Thursday June 11, 2015: When Diary revealed last week that CuDeco (CDU) executive chairman Wayne McCrae was preparing to sue one of his company’s shareholders for defamation, we foreshadowed that the ugly saga would have a long way to run.
And already we are being proven correct.
It has now emerged that the lawyer leading the legal action is a chap who goes by the somewhat pompous name of David J E Taylor (Jnr).
Diary has confirmed that this is the same David John Edward Taylor who is the deputy chairman of CuDeco.
Taylor (we’re sure he won’t mind the shortened version) is listed in CuDeco’s annual report as being an "independent, non-executive" director. He is also the chairman of the company’s human resources, remuneration and nominations committee.
Oh, and he is special counsel at Taylors Solicitors, the law firm handling McCrae’s legal action.
This all brings Diary to the critical question of how McCrae’s legal costs are being paid, if at all.
Given that this is McCrae's personal legal action – and that companies can't be defamed, only individuals can – Diary assumes McCrae, not CuDeco, is footing Taylors’ bill.
Of course, this assumes there is a bill. If Taylors is acting pro bono, as they say in the industry (in other words, for free), it would raise the question of whether David J E Taylor could be properly classed as an independent director at CuDeco.
If Taylors is being paid by CuDeco for its services to McCrae, that would open a huge can of legal worms because CuDeco shareholders would effectively be paying for the chairman's personal legal action. This could in turn open the door to all sorts of legal action by shareholders.
Regardless of which of these scenarios is correct, Diary wonders how David J E Taylor could still be viewed as an independent director. The issue could also raise questions about his role as chairman of the company's remuneration committee as well as constituting a related party transaction – something which is frowned upon by the corporate governance gurus.
Each of these three scenarios could also raise potential conflicts of interest for David J E Taylor given his obligations to McCrae as a client and his obligations to CuDeco as a director.
Diary doesn't have a mole in the CuDeco boardroom. But nonetheless we imagine there would have been at least one discussion in there about the desirability of the chairman suing a shareholder for defamation.
What his deputy had to say on this issue would be fascinating to know. And whether he and his law firm are being paid or are acting for free in relation to the matter is something that we are sure CuDeco’s other directors would like to know, if they don’t already.
Perhaps the chairman - or the client - could clarify these matters.
We thought this one had a long way to run. Now we know it.
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