TRIAL HEARS OF JASMINDER SINGH FAMILY DISPUTE WITH YOUNGER BROTHER
By Sarwar Alam
A DIRECTOR of Edwardian Hotels hit back at claims that former director and shareholder, Herinder Singh, was forced out of his family business, and instead claimed that it was Herinder’s own ‘dissatisfaction’ at his position within the company that led to his departure.
Andrew Hart, an Edwardian director since 2001, was giving evidence last week in a London court which is hearing a dispute between Jasminder Singh, the CEO of the hotels’ group, and his brother Herinder, 50.
The Edwardian Group owns 13 luxury hotels, with properties in central London. Work on a new hotel is underway at Leicester Square and it is set to open in 2020.
Jasminder Singh’s family wealth has been estimated to be £1.5 billion in the 2017 Asian Rich List, published by Eastern Eye.
Hart told the Chancery division of the high court that he acknowledged it was Herinder’s desire to be made CEO of the Edwardian Group. But Hart insisted this was ‘never going to happen’ as Herinder ‘lacked leadership skills’ and even went as far as to say he did not know what Herinder’s precise role within the company was.
From 2005 to 2010, Hart was responsible for drawing up memorandum of terms for the roles of directors within the Edwardian Hotels, which owns 13 luxury hotels, including the May Fair in central London and the Radisson Edwardian at Heathrow. He was required to establish contracts that included terms of condition, job title, specific role, responsibilities, and remuneration.
When it came to Herinder, Hart said: “I was unsure of Herinder’s job title and the exact nature of the contribution he made to the company. He had a lack of formal job title, apart from director.”
Hart added that he didn’t see Herinder as a key member of the Edwardian leadership team because of his ‘qualities, abilities and limitations’.
“He (Herinder) was not good at taking decisions,” Hart told the court. “He was not good at accepting responsibility. He was poor at leadership and dealing with work colleagues.”
Hart added: “I didn’t know what he was meant to be doing. He wanted to participate in senior management team activities and was very interested in involving himself.
“But he never accepted responsibility for projects that came up. He never wanted to become the senior management team member responsible for a project.”
Herinder, who is suing his brother for a larger share in the business, claims he was removed as director and employee for questioning two business transactions carried out by of his older brother Jasminder Singh, the Edwardian Hotels’ founder, CEO and chairman.
In the ongoing case being heard at the high court in Chancery Lane, London, Herinder accused Jasminder Singh, 66, of not giving full disclosure to the Edwardian board of directors in regards to personal dealings he had with two companies, Winchfern and Expotel, in the late 1980s and early 1990s.
Herinder claimed Jasminder Singh was ‘guilty of breaking’ the corporate opportunity doctrine, a legal principle that prohibits an officer or director of a corporation from diverting a business opportunity presented to, or otherwise rightfully belonging to, the corporation to himself or any of his affiliates.
Herinder’s supposed ‘unease’ with Jasminder Singh’s links with Winchfern and Expotel were the reasons he gave for his refusal to carry out his duty as a director in signing his confirmation of the Edwardian Hotels’ annual accounts in 2008. This ’caused a major issue as it delayed auditors from looking over and approving the company’s accounts for the year’, the court heard.
Hart, a solicitor and former partner in international law firm Baker & McKenzie, was tasked with investigating Herinder’s allegations.
At the end of his investigation, Hart concluded that Jasminder had not done anything untoward and his dealings with Winchfern and Expotel were completely legal. His shares in Winchfirm were under his wife Amrit’s name and his interests in Expatel formed trusts which were solely for the benefit of charitable causes.
Hart said: “Jasminder gave full disclosure to the board of directors on his dealings with Winchfirm and Expatel. They are recorded in the board meeting minutes (which were later read out in court).”
Herinder spent almost 18 years working for the Edwardian group. He was initially made a director in 1986 and then joined the business as an employee in 1992. He held positions as a junior in the accounts department, head of internal audit and director of marketing. He left acrimoniously as both director and employee in 2010 after falling out with Jasminder Singh.
The court had previously heard from Herinder’s barrister, Justin Fenwick QC, that Jasminder Singh had allegedly told his younger brother that they were ’50-50 partners’ and would ‘work together to build the company’. Jasminder Singh stated ‘that just did not happen!’ and said it was ‘categorically false’.
When asked by Fenwick QC if Herinder was being groomed to take over from Jasminder Singh and be the next CEO of the company, Hart said that it was ‘never going to happen’.
“He (Herinder) was clearly dissatisfied with his stature and remuneration within the company. He wanted to be at the same level as Jasminder.”
In 2005, Herinder received a £50,000 pay rise, which saw his salary increased to £250,000 per annum. Hart said that he felt at the time it was ‘inappropriate for Herinder’s remuneration to be so tremendously increased’.
“As a director, all I was concerned about was the long-term, best interests of my company and I felt this wasn’t in the best interest of the company,” said Hart, who was responsible for looking at the remuneration of Edwardian directors and if it reflected their role within the company and their work output.
When giving evidence, Jasminder Singh said he didn’t get involved in the decision to remove Herinder as an Edwardian employee and director. He left it to independent directors in Hart and Robert Morley to do what they felt was best for the company.
Hart was accused by Fenwick QC of “not acting independently” and also that he was “acting on behalf of Jasminder, doing his bidding”.
“No, I was not doing Jasminder’s bidding!” responded Hart. “As a director I have to have independent judgement. And my judgment was I didn’t see what benefit Herinder bought to the company.”
Hart also pointed out that in the early 2000s, when Herinder and Jasminder Singh first started talks of a demerger, Hart wrote a letter to the directors stating he felt ‘the company would not suffer’ if Herinder left.
The trial continues.