day operations of the $20-million-a-year research and educational nonprofit corporation and its two for-profit subsidiaries. They called for the removal of director Alessandro Marroni (president of DAN Europe) and two ex-officio board members (Chief Operating Officer Dan Orr and Bennett's son, Christopher, then employed as DAN's chief financial officer).

In protest, both Bennetts, Marroni, and Orr walked out of the meeting. Within days they filed a legal complaint accusing the five dissidents of failing to act in good faith, failing to exercise their duties as directors with requisite care, and acting contrary to the best interests of the corporation. They also got a preliminary injunction preventing the Dissident Five from removing them from their positions, as well as from "terminating or substantially modifying any existing programs, services, or activities performed by DAN and its affiliates" or from creating any new ones. The defendants challenged the injunction, but their motion for a stay was denied.

Bennett and his allies contended that their "summary involuntary removal" as officers and directors would cause "immediate and irreparable harm to DAN and its ability to carry out its mission," would likely result in "the loss of additional senior management and staff members," and would "irreparably harm the reputation and credibility of DAN...and impair its ability to provide membership services to its members."

Despite this intense lobbying, the Dissident Five all voted for Bennett's immediate termination as CEO. They also called for a forensic financial audit of DAN's operations, which Chris Bennett later protested on the grounds that it could jeopardize his efforts to refinance a $2.4 million mortgage for the DAN headquarters building, The Peter B. Bennett Center. That is a curious argument, because a clean audit would be appreciated by those who were being asked for refinancing.

Since the case was eventually settled out of court, with prejudice (i.e., both sides agreed to drop all claims and counterclaims and to say nothing defamatory about each other), we may never learn the full story behind this infighting. But we do have clues to a series of rifts between Bennett, some of his staff, and certain factions of the diving community that doubtless contributed to the board's schism.

Initially, DAN offered diver insurance through existing underwriters, but in 1993 went into the business itself by creating a wholly-owned forprofit corporation called Accident and General Insurance Company (AGI). The step proved controversial. Some industry observers believe that the organization's original focus on diving medical research and education has been diluted in the quest for the almighty buck. This concern was amplified in 1998, when DAN set up another for-profit subsidiary, DAN Services, Inc., to market supplementary life insurance to its members. While undertaking these commercial concerns, some critics charged that DAN had lost its vision to be "the most recognized and trusted organization worldwide in the fields of diver safety and emergency services, health, research, and education." Others have said that DAN has failed to establish a uniform international diver safety support system, saying that DAN's international organization lacks common goals and programs. They say traveling divers can't rely on DAN to provide uniform emergency support worldwide because the various branches "squander their resources bickering with each other over various standards and programs they are not required to comply with or adopt." Bennett's early conservative stance on Nitrox ruffled some feathers, as well.

Apparently some staff, all now ex-employees, complained to board members about DAN's organizational structure, which Bennett crafted over the years. One woman reportedly went so far as to contact Duke University with complaints of an "old boys' network."

Are these firing offenses? Perhaps not. But a counterclaim filed by the Dissident Five in July 2001 raised more serious charges. Bennett's self-drafted retirement plan, according to the document, contained "highly lucrative compensation and retirement provisions" and provided that Bennett would "remain in control of DAN through 2005."

And then the gloves came off.

Later in the counterclaim, the Dissident Five alleged that Bennett had "engaged in self-dealing by attempting to transfer corporate assets to a company he owned and controlled without revealing his ownership interest to DAN's board ... for his personal benefit and for the benefit of his friends and family." Further, the document claims that Bennett had authorized "unreasonable and extravagant expenses" and had "dissipated the assets of DAN and/or its subsidiaries to his own personal gain." Just for good measure, the complaint also accused Bennett of "engaging in acts of favoritism and nepotism to DAN's detriment." In the court documents we reviewed, there was no substantiation to back up any of these charges.

Bennett and his allies (the plaintiffs in the original complaint) answered the counterclaims a month later, switching criticism back to the Dissident Five by charging that they "have engaged in a pattern of behavior which is detrimental to DAN ... and which has been undertaken solely for their personal benefit." The defendants, according to Bennett and his fellow plaintiffs, also engaged in "a pattern of conduct which constitutes an abuse of their discretion and/or authority as members of the board."

Quite a hissing contest in this organization that we divers fund.

After failing to get the injunction against them lifted, the defendants' counterclaims against Bennett and his co-plaintiffs went nowhere. So the paper shuffling stopped and the dispute moved to mediation behind closed doors. On September 7, 2002, both sides agreed to voluntarily dismiss all claims and counterclaims. Bennett agreed to resign, effective June 30, 2003.

Today, Peter Bennett and Alessandro Marroni are still on DAN's board, which is now controlled by the Dissident Five. Dan Orr remains as COO, but Chris Bennett has left to form his own company, Medic First Aid in Tacoma, Wash. DAN's staff had been left in the dark about Bennett's future until just after the November 2002 board meeting, when they met with the directors and were assured that Bennett will stay in the headquarters building that bears his name until his official retirement, squelching rumors that their boss might be ousted sooner than June.

The squabble drained DAN's resources, both personal and financial. In 2001, DAN shelled out $95,123 in legal fees for management and general services, compared with $28,775 the previous year, according to their IRS filing. No doubt some of the increase was due to the board's internecine warfare.

Furthermore, DAN leadership has refused to disclose Peter Bennett's retirement package, although it is funded in part by voluntary donations from people who expect the money to go for better services, not to provide a financial gift for Bennett's retirment.

To see how a nonprofit expert and watchdog would view the Golden Parachute, we contacted Bob Bothwell, the founder of the National Committee for Responsive Philanthropy, and explained DAN's refusal to disclose the deal. He said, "It's reprehensible, unconscionable, possibly illegal, and certainly hugely inappropriate for the board of directors not to deal openly with the organization's membership about this situation. If the deal cannot stand daylight, it probably smells bad."

Finally, we should note that all the claims we have cited appear in legal documents and we can't be certain whether they are legitimate and supported, or just internal bickering.

Nevertheless, the new board wants to build a better DAN and it is now recruiting a replacement for Dr. Bennett. In doing so, it should keep in mind that DAN has a fiduciary responsibility to its donors. Some of these claims are serious, and ought to be addressed openly. To the extent that they are true, the board needs to assure its donors that it has full control of the finances and they will be managed properly.

Furthermore, it should disclose the terms of Peter Bennett's "Golden Parachute." It should explain why they believe it is appropriate -- or necessary -- to make such a payment, recognizing that they have already paid Bennett well for his work and contributed to a retirement plan. Not only will this ensure that the new President doesn't join DAN under a cloud, but also it will ensure donors that the can trust the organization in such a way to continue to support it.

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