Duncan Lewis targeted in lawsuit by 100 US investors
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Your support makes all the difference.Duncan Lewis, the former chief executive of the telecoms firm Mercury, and three other telecoms executives are being sued by a group of about 100 private shareholders in the US for alleged securities fraud.
The case, which is expected to be heard in a US court later this year, relates to Mr Lewis' time at Global Tele Systems (GTS), the telecoms company he joined as chief operating officer in 2001 and which was later sold to KPNQwest.
The shareholders, who bought stock in the company between 31 October 2000 and 19 October 2001, allege they bought the shares based on "a series of false and misleading statements deliberately made" by Mr Lewis and three other board members about the company's restructuring plans and prospects.
Robert Amman, the company's former chairman, Robert Schriesheim, its former chief financial officer (CFO) and Grier Raclin, formerly the company secretary, have also been named in the suit.
The shareholders allege those three executives "formulated a plan to capture for themselves as much of the company's remaining value as possible".
By renegotiating their employment contracts, they allege, the three stood collectively to receive $18m (£11.4m) in salary and bonuses and a further $3m of "target bonuses" on the completion of the sale of the company's assets to KPNQwest.
The shareholders say "former high-ranking GTS and KPNQwest" staff revealed that Mr Lewis received severance and/or retention compensation of at least $3m "in exchange for his agreement to facilitate the pre-negotiated bankruptcy and the sale to KPNQwest".
The four former GTS executives all deny any wrongdoing. Mr Lewis, a high-profile telecoms executive in the UK who has been linked with almost every vacant senior telecoms job in the industry, dismissed the case yesterday.
He said: "The basis of their case is that the board created a conspiracy to sell the company to KPNQwest. There was no conspiracy because the aim, at that stage, was to remain an independent company."
He added: "One of the things they've missed is we sued KPNQwest because they tried to poach our CFO ... we wouldn't have gone to that much trouble if we were conspiring to sell them the company."
Mr Lewis also pointed out that the company's bondholders were originally planning a financial restructuring but, in the wake of the September 11 terrorist attacks, pressed for a sale instead.
"The bondholders then [after 11 September] decided they were not prepared to take the risk of putting new money in," he said, adding: "They asked us to sell the company and that's what led to the deal with KPNQwest."
The shareholders alleged that the defendants issued false and misleading statements "in direct e-mail communications to stockholders" and in their weekly reports which were posted on internet message boards.
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