Far Resources sues former management for self-dealing
2021-12-31 18:21 ET - Street Wire
by Mike Caswell
Far Resources Ltd., now under the control of a dissident group, has filed a lawsuit against its former management. The company claims that ousted directors John Gammack and Robert Dinning engaged in self-dealing, transferring company assets to entities that they controlled for little or no consideration. Far Resources also claims that the pair improperly collected $157,815 from the company in the weeks before the dissidents took over.
The allegations are contained in a notice of claim filed at the Vancouver courthouse on Dec. 22, 2021. The suit names as defendants Mr. Gammack and Mr. Dinning as well as two private entities that they own, Aurum-Argentum Holdings Inc. and Carlton Energy Inc. Until Dec. 10, 2021, Mr. Gammack and Mr. Dinning were the president and chief financial officer of Far Resources.
The case follows a recently concluded dissident battle at Far Resources. A group led by shareholder Scott Taylor successfully ousted the company's management at a Dec. 10, 2021, annual general meeting. The vote, as reported by the dissidents, was considerably one-sided, with 96 per cent of the shares being voted in favour of Mr. Taylor's group.
Up until that meeting, Mr. Gammack and Mr. Dinning had comprised the entire board of Far Resources, and had been its only officers. The company's last AGM had been in 2018, leaving no opportunity for shareholders to vote on a new board. According to the suit, this left Mr. Gammack and Mr. Dinning in full control of the company's treasury.
The case centres in part around money transfers that occurred as the dissident battle was under way. The transfers, as described in the suit, occurred on Nov. 10, 2021. On that date, Mr. Gammack's Aurum-Argentum received $87,675 and Mr. Dinning's Carlton Energy received $70,140, the suit claims. The men had arranged to have the money transferred out of the account of Far Resources which, as the company's sole officers, they controlled.
According to the suit, Mr. Gammack and Mr. Dinning had no right, "proprietary or otherwise," to the $157,815. The transfers were based on contracts the men had supposedly entered into seven months earlier, on April 6, 2021, with those contracts including bonus payments totalling $157,815. The contracts were not publicly disclosed at the time and the men did not request the payment of the supposed bonuses until the dissident battle, the suit states.
On top of that, Far Resources claims that the men engaged in self-dealing transactions. The suit does not contain any details, simply stating that the men enriched themselves by transferring assets out for little or no consideration. The company intends to conduct an investigation and will provide details as it finds them, according to the suit.
Far Resources is seeking the return of the $157,815, plus damages, court costs and interest. Vancouver lawyer Teresa Tomchak of Farris LLP filed the suit on behalf of the company. Mr. Gammack and Mr. Dinning have not yet filed a response.
In the markets, Far Resources closed at 28.5 cents on Friday, up 2.5 cents.
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