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Telit overhauls board in recovery mode

The self-described enabler of the 'Internet of Things' has overhauled its management, following an independent review
August 17, 2017

Telit Communications (TCM) has a lot of work ahead of it to get its house in order. Following speculation around historical indictments of chief executive Oozi Cats in the US, Mr Cats has formally resigned from following the outcome of an independent review. The review found evidence showing an indictment was issued against Oozi Cats in the US and that this fact was "knowingly" withheld from advisers. 

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The board said in a statement: "It is a source of considerable anger to the board that the historical indictment against Oozi Cats was never disclosed to them or previous members of the board and that they have only been made aware of its existence through third parties." Representatives for Mr Cats could not be reached for comment. 

Chief financial officer Yosi Fait will continue as interim chief executive. Mr Fait plans to conduct a review of the group's activities and cost base. The board also plans to appoint three additional independent non-executive directors as soon as possible, one of whom will become Chairman. It is expected that the non-executive appointments will be UK-based and have previous board experience. 

In addition to this announcement, Telit dismissed speculation from third parties about its financial health and the nature of its distributors. In response to comments about its connection with Bartolini After Market Electronics Services (BAMES), an Italian business which entered insolvency in 2013. Management said Telit’s involvement with BAMES ended in 2010 and that an investigation was in a “preliminary, non-public stage”. Telit will “defend its position vigorously” if charges are filed, management added.   

There are various unanswered questions including why Mr Cats’ 1992 indictment has only just been discovered. It was not acknowledged in the relevant section in Telit’s 2005 Aim admission document and was never disclosed to members of the board.

Last month the London Stock Exchange issued a discussion paper on proposals to tighten rules around the pre-admission process for Aim constituents and their nominated advisers. At present, the LSE says that the role of the nominated adviser (Nomad) is to assess a company’s appropriateness to join Aim. The Nomad has an overall responsibility to the London Stock Exchange regarding the suitability of a company applying for admission to Aim and for overseeing the due diligence in progress. As part of its admission responsibilities the LSE says a Nomad should usually “issue and review directors’ questionnaires and review directors’ CVs”, and “test the information revealed”. 

The LSE's Aim rules state that an Aim company must provide its Nomad with any information it reasonably requests for the adviser to carry out its responsibilities under the rules. Directors must also accept “full responsibility, collectively and individually, for its compliance with these rules”. Additionally, Aim companies have lawyers, auditors and registrars. Other regulatory authorities may step in when things go wrong. 

The Nomad that brought Telit to market, Seymour Pierce, went into administration in 2013 after being replaced in the role four years earlier.