Meanwhile, two other board members will ask a judge today to stop the governor from removing them.

09:16 AM EDT on Thursday, May 4, 2006

BY LYNN ARDITI
Journal Staff Writer

PROVIDENCE -- John A. Holmes Jr. resigned from the board of Beacon Mutual Insurance Co. yesterday and two of the company's other board members prepared to go to court today to fight to keep their posts.

Holmes' resignation comes in the wake of pressure from Governor Carcieri to purge the leadership of the state's dominant workers' compensation insurer, which now faces a criminal investigation after an independent probe headed by former Gov. Lincoln Almond turned up evidence of mismanagement and favoritism in pricing.

Carcieri has demanded the resignations of George H. Nee and Henry R. Boeniger, both Democrats who work for labor unions. The two men are expected to appear at 9:30 today in Superior Court to request a temporary restraining order against the governor.

Nee and Boeniger accuse the Republican governor of discriminating against them because of their union affiliations. Nee is the secretary-treasurer of the Rhode Island AFL-CIO; Boeniger is government relations director for the National Education Association, a teachers' union. Both are gubernatorial appointments to the Beacon board.

Holmes, a Republican appointed to the Beacon board by former Governor Almond, stated in his resignation letter to the governor that he wanted to put an end to accusations by fellow board members of "discrimination for not removing me from the Board because of our political affiliation."

Holmes applauded the work of the Almond committee and said he "supported it at every turn, to fully pursue the investigation to its unbiased conclusion."

Holmes spoke with the governor several times over the last week and discussed "the issue of Holmes' future" on the Beacon board, said the governor's spokesman, Jeff Neal.

In a statement released last night, the governor thanked Holmes for his "decision to voluntarily step down."

Holmes, who joined the board in 2002, "did not preside over much of the mismanagement that was identified in the Almond report, and voted to terminate the former CEO, Joseph Solomon, after that mismanagement came to light."

"Despite these facts," Carceri wrote, "I believe that it is important that the Beacon Mutual Board of Directors be reconstituted so that we can begin to rebuild the public's trust in this important public institution."

Nee said last night that he will fight to retain his board posts.

"I think the governor is just politically motivated here . . . and I'm not going to give into that," Nee said yesterday. "I've been on that board for 12 years. We've never raised rates. We've given a billion back in dividends and shared earnings and discounts to the business community. The company has treated injured workers with respect and dignity. They have focused completely on safety and health."

Carcieri last week called for Nee and Boeniger to resign or be removed from the Beacon board "for cause."

In a news release late yesterday, Carcieri vowed to fight to "clean up" the board, calling the court challenge "an audacious and completely self-interested effort by Mr. Nee and Mr. Boeniger to distract from their abject failure to prevent the rampant mismanagement that occurred under their noses at Beacon Mutual."

Beacon is now under investigation by the state attorney general and a state grand jury. State investigators will be assisted in the probe by the FBI. Holmes is the third Beacon board member to resign since February, when a whistle-blower call to a hot line first brought the allegations against Beacon to light. The other two are Beacon's former longtime chairman, Sheldon S. Sollosy and Edward J. Braks, the chief financial officer for Paul Aripin Van Lines, in West Warwick.

larditi@projo.com / (401) 277-7335