eSys boss’ assets frozen as Seagate row rumbles on
Singapore court freezes assets of components distributor in row over unpaid monies
A legal wrangle between Seagate and eSys that has ensued since the pair fell out over a sales audit more than two years ago has led to the Singapore High Court freezing the assets of eSys boss Vikas Goel, according to news reports in the country.
Court documents obtained by daily newspaper Today supposedly show that an injunction application by Seagate to prevent Goel from disposing his assets of up to US$54m was approved last November.
The order means Goel cannot transfer his assets beyond the control of the court until the outcome of the lawsuit has been decided.
An affidavit that Today claims Goel submitted a month after the court’s decision states the value of his assets in Central Provident Fund (a pension benefit scheme for Singaporeans) and bank accounts at approximately US$166,000.
That figure excludes almost 59 million shares with an issued value of US$1 each that Goel is said to own in Rainforest Trading, a holding company incorporated in the British Virgin Islands.
eSys, meanwhile, has reportedly agreed to an undertaking concerning the movements of its funds in and out of Singapore, which includes allowing Seagate lawyers to inspect financial documents.
eSys and Seagate first locked horns in 2006 when Seagate sued the components distributor for allegedly breaking their Asia-Pacific distribution agreement by supposedly failing to pay monies it owed to the vendor.
Seagate cancelled its distribution agreement with eSys in November that year after claiming the company denied third party auditors access to its sales records and indicated that an audit was likely to reveal irregularities.
The loss of that contract had consequences for its Middle East business, which counted Seagate as one of its major vendor partners in the region.
At the time of the fall-out, eSys was shipping more than eight million Seagate hard drives a year globally, equivalent to US$460m of the vendor’s sales.
Citing documents filed three years ago, Today reported that the hard drive vendor is suing eSys for more than US$4m, while Seagate and affiliates are suing Goel — the personal guarantor for eSys debts — for around US$60m.
Since then, Today says eSys has filed counterclaims on the basis of defamation, conspiracy and payments it maintains it is owed for rebates.
Seagate has also filed an additional US$76m claim for sales incentives previously given to eSys after the company admitted in court to “false POS” (point of sale).
According to Today, the latest twist in the tale came last month when an eSys director filed an application that alleges Seagate failed to return US$4.1m for defective and non-defective hard drives and other items that were returned to the vendor.
eSys boss Goel continues to find his actions under the spotlight.
A report in India’s Financial Chronicle earlier this year questioned supposed discrepancies between details contained in an affidavit he filed in October 2008 and the precise nature of investments disclosed in the 2007-08 financial report published by software and services outfit Teledata Informatics. Teledata made a US$100m “strategic investment” in eSys back in December 2006.
In a statement addressed to shareholders and posted on its website at the beginning of February, Teledata said it “strongly refuted” the Financial Chronicle’s suggestion of a scandal and called the article “baseless”.