McPherse Thompson, Assistant Financial News EditorGRACE, KENNEDY & Company said breaches of trust committed when the Kingston Port Workers Superannuation Fund bought shares in Kingston Wharves a few months ago, have not been remedied by the resignation of four trustees and the subsequent appointment of four others last week.
"The fact that they have resigned and appointed four others does not remedy the breaches of trust," said Douglas Orane, chairman and chief executive officer of Grace, Kennedy, which manages Kingston Wharves. "The only way to remedy the breaches is not to vote the Fund's shares on February 18," he said.
KEY DETERMINANT
It has emerged that the Port Workers Superannuation Fund will become a key determinant in the composition of Kingston Wharves' board when shareholders vote at an extraordinary general meeting on Tuesday, February 18.
Three shareholders of Kingston Wharves - the Shipping Association of Jamaica Property, Maritime and Transport Services, and Transocean Shipping - have formed themselves into a consortium and requested the meeting to remove eight of the current Grace, Kennedy-controlled board members and replacing them with eight others.
Grace, Kennedy is still the single largest shareholder in Kingston Wharves, with a 43 per cent stake.
However, in September 2002, a consortium of shipping interests and pension fund managers, including the Port Workers Superannuation Fund, bought Lascelles de Mercado's 200 million shares in Kingston Wharves, taking their combined holding to about 49 per cent. It was thereafter that the consortium requested the extraordinary general meeting.
According to Mr. Orane, the first breach of trust was committed when the Port Workers Superannuation Fund was used to buy the Kingston Wharves shares on the ground that it was a good investment, but without disclosing to all the pension scheme trustees that it was part of a consortium.
Secondly, Mr. Orane said, there was a lack of disclosure to all the trustees that the consortium would be used to change the existing Kingston Wharves board.
However, contacted on Friday, Lance Hylton, the attorney representing the consortium, said "all of that is denied." He said the Port Workers Superannuation Fund was not part of a consortium and that the trustees had agreed to buy the shares because they considered it to be a good investment. "Kingston Wharves is a good company and everybody who can get their hands on those shares buys them," Mr. Hylton said.
Grace, Kennedy has been seeking to block trustees from voting the 15.7 per cent of shares held by the Superannuation Fund in Kingston wharves at the meeting on Tuesday.
It is also seeking to dissuade the Shipping Association of Jamaica (SAJ), of which Grace, Kennedy is a member, from voting its 15 per cent holding in Kingston Wharves, on the ground that it should remain objective.
And, in a letter sent to Grace, Kennedy staff last week, Mr. Orane said negotiations started with the consortium in late January fell through last week.
That was primarily because three stevedoring companies, which filed suit in the Supreme Court against Grace, Kennedy, declined to have the matter adjourned as part of an agreement.
The stevedores, which Charles Johnston represents, brought the action after Grace, Kennedy determined they would no longer be allowed to provide stevedoring services at Kingston Wharves.
WORK TOGETHER
Mr. Orane also told his staff that "We had worked day and night at negotiating with the consortium to come to an amicable resolution." In addition, there was an agreement that an interim board would be constituted of eight directors - four from each side.
During the interim period, "We would work together to find a new way forward for Kingston Wharves. In the spirit of finding a resolution to this issue, Grace, Kennedy offered to give up the management contract when it expires in August of this year, offered for sale to the consortium its shares in Kingston Wharves Ltd., and also its shares or assets of Port Services Ltd., so that others could chart a new course for port terminal operations."
According to the Grace, Kennedy CEO, "We thought we had an agreement on Monday morning (February 10). I went to the Supreme Court myself to determine why the litigation by the stevedoring companies had not been adjourned, and was told that they had decided not to adjourn their court cases.
"In an effort to explore every option for an amicable resolution, I met with Charlie Johnston on Monday afternoon, and he confirmed that they had decided not to adjourn the cases because they wanted a court decision. This position has therefore unfortunately caused the agreement not to come into effect. As a result, we have no alternative but to prepare ourselves for the Kingston Wharves extraordinary general meeting for next week Tuesday, February 18, so as to protect our rights."
He said that "As new events unfold, I will keep in touch with you. If you are a Kingston Wharves shareholder, please come out and vote on Tuesday. Encourage shareholders you know to do the same, as we demonstrate that we believe in fairness, transparency and justice."
According to correspondence obtained by Sunday Business, the agreement between Grace, Kennedy and the minority shareholders had called for a special board meeting of Kingston Wharves to be held by last Thursday, February 12. At that meeting, eight of the existing 12 directors who had offered to step down in the interest of Kingston Wharves were to have resigned, and four new directors nominated by the minority group were to be appointed to the board.
Those offering to step down were: Christopher Bovell, St. Clair Shirley, Mark Golding, O.K. Melhado, John Allgrove, Paul Edwards, Peter Bitter and Anthony Chang. Those nominated by the minority shareholders to the board were: Charles Johnston, Kim Clarke, Grantley Stephenson and Harry Maragh, all of whom have also been proposed for election at the upcoming extraordinary general meeting.
In responding, the consortium's attorney, Mr. Hylton, said the lawyers in the stevedores case failed to agree to an adjournment of the action in the Supreme Court because the trial had already been under way for several days, and there was no guarantee that Grace would have withdrawn eviction notices served on the stevedores.
