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.

Published by Richard Patey

Internet marketer, author, publisher, snowboarder and editor of this blog.

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