Sterling shareholder concerned over reduced board
Stabroek News
February 12, 2004
As a Sterling Products Limited shareholder, Dunstan Barrow is to write to the Guyana Securities Council over the resignation of three independent directors from the company's board.
Barrow says many persons who bought shares in the company would have done so because they had confidence in the directors and the axing of three directors was a concern.
Paul Fredericks, Charles Quintin and Clarence Hughes were asked to resign on January 16, the same day Johnny Carpenter, the chair-man resigned because of a policy shift in the company. The reason given for the request, according to new Chairman Dr Leslie Chin, is to cut costs. Chico Beharry of the Edward Beharry Group and main shareholder in Sterling, said the resignations would only be effective for a year.
But Barrow a former MP and head of the public accounts committee wonders what the four directors remaining on the board now could bring to the company, noting that three of them, Anand Beharry, Suresh Beharry and Paul Cheong, are closely related to and are nominees of the majority shareholder.
"What does that speak about governance?" Barrow says, noting the Guyana Securities Council (GSC) recently issued corporate governance code requiring an audit, a remunerative and a governance committee on boards of each reporting issuer.
That code also requires the audit committee to comprise three non-executive directors, a majority of whom should be independent and the remunerative committee should have only non-executive directors. Both committees are required to operate independently from management interference or any intrusive business relationship.
Barrow says he finds what has taken place alarming and will be writing the GSC on the matter.
Chief Executive Officer, Cheryl Ibbott, says no concern has been raised with the council but she would look into it if the matter was raised.
Barrow is also worried that the majority of the directors on the board would now be looking out for the Beharry Group and asks who would look out for the minority interest.
He notes that Dr Leslie Chin is the lone independent voice on the board. He concedes that while it is not a norm to have directors to look out for minority shareholders, it is a standard acceptable practice.
The shareholder says Sterling is experiencing serious problems with a high staff turnover and poor financial performance. He refers to the last annual report which he says was badly prepared. He says he raised his concerns with the directors as there was no statement from the Managing Director in the report, nor were there any explanations for major changes in revenue.
"It is a bad move to get rid of three directors after the company has had a terrible year."
Despite huge investments in the past three years Sterling's sales in 2002 were $1.96B, a $14M increase from the previous year. Net profit after tax was $49M, a decrease of $77M while dividends per share remained at $2.00.