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FBO Function

August 19, 2008

Last Revised:  May 23, 2012 4:50 PM

This Company Policy covers the functions of the "FBO" (the "Flag Banking Officer"). This term relates to the system where Mr. L. Ron Hubbard took on a Naval status of Commodore and, for some time, lived on a ship at sea.

Mr. Hubbard had a long history of service at sea, including as a Naval Officer, and Commander of a Navy vessel during WWII as well as many other non-military sailing expeditions.

Traditionally, the ship where the top Naval Officer in the Fleet has his post is called "Flag" as it would fly a distinctive flag to indicate that the top Naval person was aboard (it could be an Admiral, or other rank. Mr. Hubbard used the rank of Commodore). If the Commodore left his usual ship to visit another, the Flag went also -- the other ship then IS Flag.

The "Flag Banking Officer" was the person with responsibilities for finance and treasury, but took that responsibility from the position of "Flag" while other staff members, for instance, the "Treasury Secretary" would be the head of Division 3, Treasury in a local organization.

Typically, the local executive, the Treasury Secretary, would have the authority to WRITE a check on the local bank account, but NOT the authority to SIGN that check. SIGNATURE AUTHORITY resided with the FBO assigned to that local organization.

There is a tremendous amount of the Hubbard Management System which describes the duties and responsibilities of the FBO. As Karl Loren moves further away from the management of day-to-day operations of Vibrant Life, he will assume the position and responsibility of FBO for Vibrant Life.

This Company Policy describes some of those duties and responsibilities and how they relate to the VL Staff, particularly the Treasury Secretary and the Financial Planning Committee and its activities.

We have not done it much in the past, but Vibrant Life will now, increasingly, operate with weekly Financial Planning at which various executives present their projects for spending Company cash for the purpose of increasing income.

The results of the Financial Planning meeting are then verified by the Treasurer as adequate to meet the necessities of org operation (FP No. 1) and submits that FP to the FBO.

The FBO on his own discretion then transfers to that org's Main Account the needed funds. This is the ALLOCATION.

From this Main Account the org now further transfers funds to its other accounts.

Any reserves being built by the org are taken from the allocation.

The management of the allocation remains with the org.

The judgment of the FBO, based on the org's expected income as stated in the FP, and on the FP submitted, as to what amount the FBO allocates is entirely up to the FBO and is not subject to appeal. The FBO must make his experienced allowances for down periods and for the actual production of final valuable products of the org.

. . .

The sums and accounts of the FBO are solely under the control of the FBO. Allocated sums for the org are under the org's control.

Funds requested by an org FP from the FBO's accounts must be applied to that use or refunded to the FBO if not so used.

. . .

The solvency of the orgs and areas is the responsibility of the FBO.

The FBO's statistics consist of cash paid in to central reserves and the allocation production ratio of each org and of the area.

Central reserves are used for defenses and management overall cost and viability.

Org reserves are used for local emergencies or periods of down stats or large acquisitions to increase production.

L. Ron Hubbard

Source: HCO PL 29 January 1971RA, Revised 2 February 1991, FLAG BANKING OFFICERS, Page 419, Mgt. Series 3.

And this further guidance:

A monitoring point in the FBO's judgment is how much to give the org for its FP is how much is the org delivering.

The FP should really not be more than the org's VSD. VSD is a reflection of how much the org is delivering.

If the org's VSD is high, and high consistently, then the org is in good shape and will probably continue to be in good shape and worth investing into. It is worth it to the FBO to invest his beans into such an org.

If the org's VSD is low and consistently low, then the org is in poor shape and likely to be in worse shape. Putting beans into such an area is not a good investment for the FBO.

The FBO must not let the org run on unearned income, and income collected on which service is undelivered is really unearned income. The org hasn't really earned it, the org merely collected it.

. . . .

It is not important if this week it spent a little more than its VSD as long as next week it spends a little less. An org must not be permitted to spend ON AN AVERAGE more than its level of delivery.

This is a point of FBO judgment. His adjudication is "Is this org running consistently on more than the dollar value of what it is delivering?" If so, that org is going to starve. "Is this org running consistently on less than the dollar value it is delivering?" If so, then that org is in good shape, and there will be coffee and cakes for all.

