Sunday, February 18, 2018

Handsome fees for legal services


Several concerns were raised by the directors of Lake Asphalt of Trinidad and Tobago at board meetings held within the last year. Some of these pointed to a clear breach of Lake Asphalt's procurement policy, as well as contracts which were compromising.

But in the midst of these concerns, the board continued to agree to handsome payments for legal services.

The company outsourced the bulk of its legal work to Devesh Maharaj and Associates since September 2011. At that time, Lake Asphalt also paid for one of Maharaj's employees—Richelle Lyman—to act as the company's corporate secretary at a salary of $17,250. She acted for seven months before she was hired as the company's corporate secretary with perks allotted to an executive for the firm.

At the seventh meeting of the board of directors—held on October 11, 2012, at the conference room of the Royal Hotel in San Fernando—the minutes read: "Lake Asphalt is currently spending an exorbitant amount of money on legal fees. In light of this, it was suggested that a full-time legal officer be retained. The board of directors agreed that this should be deferred until the net profit of the company is determined."

However, the fees for various matters raised concern two months later. At the board meeting on Wednesday, December 19, at the Royal Hotel in San Fernando, the board minutes noted: "The board discussed the fees being paid to Hooverlane matter (an outstanding legal dispute) as well as the China railway matter. It was recommended that a meeting be scheduled with Mr Devesh Maharaj along with members of the board of directors, the chief executive officer and the corporate secretary to discuss further. Going forward the board stated that a proper costing from all legal counsel should be obtained stating their fees."

But it wasn't the only back-pedalling the board had to do during the space of a few months.

Its decision to forgo their go-to supplier, the Brazil-based Pegasus, in favour of local company Fastec to secure hardboard was defended by its chairman, Kaurlal Rampersad, and chief executive, Leary Hosein, at a meeting at the Hyatt Regency Trinidad hotel, Port of Spain, on October 12.

At that meeting, Rampersad had confirmed Fastec was being paid millions more than Pegasus despite the process being above-board. Rampersad had explained that both Fastec and Pegasus provided hardboard which not only passed the initial control checks, but also displayed good workability in the manufacturing of drums, but Lake Asphalt had opted to obtain the hardboard from Fastec because of late delivery from Pegasus.

Rampersad had said a decision was taken to de-register Pegasus because of "breach of payments and questionable activities".

Hardboard is necessary for Lake Asphalt's operation because it is used to transport the asphalt.

However, faced with the challenges with Fastec, the board opted to continue the contract. The Express obtained copies of board minutes, which outlined the sequence as follows:

1. At the fourth meeting of the board of directors which was held in the board room of Lake Asphalt's administration building the board agreed to order 50,000 sets at the cost of US$11.20 per sheet.

"The board reviewed the recommendation from the Tenders Committee and approved the purchase of fibreboard from Fastec Ltd at the cost of US$560,000" was the decision taken.

2. At the sixth meeting of the board on August 30, 2012, it was noted that Lake Asphalt's head of Research and Technical Services had cautioned the board on the quality of Fastec's product, but instead of acting upon the information the board instead agreed to issue the employee with a warning letter.

"Director Rambharat, the chairman of the Technical and Business Development Committee, stated that at the last committee meeting, Mr Keston Morrison, head of Research and Technical Services, indicated that the boards received from Fastec Ltd were not meeting the quality requirement set by the company and as a result the boards were not fit for use."

The CEO Mr Sarabjit informed the board of directors, since that committee meeting, further testing was done on the hardboard received from Fastec Ltd and all testing done thus far showed that the hardboard received from Fastec is indeed meeting the quality requirement set by Lake Asphalt.

"It noted that information provided at the Technical and Business Development Committee meeting was inaccurate and misleading. This raised great concern as the directors rely on the information provided to them by the respective departmental heads, in order to make informed decisions in the best interest of Lake Asphalt.

"The CEO agreed that a warning letter should be sent to Mr Morrison as a result of the incident," the board minutes read.

3. At the seventh meeting of the board held on October 11 (the day before the press conference took place), then chief executive Leary Hosein had said that Lake Asphalt had received a complaint from one of its suppliers, Beijing Oriental Yuhong.

The company had claimed that paper was used on the base of the drums previously.

"However upon doing this own internal investigation, it was evident that the paper on the base of the drums were not used prior to receiving complaints of the product sticking. Mr Hosein explained that the two shipments of fibreboard received from Fastec Ltd were not the same and the boards were indeed different. The purchase order issued did not contain the specification. The CEO recommended that the order should still be placed even if its half the order to ensure that the company doesn't end up in a stock out position. An order for 100,000 sets of fibreboard placed at US10.65 per set," the minutes read.

4. At the eighth meeting, November 29, 2012, at the Royal Hotel, San Fernando, an internal audit report on the hardboard contract noted that "there is recommendation for improvement".

5. At the ninth meeting held on December 19, 2012, the board minutes read: "Under no circumstances should there be a plant shutdown due to shortage of fibreboard."

The board also agreed to make payments for invoices even though the minutes acknowledge that there was not enough documentation to substantiate the claim.

1. In response to an invoice from Smart Communication, which is owned by attorney Om Lalla and Sushma Sawh, to be paid $209,699.29, the board requested a rationale for the payment, as the amount exceeded the financial authority of the chief executive for the Lake Asphalt display at the Hyatt Regency for the country's 50th anniversary celebrations.

The minutes of the eighth meeting on November 29, 2012, at the Royal Hotel, San Fernando, read: "The board indicated that the report provided gives no explanation on how this company was engaged nor does it give any indication of what the scope of works for this project was. The engagement of this company is a clear breach of Lake Asphalt policy.

"This process is not a true reflection of how contractors are engaged by Lake Asphalt. Proper documentation should be submitted at all times ensuring that transparency is maintained and due process is followed."

However, the board still agreed to pay the company the invoiced sum.

2. An agreement with Lake Asphalt and it's Canadian distributor, Applied Technology Ltd (ATL), was signed by Lake Asphalt officials and was brought to the attention of the board at it's eighth meeting on November 29, 2012, at the Royal Hotel, San Fernando. The minutes read: "It was agreed that prices being stated in agreements should be determined by the Pricing Committee. This would ensure that the price agreed upon is in the best interest of the company.

"The CEO indicated that Applied Technology had provided invoices—ATL stated that former CEO agreed to this payment and has since provided correspondence showing this. After reviewing documents, the board agreed that invoices should be paid- but required a report from officials on the benefits of the agreement."

According to the minutes of the ninth meeting of 2012—Wednesday, December 19, at the Royal Hotel in San Fernando—the board decided: "After careful consideration the board stated they had no prior knowledge of the agreement signed. The board requested that the process in which the distributor was engaged be looked at thoroughly and a report be submitted to the board at the next board meeting."

The Express understands that the appointment of the board, which include Leong Poi, Margaret Parks, Peter Machikan, Vallence Rambharat, Khemraj Singh and Afeisha Charles was renewed by Cabinet last week.

The Express also learnt that Rampersad's appointment as chairman was not renewed.