Latest update December 12th, 2024 1:00 AM
May 22, 2014 News
The National Industrial and Commercial Investments Limited (NICIL), headed by Winston Brassington, is accusing Chairman and Managing Director of Guyana Stockfeeds Inc. (GSI), Robert Badal, of misleading shareholders at the stockfeed company’s last Annual General Meeting (AGM) as it relates to dividends to be paid.
Brassington by way of a public missive on Tuesday said that at the conclusion of the company’s AGM held at the Pegasus Hotel on Friday last, Badal introduced a handwritten “statement” to the meeting attacking the Securities Council. The statement was read out to the shareholders by Priya Nauth-Badal, Company Secretary.
Badal then asked the shareholders to endorse the “statement” by a show of hands.
Brassington claims that the “statement” was not, however, made available to the shareholders and its presentation to the meeting for endorsement, was contrary to the provisions set out in Articles 112 of the Companies Act governing the conduct of the meeting.
The “statement” was released to the media and published last Sunday demanding the resignation of Chief Executive Officer (CEO), Cheryl Ibbott, and Legal Officer, Shawn Allicock, of the Guyana Securities Council.
GSI had been castigated by the Securities Council in a Public Advisory for allegedly misleading its shareholders by claiming, in its Interim Financial Report published for January to June 2013 that it had paid shareholders dividends amounting to $80,285,557, when, in fact, the company had not paid the dividends.
According to Brassington, “The truth is that, in 2008, the Court ruled in favour of an action brought by NICIL against Mr.Badal’s attempt to unlawfully reduce the Government of Guyana’s shares in Stockfeeds from 38 per cent to seven per cent by means of an illegal Rights Issue.
This move was giving Mr. Badal almost 80 per cent ownership of the company, under the guise of raising capital for the construction of a wharf, illegally on and through NICIL’s land.”
NICIL said that Badal, rather than restore the government’s shareholding as ordered by the Court, appealed the decision which is still to be determined.
“Badal, however, improperly declared in his 2013 Interim Report that dividends of $80M were paid and, as a result, mislead the shareholders prompting the Advisory by the Securities Council.”
According to Brassington, the Court, in fact, ruled that the business affairs of Stockfeeds were being carried out oppressively, that the company had not complied with the Companies Act and that the Rights Issue was illegal, null and void and issued an order restraining any further issuance of shares or increase in the defendant’s shareholding or any changes to the share register of the company.
“NICIL’s challenge to the declaration and payment of the $80M dividend for the year 2012 was based on the prevailing ruling of the Court effectively preventing the payment of dividends on a share record that was based on an illegal Rights Issue which is still to be determined by the Court.”
Brassington said that Badal’s reaction to the challenge was to threaten to have NICIL’s representative forcibly removed from the 2013 meeting and to become abusive. He, Badal, informed the 2013 AGM that he intended to pay the dividends immediately and that no Court could stop him.
“The payout would have, of course, resulted in Badal receiving 80 per cent of the $80M payout…At the most recent 2014 AGM, as we have pointed out above, Badal misrepresented the foundation for the Court’s ruling restraining the payout of dividends and was openly critical of the Court.”
NICIL’s statement, claimed, too, that there are other questionable arrangements with regard to the management of Stockfeeds which its Chairman and Managing Director may wish to explain especially which, “in other jurisdictions” may have led to his resignation/removal as Chairman and Managing Director.”
NICIL stated too that Guyana Stockfeeds, for instance, each year, purchases billions of dollars in goods and services from a company called Guyana Stockfeeds Inc. created in Trinidad and Tobago by Badal.
“The Trinidad and Tobago company is not, however, as one would expect, a subsidiary of Guyana Stockfeeds in Guyana…It is solely owned by Badal who directly profits from the sale of these goods and services from Guyana Stockfeeds Inc. in Trinidad and Tobago to Guyana Stockfeeds Inc. in Guyana.”
The NICIL statement used as example, payments made from GSI (Guyana) to GSI (Trinidad & Tobago) for goods and services (that can be done by GSI/Guyana directly) amounting to $909.9M in 2010; $852M in 2011; $771M in 2012; and $1.3B in 2013.
“To add insult to injury, GSI (Guyana) paid Badal’s GSI (Trinidad & Tobago) management fees of $30M per annum for the last 5 years and in 2013 paid for all operating costs of maintaining GSI (Trinidad & Tobago) amounting to $52.3M…
“The proceeds from these transactions are pocketed by Badal.”
Brassington also pointed to the case of Badal’s disposal of the Popeye’s franchise ownership.
“Badal, as the sole shareholder of El Dorado Restaurants Inc., sold the Popeye’s franchise to Guyana Stockfeeds Inc. in 2007 for $123M. Some three years later, however, in 2010, Badal was offered a higher price for the Popeye’s franchise than the price he sold it for to Stockfeeds in 2007.”
According to Brassington, “Instead of Stockfeeds shareholders profiting from the new offer for the Popeye’s franchise, Badal promptly rescinded the 2007 sale of the franchise from El Dorado Restaurants Inc. to Stockfeeds, pocketing the profit from the sale as the sole shareholder of El Dorado Restaurants Inc.”
Brassington added, “When this extraordinary financial sleight of hand by Badal was challenged by NICIL’s representatives at the Stockfeeds 2011 AGM, Badal offered the specious explanation that Stockfeeds had not paid El Dorado Restaurants even though Stockfeeds cash at bank was in excess of $304M at the time he reversed the sale.”
Brassington claims, too, that another transaction that invites explanation regarding Badal’s stewardship as Chairman and Managing Director of GSI relate to his El Dorado Trading Company Ltd and National Edible Oils and Fats Inc (NEOFI) which purchased 4.2 acres of land at Farm from GPC and Government in 1997 for US$540,000.
“On NEOFI’s failure to complete payments, on 10th April 2002, NEOFI (owned by Badal) assigned its rights, interests and obligations in the Agreement of sale for the land to GSI…In 2003, GSI issued a letter of Guarantee paying for the land and in 2003 the property was transferred to GSI.”
Brassington claims that in the 2013 Annual Report, land disposal totalling $178M and equipment valued at $35M and sold for $139M were recorded without any notes or explanations.
“Verbal indications revealed that Badal recorded and exited the property from GSI to himself.”
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