Regulators take CCI, Webster to court

over questionable share transfer

Authorities have filed a legal action against Ronald Webster and Caribbean Containers Inc. (CCI) over the transfer of shares which reportedly give the businessman at least 85% control of that public company.

Ronald Webster

According to a Stock Exchange Bulletin on the website of the Guyana Association of Securities Companies and Intermediaries Inc (GASCI), the action is against Webster, CCI, Demerara Holdings Inc. and Technology Investments and Management Inc. (TIMI).
Demerara Holdings was reportedly the former overseas investor in the company.
“The claim seeks to set aside, among other things, the transfer of shares in Caribbean Container Inc. to Demerara Holdings Inc. and any benefits which may have flowed there from,” the website said.
GASCI is the company on the local stock exchange that organises and supervises the stock market in Guyana.
Webster is the current Chairman of the Private Sector Commission (PSC), one of the most vocal business advocacy bodies in the country. He is the former Chairman of
CCI, which is located at Farm, East Bank of Demerara, and manufactures corrugated packages for a number of clients, including the rum-producing companies.
The issue of the share transfer came to light last year when Chartered Accountant, Christopher Ram, who also hosts a business blog, flagged what he described as a strange transaction.
Regarding the transfer of shares, Ram said that common law and the Company’s Act have strict rules and sanctions regulating gains from one’s office as a director. He urged the Securities Council to move quickly to have the matter of the share transfer addressed.
According to the accountant, from information gleaned from CCI’s financials, the shareholders of TIMI were Colin Wiltshire, a former director of CCI who has since died, and Webster.
In late December 2012, records indicate that 600 class “A” shares valued at $5,618,000 were issued to one Patricia Bacchus in consideration “for past services. Ms. Bacchus joined the company as a Consultant in September 2006, became Company Secretary in 2007, and was later appointed Director of Administration and Chief Operating Officer.”
Since its incorporation on January 16, 2004, Ram said that TIMI carried on absolutely no business, not even management services to CCI, with which it shares common officers.

Patricia Bacchus

With the exception of Bacchus, no shares were ever issued to any managers of TIMI or CCI or indeed to anyone else.
“It is noted that at the time of the purported buyout the management team of CCI consisted of ten persons including two executive directors other than Mr. Webster. Yet in that purported management buyout, the records show that Webster issued shares only to himself.”
TIMI had acquired the 85.31% of the shares in CCI from Rand-Whitney Caribbean under a right to purchase arrangement.
The audited financial statements of TIMI indicate the share purchase at the cost of $300,000 or US$1,500 for the 100% shareholding in Demerara Holdings Inc.
According to Ram: “Having paid $442,000 for his shares in TIMI, Mr. Webster gained an 85.31% controlling interest in CCI.  At a current stock market price of CCI’s shares of $10, Mr. Webster’s investment is worth more than $1.25 billion!”
Public records revealed that accounts and reports of the auditors for the year 2004 –2010 were approved by the two shareholders of TIMI – Webster and Bacchus – on January 24, 2012.
“On its incorporation, the registered office of TIMI was at the residence of Mr. Ron Webster but later moved to the chambers of Hughes, Fields and Stoby, who are also the attorneys for CCI.”
Ram also noted that while paid officers of CCI, Webster and Wiltshire, or at least one of them – Webster – was engaged in negotiations with banks in which he was a “major beneficiary. In corporate law this is considered a breach of fiduciary obligation to CCI which subjects the fiduciary to the highest burdens of fair dealing beyond those of all persons engaging in contractual dealings.”
Ram argued that the duty of fiduciaries to refrain from benefitting from corporate opportunities – such as a share-buyback – is well established in law. He also made it clear that despite the overwhelming control of CCI by Webster, it remains a public company.
“Such companies must pay not only lip service to corporate governance: they must observe and practice it. Non-executive directors, who have no lesser fiduciary duties than executive directors and officers, must be prepared to take the lead.”