Friday 10th February may mark the social enterprise movement’s first Watergate-style scandal when Civil Society published the article ‘Social Enterprise Mark considers libel action against members of its former parent‘ outlining how the Social Enterprise Mark (SEM) Company used its resources (organisations operating the Mark have received almost £1m public funding since the 2007 pilot) to seek legal advice to deal with members of the now defunct regional social enterprise support organisation Rise who have publicly objected to closure of the organisation with assets transferring to SEMco.
Civil Society reports that the MD of SEMco (and ex CEO of Rise) – Lucy Findlay - is “considering further action in terms of libel” in respect to the members – such as MJ Ray from software.coop – who opposed the closure of RISE.
Lucy, as reported, states that the members who have spoken out against the closure have a “vested financial interest” however Dr Rory Ridley-Duff counters in the comments by stating:
Given that the issue of ‘vested interests’ has now been raised publicly, let get some relevant information into the public domain.
The following information was obtained from documents filed by RISE and SEMCO (The Social Enterprise Mark Company) at Companies House. RISE and SEMCO reported the following financial information in their most recently filed accounts (accounts up to 31-03-11):
RISE (Net Assets): £444,766
SEMCO (Net Liabilities): (-£98,103)
Even allowing for changes in trading circumstances, and the closure of the RDA in the South West, the following three questions have to be asked.
1. “Why would the directors/executives of RISE/SEMCO choose to dissolve a solvent company to save an insolvent, loss-making, company?”
(Surely the more sensible thing would be to dissolve the insolvent company and keep the solvent one).
2. Whose vested interests are served by the dissolution of RISE (and the transfer of its assets to insolvent, loss-making, SEMCO)?
3. Were the members of RISE told that SEMCO was insolvent (and had made a trading loss of nearly £100k) before being asked to vote for the dissolution of RISE and the transfer its assets to SEMCO?
These are serious questions because an impartial observer would probably regard such behaviour as the basis for removal (or even disqualification) of its directors.
Lastly, as other social enterprise agencies in the UK have maintained services to their regions following the closure of their RDA – even when they have far fewer assets than RISE – what business reason can be given for RISE’s closure beyond the SEMCO’s need for its assets?
These are questions that will surely be raised in any attempt to accuse former RISE members of libel. The above information was known to those members and they fought (unsuccessfully) for the RISE board to share it with members before a vote was taken at the AGM to close RISE and transfer its assets to SEMCO.
The old adage ‘when you point a finger at someone remember there are three pointing back at you’ still seems fit for purpose – follow the discussion on Twitter using the hashtag #socentgate.
There is also a discussion going on the CIC Association Forum.
To date Social Enterprise UK - who pulled out as co-owners of SEMco in October 2011 before the closure of Rise in November 2011 – have not commented on the libel threat.
About Richard Patey
Search, social and content marketer and editor of the Profit Is Good Blog.
- Web |
- More Posts (16)
I’m not sure I’d call this a scandal. I think it’s an example of poor judgment from someone who’s upset because – rightly or wrongly – they feel they’ve been misrepresented.
If SEMCO were looking from advice from me, I’d advise them to withdraw this threat and attempt to draw a line under these discussions.
I would have to agree with David.
From what I have heard of this ladies character she is obviously acting in a very defensive manner. It is however making her look incredibly unprofessional. Pursuing this line of action will almost certainly loose any credibility she has in the Social Enterprise industry.
I just wonder whose money is she going to use for the legal battle. Surely she’s not going to dip into the purse that has been filled by the general public.
Lucy Findlay … You are taking things too personally.
This is business.
Draw a line under it and move on.
Real Social Enterprise requires that you are Commercially Minded and a genuine Entrepreneur in the first place.
We see too many people running these organisations who are just slapping the fluffy badge on themselves in some delusional self belief that they are helping the world become a better place when all they are really doing is fuelling their own ego’s.
Lucy you do not want to be seen as just another one of these fluffers.
