David Woollam wants to profit from shorting Lewis shares, furniture firm says
Business Day Live - Jun 13th 2016, 12:10
Lewis’s directors hit back at former African Bank MD David Woollam — who applied to have them declared delinquent — by accusing him of attempting to drive down the furniture retailer’s shares in order to profit from shorting them.
Lewis said in a Sens statement issued after the market closed on Thursday that it had filed a complaint with the Financial Services Board in respect of Woollam’s short position.
"It is Lewis’s contention that Woollam’s ongoing campaign against it is a concerted attempt by him to drive down the price of Lewis’s shares in order that he may opportunistically benefit financially by taking short positions in relation to Lewis’s shares. The demand, Lewis submits, should be seen as part of this overall strategy on the part of Woollam," Lewis said in the statement.
Lewis also said that proceedings were initiated on Thursday in the High Court in Cape Town, to have Woollam’s demand that its directors be declared delinquent set aside.
Lewis said on June 1 its board received a letter from Woollam demanding it commence proceedings against CEO Johan Enslin, chief financial officer Les Davies, Chairman David Nurek and independent Nonexecutive Director Hilton Saven.
Woollam said in his letter to Lewis’s board that he attempted to raise "multiple breaches of the National Credit Act and the issuance of consolidated annual financial statements that do not conform with international financial reporting standards" at its annual general meeting.
Instead of listening to the issues he raised, Lewis’s board proceeded to threaten him with defamation action, Woollam said.
Among the issues he raised was Lewis claiming that the mis-selling of unemployment insurance to pensioners and self-employed people was due to human error.
The national credit regulator ordered Lewis to pay R67m back to the customers involved.
"It is so far-fetched an explanation that, on its own, it constitutes a further reason why the relevant directors should be declared delinquent. At a conservative calculation of R1 000 per customer, it means that 46 000 individual human errors occurred over the past eight years."
Woollam said Lewis’s board refused to answer questions on whether the employees responsible for this "human error" had been identified and what measures it had taken to avoid this problem in future.
Through "mystery shopping trips" to various Lewis stores, Woollam said salespeople told him that buying extended warranties was compulsory, and that they added delivery charges to the bill for small items such as laptops, which did not require trucks.
"After conducting extensive research into the financial disclosures it became apparent to me that Lewis had, for many years, been overstating its revenue through the use of various inappropriate accounting policies. I attempted to raise these concerns with members of the board of Lewis on a number of occasions, only to be snubbed and told that my assumptions were wrong."
Woollam concluded his letter by saying:
"I am convinced that the conduct referred to in this letter is the result of a lack of leadership at Lewis. Until such time as Lewis, Enslin, Davies, Nurek, and Saven take responsibility therefore, the culture at Lewis will not improve and Lewis will continue to destroy shareholder value."From Business Day Live
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