Chairman Admits To Using Shares As Collateral To Secure Personal Loans
UK and US unions call for investigation at National Express Group amid resignation of chairman
LONDON - UK union Unite and the North American-based International Brotherhood of Teamsters (IBT) are today calling for an urgent review of the National Express Group's corporate governance policy by a committee of independent directors.
The call follows David Ross's resignation as chairman of the National Express Group amid allegations that he had failed to notify companies within four days of share dealings made for his own personal benefit, actions required by disclosure and transparency regulations. Ross has admitted using 136.4 million Carphone Warehouse shares, where he was deputy chairman, and 3 million National Express Group shares, where he had served as chairman, as collateral to secure personal loans.
The two unions have joined forces to ensure that National Express workers in the UK and North America do not pay the price for any oversight of regulatory compliance within the company.
"During this global economic crisis, with investor confidence at an all time low and companies struggling to survive, National Express workers and shareholders demand answers and seek protection," said C. Thomas Keegel, IBT general secretary-treasurer.
Graham Stevenson, Unite's National Organizer for Transport, added, "Such behavior is clearly linked to the 'casino-style' economy that has resulted in a lack of confidence in the financial system, and this situation should not be allowed to have a negative effect on the 6,000 Unite members who drive millions of miles in National Express buses and coaches."
"At the same time National Express was announcing over 300 job losses at the East Anglia rail operations," Stevenson continued, "One wonders how much attention the chairman was paying to the business, or was he more concerned with his own financial interests? Why didn't the banks who lent him the money ensure that he made the required disclosures? It certainly raises the question about how much of a company should be owned by one individual, given that the largest shareholder in National Express is Jorge Cosmen." Cosmen's family formerly owned the Spanish Alsa coach company, which was acquired by National Express.
"While the Financial Services Authority investigates this situation, we are calling for an investigation by a special board committee comprised of the independent directors that would develop recommendations on how to strengthen corporate governance at National Express," said Keegel. "With the US economy in recession, it is not right for National Express workers to pay the price for the lack of regulatory compliance by the company's chairman." The Teamsters Union currently represents more than 1,200 National Express workers in Canada and the USA.
In a 2007 report, the Pension Investment Research Consultancy (PIRC) highlighted several areas where National Express failed to meet their Shareholder Voting Guidelines criteria. Specifically, PIRC expressed concern that the board did not consist of a majority of independent directors and that the process for succession planning did not have a clear structure. PIRC's comment on the subject of training for board directors was that "it is unclear if training needs are considered on a proactive and ongoing basis."
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