May 6 (Bloomberg) -- Richard Marin, former chief executive officer of Africa Israel USA, sued the company and its Israel-based parent, saying he was fired after uncovering “serious instances of self-dealing and conflict of interest.”
Marin, who became CEO in February 2009, is seeking to recover a $1.25 million bonus he said he was promised for last year, plus management incentive fees and damages for his termination in December.
“This is a case of a company firing an executive in order to cover up wrongdoing that the executive discovered and reported,” Marin said in the complaint, filed yesterday in New York State Supreme Court in Manhattan. A lawyer for the company said today that Marin was fired after disagreements with management in Israel about strategy, and that he delayed repayment of a loan against the bonus.
Africa Israel USA, a unit of Israeli billionaire Lev Leviev’s Africa Israel Investments Ltd., made its highest-profile acquisitions just before the onset of the credit crunch in 2007. A series of acquisitions that included the $525 million purchase of the former New York Times building and Manhattan’s Clock Tower building for $200 million saddled the firm with $2 billion of debt.
Marin was hired to help the company “stop the bleeding” from its “badly timed investment binge,” according to his suit.
Marin alleges that the company, struggling to restructure its debt, diverted a valuable client to a competing firm founded by a former employee. That client, China Sonangol International Ltd., which owns an office building at 23 Wall Street, brought more than $200,000 of fees to Africa Israel, which was managing the property, Marin’s suit said. China Sonangol also owed Africa Israel $700,000 and Marin said that senior management in Israel prohibited him from suing to recover those funds because the Hong Kong firm has ties to Leviev’s non-real estate ventures.
“Willful diversion of the opportunity deprived shareholders of Africa-Israel of hundreds of thousands of dollars in revenue,” Marin alleged in the suit.
Y. David Scharf, a lawyer for Africa Israel, said Marin was terminated because of a series of disagreements with management in Israel, including disputes over the strategic direction of the company and “outwardly hostile” remarks to Leviev in front of senior management. Marin also borrowed $500,000 against his bonus, according to Scharf and Marin’s lawsuit. The amount should have been paid back in 2010, Scharf said; instead Marin created a promissory note with a date in 2011, against the bonus he expected to receive for 2010.
“He basically took the company’s money and gave himself an advance against the 2010 bonus, which wasn’t guaranteed. It was completely discretionary,” Scharf said.
Marin described the bonus advance in his suit, saying he and management agreed the loan would be due in June 2011, and be repaid from his expected 2010 bonus. Africa Israel recorded the loan and its payment date in corporate filings in June and September 2010, according to the lawsuit.
Scharf also said that China Sonangol was unhappy with Africa Israel’s performance in leasing the vacant space at 23 Wall Street, so Africa Israel referred it to another firm.
“It wasn’t like Africa Israel diverted business to a competitor; they actually saved a working relationship,” Scharf said. “Africa Israel was not generating revenue, not leasing the property.”
The case is Richard A. Marin v. AI Holdings (USA) Corp., 651224/2011, New York state Supreme Court (Manhattan).
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