L. Ron Hubbard

Source: HCO PL 17 March 1982, FBO FP ADJUDICATION, Page 487, Mgt. Series 3.

At Vibrant Life, starting within a week from the date of this Company Policy, all credit card receipts will be deposited into a Wells Fargo Account in Nevada.

Cash, checks or any other form of income received in any way (mail, walk-in or other) must be deposited into the local Cal Nat account during the week so that, by Monday, all such shows up in the Cal Nat main account.

The cash (and other) deposited in Cal Nat, plus the deposits into the Wells Fargo (Nevada) will constitute the Gross Income of the Company for the week ending Friday, close of business. The GI will be based on what is actually in those accounts (when viewed online) on each Monday morning. (An approximation can be seen on any earlier day.)

(Karl Loren, acting as FBO, will have online banking access to all accounts and will see on each Monday morning (depending on banking days) and report to the Treasury Secretary, the total (from both accounts) as the GI for the Company. )

Karl, as FBO, following the Policy excerpted above from the Hubbard Management System, must have received by eMail the FP for the week -- must receive this not later than 6 PM, Friday nights.

He will return any items not properly done, but choose from the properly done items an ALLOCATION for the Company.

He will transfer, via electronic one-day deposit, the amount of money from the Wells Fargo Account into the Cal Nat account so that the cash that had been deposited into the Cal Nat account in the previous week, plus the transfer is equal to the total ALLOCATION for that week.

Until an ED is appointed and is no longer an ED I/T, Karl Loren will be the ED as well as the FBO.

When an ED is fully posted, no longer I/T, he may be the only person on the VL Staff to have check signing authority, or if a competent Treasury Secretary is on post, that person could also have check signing authority.

There is a possible interim stage when the ED I/T and or some other person would have authority within the Cal Nat accounts, to WRITE a check but NOT TO APPROVE it for disbursement. (Cal Nat is well set up to allow such differential permissions. If this interim step is in place, then an ED I/T could access the Cal Nat account to WRITE a check, but not disburse it, and Karl Loren would access the same account with "disbursement authority" to approve electronic payments as meet the ALLOCATION criteria.)

Eventually, the Company will exercise full control over all of the Allocation cash transferred to it each week.

The FBO will deduct from the available GI each week those sums set up for transfers to reserves of various types, license fees and retirement income to Karl and Jean.

The statistic for which the FBO is responsible includes the "allocation production ratio."

The concept here is that the FBO makes the decisions on where to spend the money taken in as GI by the Company. If those decisions are well made, they result in increased production (measured in VSD).

Thus, if the "allocation for one week is $15,000 (transferred to the Company checking account) and the production (VSD) of the Company for the just-past week was $25,000, the ratio is $15,000 divided by $25,000, or 60% ratio. The lower is this ratio then the lower is the amount of money needed to generate dollars of income. (For instance, when the allocation is $15,000 and the VSD is $45,000 for that week, the ratio would be $15,000 divided by $45,000, or 30%. Since the same allocation ($15,000) brought in $45,000 instead of $30,000, the ratio got smaller -- from 60% to 30%. The FBO, with a statistic that stays low and goes lower would be seen as exercising good judgment at allocating funds to projects which increase production well.

The FBO will also be transferring money from GI to reserves and retirement pay, but these amounts will remain stable. Thus, the amount actually transferred as the Allocation will be a fairly constant part of the tonal GI, and the Allocation Amount will rise and fall depending on the GI of the Company.

When the GI falls, the allocation will transfer a larger relative amount of money to reserves and retirement -- meaning the allocation for operations may now cover FP No.1, but not as much as management had submitted projects for.

The reverse is also true. When the Company gets a big bang for the buck spent, the next week they will receive a larger percentage of the GI to continue the successful actions of the past.

The Hubbard Management System rewards UP statistics and penalizes DOWN statistics. The Proportionate Pay Plan does the same thing for the individual Staff Member. 

Quotes from L. Ron Hubbard are copyright 1994 © by the L. Ron Hubbard Library. All rights reserved.