Thursday 19th May 2016
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Former NZX chief Mark Weldon has denied intimidating the former owners of the Clear Grain Exchange and described them as being more focused on their earnouts than the success of the business.
In Weldon's third day of being cross-examined by Tim North QC, who is counsel for Clear's former owners, Grant Thomas and Dominic Pym, and their companies Ralec Commodities and Ralec Interactive, the focus was on Weldon's relationship with Thomas and Pym.
Late in the afternoon at the Wellington High Court, Weldon was presented with an email sent by Pym to Thomas which North said was an accurate transcript of a conversation Weldon and Pym had, but which Weldon described as "concocted."
North said the conversation was him intimidating his employee, and asked Weldon whether he had told Pym he would lose his job if Clear didn't succeed.
Weldon said he had an obligation to have a "firm conversation" with Pym, who he described as a "very highly paid employee who was consistently underperforming and undermining the business." He denied the email was a transcript of the conversation and said that while he didn't have notes about the conversation, he remembered it as he had been conscious of the conversation because Pym "needed to understand his behaviour was unacceptable."
Earlier, cross-examination was centred around what Thomas and Pym had disclosed about a dispute with two shareholders of another company, called Thundercats, who also claimed to be founding members of Clear. NZX had asked whether there were any disputes in due diligence, and Clear said there was a dispute with a disgruntled shareholder but it was not substantial, a point Weldon made in his brief on Monday.
Weldon said it didn't matter that the shareholders had not made a legal claim, but the issue was that the two shareholders were "very important people in the grain market" who had gone on to refuse to use Clear and badmouth the platform, and this had not been disclosed.
"They were a very large broker and wouldn't support Clear," Weldon said. "Had we been aware they [Thomas and Pym] had squeezed out the grain experts we may well have done things quite differently."
North said NZX had been copied in on correspondence between the parties before the transaction was completed in October 2009. He asked Weldon whether there had been anything preventing NZX's corporate counsel Rachael Newsome from talking to the shareholders or their lawyers, and Weldon said there wasn't, but NZX had trusted Pym and Thomas and took them at their word over the issue.
North also asked Weldon about the financial situation Thomas and Pym were in after NZX acquired Clear. Weldon said the business was "very adequately resourced," and the former owners were treated the same way as any other senior executive at NZX. He said Thomas had run into issues as he had not wanted to provide receipts for his expenses.
Throughout today's cross-examination, Weldon asked North how he was trying to "trap" him, what "wormhole" he was leading him down and at one stage exclaimed "for god's sake" in apparent frustration at being interrupted. He referred to some of North's questions as "completely nuts" and said on multiple occasions he had already answered the question on an earlier day or told North he had asked a confused question.
Justice Robert Dobson told North again that he was taking too long in his cross-examination of Weldon. North said he anticipates finishing cross-examination tomorrow morning, having begun on Tuesday morning.
"[Weldon] has been in the witness box long enough," the judge said. "This has been going on an awfully long time. You're taking longer on the pre-document testing than is useful to us. I said that a couple of days ago - I don't want to sound like Mr Weldon."
In the afternoon, North asked Weldon about what he described as "machinations" when NZX became concerned with Thomas's performance before his resignation in April 2010.
Weldon said Thomas wasn't delivering and concern about his performance and "recalcitrant attitude" had been voiced by other executives in early 2010. He said Thomas and Pym "liked to act as a law unto themselves" and had to be repeatedly reminded of their obligations to NZX.
North, who put it to Weldon that he had decided to get rid of Thomas as early as late 2009, asked Weldon about the phrase "what we get him on" which Weldon used in reference to Thomas in an email which included his concerns about Thomas's performance.
"What we would get him on - that means what work we would get him to do, and that's normal sensible business practice," Weldon said. "There's nothing mysterious or bad about this. There's nothing in here that says we want to move Thomas out of the organisation, but it says we need to think through options."
Weldon was also asked about his concerns that Thomas might start legal proceedings against NZX if he was fired.
"This is a conjecture, I'm not saying we've got any obligations, I'm saying he might make an argument of such," Weldon said. "All I'm doing is identifying a risk we need to be cognisant of. We were, as it turns out rightly, concerned he would look to construct legal outcomes to get money, rather than business outcomes."
Weldon said Thomas was "someone we were coming to view as massively focused on themselves and their earnouts ahead of their general business obligations."
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