Ascendis chairperson ousted in boardroom coup over questions about corporate espionage
Allegations about ‘kickbacks’ relating to the sale of the Pharma division
ASCENDIS Health’s chairperson Harry Smit, who last year gathered a group of shareholders to oust the previous management and put the wellness product company on the road to financial health, was voted off the board at the annual meeting yesterday after raising questions about corporate espionage.
The annual meeting was held at 10am yesterday morning, and at about 5.30pm, the prior evening, Smit said a board director Bharti Hari had called him to tell him that if he raised questions about his allegations of corporate espionage at the meeting, he would be voted off the board.
Smit said in a telephone interview after the meeting yesterday that he had laid the complaint relating to “corporate espionage” at the Financial Sector Conduct Authority (FSCA), which was now investigating the claims.
Smit said just two of the issues related to the fact that acting chief executive and chief transition officer Carl Neethling was claiming to shareholders he was working for R1, while at the same time had requested an R18 million bonus by June next year. He also made allegations about “kickbacks” relating to the sale of the Pharma division.
Ascendis in July sold its pharmaceutical business to Austell Pharmaceuticals for R410m, with the purchase price set off against a R590m loan that Ascendis concluded with Austell Pharmaceuticals in May 2022, to repay Ascendis’s lenders.
Ascendis’s pharmaceuticals business houses its generics portfolio and the Reuterina probiotics brand.
Smit said that when he tried to raise his concerns at the annual meeting, he was told that he could only raise matters related to the resolutions being considered, and “I was shut out” of the online meeting.
“I have always stood by the shareholders. I would never make unsubstantiated claims. I intend to continue investigating and do all the necessary reporting that is required,” he said.
He said the FSCA had already been approached to investigate his claims.
Neethling said in a telephone interview, however, that the company had withdrawn its complaints with the FSCA because an investigation had showed that it was in fact Smit who had given out “price-sensitive information” to somebody who was “just a friend,” information that had later, through another party, reached Neethling.
Neethling said he had been brought in to restructure Ascendis, notably to reduce its “R150m” of head-office costs,
and he was registered as an employee of Ascendis Health with a salary of R1, with the proviso to reach agreement on a market-related salary or equivalent amount in a share incentive scheme, although “no structure has been discussed yet”.
He said their intention was to work on an appropriate remuneration policy for all the directors that included a share incentive scheme, and the intention was to hopefully put this to shareholders for approval in a special resolution, possibly by early next year.
Smit said he had first detected governance problems in March, and after raising the issue at the company, Neethling had signed an “MOU” (modus of understanding) to the effect that there had been no governance failures.
“I went through a period of about four months of trust that things were okay,” but he said after that he became aware that there were still problems that he raised with the company.
Ascendis’s share price had gained 4.35% to close at 72cents on the JSE yesterday.