Baker’s labor pick left board as trouble began

City health center collapsed soon after he left board

Ronald L. Walker II.Handout

In the last few years that Ronald L. Walker II served as chairman of the board of Roxbury Comprehensive Community Health Center, his own business — Next Street Financial — charged the center hundreds of thousands of dollars in consulting fees for board development and strategic planning, documents show.

Within a year of his departure, the board had been decimated and the health center was about to suffer a financial collapse the board members apparently never saw coming. The 45-year-old institution was closed in 2013, and many of its employees never got paid for four weeks of work.

Last month, Governor-elect Charlie Baker named Walker the state’s next secretary of Labor and Workforce Development, heralding his work as a cofounder of Next Street Financial, which is a merchant bank that invests in small businesses and advises entrepreneurs in urban areas.

“Ron’s experience will serve him well as he takes on the job of connecting our administration’s job training and workforce development services with employers ensuring they expand and grow here,” Baker said in a statement.

Baker’s announcement listed many of Walker’s accolades, including his membership on prominent local boards and a variety of corporate leadership awards, but made no mention of his long-term oversight of the now-defunct health center known as “RoxComp.”

Walker was no longer on the board at the time the center closed, a point that Baker spokesman Tim Buckley made repeatedly on the day of the appointment when asked about Walker’s RoxComp involvement.

But Walker served as chairman of the community health center’s board for at least a dozen years, leaving after the first alarm bells went off in the summer of 2011. In July 2011, Walker had been among those meeting with federal regulators, who detailed the many program requirements RoxComp was failing to meet and specifically cited Next Street’s contract as a concern, said one former employee who had direct knowledge of the situation.

The regulators also faulted the health center for failing to require board members to disclose potential conflicts of interest. Both concerns were echoed in a draft of the report later issued by the federal regulators.

By then, Walker apparently had stopped working with the board, although verifying the exact date is difficult given the lack of record-keeping at the center.

In the summer of 2012, the Department of Public Health shut down RoxComp’s laboratory because of “serious, unsafe patient practices.” In the spring of 2013, the center folded and a receiver was appointed to oversee its closure. Its management was so dysfunctional, Attorney General Martha Coakley said at the time, that she could not obtain a current list of the board members.

Walker did not respond to repeated requests for comment. The governor’s spokesman said Walker was unavailable and issued a statement: “The Governor-elect has begun to assemble a diverse cabinet with a wealth of experiences that will contribute to his vision for making Massachusetts great. He is proud to have someone as civically engaged as Ron on the team as he feels Ron is the best person to link the state’s workforce development services with employers, ensuring they grow here.”

Along with the presidency of Next Street, Walker’s resume includes a stint as executive vice president at Sovereign Bank and as board chairman of the BASE, a Roxbury mentoring center. He won the 2013 Boston Business Journal’s CEO of the Year Social Leadership Award, and the Boston Chamber of Commerce’s under-40 Leadership Award, according to Baker’s team.

The spectacular 2013 downfall of a health center that had been a neighborhood fixture for four decades has been primarily attributed to mismanagement by the chief executive officer, Anita Crawford, who was forced out before the center closed. But board oversight and governance problems were heavily criticized in federal reports on the center that preceded its demise. Walker’s company was paid since 2008 to strengthen the center’s planning and governance.

The former employee who spoke with the Globe on the condition of anonymity said Next Street’s involvement was pitched as an ambitious marketing campaign and that employees were interviewed about the strengths and weaknesses of the organization. Next Street created a website for RoxComp, but the employee could not recall ever seeing actions result from the strategic planning.

Rishi Shukla, Next Street’s head of finance and operations, did not respond to questions about whether a strategic plan was ever delivered. He also would not address specific questions about the firm’s work with the health center, saying in a statement only that it involved “strategy consulting, organizational development, and marketing,” and that a “strict confidentiality agreement” prohibited him from saying more.

Buckley, the governor’s communications director, said that Next Street provided similar strategic planning services to nonprofits including Crispus Attucks Children’s Center, The Bay State Banner, and Central Boston Elder Services Inc.

Tax records later filed for the nonprofit Roxbury health center reveal Walker’s company charged $131,750 in fiscal 2009 and $32,500 in fiscal 2010, in both cases, for “board development.” In fiscal 2011, Next Street Financial charged $82,500 for “consulting regarding the health center’s strategic marketing plan and talent/strategy,” the tax form filed in July 2012 shows. The payments were reported as “business transactions involving interested persons,” and noted that the “board chair is partial owner of Next Street Financial.”

Such arrangements are not illegal for nonprofit board members, but the charities division of the attorney general’s office urges them to be “cautious” about such relationships and to recuse themselves from related votes.

“A situation of this type presents a potential conflict between your own financial interests and your duty as a board member to be absolutely loyal to the organization,” says the attorney general’s Guide for Board Members of Charitable Organizations. “It also may look questionable to the public.”

Next Street’s consulting rate raised eyebrows at the federal agency that provided RoxComp much of its funding, the Bureau of Primary Health Care, which is part of the federal Health Resources and Services Administration.

Next Street‘s “daily consulting rate of $2,500 for board development and strategic planning is excessive for a nonprofit organization in a precarious financial state, especially when technical assistance is available at no or low cost,” the bureau said in a draft report on the health center that was based on a 2012 site visit and is on file at Suffolk Superior Court. It references another $99,000 contract with Next Street — apparently for 2012 — that the Globe could not independently confirm and noted that the contract was missing dates.

The bureau also took RoxComp’s board to task for failing to meet its program requirements on board governance, including areas that Next Street was supposed to be helping the board handle, such as recruitment of talent.

After many board members left in 2012, the board had only six members, insufficient for federal expectations or even the community health center’s own bylaws, weakening the board’s authority and ability to conduct business, the report said.

Members of the board were not expected to be experts in finances or corporate governance; the federal program’s requirements call for more than half of them to be consumers of the health center.

Still, the bureau faulted the health center’s board for lack of preparedness, saying they had “little if any formal Board orientation or ongoing training and development,” according to the draft report. “Not all of the Board members clearly understood their roles and responsibilities or liabilities as a Board member.”

The board was responsible for assuring annual audits were completed, but by December 2012, its year-end audit hadn’t started, the federal draft report said. That was because the center still owed $35,000 for its 2011 audit, and neither the board treasurer nor the chief financial officer was clear about the timeline, an instance that reflected a communication gap between management and the board of directors that held ultimate responsibility for hiring the auditors, the report said.

With the center now in receivership, employees have sued the final board president and treasurer individually, trying to hold them responsible for their losses. But the board members “profess to have had very little understanding of their oversight duties,” said the former Roxbury Comprehensive Community Health Center employees’ attorney Richard B. Reiling, citing their comments during depositions. And although the board members had fiduciary responsibility, he, too, focused the blame on the center’s day-to-day leadership.

There was “clear financial mismanagement,” he said.

Keith Crawford, the chairman who succeeded Walker, would not answer questions about Next Street’s contract. He referred questions to the receiver, Joseph Feaster, who did not return repeated phone calls.

As of June, the center still owed employees $266,722, and owed the city $25,859 and the state Division of Unemployment $761,400, according to court documents.

RELATED:

• 8/2012: Alarm bells in Roxbury health center

• 2/2013: Roxbury health center missed its payday

• 3/2013: Roxbury health center closes its doors forever

• 4/2013: Longtime Roxbury clinic is placed into receivership