FARMINGTON - A leadership conflict over a multi-million dollar Navajo-owned company that has been stewing since December could be cleared up if the Navajo Nation Council ratifies a new charter later this week.
The Navajo Nation Oil and Gas Company is worth about $458 million dollars and has brought in record revenues in the past few quarters. It is controlled by nine board members and since December, five board members have fought and seemingly won control of the board.
Four board members were removed by being voted off the board or by term limitations in December, but a Navajo Nation Supreme Court ruling last month changed that and has since created confusion among workers and has pitted Navajo leaders against each other.
But since last week, Council Delegate Russell Begaye (Shiprock) said he and other Navajo leaders have been working to resolve the conflict and calm the situation by putting a new board in place that would have oil and gas industry expertise.
Begaye, in an interview Sunday evening, said he expects the Navajo Council to meet in a special session later this week and ratify a new charter for the federally-chartered and Navajo-owned company.
The charter, which he said has been in the works since last fall, would reduce the board from nine members to seven members. Then the new board would need three new members that would have to be appointed based on expertise while the other four board members could be reevaluated.
The Navajo president makes appointments that the council must approve.
In December, Navajo lawmakers approved the appointment of four board members, but sitting members of the board, lobbied against the appointed board members, and that's when, Begaye said, the issue of control of the company became a Navajo Council issue.
"They started challenging the new selection of board members and one of them was refusing to leave," he said. "You're the board and we're the Navajo Nation Council."
The board oversees company operations, but ownership lies in the hands of the Navajo people, the Navajo Nation Supreme Court stated in a June 20 ruling that forced the company to leave four board members in place who were either voted out or whose terms had expired.
The court ruled the removal of the five board members didn't follow procedures.
Shortly after the ruling, the board removed CEO Robert Joe, who has been credited with turning around Navajo Oil and Gas creating better performance and higher revenues, and chief financial officer Rueben Mike, who worked closely with Joe to revamp the company.
The decision caused at least three employees to file for protective orders limiting contact with the board or Denetsosie, all of which were granted.
Lynette Willie, community and government relations manager, was granted a temporary protection order against board president Lennard Eltsosie.
Willie said Eltsosie and four other board members have taken over the corporate offices, which are based in St. Michaels, Ariz.
"Mr. Eltsosie was camped out at the office and demanding files. This is not the first time he has interrupted the NNOGC operations. Eltsosie previously stopped bank accounts which impacted payroll checks causing employees financial hardships," she said in a email.
Attempts to reach Eltsosie for comment were unsuccessful.
Two other employees have filed for similar protective orders and hearings for all three orders are scheduled for July 10 in Window Rock.
However, the Supreme Court ruling caused shareholders to file for a restraining order in federal district court. Although the company is federally chartered, Navajo Nation ownership means it falls under the tribe's sovereign immunity umbrella.
With the ongoing strife, four shareholders — Navajo Nation Council delegates Begaye, Mel R. Begay, Kenneth Maryboy and Charles Damon — filed for a restraining order in federal court.
Though the court denied the order, the four delegates have taken criticism from Navajo president Ben Shelly and others who say their efforts could harm the tribe's sovereign status.
"These delegates acting as shareholders were asking the federal court to overturn our Navajo Supreme Court ruling that was entered against them last month on June 20," Shelly said in a release. "This was bad decision making on their part."
However, Begaye said the strife in the company leaves the tribe open for significant financial liabilities that tribal sovereignty might not be able to protect.
Navajo Oil and Gas was created under a federal government code that gives the company a federal charter, but since the company is owned by the tribal government, the tribe would eventually be liable for the company.
Begaye noted that the Running Horse Pipeline, a pipeline that transports crude oil from Montezuma Creek, Utah, to Bisti, has a portion that crosses the San Juan River.
He said that if the pipeline were to break over the river, he estimated that the clean up could cost billions of dollars.
"The tribe would be liable," he said, noting that the tribe's permanent trust fund could be "wiped out."
The fund is estimated to be worth more than $1.2 billion and expenditures from it require Navajo voter approval, along with a super-majority vote of the Navajo Council and the approval of the Navajo president.
Begaye said the new charter will alleviate the strife. However, he said whatever decisions the board has made will stand, which includes the removal of Joe and Mike.
"Whatever is in place is in place. We have no control, administratively," he said. "We need to get this charter put in place and get skilled board members in place and move the company forward."
Regardless, Willie still worries about the stress at the workplace created by Eltsosie and others.
"His presence in the corporate offices is creating intimidation and fear amongst employees," she said. "Some of these employees have worked very hard for NNOGC and have helped in building its success. It is a shame that we are caught up in this coup (that) is trying to take control of the organization."Erny Zah is The Daily Times business editor. He can be reached at 505-564-4638. and email@example.com. Follow him @ernyzah on Twitter.