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Kent LaCroix under pressure

Auto dealers accuse ADA chairman of bias towards Stewart’s Automotive Group, his employer

Friday, August 15, 2014    

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THE driver's seat of the usually no-drama Automobile Dealers Association (ADA) has suddenly become hot for 11-term chairman Kent LaCroix.

A revolt by two of the largest members of the ADA over claims that LaCroix is showing bias towards the company he works for — Stewart's Automotive Group — has provided the chairman his biggest test to date and the possibility of a leadership challenge, the first since LaCroix took the reins in 2003.

ATL Automotive and Kingston Industrial Garage (KIG) are angry that the logo of the Automobile Dealers Association, the umbrella organisation for new car dealers, was appended to a newspaper advertisement in January this year which purported to show unverified sales figures that suggested Stewart's Automotive was top of the heap, effectively pitting one member against another.

The two dealers questioned the veracity of the figures and accused the ADA chairman of complicity with Stewart's Automotive, where he is group special projects manager.

LaCroix further angered his members by allegedly ignoring their request for an audit of the sales figures, despite an offer by ATL Automotive to pay for the audit to prevent it being a burden on the association.

"Those figures were put out with the blessing of the association as indicated by the use of the logo, thereby pitting one dealer against another, which is a breach of the ADA rules of engagement," said attorney Harold Brady, speaking for United Motors Limited which owns KIG and Cars and Commercials whose principal is Jeffery Panton.

"ADA, if necessary, should act as an arbiter between competitors, not in favour of any one. That advertisement favours the company for which he (LaCroix) works. That's a clear conflict," Brady insisted.

Trevor Patterson, attorney-at-law, who represents ATL Automotive -- dealers for Honda, Audi, Volkswagen and Land Rover Jaguar -- said his client was suspicious of the figures used in the advertisement as they did not "add up".

"Based on the figures which were given out in the previous months by members, those end-of-year numbers endorsed by the ADA raise concern as to their credibility. We wrote to ADA querying the figures and proposing an independent audit by any one of the leading accounting firms in Jamaica. Our clients have even offered to pay for the audit, but the association has ignored both the request for the audit and our client's offer to bear the cost," Patterson complained.

Patterson further remarked that "members of the association have a legitimate expectation that the ADA would act impartially in the interest of all members, and the conduct of the ADA under the leadership of Mr LaCroix is a violation of his clients' membership rights".

He said that his clients were prepared to take legal action against the ADA and LaCroix for breach of fiduciary duties and tortuous damage to their business.

The dispute is being fanned by the belief of the dissenting members that under LaCroix, ADA's seven-member board is controlled by Stewart's Automotive Group. Each company is entitled to one director, but Stewart's, they said, had managed to get an additional director through their Mitsubishi brand, which was not a company.

The ADA board of directors comprises LaCroix and Duncan Stewart of Stewart's Automotive; Danville Walker of ATL Automotive; Nigel Pagon of GM Challenger Transport Company; Gregory Webster of Fidelity Motors (Nissan); Tom Connor of Toyota, and Michael Adam of Kingston Industrial Agencies.

"Our company -- United Motors -- has two brands, but when we tried recently to have another director, we were told by ADA that we could not. ATL has four brands but could not get any more directors," Brady told the Jamaica Observer.

"The Articles of Association say members should have dealership agreements with a manufacturer. Stewart's is a company which has dealership agreements for, say, Mercedes Benz and Mitsubishi. You can't divide up yourself into Benz and Mitsubishi for purposes of getting more members unless they are owned by separate entities.

"Let us not forget that under law, a person is either a natural person or a company. We wrote to the ADA board to request that the issue be sorted out at the Annual General Meeting but this has not been done. It's clear the decisions are being taken in Stewart's' favour," said Brady. "The board should be a broad-based one representing all members. They are operating as if it is their private fiefdom."

Asked for his response to the charges, LaCroix declined to speak to the Observer on grounds that "this is an internal matter". However, he referred the reporter to ADA lawyer Roderick Gordon of Gordon McGrath.

When contacted, Gordon said it was his sense that the association preferred to treat the matter as an internal one that could have been resolved by the members. However, he confirmed that his firm had been retained by the ADA in January 2014 to handle the issues on its behalf, as the dissenting companies had also "lawyered up".

He said he had been in dialogue with ATL Automotive and KIG, hoping to help bring the outstanding issues to a resolution. "We really want to make all the members comfortable with their association," he told the Observer.

Queried about the use of the ADA logo in an advertisement, Gordon said historically all members had the ability to use the logo in their advertisement. He insisted that the ADA did not place the ad and could not tell members what to say in their ads. But he conceded that there was need to have new guidelines governing the use of the logo by members.

On the question of Stewart's Automotive being allowed an unfair advantage in membership in ADA based on the Mitsubishi brand, Gordon said he was also not aware of any application to join the ADA that was refused, and "I do not have a sense that anyone is being locked out". He said if members believed that there needed to be changes to the Articles of Incorporation governing membership, it was a matter that could be pursued at the AGM.

"We would love to see this issue resolved in the spirit of membership in an organisation that is there to serve everyone," he added.

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