Former CEO sues paint company he founded for R610m

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Strath Wood, who stepped down as CEO of Chemspec in November 2010 and shortly afterwards moved to the US, was among other things, accused of "dishonesty" in a Durban High Court judgment in November 2013.

Chemspec is in provisional liquidation and its share has been suspended at 10c on the AltX section of the JSE for more than three years.

Wood has long been a controversial figure. The Pietermaritzburg High Court ordered that he repay around R3m, plus interest, to International Financial Advisors and Kuwait Investment Company following a share sale dispute.

In November 2013, he was provisionally sequestrated in the Durban High Court. The court-appointed trustee, Kurt Knoop, announced an investigation into his financial affairs, claiming he was hiding millions in two fake trusts, and had fled to the US leaving a trail of debt.

Yet, there was a time when Chemspec and its share price were doing reasonable well. This was mainly under the non-executive chairmanship of Ivan Clark, the head of international shipping and logistics group Grindrod, who retired all his board positions in February last year due to poor health.

Since its liquidation Chemspec has retrenched staff and it appears that the board has disbanded since the departure of Clark. Its last CEO Baron Schreuder, the former MD of Plascon, who was appointed to the board of Chemspec in January 2013, could not be traced or contacted.

Even when Chemspec was doing relatively well there were warnings. In July 2014, Marc Hasenfuss, in his Market Watch column in the Financial Mail, wrote: "I don't think there's a huge incentive for hopeful punters to go rushing into the stock just yet."

Clark was hurt financially by the Chemspec debacle. He built his shareholding in the company up to about 15%. He told this writer in 2012: "It was necessary in December (of 2011) for my own company, Clark Investments, and Corvest (another major shareholder), to put about R100m into Chemspec".

Commenting about the effect on Clark, Nick Pawley, wealth manager at Alpha Wealth, wrote in May last year: "Whilst the outcome of the rescue plan is yet to be finalised, it goes without saying that Chemspec has burnt a massive hole in Clark's pocket and is an investment which he won't forget in a hurry.

"His loss seems unimaginable, even relative to his net worth, which is estimated at R260m. A net loss of R70m to R80m equates to a drawdown of 30%, something most retirees can't handle."

Other shareholders will be hurt too. In a stock exchange news service (Sens) announcement on August 3 last year, it was stated: "A recovery for shareholders appears to be extremely unlikely." Should Wood's claim be successful it will probably rule out payments for other creditors as well.

But that seems unlikely. Liquidators say creditors have been told that the master of the High Court in Durban has rejected the claim, "but we anticipate it will become litigious".

The ball is now in Wood's court as to whether further legal action is pursued. He did not respond to emailed questions about his intentions. Should he continue with his R609.5m claim, however, it could cost him a lot more money.

Source: BDpro