All the best,
Duncan
There’s not a legal battle. SEMCO have said they’re looking to take advice – quite possibly pro bono advice.
I think SEMCO critics can draw a line under things, too.
Hi David, unfortunately people will not be able to draw a line under things until all questions have been answered and responses given such as on your blog post about the closure of Rise here.
Hi Richard, I suppose I don’t feel that any of the questions in that blog post remain unanswered.
Does anyone know if the assets have actually been transferred yet? Its still a live issue I think
this has got me thinking… do we actually have any social enterprise law practices in the UK? I know of socent accountancy firms, and various lawyers who ‘specialise’ in social enterprise, but if this does end up going the whole way, it would be nice if we could keep the money ‘in the family’ as it were…
but sadly, beyond that, I’m afraid I can’t really offer anything more – not because I don’t want to, but having been involved in legal disputes around and within co-ops and social enterprises over the years (on all sides), I try to take a position of impartiatiality as far as possible until any formal hearings that may take place have, to ensure a fair hearing for all – on which point, thanks are due to Rory for identifying and sharing the additional details that he has above.
Senscot in Scotland have setup a social enterprise law firm for the sector to provide affordable legal advice and services. http://www.se-legal.net for more info. I’m not aware of any others.
Hello David, et’al
The direct statement and quote from Lucy Findlay is:
“We have taken legal advice on this and are considering further action in terms of libel,” she said.
Read full article here: http://www.civilsociety.co.uk/finance/news/content/11518/social_enterprise_mark_considers_libel_action_against_members_of_its_former_parent
WRT the “pro bono” advice… LOL
As a businessman I can guarantee you, if she’s pursues this any further that a chat over a cup of coffee then the legal eagles will not be doing pro bono.
Fancy a wager ;o)
Is this all going to be remembered in five years time – even by the protagonists? Probably not. So let’s let sleeping dogs lie. Life is too short….
I agree with Craig that the best thing we can all do now is just forget the Mark, and work to heal the regretable divisions it has created (though I do understand this must be hard for those in the South West).
One of the ways we can move on though is by understanding that the Mark came out of a fundamental misunderstanding – between a fractured, oppositional social enterprise movement and a New Labour dream of consensus, in which social divisions and dislocations were less real than some idealised notion of ‘community’.
Some strands of social enterprise, notably worker co-ops, always knew that sometimes oppressed and exploited groups have to stand up for themselves – against the ‘community’ or ‘society’ – and that for these groups the really ethical stand might be to keep your profits.
It is no accident that key protagonists in the Mark conflict come out of organisations spawned politically by New Labour on the one hand – and still hanging on to the fringes of the public sector – and worker co-ops with their independent and oppositional roots on the other.
Any attempt to retrospectively impose coherence on the social enterprise movement is wrong-headed – precisely because what social enterprise means – what we all really understand by it – is a broad and diverse and conflicted movement, not a ‘sector’ with a formal set unifying technical characteristics.
The best analogy is with the environmental movement: you can do your bit by insulating your loft and getting a bike – or you can go completely off-grid and grapple with composting toilets – the movement embraces you all. Within this, there are many ‘marks’ – like the Soil Association organic standard – that for sure have their specific criteria and usefulness – but nobody claims they are THE Environmental Mark.
For me, this is the lesson we need to learn: accept that there isn’t a sharp line between social enterprise and not-social-enterprise, but a fuzzy shading into ethical and sustainable businesses on the one hand and not-for-profit organisations on the other. And this is a good thing, beacuse hopefully by not drawing that sharp line around ourselves, we make it easier for others to merge in and travel with us.
A one level, this makes rather sad reading indeed.
It is also rather informative though – especially Rory’s and Geof’s contributions.
Geof’s, particularly, underscores the complexity of even defining the social enterprise sector, which is reassuring for me and reinforces my belief that I have done the right thing in registering my organization (Intelek International, http://www.intelek.net) as a sole proprietorship, to keep things as simple as possible.