28 February, 2007



We are looking at pages 18-30 of the Thomas Report of August 2003. Mr Thomas considers how Kennedy Hodge handled the investment of NICA’s funds in the stock market. Mr Hodge had been appointed manager by the Board. He points out that Mr Hodge had never claimed to meet the high standard of management that the Prospectus had promised for its manager, especially in the area of investment in stocks. He had never been an active participant in the stock market. He had at best only some experience in investing in mutual funds or individual stocks and bonds.

The Board agreed to invest US$60,000.00 in overseas stocks and bonds. $40,000.00 were to have been placed directly with Salomon Smith Barney, and $20,000.00 to be invested through the Investment Partnership with Kennedy Hodge and George Kentish. The Partnership was to purchase $79,000.00 shares in a German company named Deutsche Telecom. NICA was to put up the $20,000.00. Kennedy Hodge was to put up $50,000.00. George Kentish would invest the balance of $9,000.00. On 8 November 1996, the amount of $40,000.00 was transferred from NICA’s bank account to Kennedy Hodge’s account. George Kentish and Kennedy Hodge signed the NICA cheque. It was supposed to have been $20,000.00, not $40,000.00. Kennedy reduced his personal investment from $50,000.00 to $30,000.00. When asked by Mr Thomas why he did this, he replied that he had made a mistake in writing out the NICA cheque! He had not immediately paid back the excess of $20,000.00 because he had a nasty headache! He did not pay it back the following day because he had not thought of doing that!

Everything might have been forgiven if the Partnership had made a profit, and NICA had been handsomely rewarded for permitting Mr Hodge to unilaterally change the verbal agreement. But, according to Mr Thomas’ research, that is not what happened. If the proceeds had been divided in the ratios agreed for the Partnership, NICA should have been paid $53,165.00, a profit indeed. The amount Mr Hodge actually paid to NICA was $42,927.88. He paid his family company, Dolphin Enterprises Ltd, $132,911.00, and George Kentish $23,924.00. He paid himself 5%. He took this out of NICA’s share. He never told the Board. When asked by Mr Thomas about it, he explained that he had paid NICA for the 5%. He explained to Mr Thomas that Dolphin had always been the 63% partner. Mr Thomas concluded that, based on the information provided, Mr Hodge had no authority to sell NICA’s asset to himself, and, in any event, there is no indication he ever paid for it.

It was not acceptable conduct for the manager and the Chairman of the Board to have arranged this Partnership with their company, no matter how acquiescent and forgiving the Board was. It was improper, even if there had been no fiddling with the figures and the pay outs. It was wrong for the company funds to have been invested through a personal account of the manager, and not through a properly set up Partnership account. Mr Thomas concludes that Mr Hodge’s behaviour was like a man accountable only to himself. In any business organization that should never be the case. In a public company, he opines, that is diabolical. That is strong language, indeed.

1 comment:

  1. I would like to know from Kennedy exactly which part of today's posting is "demonstrably false and highly defamatory" of him, "totally misrepresents the facts" or "are so egregiously false or wrong" that he verily believes "that the report is malicious." I ask that Kennedy please be specific.


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