DISMISSAL UNLAWFUL

LAWYERS acting on behalf of Captain Ian Brunton have accused the George Nicholas III-led board of Caribbean Airlines (CAL) of an “improper and unlawful” abuse of power, as Brunton called on the board to recant a purported decision to dismiss him.

In a letter dated November 28, which was released by the Ministry of Works and Transport yesterday morning, attorney Rishi Dass called on the board to clarify whether or not Brunton was properly dismissed given the fact that Brunton was served with no advance notice before a termination letter was hand-delivered to him last Friday at the CAL offices.

The attorney also queried whether a board meeting was convened in order to effect a lawful termination of Brunton.

“We hereby call upon you to immediately confirm that the board of directors met and voted in favour of the purported decision to terminate our client,” Dass wrote in the letter addressed to CAL corporate secretary Nerine Small. The letter was carbon copied to board members Moham Jaikaran, Alan Clovis, Gizelle Russell, Susan Smith, Avedanand Persad, Venosh Sageewan Maraj, as well as Nicholas.

“We wish to note the independent obligations of each board member to act collegiately in the best interest of the airline,” Dass continued. “Accordingly, we ask that this purported decision be recanted with immediate effect as being an improper and unlawful exercise of power.”

Last Friday, Works and Transport Minister Jack Warner, whose ministry has direct responsibility for the State-owed private company CAL, said Nicholas had unilaterally removed Brunton. Warner said the matter has been referred to the Offices of the Prime Minister and Attorney General for advice. Dass said no reasons have been advanced for the removal of Brunton, amidst reports that the action stemmed from an apparent fallout between Warner and Nicholas over a Cabinet-approved aircraft contract.

“Our client during his tenure has received no criticism or complaint regarding his performance as CEO from either board or line ministers, past or present,” the attorney said. “In this context it is with astonishment and disappointment that our client received a letter purporting to dismiss him on November 26 under the hand of the newly-appointed chairman of the board.”

Speaking to the press on Monday, Nicholas said he had no views in relation to the aircraft contract and denied a rift with Warner. He offered no reasons for the dismissal of Brunton.

Dass revealed that at the last board meeting, attended by Brunton on November 15, no issue of Brunton’s performance was raised. (See letter on Page 14A)

“An apparently unilateral decision to terminate our client’s services was undertaken,” Dass said. “Our client’s instructions are that at the last meeting of the newly appointed board held on November 15, 2010...no issue was raised at all as to his performance as CEO.”

“It is our client’s understanding that no further meeting of the board was convened,” he said. “In fact it is our understanding that the deputy chairman of the airline has been out of the jurisdiction since the date of the last board meeting.”

Dass, who signed the letter on behalf of Senior Counsel Seenath Jairam, argued that any purported unilateral termination of Brunton in this context, without the input of the line minister, would have been outside of chairman Nicholas’ powers, in addition to being undignified.

“Having regard to the reported statements of the line minister, it would appear that the purported unilateral termination was ultra vires Mr Nicholas’ authorities,” he said. “Any decision to terminate the services of our client would require the specific approval of the board of directors. Any unilateral decision...would be unlawful on settled company law principles.

“No reason has been forthcoming for the abrupt and intemperate manner in which our client has been relieved of his duty and his record amply demonstrates that there could be no good reason,” Dass said, pointing to Brunton’s stewardship of CAL which he praised in glowing terms.

The Dass letter was faxed from phone number 625-8070, one of the fax lines listed for the Ministry of Works and Transport. Its release, coupled with the Government’s continued silence on the issue, fuelled speculation yesterday that the Cabinet will take action on the matter. Such action ranges from the removal of Nicholas to Brunton’s reinstatement.

Sources close to Brunton yesterday reported that Nicholas hand-delivered the termination letter, dated November 26, to Brunton’s offices at CAL last Friday. Despite lawyers setting a deadline of yesterday for a response and withdrawal of Brunton’s “termination”, CAL had up to late yesterday afternoon failed to respond.

In the letter, Dass links the move to terminate Brunton to a reported preference by Nicholas for the firm Bombardier, as opposed to ATR, in relation to a $1.3 billion deal for the acquisition of nine aircraft.

“The statements in the press, thus far not refuted by the airline, suggest that our client has become an unwitting casualty of a disagreement between Mr Nicholas and the line minister over the pending aircraft acquisition from ATR with Mr Nicholas having a preference for a competing supplier, Bombardier,” Dass wrote. Bombardier was the firm earmarked for the provision of a controversial executive jet in a deal which stalled under the tenure of former Prime Minister Patrick Manning after public outcry.

Dass said Bombardier was brought into the picture through an “exhaustive” six-month evaluation process after Bombardier and ATR were deemed “the only feasibly suppliers.”

“It should be noted that the acquisition process for these aircraft was the subject of an exhaustive six-month evaluation process which generated a comprehensive report relative to both ATR and Bombardier, the only commercial suppliers,” Dass said. The CAL board was only appointed in November.

The lawyer said the Cabinet had approved the contract for ATR on the basis of the report — whose authors were not identified.

“This comparative report demonstrated conclusively that a supply from ATR most benefitted the airline’s needs. Indeed, this decision received the specific approval of Cabinet and culminated in a signed contractual Heads of Agreement with ATR executed in September this year,” he said.

Dass said ATR has already been paid $11.3 million in support of this “Heads of Agreement” document.

DISMISSAL from Page 3A

“Our instructions are that upon signing the said Heads of Agreement the airline paid ATR the sum of US$1.8 million ($11.3 million) which it stands to lose if it does not honour its obligations thereunder,” he warned. He also revealed ATR was to establish a maintenance repair and overhaul facility under the terms of the arrangement.

“Our instructions are that under the Heads of Agreement additional benefits will accrue to the airline and the national interest, not the least of these being the undertaking of ATR to assist in the establishment of an MRO facility at Piarco,” Dass said. He further opined, “it seems difficult in this context to understand any rational basis for attempting to revisit Cabinet’s decision in the matter.”

Further, Dass said, “any decision to terminate our client merely to retaliate against the line minister with no heed being paid to the deleterious consequences to the airline is a clear breach of the fiduciary obligations of a board member and a flagrant act of corporate misconduct.”

CAL is a limited liability company incorporated under the Companies Act. However, the act contains no explicit guidance on the issue of the procedures surrounding the termination of a CEO. But it is understood that a board may terminate a CEO at any given time as long as this is in line with common-law principles. Dass argued that a CEO’s dismissal is now regulated in this country by convention.

“It has become a well-established practice in Trinidad and Tobago that a CEO’s contract would not be unilaterally terminated....The practice is that a notice is not given simpliciter for the termination of the CEO’s contract but a negotiated settlement and a dignified exit is settled upon by the employer and the CEO,” the attorney said.

“Even if the board had met and voted to terminate our client, the manner in which this purported termination has been effected is unfair and inappropriate in the context of our client’s national contribution and his reasonable expectations under the terms of his contract.”