Canadian Venture Exchange - Street Wire
CDNX member Global sues Reynolds, a Saxena associate
Thu 9 Aug 2001 Street Wire
Also Asean Holdings Inc (AHI)
Also WaveTech Networks Inc (WAVE)
by Brent Mudry
Fugitive Thai financier Ra zkesh Saxx ena, living under house arrest in
Vancouver as he fights extradition for his key role in the $2-billion
(U.S.) collapse of the Bangkok Bank of Commerce, has used a number of
trusted fronts in recent years, including the fresh and winsome Allison
Eaton, who dislikes being called youthful and attractive.
The identity of the latest purported front for Mr. Saxena, Thailand's
most-wanted alleged criminal, may come as a shocker to Stockwell Day, the
besieged leader of the Canadian Alliance, Canada's official opposition
party. He is none other than John Douglas Reynolds, the former Howe Street
promoter turned prominent Canadian politician, who is busy propping up Mr.
Day and defending the fast-fading opposition leader from rancorous Alliance
deserters and detractors.
In the latest bombshell to hit Mr. Day's fast-sinking ship, key lieutenant
Mr. Reynolds, whispered as the opposition-leader-in-waiting, faces an
extremely embarrassing lawsuit from a Vancouver brokerage.
In a statement of claim filed Tuesday in the Supreme Court of British
Columbia, Global Securities claims Mr. Reynolds left a whopping $484,000
debit at the brokerage after becoming a Saxena-associate director of
WaveTech Networks Inc., listed on the former Canadian Dealing Network.
The Reynolds-Saxena connection is particularly intriguing, as Mr. Reynolds,
arguably the No. 2 man and perhaps currently the most powerful player in
the opposition Alliance party, has acted as the party's chief opposition
justice critic.
Mr. Reynolds, currently the Member of Parliament for the riding of West
Vancouver-Sunshine Coast, has risen from his roots on Howe Street, the
centre of dealings on the former Vancouver Stock Exchange, to become one of
the longest-standing high-profile politicians from the West.
The former Vancouver stock promoter was first elected to Canada's House of
Commons in 1972, and parachuted into provincial politics in B.C. in the
late 1980s. He was elected as speaker of B.C.'s Legislative Assembly in
March, 1987, a position he served until November, 1989, when he was
appointed to cabinet as Minister of Environment.
Despite the allegation of the suit, Mr. Reynolds denies a relationship, at
least a current relationship, with the Thai fugitive. "I have no
relationship with Mr. Saxena. I have no relationship with him," Mr.
Reynolds told Stockwatch. Mr. Reynolds declined to comment on the suit,
saying, "It will all come out in court."
Mr. Reynolds is now apparently the highest-profile Canadian associate of
Mr. Saxena to show up to date, although he pales by comparison with the
fugitive Thai financier's most notable associate, legendary Saudi arms
dealer Adnan Khashoggi. Evidence at Mr. Saxena's extradition and bail
hearings suggested he has also had dealings with Gerry Adams of Sinn Fein
and unidentified members of the Irish Republican Army, or IRA.
While Mr. Saxena does not appear to show up in public WaveTech documents,
his presence is revealed in the Vancouver suit. "John Reynolds entered into
a business transaction with Rakesh Saxena, pursuant to which Mr. Reynolds
became a director of WaveTech Networks," states the suit, filed by
Vancouver lawyer Shayne Strukoff of Gowling LaFleur Henderson.
The exact nature of this business transaction is not spelled out. The
allegations in the suit have not yet been proven in court and no statements
of defence have been filed by either Mr. Reynolds or his private company,
Gainey Consultants Inc., the only other defendant. Mr. Saxena is not named
as a defendant.
This is the seventh-Saxena related debit suit filed by a Vancouver
brokerage in the past 10 months and pushes the total tally to
$4.97-million. The Reynolds action is the third Saxena-related debit suit
filed by Global since March, and pushes the total hit taken by the
brokerage to $791,000. The suits are at various stages of resolution.
Mr. Reynolds's apparent sense of timing in doing business with Mr. Rakesh
was nothing short of awful. The prominent politician opened an account at
Global Securities in the name of Gainey Consultants on Sept. 7, 1999, which
he guaranteed that same day.
(A corporate search for Gainey shows the company was incorporated on Feb.
11, 1997, last filed an annual report this February, and has two
principals: Mr. Reynolds's wife Yvonne P. Reynolds, as director, and Mr.
Reynolds himself, as president, secretary and officer. Although Gainey has
a registered records office in West Vancouver, an upscale Vancouver suburb,
the origin of the company's name is unclear, although Scottsdale, the
Arizona retreat favoured by Mr. Reynolds and scores of other veteran Howe
Streeters, has a street called Gainey.)
Mr. Reynolds was part of a new board slate which took control of WaveTech
in February, 2000, and that March, six months after opening the Global
Gainey account, he made his big whopper purchase. The federal politician
bought a block of 320,000 WaveTech shares at about $1.52, resulting in a
total debt of $483,814.
The identity of the seller of this block is not known. (It is not known if
this block was recorded as a public trade through the facilities of the
CDN, as the stock's biggest daily volume that month was 300,300 shares in
seven trades.)
Mr. Reynolds's badly timed big trade was a disaster. Although WaveTech
shares traded as high as $2.25 in March, 2000, shy of the stock's October,
1999, peak price of $2.75, the volatile stock's volume dried up the next
month, crumbling to 50 cents by April 25 before inexplicably tripling to
$1.45 on a single trade of 5,500 shares on April 26.
The stock displayed a remarkably well maintained trading price, usually
bang on the buck, through May and June, 2000, before it was given the hook
by the Ontario Securities Commission for failing to file timely financials.
The stock last traded on the CDN at 50 cents on July 28, 2000.
This understandably left Global in quite a pickle, as the right honourable
Mr. Reynolds apparently failed to put up a penny of cash or other
securities to cover his big-whopper debit. "Notwithstanding demand, Gainey
Consultants and Mr. Reynolds have refused to pay the outstanding debt,
which remains justly due and owing," states the suit.
While such high-stakes free-riding is generally frowned upon by brokerage
compliance officers and securities regulators, who occasionally look the
other way, and is technically a securities violation, there is no
allegation of wrongdoing by Mr. Reynolds.
The timing of Mr. Reynolds's alliance with Mr. Saxena is quite intriguing,
as the Thai fugitive was at the tail end of a highly-publicized extradition
case, reported worldwide. In September, 2000, the case, the longest
extradition hearing in Canadian history and the first-ever Thai extradition
proceeding, finally ended.
Mr. Saxena, the alleged co-mastermind of a massive fraud scheme at the
Bangkok Bank of Commerce, lost his extradition fight in the Supreme Court
of British Columbia, which included 92 days in court. The fugitive promptly
launched parallel appeals to the Minister of Justice in Ottawa, the senior
cabinet minister Mr. Reynolds has been appointed to criticize, and the
Court of Appeal for British Columbia.
Mr. Saxena was arrested July 7, 1996, at a luxury hotel in Whistler, a ski
resort 140 kilometers north of Vancouver, three weeks after Stockwatch
revealed his presence in Vancouver.
The Royal Thai Police had sent arrest teams to London, Switzerland and New
York in the aftermath of the collapse of the Bangkok Bank of Commerce, a
scandal which led to the fall of the Thai government and the collapse of
the Thai economy, but Canadian police were unaware of Mr. Saxena or his
whereabouts until contacted by Stockwatch.
(c) Copyright 2001 Canjex Publishing Ltd. stockwatch.com
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