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Ian Penny, who headed the NHLPA on an interim basis, alleges that 'very troubling issues' haunt the union. ((Bruce Bennett/Getty Images) )

Ian Penny is the first casualty of the infighting within the National Hockey League Players' Association since Paul Kelly was removed as its executive director two months ago.

Penny, who was named interim executive director after Kelly’s dismissal, resigned Friday. The NHLPA issued the following statement:

"Interim executive director Ian Penny informed the NHLPA staff and the NHLPA executive board earlier today that it is his position he has been constructively dismissed as interim executive director of the NHLPA and can no longer work in the present circumstances. Effective today, Ian Penny is no longer employed by the NHLPA.

"There have been inaccurate media reports circulating today that the NHLPA has suspended operations. The NHLPA staff continues to work very hard on behalf of the players in all areas of the association's business and will continue to do so going forward."

This latest episode in the saga of the players' union arrives a week after Penny delivered a detailed missive to the 30-player executive board, in which he stated he has "been constructively dismissed by the union."

In his lengthy email, Penny outlined what he felt were some "very troubling issues" that arose from actions taken by Chris Chelios, a thorn in the side of NHLPA's executive board since Kelly was ousted.

Chelios was one of the five executive members who supported Kelly when the board voted 22-5 to sack him in a Chicago meeting in late August. Penny alleged in his email that Chelios kept in close contact with Kelly after his dismissal.

"Shortly after Paul Kelly’s termination, Chelios and several other board members received a written communication from Kelly encouraging him to investigate me and other staff," Penny wrote.

"Since that time, Chelios has continued to communicate with Kelly. These contacts create the appearance that the review is being co-ordinated with Kelly and that the review will target certain staff, while steering clear of Kelly’s conduct and the conduct of his allies."

After Penny’s Oct. 23 email, a four-player committee of Chelios, Rob Blake, Nicklas Lidstrom and Mark Recchi delivered their own memo to players, outlining their mission to review all issues related to the Kelly firing as well as the NHLPA’s operations.

In this email, the review committee also indicated that it would hire a third party to help in the investigation and announced that the duties of the retired division reps, advisory board members and ombudsman Buzz Hargrove would be restricted. The four-player committee also suggested that they would seek immediate legal advice on whether or how to respond to Penny’s concerns.

There was speculation that a handful of advisory board members had resigned in the past few days, including the respected former player Steve Larmer. When reached on Friday, Larmer clearly wasn’t in the mood to discuss the recent developments.

"I don’t know. I haven’t been home yet," said Larmer, when asked if he has resigned. "Maybe at some point I will. We’ll see."

Accusations fly

The player executive voted to remove Kelly amid a variety of allegations, including an accusation that he read a transcript of an in-camera, private meeting among the executive wherein they discussed Kelly’s leadership. Kelly claimed he read the transcript to make sure the NHLPA constitution was followed because during that same meeting, Penny was given a five-year contract extension.

However, in a nine-page legal opinion from former Ontario chief justice Roy McMurtry, commissioned by the NHLPA, McMurtry wrote that Kelly "improperly obtained a full transcript of a confidential board meeting that excluded him; told the board he looked at only part of it but then informed colleagues he had read all of the contents, including discussions about his performance."

The McMurtry legal opinion caused a firestorm because he was an associate of disgraced former NHLPA executive director Alan Eagleson. Kelly served as the assistant U.S. district attorney who prosecuted Eagleson for mail fraud.

As a result of the NHLPA’s misstep with the hiring of McMurtry, Chelios revved up support to construct his review committee to examine the entire process surrounding Kelly’s dismissal.

McMurtry wrote that the "unravelling of Kelly’s tenure" began following a June 18 meeting in Las Vegas, when the player executive "approved a contract extension for Ian Penny as general counsel and discussed concerns over Kelly’s performance."

McMurtry continued that the "meeting transcript indicated members expressed  ‘considerable mistrust’ between Kelly, Penny and senior association staff," and matters "surfaced about a lack of preparation for negotiations for a new contract with the NHL and criticism over ‘structure’ in maximizing business revenues."

According to McMurtry’s report, Kelly also argued he "only read the first few pages to probe the issue of Penny’s contract." But McMurtry indicated "there would appear to be no doubt that the executive director read the entire transcript because he confirmed it in two emails" to NHLPA chief of business affairs Mike Ouellet.

After the McMurtry legal opinion was reported in the Toronto Star, Kelly’s lawyer James Hartley issued a statement that read, "Paul Kelly’s rights should be decided by a court or an arbitrator with no connection to the parties, not by a document leaked to the media. The people who ousted Paul seem not to understand basic notions of due process, which also include obtaining Paul’s side of the story."