International port and container terminal group under fire from global unions again
Shareholders asked to vote against Directors at forthcoming AGM.
The row continues between global transport unions and International Container Terminal Services Inc. (ICTSI) which has port and logistics holdings and, by its own admission, has always adopted an aggressive acquisition strategy whenever it perceives an opportunity to and a company which is currently pursuing an active programme to acquire new terminal concessions in Asia, the Middle East, Africa, Europe and the Americas, often as governments divest themselves of nationalised freight handling facilities.
The International Transport Workers’ Federation (ITF) has been amongst the harshest critics of ICTSI and the disharmony between the two shows no signs of abating. In November 2017 the ITF and local unions were harshly critical after two deaths at the Port of Jakarta following complaints earlier that month about potential redundancies in Papua and New Guinea. A month earlier 43 sackings at the Port of Toamasina in Madagascar was the target for protests whilst earlier in the year it was Portland, Oregon that proved controversial. ICTSI currently owns and operates 31 terminal facilities in 18 countries.
Now, with ICTSI’s 2018 Annual Stockholders’ Meeting taking place on 19 April 2018 the ITF is recommending that shareholders vote against directors Stephen A. Paradies and Jon Aboitiz stating that it believes these directors bear meaningful responsibility for major governance and operational issues at the company. The ITF believes greater board independence would help ensure that minority shareholder interests are safeguarded.
The Philippines SEC recommends that directors with more than nine years of Board membership should not be considered independent. If this recommendation was rigorously enforced at ICTSI, none of its directors would qualify as independent. Paddy Crumlin, President of the ITF and Vice-Chair of the ITUC’s Committee on Workers Capital (CWC) said:
“ICTSI has grown over the last decade. This growth has been accompanied by a failure to put in place decent and sustainable governance structures in line with accepted international best-practice. The Board Risk Oversight Committee, chaired by Mr. Paradies, has failed to ensure that ICTSI’s internal controls are significant enough to avoid major operational issues, including major port disputes and relationships with censured regimes.
“These directors seem to have been unsuccessful in guiding the company towards outcomes that are better for all shareholders. We call on shareholders to vote against these directors and send a message to ICTSI management that these governance issues must be addressed.
“In the last 18 months, ICTSI has seen protracted disputes at five terminals, disputes that have directly affected multiple port stakeholders, including governments, global brands and shipping lines. 40% of ICTSI’s ports are operated with partnerships involving regimes that are either internationally censured or under investigation for crimes against humanity.
“Proxy advisor Institutional Shareholder Services (ISS), the ASEAN Corporate Governance Scorecard and the Philippines’ Securities and Exchange Commission (SEC) all recommend that firms have at least three independent directors. Yet ICTSI only has two independent directors, out of a board of seven. The fact that the Razon family hold over 60% of the voting rights at ICTSI, the lack of board independence should be a major concern for shareholders.”
As of December 31, 2017, ICTSI is owned 61.4% by its Chairman and President, Enrique K. Razon, Jr. through direct individual shareholding and various family-owned corporations. There are no other substantial shareholders in the company. ICTSI has seven directors, two of whom are independent non-executive directors. The Board is headed by Chairman Enrique K. Razon, Jr. The other members of the Board are Stephen G. Paradies, Octavio V. Espiritu, Andres Soriano III, Jon Ramon M. Aboitiz, Jose C. Ibazeta and Joseph R. Higdon. Messrs. Espiritu and Higdon are independent directors.
The ITF is recommending that ICTSI shareholders vote against directors Stephen A. Paradies and Jon Aboitiz at ICTSI’s 2018 Annual Stockholders’ Meeting on 19 April 2018. The ITF believes that these directors bear meaningful responsibility for major governance and operational issues at the company.
The ITF claims that even ICTSI’s own published documents highlights that there are company policy statements published which demonstrate a potential risk to outside shareholders, saying these state:
"…the Razon Family exercises control over or has significant ability to influence major policy decisions of the Company, including its overall strategic and investment decisions, dividend plans, issuances of securities, adjustments to its capital structure, mergers, liquidation or other reorganisation and amendments to its Articles of Incorporation and By-laws.
"If the interests of the Razon family conflict with the interests of other shareholders of the Company, there can be no assurance that the Razon Family would not cause the Company to take action in a matter which might differ from the interests of the other shareholders.”
Source: Handy Shipping Guide