Until then, the $1.2 million amount will be booked as an unsecured, no interest, impaired loan in the Cann Global accounts.
Soon after the sapphire mine was transferred to their private company, Volcan’s financial statements show Mrs Feldman and Sholom Feldman received a massive pay boost with each taking home a salary of $571,291. This was $700,000 more than what the pair received from Volcan in 2010.
Mr Feldman said the mine deal had nothing to do with the pay increase at Volcan. He said all transactions with related parties were done with shareholder approval, on an arm’s length basis and were in line with, or even cheaper, than what Cann Global’s peers were paying for service provision.
But this is little comfort to aggrieved shareholders who told theAgeandHeraldthat the flow of money from the publicly listed Cann Global to private entities associated with the Feldman family shared some similarities with the goings-on at Mr Gutnick’s former listed company, Merlin Diamonds, which was wound up by the Federal Court last year.
While the Australian Securities and Investments Commission (ASIC) has had a long-running investigation into Merlin, it has not examined any of Cann Global’s affairs. Mr Feldman said Cann Global’s transactions had always been disclosed to shareholders and approved by independent directors.
Joe Gutnick appearing at the Federal Court in Melbourne in 2017.CREDIT:JASON SOUTH
Just as Cann River, and its predecessor Queensland Bauxite, had a contractual relationship with Mrs Feldman’s Australian Gemstone Mining for the provision of services, Merlin Diamonds had a similar service provision arrangement with a private company controlled by Mr Gutnick called AXIS Consultants.
In 2019, theAgeandSydney Morning Heraldrevealed how Merlin had also loaned more than $18 million to AXIS and other private entities linked to Mr Gutnick, with many of the loans being recorded as impairments in the same year they were made.
Mr Gutnick rose to prominence in Australia during the 1990s and 2000s with his flair for uncovering gold and diamond deposits in the outback. For a time, he was a regular inBusiness Review Weekly’s annual richest 200 list and became the Melbourne Football Club president in the late 1990s.
But his star has fallen more recently, with him declaring bankruptcy in 2016 and being discharged a few years later. Federal Court Judge Michael O’Bryan issued a scathing judgment last year about the situation at Merlin, highlighting what appeared to be “dishonest” and “uncommercial” transactions.
ASIC’s investigation into Merlin remains ongoing.
Mrs Feldman has been a significant figure in Australia’s mining industry in her own right, being the first woman to chair a listed mining company. She was also formerly the principal of Sydney’s Yeshiva College.
In 2017, Mrs Feldman unsuccessfully sought Victorian Supreme Court approval to obtain a $1 million loan from Cann Global’s listed predecessor, Queensland Bauxite, to pay for the legal expenses of one of her private companies which had become embroiled in Mr Gutnick’s affairs.
Last year, Mrs Feldman and Mr Gutnick were on the losing side of a High Court appeal to secure a mining project once valued at $174 million for just $1 in a move alleged to avoid Mr Gutnick’s creditors.
Another area of concern for some CGB shareholders has been the board’s decision to issue shares to pay relatively small invoices. The placing of extra shares on a register almost always dilutes the value of existing shares.
The company’s accounts show it recently placed 8 million shares with a third party to cover a $40,000 bill and 2.9 million shares with a separate third party to pay for a $26,000 invoice. It also this month raised a further $1.8 million by placing 610 million shares with broker 180 Markets. This was despite Cann Global recently reporting it has $10 million in cash.
The proposal to grant Mrs Feldman 70 million shares to mark her retirement in August was explained in Cann Global’s most recent annual report as being in recognition of long service and the meet contractual obligations to her Australian Gemstone Mining company, which will no longer provide any services to CGB.
Shareholders will be asked to vote on the proposal at the company’s upcoming annual general meeting.
“If the share issue is not approved, the amount outstanding to Mrs Feldman under the agreement with Australian Gemstone Mining Pty Ltd will be required to be paid in cash, and at a cost that may end up being significantly higher to the company,” Mr Feldman said.
Mrs Feldman’s replacement as an “independent non-executive chair”, is David Austin, a Sydney lawyer who has long provided legal advice to the Feldman family.
Cann Global recorded a net loss of $4.4 million in the most recent financial year and wrote off more than $800,000 in exploration costs, failed investments and other receivables. It also spent $134,722 on travel despite the COVID-19 pandemic closing many state and international borders and $400,000 on marketing.
Mrs Feldman and her son each received $312,000 in directors’ fees last year from Cann Global, which has a market capitalisation of about $20 million and shares valued at 0.3 cents. It has several cannabis-related products available for purchase in Australia and Thailand, as well as several others at various stages of clinical trials.
Mr Feldman said he understood shareholder frustration with the share price. But he said nearly all other cannabis stocks had lost huge amounts of value in recent years. “It is just the unfortunate reality of the industry we are in,” Mr Feldman said.
Know more? Contact Richard Baker securely [email protected]
