Former Massy Group general counsel and executive vice president, Angélique Parisot-Potter yesterday questioned the more than doubling of the company's corporate expenses, its handling of the write off of $175 million Niquan-related receivable and whether it was operating under an absentee-leadership model.
Parisot-Potter raised the questions at yesterday's annual general meeting of the group, which was held at the Hilton hotel and attracted hundreds of shareholders. At the group's December 2023 meeting, Parisot-Potter shot into the limelight when she questioned Massy's relationship with an American executive training company and its spending of scarce foreign exchange.
At yesterday's meeting, Parisot-Potter questioned Massy's corporate expenses, which she said more than doubled from $67 million in 2023 to $139 million in 2024.
"This begs the question, what severance payments were made to the former CEO (Gervase Warner). If none, what accounts for this additional $72 million?"
Massy's deputy CEO, James Mc Letchie said the increased expenses included severance costs, "but for obvious reasons we cannot share the personal compensation of executives who have left."
He included in the higher corporate expenses, spending on new capabilities such as the one-off investment costs in governance reforms, treasury management and cash flow management. The return on those investments, he said, would be seen in the next few years.
"And the third bucket includes $70 or $80 million of a net interest swing," said Mc Letchie, explaining that as soon the group divested assets, the money was placed into a bank account to earn income.
"As we drew down on that fund to make acquisitions, the interest income went down...and our interest expenditure created an expense," Mc Letchie said.
Massy CEO David Affonso added that legal fees and expenses related to the closure of the Massy Learning Institute also contributed to the increase in the group's corporate expenses the inrease.
Parisot-Potter questioned the board's judgment and control in authorising unsecured credit to an energy company, allowing receivables to escalate to $175 million, only to write it all off. "What was the thinking behind this decision and what have been the consequences to those responsible for this almost $200 million loss?
Mc Letchie identified the energy company, referred to by Parisot-Potter, as Niquan. He said in August 2023, the balance on Massy's receivables was about $68 to $70 million. By September 2023, the group's third-party contractors working on the Niquan plant "sent in all the invoices" relating to the job, because of the publicity surrounding the death of Allanlane Ramkissoon, the Massy Energy Engineered Solutions Ltd (MEES) employee in June 2023.
"Within a month coming up to Massy's September 30, 2023 year end, we went from about $70 million to the $177 million. At that point, because we were speaking to bondholders, we anticipated that natural gas would be provided to Niquan, but we thought that it would be right to provide for some of it. So we took a $55 million provision in the 2023 year-end financials.
"In January or February 2024, there was a change of circumstance and immediately we decided that the right thing to do was to provide for all of the $177 million," said Mc Letchie.
Parisot-Potter also said Massy is operating under an absentee-leadership model, with previously eight out of 12 directors being based overseas. Now five of the nine directors are based overseas, including chairman Riley and Mc Letchie.
"Did this absentee model contribute to some of the decisions we have seen. Will it continue and what will be the impact to shareholders?" she asked.
Addressing that issue, Riley said he did not believe that Massy has an absentee-leadership model.
