WASHINGTON The former CEO of Ukrainian National FCU says she was terminated by a resentful board a year ago while she was in the hospital after suffering a heart attack because she complained to NCUA several times about board meddling and financial improprieties at the $145-million credit union.
In a whistleblower suit filed in federal court here last week, Christine Balko, who led the credit union since 2005, said throughout her tenure certain longtime directors sought to fire her because of her insistence on “reporting risk and other issues” to NCUA. The board discrimination, according to the suit, “reached its pinnacle in late 2011 when she reported to the NCUA a series of unauthorized misappropriation of funds and suspicious transactions,” that occurred at the credit union, based in nearby Long Island City.
The suit claims a few months after her report to NCUA, several members of the board and supervisory committee “seized upon an error made by several of Balko’s subordinates as a pretext for her termination.” Balko’s suit identifies as her main antagonist, Vesvolod Salenko, well known in the ethnic credit union movement, who has held top executive or board positions for Ukrainian National FCU for 46 years. During that time, according to the suit, the board held an iron grip over the day-to-day operations of the credit union.
Balko was fired during a March 10, 2012 board meeting, when the supervisory committee, chaired by Salenko knew the CEO was in the hospital in the intensive care unit suffering from a heart attack, according to the suit.
The termination made it impossible for Balko to continue to meet her monthly mortgage payments with the credit union, which refused her request to restructure the loan, and the credit union eventually foreclosed on her mortgage, she alleged. “Balko’s hardship and struggle to maintain ownership of her property are the direct results of the Board’s actions against her,” she claims in the suit.
The suit claims that Balko first went to NCUA with complaints about the credit union’s governance regarding the legality of investments and allegations of misappropriation of funds in 2009, incurring the wrath of several longtime directors. NCUA, according to the suit, determined that the board’s decisions put the credit union at “significant risk” and identified it as a “troubled credit union.” As a result, NCUA issued Ukrainian National a Letter of Understanding and Agreement and assigned it a CAMEL 4 code. The LUA required the credit union to adopt a new governance structure, follow its own bylaws, hire new executives as chief financial officer and chief operating officer, and required each director to sign the supervisory agreement.
In a major twist, in February 2010 the board terminated Balko, who then was serving as interim CEO, and hired a successor. But Balko was elected to the board and the board elected her as chairman. The newly elected board then asked her to step down from the board and resume the job as CEO, with the demotion of the new CEO to CFO.
