Greenberg article on ASW - Audit Committee
Most of you may have already read Greenberg's most recent article, but in case you haven't:
Meet A.C.L.N.'s Audit Committee, and Worry
By Herb Greenberg
01/10/2002 12:40
If it's doing its job right, the audit committee of a company's board of directors is supposed to be the last line of defense for investors. For that to happen, says Lynn Turner, former chief accountant for the SEC and currently director of the Center for Quality Financial Reporting at Colorado State University, it "needs to be an audit committee with members who are independent of the company and its management, including not doing consulting for it, and it needs to be financially literate so its members are able to read financials, understand them and flesh out the issues with the right type of questions. Without this in place, the chances of shenanigans occurring are much higher."
Which brings us to A.C.L.N. ASW , a shipper of cars from Europe to Africa that is no stranger to this column and which disclosed last week that it's the subject of an SEC investigation. A.C.L.N.'s audit committee is made up of Charles Brock and, through mid-2001, Marina Savva. How do they fit the mold of what Turner thinks make good audit committee members? You be the judge.
Brock is a securities attorney whose former law firm, Brock Silverstein, used to advise A.C.L.N.
And Savva?
Before I tell you who she is, you need to read what A.C.L.N., in its own words, describes as the responsibilities of its audit committee. According to A.C.L.N., the audit committee "is charged with reviewing the following matters and advising and consulting with the entire board of directors with respect to preparation of our annual financial statements in collaboration with our independent auditors; sale or disposition of vessels, if any, owned by us; mortgaging of vessels, if any, owned by us, as security for our indebtedness or indebtedness of our subsidiary; annual review of the ratings of the vessels, if any, owned by us, in consultation with independent shipbrokers; and contracts between us and our officers, directors and other affiliates of our company."
So, who is Marina Savva and why should A.C.L.N. investors care? According to the company's SEC filings, Savva, as of the company's last annual filing, was a 25-year-old "associate" of Economides, Patsalides & Co. (formerly KC Saveriades & Co.), the company's Cyprus-based law firm.
What's an associate? According to the company's prospectus, she is "executive secretary" of the law firm.
What's an executive secretary?
My associate, Mark Martinez, called the law firm the other night and asked its receptionist a few questions:
"Is Marina a lawyer?" he asked.
"No, she is just a secretary," said Gabriella Chrysostomou, the firm's other secretary. "She just answers the phones along with me." Mark says Chrysostomou couldn't stop laughing when he asked if Marina was a lawyer.
"So, if I call back is there a good chance that Marina would answer the phone, since she is the secretary along with you?" he asked. Chrysostomou told him there are two secretaries -- Gabriella and Marina -- so there was a chance, she said, that he'd get Savva personally if he called back. "Either her or I will answer," Chrysostomou said.
"Well, is she an accountant?" Mark asked. Still laughing, Chrysostomou insisted that "she's just a secretary; she's on salary as a secretary."
After getting several more reassurances that Marina Savva is a secretary at the firm -- and not a lawyer or accountant -- Mark ended the call.
A.C.L.N. officials didn't return my inquiry about Savva. Savva couldn't be reached. She never did answer the phone and wasn't there both times Mark called. She was replaced on the board and audit committee by a partner at the law firm in July when A.C.L.N. jumped to the New York Stock Exchange from the Nasdaq . (Could it be the NYSE has higher standards than Nasdaq?)
Brock, who as of July owned 156,250 A.C.L.N. shares, couldn't be reached either. He was listed in a June SEC filing as being with the law firm of Reitler Brown in New York City. A receptionist at Reitler Brown, however, says he hasn't been there since March and didn't know where he had gone. A call to his home was not returned. |
