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.
According to them, 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 is being pursued by SSNIT, 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 for 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 has been necessitated by the desire of SSNIT and Republic Bank to have Prof. Joshua Alabi, the SSNIT appointee, who also happens to be the chairman of the SSNIT board, appointed as chairman of the HFC Bank board; a position not backed by any law or the HFC Company regulations.
They noted that even though appointees of SSNIT had been on the board of HFC Bank since its inception, SSNIT did not appear to have had 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 wrong doing, 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 him/herself from actions by 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”.
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.
They said while the Republic Bank was desperate not to have the insider trading allegation against them investigated, their moves, with the collaboration of SSNIT, to remove the two directors from the board was “indeed puzzling”.
“This ‘sword of Damocles’ was a clear act to intimidate directors to vote for the SSNIT appointee”, stated Mrs. Edusei.
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, it is duty bound to establish the truth of this allegation.