Environmental Management Solutions (EMS) fired its founder and vice-chair "for cause" on Monday after an audit report alleged that company funds had been misappropriated, the company said.
The employment of vice-chair Frank D'Addario was "terminated" immediately. D'Addario was chairman and CEO of the company until March 16, 2004, and was CEO until Sept. 28, 2004. Since then, he had been serving as vice-chair for business development.
EMS said D'Addario resigned as CEO on Sept. 28 following an audit committee report. At that time, he was told "to refrain from acting beyond the scope of his new role." The company said it took steps to correct matters identified in the audit committee report.
The company said the audit report found "indications of misappropriation of corporate funds, improperly disclosed related party transactions, and inappropriate arrangements with related parties." A further probe by the company's auditors was deemed necessary. That review was received last week.
Canadian Press said D'Addario would fight to clear his name. "I deny any wrongdoing, I can tell you that," the news agency quoted him as saying.
None of the allegations made in the auditor's report has been proven.
D'Addario and "related parties" own 26.2 per cent of the common stock of EMS â almost 10 million shares. EMS, which trades on the TSX, closed Monday at 80 cents, down 4 cents on the day. News of D'Addario's firing came after the markets closed.
The shares have a 52-week trading range of 66 cents to $4.
D'Addario's wife is also suing EMS for wrongful dismissal.
In the first nine months of 2004, the company lost more than $20 million. It negotiated $9 million in new financing late last year to address a cash flow deficit. At the time, the company said the new financing was "critical" to its ongoing business operations.
Current management is restructuring the company. After a spate of acquisitions in the past few years, losses have grown and cash flow has fallen, even as revenues soared.
Environmental Management Solutions expects fiscal year 2005 revenues in the $95 million to $100 million range. It provides organic waste management and site cleanup services to industry, primarily in Ontario, Quebec and Alberta.