Business News of Monday, 12 January 2015
Source: Graphic Online
Two independent members of the Board of Directors of HFC Bank have charged the bank to take appropriate actions with the Securities and Exchange Commission (SEC) on allegations of ‘insider trading’ by the Republic Bank of Trinidad and Tobago (RBTT) before the process of a mandatory takeover of HFC Bank proceeds.
This is to forestall any possible legal action against the directors of the bank on their duty of care and due diligence, because ‘insider trading’ is a criminal offence.
Mrs Muriel Edusei and Mr Francis Koranteng, the two non-executive independent directors whose removal from the board of HFC Bank the Social Security and National Insurance Trust (SSNIT) is pursuing, raised the above concern in separate statements over the weekend.
The statements were occasioned by a letter signed by the Director-General of SSNIT, Mr Ernest Thompson, and addressed to the Board Chairman of HFC Bank last October, expressing apprehension about the composition of the board.
Subsequently, SSNIT has requisitioned an Extraordinary General Meeting (EGM) of the bank to be held on Tuesday, January 20, 2015 to remove and replace the directors.
According to the statements, the EGM was necessitated by the desire of SSNIT and Republic Bank to have Professor Joshua Alabi, the SSNIT appointee, who also chairs the SSNIT board, appointed as chairman of the HFC Bank board, a position not backed by any law or the HFC Company regulations.
It is interesting to note that even though appointees of SSNIT had been on the board of HFC Bank since its inception, SSNIT did not have any problem with the composition of the board until a few months ago.
“Yet, no reason was assigned for the removal of the two directors, even though they deny any wrongdoing,” the statements noted.
They have, therefore, challenged SSNIT to tell the shareholders of the bank what aspects of the directors’ duties and responsibilities had been breached to necessitate their removal.
“It is the right of shareholders to appoint and remove directors. This right is unfortunately being abused by SSNIT. It is also the right of a director, especially an independent director, to dissociate her/himself from actions of any shareholders which could lead to criminal liability for the director.
“As you are well aware, it does not lie within the powers of the Board to remove directors appointed by you, shareholders,” the two said in their statements.
They claimed the move by SSNIT sought to prevent further requests for investigations into the alleged ‘insider trading’ against RBTT.
The statements explained that because directors carry civil and criminal liability for false statements, there was the need to be cautious and ensure that the allegation of ‘insider trading’ by Republic Bank was fully investigated and resolved.
There are issues of alleged ‘insider trading’, a criminal offence, against RBTT which became a court matter between HFC Bank and RBTT.
The Supreme Court recently upheld RBTT’s view that the complaint should first have been lodged with SEC and not at the court. That issue remains unresolved.
The statements, therefore, cautioned the HFC Bank board not to turn a blind eye in view of shareholder interest, noting that it is duty bound to establish the truth of this allegation.