Oregon Business & Industry, newly established as the voice of the state’s business community, fired its chief executive Wednesday amid accusations of improper conduct and a six-month tenure characterized by organizational chaos.

Word came a little more than an hour after The Oregonian newspaper published an article recounting accusations that CEO Mark Johnson had mismanaged the association and used racially charged language. The organization acted Wednesday while Johnson was vacationing in Hawaii. He issued a statement apologizing “for any insensitive comments I may have made.”

Oregon Business & Industry said it hadn’t been aware of Johnson’s specific comments until Tuesday night, amid an ongoing newspaper investigation. The organization said its executive committee voted unanimously to remove Johnson.

Oregon Business & Industry named former CenturyLink executive Ginny Lang as interim CEO and said it will begin a search for a long-term replacement. With Johnson’s exit, and a surge in staff turnover that followed his hiring, the organization must now replace nearly its entire leadership team.

Signs of trouble had been apparent for weeks at the trade group, which hired the Republican legislator from Hood River as its first CEO in October.

The selection occurred three months after the merger of Associated Oregon Industries and the Oregon Business Association. It was a galvanizing moment for Oregon’s fractured business lobby, meant to usher in a newly unified, more proactive and well-funded business voice at the state Capitol.

Instead, Johnson’s tenure has been plagued by turnover of senior staff, frayed relationships internally and externally, questions surrounding his executive and managerial skills, and the lack of a coherent strategy for members.

Several top staffers left during Johnson’s first months on the job, and he unsuccessfully sought to install his legislative chief of staff as the business association’s chief operating officer. Moreover, a fired staffer accused Johnson of making a racially charged comment about one of his former colleagues in the House.

That staffer, Joel Fischer, told The Oregonian that Johnson denigrated Rep. Diego Hernandez, “and his chain-migration homeboys from the hood.” Two other people, who asked not to be named because of sensitive relationships to the organization, said they also heard him make those comments.

Oregon Business & Industry’s executive committee hired Portland lawyer Courtney Angeli to investigate claims Fischer made in a letter to the board, which accused Johnson of broad mismanagement, as well as using racist and misogynistic language, according to a copy of the letter obtained by the newspaper. Fischer’s letter did not specifically reference the comments about Hernandez, but he and the two others who heard the comments said investigators never asked them about any accusations against Johnson.

“There wasn’t anything to substantiate the claims, and so we moved forward,” Scott Parrish, the organization’s board chairman, said during an interview last week.

That changed Tuesday night, the organization said in a written statement.

“When vague allegations were raised about OBI President Mark Johnson by a former employee, the executive committee retained an experienced outside investigator to thoroughly review and evaluate them. The details of the investigator’s report are privileged, but the investigator did not find any pattern of misconduct.

“However, the full executive committee has learned that, on one occasion in a private meeting, Mr. Johnson made an inappropriate comment that, regardless of any joking intent, is unacceptable and wholly inconsistent with OBI’s values and the values of its members. At its meeting Tuesday evening, the OBI executive committee was informed of the inappropriate comment, and reached the unanimous decision to ask Mr. Johnson to step down as CEO.”

In a prior interview with The Oregonian, Johnson said he didn’t believe he had used the racially charged language.

“I don’t recall that at all,” he said. “I don’t know where that would have come from.”

In Wednesday’s statement, though, Johnson did not specifically deny the comments. He noted that he had supported access to driver’s cards and affordable college tuition as a state lawmaker.

“I’m proud of the work that I have done to promote equity and improve outcomes for students across our state,” Johnson said. “So it is shocking (to) be accused of insensitivity on equity issues I have demonstrated I care about.”

About OBI

OBI inherited 1,700 members and an annual budget around $2.2 million from last year’s combination of Associated Oregon Industries and the Oregon Business Association.

In addition to its advocacy role in public policy, OBI offers its members access to health insurance and workers’ compensation programs designed to help small businesses tap insurance plans typically available only to large corporations.

OBI also inherited the schism that produced two competing business organizations in 2000. OBA formed as a “progressive” alternative to AOI, which dated to the 19th century. The organizations increasingly embodied Oregon’s urban-rural split, with OBA speaking for large Portland employers including Nike while AOI advocated for traditional industrial interests and outlying parts of the state.

Business leaders worked for years to heal that split and combine OBA and AOI. They hoped a single voice would be more effective in Salem, and that it would spare some members paying dues to two organizations. In practice, though, OBI has struggled to find its footing.

A homebuilder and school board member, Johnson had a reputation for reaching across the aisle at the Capitol. But he was not a thought leader in his caucus and had no experience running an organization of any size.

The upcoming election

Wednesday’s firing comes as Oregon heads into the May primaries, the fall campaign season and a 2019 legislative session that is already shaping up as a budgetary train wreck.

The group claims one of its priorities is heading off Democratic supermajorities by focusing on key legislative races. But with $188,000 on hand, its political action committee is underfunded, both in absolute terms and relative to smaller, more specialized business organizations.

Meanwhile, it is outsourcing its lobbying on critical issues, such as tax policy, to contractors. And it will be fielding a green team on other issues, such as the environment, in a session when Democrats are again determined to pass an expansive climate bill.

New at the helm

Oregon Business & Industry formed in the afterglow of the business lobby’s thrashing of Measure 97, a union-backed initiative on the 2016 ballot that threatened to raise corporate taxes by $3 billion a year.

But instead of capitalizing on that momentum, Johnson frayed relationships. In his first major policy pronouncement, denouncing Democrats’ climate change legislation as a California-style boondoggle that would hobble Oregon business, Johnson surprised some of his group’s liberal members.

Some 80 businesses have formed a new organization — the Oregon Business Alliance for Climate — that is supportive of the cap-and-trade legislation lawmakers were considering. They included many OBI members, such as Nike. OBI, meanwhile, has developed no viable alternative to offer legislators.  

As one of his first acts as CEO, Johnson installed his legislative campaign manager and chief of staff, Cassandra Hayt, as his right hand at OBI. Hayt had moved to Pennsylvania more than a year earlier, public records show.

But Johnson had flown her regularly to Salem, tapping his own campaign funds and the House leadership political action committee to cover her pay, airfare and her housing at a hotel near the Capitol, according to campaign finance records. Oregon allows lawmakers wide latitude in how they spend campaign funds.

Both Johnson and the trade group’s executive committee agreed he needed a chief operating officer to help manage membership services, which include the health insurance and worker’s comp programs.

Though she lived thousands of miles away in another state and had even less managerial experience than Johnson, he tried to slot Hayt into that role.

Parrish said he made it clear to Johnson that was an untenable situation: “This can’t work with her not moving.” Johnson, though, says Hayt came to that conclusion on her own.

So Hayt left within months of being hired, and the business group began a fresh search for a new COO. It’s also seeking a political director, membership director and potentially a communications chief after prior staffers left early in Johnson’s tenure.