More details emerge in Access row
James denies going on spending spree
THE legal battle between majority shareholder and CEO of Access Financial Services, Marcus James, and company directors Christopher Berry, Gary Peart and Brian Goldson is set to be a landmark case for how effective governance is adhered to in corporate Jamaica.
In affidavits seen by Sunday Finance, the chairman of Access Financial Services, Goldson, and other defendants, Berry, Peart and Mayberry West Indies Limited, contend that James failed to explain the unexpected downturn in the company's fourth-quarter result (2013) and offered no cogent analysis or plan for addressing the matter.
Such behaviour, they deemed unbecoming of a CEO and warranted disciplinary action and possible dismissal.
Speaking with Sunday Finance last Friday evening, James countered that he had in fact furnished an explanation to the board and was not derelict in his duties as CEO of the company.
He further pointed out that for the quarter in question, Access Financial Services had posted a profit of $70 million which, though down from the corresponding quarter in the previous year, was nevertheless not bad given the downturn the Jamaican economy is currently experiencing.
"For the financial year ended 2013 we made a profit of $270 million, which was 14 per cent higher than 2012. OK, we had one bad quarter, but that does not warrant firing the CEO. Access has consistently performed well over the last 14 years," James said.
Another charge levelled at James is that he failed to obtain board approval for capital expenditure associated with renovation of Access' Half-Way-Tree branch. The defendants have said that records show that without authorisation from the board, James caused to be paid out of Access' funds close to $24 million in excess of the budget on the renovations. Also, he never submitted to the board any capital expenditure forms for the first quarter of 2013, the defendants said.
The troika of board members looking to oust James as CEO also claim that the said renovations benefited the landlord of the
premises which is a company owned by James' parents.
As far as the three directors are concerned, James placed himself in a position where his personal interests conflicted with those of the company and that he obtained a secret profit in breach of his fiduciary duty.
But James responded by saying that the directors always knew that his parents owned the building and that as the company expanded, the building was in need of extensive renovation. He said he did not go on a wanton spending spree in renovating the premises but judiciously set about turning the branch into premises befitting a company that is still enjoying an upward trajectory.
A source close to the defendants' claim said: "This is not an attempt to summarily dismiss James from a company he founded, but as CEO he must be held to certain standards, including those of corporate governance. Access Financial Services is a listed company and transparency is all-important. He can still be a director and a shareholder and he can still receive dividends but cannot be allowed to continue in his present capacity. He has not proven to be an effective CEO.
"Any CEO is accountable to the board and shareholders and his or her performance can be questioned accordingly. A CEO does not have the right to act with impunity or unilaterally. There is no attempt here to surreptitiously take over the company, rather it would auger well for all if the CEO adhered to corporate governance."
But James, in response, countered: "I do adhere to corporate governance, and that is why I say to you, a CEO must always answer questions posed by the board, but when placed in the context of charges which are not ratified by the board, then that is an altogether different situation.
"The fact remains that on April 2nd, the three directors in question tried to ratify a resolution to oust me as CEO. On April 4th, I successfully secured an interim injunction preventing them from doing so. The defendants then held a subsequent meeting on April 7th. Now, bear in mind that the chairman, Brian Goldson, wrote to me on March 19th, outlining charges that were not ratified," James said.
"I need not labour the point that accusations and claims are not the same as ratified charges. These are not bona fide actions that the company has taken against me. I still remain CEO of Access Financial Services and its majority shareholder. I fully intend on remaining CEO of the company I founded in 2000," James added.
James was granted an interim injunction on April 9 to preserve the status quo pending a hearing on April 23. This means that the three defendants cannot pass resolutions that interfere with James' role as CEO of Access.