Same here, do ya think this RE HASH of old news with some added is news, Re NEWS NAXOS- at CSW:
Naxos Resources Ltd -
Naxos spent $800,000 to defend old board in probes
Naxos Resources Ltd NAXOF
Shares issued 30,409,574 1899-12-30 close $0
Friday Apr 2 1999
by Brent Mudry
Naxos Resources has already spent almost $800,000 from the company's treasury defending itself, securities violator, founder and controlling mind Jimmy John, and four other former directors. The lion's share went to defend the company's lawyer, Sidney Kemp, and secretary Ian Gordon, a Vancouver chartered accountant, Mr. John's most important long-time loyal directors, from probes and prosecutions mounted by Alberta securities regulators. The controversial company, delisted under a cloud from the Alberta Stock Exchange, now hopes to force the Alberta Securities Commission to pick up the tab for $689,000 of this massive legal bill, according to the company's March 25 management circular. Naxos's new board also claims it will attempt to force Mr. John, a Victoria stock promoter, to repay the $110,000 spent defending him.
In a March 23 decision that prompted controversy in the press, the ASC cleared all directors but Mr. John of any wrongdoing, and found the director guilty of issuing years of false and misleading press releases, but innocent of any insider trading during this period. "The panel finds that Mr. John has displayed, over a long period of time, a wanton disregard for the necessity of issuing accurate press releases," stated the commission decision. The panel has not yet decided on a penalty for the securities violator.
Company lawyer Mr. Kemp, who presumably vetted the press releases, and Mr. Gordon merited a mildy barbed comment or two, but no finding of any transgressions. "The panel notes that Mr. Kemp, and to a lesser extent Mr. Gordon, appeared to have exercised poor judgment from time to time in that they should have brought more discipline to the process of press releases and material change reports. This is somewhat surprising, as Mr. Kemp was counsel to Naxos both before and after he became a director and Mr. Gordon is a chartered accountant," stated commissioner Walter O'Donoghue, Wendy Best and Ian McConnan.
It remains unclear how quickly Mr. John will fork over a cheque to reimburse Naxos, as he has refused to repay a $733,000 loan granted to him by the old board a year ago. The circular also reveals Naxos bumped up its payments last year to Mr. Kemp's law firm, Walker and Company, which billed $249,200 for the fiscal year ended Oct. 31, 1998. This includes $14,000 per month for Mr. Kemp's brief tenure as president and chief executive, positions he assumed when Mr. John left the company with his $733,000 loan in hand. Filings with the United States Securities and Exchange Commission note that Walker billed Naxos $217,000 in fiscal 1997. The controversial company's billings represented more than five per cent of the total income of the law firm for three years.
The circular reveals that Naxos hired three high-billing Alberta law firms to defend itself and its besieged former board. The company paid $109,782 to Peacock, Linder & Halt as full indemnification of Mr. John's defence campaign. Naxos also paid $164,925 to MacLeod Dixon to defend three secondary directors: Tony Moilliet, Carl Campbell and the late Fred Arkoosh Jr. The biggest bill, however, was paid to defend the company and its two professionals: Mr. Kemp, the lawyer and Mr. Gordon, the accountant. Naxos paid a total of $524,233 to Burnet, Duckworth & Palmer to defend these two key members of Mr. John's loyal board, and itself. The company notes that all these costs represent the bills paid to date, and the extent, if any, of any further legal bills remains undisclosed.
In one of the odder twists in the tangled tale of Naxos, the dissident shareholder group scrapping over the company's carcass is determined to reverse the company's costly indemnification of its former directors. Naxos revealed in its management circular last year that its former board voted to fully indemnify the directors and officers from all of their personal expenses, including legal expenses, relating to the ASC's investigations and prosecutions. The unhappy dissidents note that the public register shows that when the board passed this costly resolution, it was comprised of five directors, all of whom were respondents to the ASC hearings. "What is most disturbing is the obvious conflict of interest in which the board of Naxos, all of the members of which were the subject of the ASC's hearings, entered into this indemnification arrangement in the first place," states the dissident circular.
On the surface, it might be understandable why this could make the dissidents upset, but the dissident group, ostensibly led by Father Gregory Ofiesh of San Francisco, has two intriguing backers. They are Mr. John's wife Anne and Mr. Moilliet, one of the promoter's loyal former directors. If the dissidents succeed in turfing Naxos's current board, which has been in office just five months, they claim that one of their top priorities will be to determine whether they can recover the $800,000 in indemnification expenses from the regulatory respondents. Mr. John has not yet officially backed the dissident group, and it is not known whether he or Mr. Moilliet intend to reimburse the company for their legal defence fund benefits.
The management circular also notes the company's spending spree includes $244,000 in total compensation paid to John Norton, its director of mining operations. Mr. Norton, who was paid $66,000 in 1997, negotiated an employment agreement last June which included a base salary of $15,000 (U.S.). Mr. Norton's packet of perks included full payment of all housing-related expenses in Vancouver, a company car, and full payment for his family to travel between South Africa and Vancouver once a year. On Oct. 28, four months after signing his contract, Mr. Norton was terminated and paid a $30,000 (U.S.) termination allowance.
Mr. Kemp, the long-time Naxos lawyer who was totally vindicated for any role in Mr. John's years of issuing false and misleading press releases, was less fortunate. The lawyer abruptly resigned as president, along with Mr. Gordon, the company's chief financial officer, on Oct. 20, the day before Alberta regulators were set to resume a hearing into the company's controversial affairs. Mr. Kemp filed a $72,000 suit against the company on March 4 in the Supreme Court of British Columbia, seeking $60,000 for four months of severance and $12,000 for expenses. The new board notes the lawyer claims he should be entitled to this $60,000 payment to allow him to rebuild his law practice, now that he has been weaned off the Naxos gravy train.
(c) Copyright 1999 Canjex Publishing Ltd.
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