am really uncomfortable and concerned re the Indemnity Agreement.
the reasoning and excuse supplied by LWP that the Indemnity and payment of $37,000 to SK, does not make sense.
10 May 2017 - DMAW lawyers appointed to do Corporate Governance Review
24 July 2017 - SK resigned as Director
17 Oct 2017 - Dentons appointed to do a Legal Review of business transaction for compliance with Corps Act, ASX Listing and staututory obligations in dealings with Directors or related parties.
2 Nov 2017 - SK Consultancy Agreements terminated.
2 Nov 2017 - The Company and Mr Konig further agreed to indemnify each other such that neither party will take legal action against the other.
Dec 2017 - Reviews completed
Jan 2018 - Reviews handed to ASX then to ASIC
March 2018 - LWP becomes aware of existence of AMEX card and debt billed to LWP, but relating to personal expenditure of SK.
A. AMEX
1. So one can presume logically, that the existence of the AMEX card and debt was known by SK, and unknown by LWP, at the time of Termination on 2 Nov 2017.
2. One can presume that the existence of the unpaid debt was known by SK, and unknown by LWP, at the time of Indemnity on 2 Nov 2017.
So in my untrained view, this circumstance would be grounds for the voiding of that Indemnity.
B. Timing
Why would you agree to an Indemnity on 2 Nov 2017, when you had already started a Corp Gov Review way back in May, and a Legal Review in Oct 2017 ??
The provision of a Indemnity to a former director, in the circumstances suffered by LWP, with almost no cash, would be a major and material decision.
Provision of that Indemnity would surely affect the D&O Liability cover held by LWP.
Why would LWP not wait for results of Corp Gov review, and /or Legal Review??
The problem for me is that I suspect that the Legal Review by Dentons was initiated in Oct 2017, because the Corp Gov review by DMAW uncovered material and significant issues!
If so, just WHY would you then provide an Indemnity to a director possibly involved?
The excuse of saving a larger payout is rubbish, because the need for a new Legal Review because of all those issues below, would absolutely indicate there would be grounds for LWP NOT to pay ANY termination benefits to SK until such time as the results of these reviews were completed.
All that would result from that argument would be a Court case over that issue - terrific, let that happen !
The results of these Legal Reviews would also surely be grounds to Void the Indemnity ?? Because LWP would claim that it was not aware of the alleged legal breaches at the time it agreed to execute the Indemnity.
LWP should Void the Indemnity ---> and claim on its D&O.
It is LWP which has suffered, and LWP should seek damages.
************************************************************************* Independent Corporate Governance and Legal Reviews On 17 October 2017, the Company announced that the Board had resolved to appoint the law firm Dentons to conduct an independent legal review of aspects of the business and investment activities of the Company. This review is to include an examination of the Hallmark agreements and other investment activity by the Company. The purpose is to confirm compliance with the Corporations Act, ASX Listing Rules or other statutory obligations by the company in its dealings with any Director or any party associated with or related to the Company. The Independent Corporate Governance Review conducted by DMAW Lawyers, and the Independent Legal Review by Dentons were completed in December 2017. Both reviews highlighted apparent departures from generally accepted process and procedures with regards to related party transactions, share issue procedures, share trading and timing of board engagement in decision making and scheduling of board meetings, based on the information available. Both reports have been forwarded to the ASX. In January 2018, ASIC advised the Company that an inquiry into certain activities had commenced and issued a Notice under Section 33 of the Corporations Act for information in addition to that included in the Independent Corporate Governance and Independent Legal Review reports. The Company continues to co-operate fully with the ASX and ASIC during this process. ASIC representatives have advised the Company of ASIC Information Sheet 152: "Public Comment". As the matters are ongoing, no further comment can be made at this stage and an update will be made to the market at the appropriate time as guided by ASIC and the ASX
Former Executive Chairman
The Company entered into a service arrangement with Mr Siegfried Konig as Executive Chairman of the Company commencing from 8 June 2015. The key terms of the arrangement were a three year term with the option of an extension for a further three years; a fee of $285,000 per annum plus superannuation payable at 9.5%; a cash bonus of 25% of remuneration if the market capitalisation of the Company increases in any year by more than 50%; a vehicle allowance up to $12,000 per annum; and a 12 month notice period. The payments to Mr Konig were made through WPF Pty Ltd, a company in which Mr Konig has a substantial interest. Mr Konig resigned as Executive Chairman on 24 July 2017. The Consultancy and Variation agreements between Mr Konig and the Company were terminated on 2 November 2017 where a full and final payment of $37,000 (ex GST) was made to Mr Konig in settlement. The Company and Mr Konig further agreed to indemnify each other such that neither party will take legal action against the other.
Other transactions with related parties to Key management personnel and directors Mr Siegfried Konig, a former Director and Chairman of Ecopropp Pty Ltd and LWP had control of an AMEX business credit card in his name and linked Ecopropp Pty Ltd to the account. LWP was not aware of this AMEX business credit card and its associated debt until a letter was received from AMEX by the Company in March 2018 demanding payment in full of $69,140 (including interest of $18,497). This debt is a personal debt incurred by Mr Konig and the Company considers payment of this debt to be the sole responsibility of Mr Konig. As Ecopropp Pty Ltd is linked to the account, the debt has been provided for as an expense and a corresponding liability of the consolidated entity. LWP has made full provision for the claim, notwithstanding its intention to defend the claim and/or seek a settlement with AMEX. LWP has also requested Mr Siegfried Konig to settle this personal debt. Should this not occur and LWP ultimately suffers a loss, then LWP will consider its rights and responsibilities and whether the matter needs to be referred to the appropriate authorities
LWP Price at posting:
7.0¢ Sentiment: None Disclosure: Held
