January 09, 2009

The Kaselehlie Press

Weno, Chuuk - A dispute over shares in Truk Transportation Company (Transco) led the FSM's highest ranking elected government official to file a civil complaint against the corporation at the FSM Supreme Court in Chuuk on November 28, 2008.

In a deal made in March of 2008, President Manny Mori bought all of Barney Olter's shares in the corporation for $3000. He holds a bill of sale for the shares which was signed and agreed to by Olter. Whether or not the bill of sale is legally binding is one of the many questions that the court will need to consider.

Transco, which performs stevedoring services in Chuuk, has more than 650 individual share holders who hold over 83,000 shares of stock. At issue is the ownership of 2160 shares of the stock.

The par value for Transco stocks is five dollars per share. Legal counsel for Transco said in a counterclaim filed on December 22, 2008 that the book value is higher than that.

Annual dividends per share of stock currently average approximately 50 cents per share.

President Mori's complaint named as defendants, Myron Hasiguchy, President of Transco; Elsha Lagradilla a citizen of the Philippines, and a managerial employee of the company, and Truk Transportation Company.

Though Barney Olter wrote a letter to Transco management in October saying that he felt that he had been "defrauded" and requested that Transco not transfer the ownership of the shares, he was not named in the civil complaint.

Transco's attorney in his counterclaim has named Olter as a third party and argues that the omission of Olter as a defendant in the case is a grounds for dismissal of the original claim.

Barney Olter inherited the shares from the estate of Salter Olter, his father but even in March, when the sale was made he didn't seem to know how many shares he owned. Micronesian Legal Services represented him at the time of the probate hearings and filed documents apparently based on Olter's assumption that he owned approximately 100 shares of stock in Transco.

Mori didn't seem to know exactly how many shares he had bought either.

He wrote a letter to Transco President Myron Hasiguchy on October 20, 2008, demanding that 2040 shares be transferred immediately to his name. By the time the civil complaint was filed the number had been corrected to 2160.

There were more accusations in the complaint filed by Mori's attorney.

It said that Hasiguchy has taken actions that are "inconsistent with and detrimental to the business and legal interests of Transco by "making Transco" purchase goods, including outboard engines from his family store, the Shigeto Store, when the goods could have been obtained elsewhere for a lower price.

It claims that Hasiguchy took away for himself a rock crushing and quarry business when Transco had the resources, interest and proven capability of operating and managing a business of that type.

Previous court documents from other court actions show that Transco's rock crushing and quarries operation lost many thousands of dollars when it was in operation.

Mori's complaint also alleges that Hasiguchy transferred substantial company assets into capitalization of other companies in which he had a major interest.

The claim lists "fraud" as a cause of action. It says that the delay of action on the transfer of stocks was motivated by Hasiguchy's own later purchase of the stocks.

Another cause of action was "breach of fiduciary duty" based on the claim that Hasiguchi personally bought Olter's stocks for $10,000.

It claims "intentional interference with contract" for the purpose of personally enriching Hasiguchy.

The last cause of action was "interference with advantageous business relationship" also for the purpose of personally enriching Hasiguchy.

The December 22, 2008 counterclaim filed by Transco's legal counsel on behalf of Transco said that the stocks are still in the name of Barney Olter and that Hasiguchy did not buy them.

Mori, through counsel is asking for Transco to make him the legal owner of the disputed shares.

His counsel is asking for injunctive relief to prohibit the defendants from making any gain based on the ownership of the stocks including dividends until the matter has gone through the judicial system.

Mori has asked for punitive damages of $500,000. If damages are awarded, Transco, and Hasiguchy, would each pay $200,000. Lagradilla would pay $100,000.

The suit also asks that Hasiguchy and Lagradilla be immediately and temporarily removed from their positions by the court. It asked for a receiver to conduct an inspection and accounting of the company's books and operations to determine "other breaches of the defendants' fiduciary duties and its minority share holders."

Transco's counterclaim asks for the court to decide who owns the shares so that the company can transfer shares to the correct owner. It asks also that the costs of the legal proceedings including attorneys fees be "deducted from the dividends or stock whose ownership is to be determined."

The issues that the court will have to consider are complex. When a citizen of Pohnpei dies intestate (without a will) his personal property is to be split amongst the heirs in a legally defined way. 1/3 of the estate is supposed to go to the surviving spouse and the remaining 2/3 is to be split amongst the surviving children. While other assets were split in the defined way, all of the stock went to Barney Olter.

Transco, according to their counterclaim was concerned that the other surviving children might have a claim on the stocks.

Further, at the time of the sale of the shares, the language in the Pohnpei State probate court decision transferred ownership of three Transco shares to Barney Olter. Olter actually owned three share certifi cates; one for 20 shares, one for 100 shares, and one for 2040 shares of Transco stock.

Transco's attorney argued that company offi cials acted reasonably and in good faith when they requested that Olter seek an amended court order stating that he was in fact the rightful recipient of the shares.

The court amended its order on July 21, 2008 confi rming Olter as the owner of all 2160 shares of stock. Shares were not actually transferred into Barney Olter's name until September 4, 2008, nearly six months after he sold them to President Mori.

The merits of both sides of the dispute will be weighed at the Supreme Court.