And to underscore the “avoid like the plague” call, here’s a mail received from regular reader RL this morning. I asked for and received permission to share this mail because with a little luck it might help somebody out there avoid wasting their money on BhartiStocks. Here’s RL:
“Thanks for the link to Rock Solid – good to air out the practices of Forbes & Manhattan.
I’m a shareholder of Aberdeen International and besides being pissed that they paid out an extra $5MM in compensation in the first half of this year (no disclosure on why or who got it but it’s a sure bet it went to related parties) I’m not happy that they’ve been using Aberdeen as a piggy bank for other F&M companies who need the money, apparently so that they can continue paying the salaries and fees of related parties in those companies.
They’re giving unsecured loans to companies that have little prospect of paying them back and that appear to be going nowhere. Temujin, their largest investment, is getting money advanced to them by Aberdeen on an unsecured basis (over $1MM last 6 months probably mostly flowing into the pockets of related parties) – this is after Aberdeen gave up a secured debt position last year to get common shares that appear next to worthless. Both Aberdeen and F&M have removed discussion of Temujin from their sites so best guess is that nothing much is going on to advance their holdings and their investment (now over $13MM) doesn’t look like it’s worth much if any.
Another company continuing to get unsecured money from Aberdeen (now over $1MM and counting) is Desert Eagle Resources, a penny stock where Aberdeen has a less than 10% stake. The company appears to have no operations and no assets to speak of, having lost its properties of consequence in a title dispute. It has a working capital deficiency of over $3.5MM and the Aberdeen loan ranks behind a secured debenture. Yet Aberdeen shows the loan on their balance sheet as if it is unimpaired.
Their modus operandi seems to be to provide working capital to related companies which have no means of repayment, so that their own salaries and fees can be paid, and after a while converting the loans into shares of doubtful value.
If anyone has any ideas about how to bring even a minimum level of good governance practices to this company, that would be helpful ”
UPDATE: Reader T chips in with another datapoint
Not sure if this was already covered in the Rock Solid Politics post but…did you happen to notice this when it came up last summer?
Dacha makes a Loan of 3.5m to F&M Asset Management (a sub of F&M), and then just writes down about $2m of it (with more writedowns to come). It amazes me that stuff like this is allowed to go on in Canadian capital markets.
TORONTO, ONTARIO–(Marketwire – June 21, 2012) – Dacha Strategic Metals Inc. (“Dacha” or the “Company“) (TSX VENTURE:DSM)(OTCQX:DCHAF) is issuing this press release at the request of TSX Venture Exchange (the “Exchange”) to provide information regarding the convertible loan it issued to Forbes & Manhattan Asset Management Corporation (“FMAMCo”), a related party, for up to C$3,500,000 during the fiscal year ended March 31, 2010. The Company loaned FMAMCo $3,056,118 and accrued interest of $647,732 on the loan. To date the Company has written off $2,056,118 of the principal amount of the loan as well as the interest receivable of $647,732. Further write-offs on the principal may occur. On May 15, 2012, FMAMCo advised the Company that it had conditionally sold the underlying business and all its subsidiaries including Monarch Wealth Corporation for $1,950,000. The first payment of $750,000 will be applied to the subordination agreement with non-arm’s length party, Forbes & Manhattan, Inc. (see press release dated March 1, 2012) and other FMAMCo liabilities. Although not completed at this time, FMAMCo and Dacha intend to enter into a release and assignment agreement irrevocably directing the remaining installment payments from this sale to Dacha. As a result Dacha expects to receive $1.2 million less certain contingent FMAMCo liabilities as repayment for this loan. Stan Bharti is a director of both Dacha and FMAMCo and Executive Chairman of Forbes & Manhattan, Inc. therefore, transactions between Dacha, FMAMCo and Forbes & Manhattan, Inc. are considered to be non-arm’s length.
The Exchange conducted an issue specific review on the Company and concluded that non-arm’s length transactions commencing August 2009 failed to comply with Exchange Policies requiring timely press release disclosure and Exchange notification for non-arm’s length party transactions. To address past deficiencies in the corporate governance practices applied and to ensure the Company appropriately deals with non-arm’s length transactions according to TSX Venture Exchange Policy going forward, the Company has implemented a Code of Business Conduct and Ethics and a Corporate Disclosure Policy.