Following disagreements with now resigned Guyana Water Inc (GWI) Chairman, Nigel Hinds over a range of issues including the ownership of a well at the Queens Atlantic complex, Chief Executive Officer Richard Van West-Charles sought and received a legal opinion that appeared to strengthen his position.
Sources close to Van West-Charles told Stabroek News that the CEO felt that the Chairman was operating as if he was an Executive Chairman and needed to “draw the line” to distinguish both his and Hinds’ roles.
The situation was exacerbated when according to sources, Hinds stepped in to stop GWI from repossessing a well located in the Queens Atlantic compound, the former Sanata Textiles at Industrial Site, Ruimveldt. The latter complex was sold, amid much controversy during the Bharrat Jagdeo presidency to the Ramroop group.
The opinion dated September 12th from Satram and Satram noted that it had been requested to “advise on the scope and extent of the powers conferred by the Companies Act, 1991 and the By-Laws of GWI on the Board of Directors of GWI and particularly on its Chairman and Managing Director. Our advice is based on the By-Laws of the 14th October 2012”.
The GWI Chairman resigned from the post last Friday, while saying that he could not perform in the best interest of the company as a “rubber stamp.” His resignation, effective from October 26, 2016 follows ongoing issues with Van West-Charles.
“The faith and confidence you have placed in me to perform the duties of Chairman is greatly appreciated and I have endeavoured over the last year to carry out the functions of the Board Chairman to the best of my ability,” he wrote to Minister of Communities Ronald Bulkan.
“However, I cannot perform in the best interest of GWI, GWI staff, GWI shareholders and other stakeholders of GWI – as a rubber stamp Chairman of GWI. Thus, my resignation,” he added.
Stabroek News had been told that Hinds had wanted a motion to be moved by the board to recommend to Bulkan that the CEO be sent on administrative leave, pending an investigation into complaints made against him by senior staff. The motion was later amended to having the affected senior staff be given a hearing before any decision is taken.
This newspaper was told that the board, which had reportedly launched an investigation into the CEO’s actions, was unable to take any disciplinary action against him and even if it were, there are some members who would be against such a course of action.
Stabroek News was told that the matter had reached the level of Cabinet and that a sub-committee was set up to meet with the board chair and the CEO. This would have been after a number of complaints would have been handed over to Minister Bulkan and others from senior managers at GWI.
‘General Powers’
But according to the source, Van West-Charles also complained bitterly about Hinds’ attitude and his intervention into the Sanata Well issue and on salary scales of employees of the entity which prompted his seeking legal advice.
“A decision of the chairman publicly conceding ownership of a well, apparently owned by the company, in some other entity may not have been in the best interest of the company and was beyond the scope of his authority as an individual director. An individual decision by the chairman to reclassify the debt of the company also presents the same difficulty,” the legal opinion from Satram and Satram stated.
“The same problem arises in respect of the fixing of the salaries of employees of the company. These decisions cannot be taken by an individual director unless he is so authorized by the Board. A representative of the shareholder cannot strictly speaking give instructions to employees of the company. Such directions may be given by the Board of Directors acting collectively or by some committee or director thereof duly authorized by the Board of Directors. The Board of Directors exercise an independent decision making power conferred on them by section 59 of the Act,” it adds.
The general powers of the directors of a company were also addressed. The opinion stated that the directors are empowered to direct the management of the business and affairs of the company and are generally appointed by the shareholders of the company.
“Once elected, they are under a duty to act in the best interest of the company when exercising their powers (section 96(1) of the Act). They are also obliged to discharge their duties with reasonable care, diligence and skill. The powers of the directors are collectively given to them. The board of directors collectively exercise an independent power of management. Their powers are not subject to the dictates of shareholders. This is because the directors’ power is original and not delegated,” the document reads.
Further, it adds “They exercise their powers for the benefit of the company. The duty to act in the best interest of the company is an individual duty. The statutory power to manage the affairs of the company is a collective one. The powers of the board are not given to individual directors but to the board as a unit. The board acts collectively. The board of directors operates through meetings and resolutions. Decisions of the directors can only be taken at a properly constituted board meeting. Decisions made outside of meetings and by individual directors are not properly decisions of the board and may not be binding on the company.”
The CEO was also told that the powers of the board to manage the affairs and business of the company may be restricted by the By-Laws of the company. “By sections 3.04 and 3.05 of the GWI By-Laws it appears that both the chairman and the managing director are members of the board of directors. These two directors may be vested with special powers and duties which the board may confer upon them (see 3.04 and 3.06 of the By-Laws). They may exercise powers of the board only to the extent that they are authorized to do so by the board. The board is expressly authorized to confer any of its powers on the managing director subject to such conditions and restrictions as it thinks fit,” the legal opinion explains.
“I do not think this will be the first or last time you find Chairmen and CEOs at loggerheads. Members of Boards need to get acquainted with the laws. They owe the people they represent that much,” an attorney told Stabroek News.
