The Secretary of the Senate J. Nanborlor Singbeh has been arraigned before the Commercial Court in Monrovia, after Czech Republic-based MHM Eko-Liberia sued him over allegations that he committed financial fraud by misappropriating over a million dollars in equipment and materials belonging to the company.
The Court on February 4, 2019, heard legal arguments to determine as to whether or not Singbeh should be made to submit to audit and turn-over the affairs of the corporation as well as corporate assets to the new management. But up to Friday evening, March 1, the Court had not been able to rule into the matter.
Singbeh, who is also former president and chairman of the board of directors, holds 30 percent of a total of 100 shares, while two Czech Republic nationals, Pavel Miloschewsky and Martin Miloschewsky, hold 35 percent each.
MHM Eko-Liberia Incorporated is a company established in 2013 to engage into the production of crushed rocks. But the Miloschewsky brothers has accused Singbeh of misappropriating more than US$5,000 as well as several trucks, machines and equipment valued at over US$1,500,000 and which the company's majority shareholders had invested in its operations.
The company was operated in Seeke Town, District#4, in Margibi County.
Based on that accusation, the majority shareholders through their then lawyer, Cllr. Frank Musa Dean (now Minister of Justice), on October 18, 2017, instituted a lawsuit for "Derivative Suit for Audit and Accounting, and to turn-over the Affairs of the Corporation and Corporate Assets to the new management against Singbeh."
Cllr. Dean has so far turned over the management of the company to one Hans Armstrong, a British national. Armstrong is now pressing for the audit and accounting of Singbeh's management of the corporation's assets.
But when he was first arraigned before the court on February 4, 2019, Singbeh denied all allegations.
In their lawsuit, a copy of which is in the possession of the Daily Observer, the Miloschewsky brothers alleged that Singbeh's deliberate refusal to attend shareholders' meeting on several communications, including the one issued on July 31, 2017, left them with no choice other than to pass a resolution to re-constitute the Board of Directors, appointing Cllr. Dean as president and chairman and Hans Armstrong as managing director and member of the board of directors. The board also convened on July 31, 2017, authorizing the management to commission an audit.
"Singbeh had refused to cooperate and to submit himself to an audit after having administered the affairs of the corporation since June 2013 and has also refused to vacate the corporation's premises and offices and to turn over the assets and management of the corporation to the new managing director," the lawsuit against him claimed.
The court's record claimed further that the resolution authorized Mr. Armstrong to bring the action in the name of the corporation.
"Pavel and Martin Miloschewsky, as 70 percent shareholders of MHM Eko-Liberia Inc., have each issued Power-of-Attorney to Hans Armstrong, to bring the action in their names as though they were personally present in Liberia," the suit said.
The lawsuit also claims that upon the incorporation of the company on June 14, 2013, and up to July 31, 2017, J. Nanborlor F. Singbeh was appointed as president and chairman of the Board of Directors.
The court's document alleged that between June 14, 2013, and July 31, 2017, the Miloschewsky brothers remitted funds in excess of US$2,500 for the operation of the corporation.
They also sent equipment and machines, which amounted to another US$2,500, to MHM Eko-Liberia, Inc., "it being understood and agreed that several of the equipment and machines were sent to MHM EKO-Liberia, Incorporated on the basis of a rental agreement and arrangement," the record noted.
The court's document alleged that the equipment and machines were to be rented to MHM Eko-Liberia until the company could pay for them or was able to acquire its own machines, while some of the equipment and machines were purchased using funds remitted to Liberia by the Miloschewsky brothers.
They also claimed that the funds, equipment and machines were sent to MHM Eko Liberia to be used by the company to engage in the production of crushed rocks for sale, with the understanding that funds generated from the production would have been used to refund money spent by the Miloschewsky brothers, with the profit being applied and invested in the expansion of the company.
According to the lawsuit, Singbeh, after receiving the funds, equipment and machines, refused to sign the rental agreement and other documents. He also failed to provide an accounting or submit to an audit, according to the court's record.
In counter argument, Singbeh said the Miloschewsky brothers did not inform him that they had appointed anyone to act as their attorney.
Singbeh also argued that all of the financial matters of the corporation were handled by the Miloschewsky brothers in the Czech Republic. Up to present, according to Singbeh, the corporation is being managed by the Miloschewsky brothers and that he (Singbeh) is not actively involved in managing the company.
Although he was not actively involved with the management of the company, Singbeh claimed that he only signed checks due to the fact that he was one of the signatories to the company's account.
"I did not get involved in the day to day management of the corporation. Rather, it was to the Miloschewsky brothers and their team of crisis managers," Singbeh argued.
He also argued that MHM Eko-Liberia never received from its majority shareholders money in the amount of US$2,500 -- at least not to his knowledge -- as is being alleged.
Instead, he was given a purported loan agreement for him to sign, and he refused to do so, "because it contravenes all rules of the contract."
Singbeh said the machines were purchased and sent to the company by the Miloschewsky brothers and that he was never informed that they were intended to be leased.
According to Singbeh, it was not until 2017 that he received from the Miloschewsky brothers a "machine rental contract."
He also claimed that his partners advised him that the signing of the subject agreement was a formality.
On the issue of the equipment, Singbeh argued that his partners sent equipment to MHM Eko-Liberia. He said the equipment are still parked at the site of the company's operations, while some of the machines were stolen by Mr. Armstrong.
He claimed that it was in 2017 that he received through DHL a document, termed 'sublease agreement'.
He said that the sublease agreement is incriminating and is the work of fraud and deceit practiced for the mere purpose of making him commit himself to an illegal contract.
He argued that he did not refuse to give account of the company's activities and neither has he refused to submit to an audit, "because my former manager Karel Sochor had already submitted to the shareholders financial report of the corporation covering the period December 2013 up to September 30, 2015."
Singbeh again argued that he did not refuse to account to the company. Rather, he refused to submit to a total stranger and a person who lacks the capacity to question management about the company, making specific reference to Cllr. Dean and Armstrong.
Singbeh also alleged that the by-laws made it clear that there shall be no proxy unless the owners of the hundred percent share agreed, "and so Dean has no capacity to request or demand for accounting and/or audit of the company."
"It is illegal, for the fact is that the by-laws absolutely forbid the appointment of a proxy by any shareholder without the consent of the other shareholders," he said.
However, the Miloschewsky brothers, who claimed in their lawsuit to have a combined total of 70 percent shares of the company, said at no time were they ever invited to a meeting or participated in any meeting where by-laws were discussed and agreed upon.
They also claimed that they have never ever been present with regard to accounting statements, since 2013 when the company was incorporated, up to present.