While most of the dust has settled in the Naber Seed case, a group of grain companies and Naber’s former bank are still kicking up a storm.
They are in a legal dispute over proceeds from the sale of yellow peas amounting to approximately $500,000 US.
As part of that court battle, the grain companies, led by Agricore United, have filed a motion to declare Naber’s receivership null and void. It will be heard in court on Feb. 2.
Naber Seed and Grain Co. Ltd. of Melfort, Sask., went out of business last year, leaving unsecured and secured farmer creditors on the hook for $3.4 million, $900,000 of which was eventually reimbursed by the Canadian Grain Commission.
Read Also
Increasing farmland prices blamed on investors
a major tax and financial services firm says investors are driving up the value of farmland, preventing young farmers from entering the business. Robert Andjelic said that is bullshit.
The pulse processor’s largest creditor, the Canadian Imperial Bank of Commerce, placed it into receivership on June 10, 2002.
Agricore United claims CIBC broke the law by doing so because Naber was a farming operation and the bank failed to follow the proper notification procedures under the Farm Debt Mediation Act.
Former owner Todd Naber agreed.
“We’ve gone through hell here, which could have been avoided had the bank followed the rules properly,” he said in a recent interview.
He said the company was a diversified farming operation and the bank failed to properly recognize that fact.
However, in an affidavit filed in opposition to the Agricore United motion, former company receiver Rob McMahon, senior vice-president of Ernst and Young Inc., disputes this assertion.
He states that in fiscal 2000 and 2001 the company’s gross sales were $32.7 million and $51 million respectively. Income from crops grown on company land in those years amounted to $21,600 and $33,500.
“This is less than 0.1 percent of Naber Seed’s gross sales and is merely incidental to Naber Seed’s business of grain purchase and resale.”
In his affidavit McMahon also said Naber Seed did not claim provincial sales tax exemptions, fuel tax rebates or capital tax exemptions afforded farmers and that the company stated the nature of its business as “grain purchase and resale” on a provincial tax return.
Naber countered that his firm was a diversified farm consisting of two quarters of land and a processing plant situated on the farmyard.
“You’re a farming corporation if you are engaged in the business of farming and have farmland. That’s the fact of the matter,” Naber said.
Millions at issue
McMahon’s affidavit contained other allegations. It said Naber Seed was guilty of “deliberate financial misrepresentation” amounting to millions of dollars.
McMahon took the position in his affidavit that statements provided by Naber to the CIBC were “grossly and significantly incorrect” to the tune of $12.5 million and that the company “materially and intentionally misrepresented” its true financial situation to its creditors.
“At Jan. 31, 2002, the financial statements of Naber Seed indicated a positive shareholder’s equity of $4,009,675. As a result of Ernst and Young Inc. adjusting inventory and accounts receivable significantly downward to actual amounts and adjusting accounts payable upward, shareholder’s equity decreased by $12,451,647 to a deficit balance of $8,449,972 at June 10, 2002,” McMahon said.
Naber vehemently denied wrongdoing.
“I don’t agree with that at all,” he said. “That has totally been unfounded and totally is the re-ceiver’s opinion about it. The fact of the matter is he (the reciever) had no right to be there and there is a third party (grain companies) that is asserting that position.”
In his affidavit McMahon also stated that Naber regularly committed bank fraud in the form of cheque kiting.
Naber denied that accusation.
“That was an opinion of the receiver, that’s not a proven fact at all,” he said, adding that anything that happened in the corporation was “normal course of business.”
He and Agricore United lawyer Jamie Kagan said the affidavit is a “smear campaign” against Naber, pointing out he is under no criminal investigation by the RCMP or any other agency for the activities alleged by McMahon.
Naber said he has “worked (his) butt off” to resurrect the Melfort processing business, which has new ownership and is taking deliveries under the name Naber Specialty Grains Ltd.
He wouldn’t identify the new owners, but said the new firm has already paid “loyalty premiums” to customers who lost money through the old Naber Seed and Grain firm.
“We’re doing something that hasn’t ever happened in agriculture before and that is put a corporation back up to pay people that got caught,” said Naber, who added he is an adviser, not an owner, in the new plant.
If Agricore United wins its court challenge and the receivership is deemed null and void, the money raised through the receivership process will be returned to Naber Seed, Kagan said. That could mean a payout for farmers who lost money.
“Naber Seeds would be in a position to have money to distribute,” Kagan said. “It’s up to Mr. Naber as to what he would do with those funds.”
