AMA Group has filed proceedings in the Federal Court of Australia against former Chief Executive Officer Andy Hopkins and one of his companies in an attempt to “recover” more than $2.4 million.
According to an AMA statement, the $2.4 million consists of alleged “unauthorised expenses incurred by or on behalf of” Hopkins of around $1 million, along with repayment of an “outstanding loan” of around $1.4 million.
“This claim results from the findings of an investigation by leading forensic accounting firm McGrath Nicol of a number of whistleblower complaints made with respect to the actions of Mr Hopkins while he was a senior executive with the company,” said AMA.
Hopkins resigned as CEO on 31 January 2021. He subsequently resigned from the board and sold his shareholding in the company.
While AMA has remained tight-lipped about the circumstances surrounding Hopkins’ departure, he issued a statement earlier this year denying the allegations.
“While I categorically deny the allegations against me, I cannot allow this dispute to impact the operations of the company I have been involved in leading since 2015, in an industry I have worked in for 30 years,” said Hopkins.
In court documents obtained earlier this year by the Australian Financial Review (AFR), Hopkins’ lawyer said AMA director Simon Moore, who is also Senior Partner at private equity firm Colinton Capital Partners, wrote to Hopkins to have him terminated immediately due to the staff whistleblower complaint the company received in September last year. Hopkins countered by saying the expenses and bonuses were previously approved, but “are now alleged not to have been approved. Regrettably, this allegation is false and made without any proper process,” he was quoted as saying in the documents.
According to the AFR, Hopkins’ lawyer then dropped a bombshell.
“Further, and in summary, the corporate background in which this surprising allegation is now belatedly made is that of significant shareholder disquiet about the $4.4 million payment Mr Moore had demanded in 2019 and [Moore’s] proposed removal from the board.”
The documents alleged that when AMA was purchasing repairer Capital S.M.A.R.T, Moore argued that private equity would generally borrow a greater proportion of funds and “insisted AMA borrow more than the market had indicated was appropriate”. Colinton Capital later sought that “AMA pay $4.4 million for its part in the borrowing and acquisition of Capital S.M.A.R.T,” the documents said.
While this price was later negotiated and reduced to just over $3 million, the apparent conflict of interest that emerged between Moore, his private equity firm Colinton Capital and AMA infuriated investors, and according to the AFR, the AMA board passed a resolution to stop Moore or any other director “behaving in this manner again”. The documents added that many large shareholders wanted to sell out but were ultimately persuaded not to by Hopkins.