Ousted Smiles Inclusive founder escalates vote tampering claims

Ousted Smiles Inclusive founder escalates vote tampering claims

The founder of Smiles Inclusive (ASX: SIL) has made it clear he will not go quietly, with continued allegations there were voting irregularities at the EGM where he and former chairman David Herlihy were removed from the board

Last week the embattled Gold Coast-based dental company, whose shares have fallen 85 per cent since October, threatened legal action against founder and former CEO Mike Timoney over his protestations surrounding the vote. 

Timoney alleges electronic proxy votes from a major shareholder were switched in the final hours before a deadline on 20 May.

"The issue is that votes were tampered with before they were submitted to Link, and we have irrefutable evidence that that's gone on and we've submitted those to the authorities - to ASIC, the ASX and the police," he tells Business News Australia.

The ousted executive claims that prior to a second lodging of electronic votes on behalf of the shareholder concerned, he collected proxy votes from him in favour of removing chairman David Usasz and director Tracey Penn, and against removing Timoney and Herlihy.

"The proxies that I collected and submitted to Link [Market Services] were all correct," he says. 

"If there was any doubt over those proxies then they would have been voided, and they've indicated that one of the largest shareholders has electronically revoted his shares and we know that irrefutably is incorrect.

"That person didn't have the means to vote his shares electronically and nor was he available to vote his shares electronically because he was actually with colleagues of mine for that three-hour window."

Timoney says he is unable to reveal the identity of this shareholder, who has been "thrown in the limelight through no fault of his own".

When asked how it would even be possible to forge electronic votes with Link, Timoney replies "you tell me, that's what we're asking for".

In a response on the ASX, Smiles Inclusive said it categorically rejects the Timoney Associates' assertions of irregularities in the voting process, with its own investigations indicating the 'major shareholder' referred to is actually two separate shareholders controlled by one family.

"One of the shareholders is a company with a sole director. The other is a super fund with natural persons as trustees," Smiles said, noting Timoney visited a member of that family one month before the EGM.

However, Smiles Inclusive claimed the person Timoney visited was not actually the sole director of the company, and nor was the proxy form properly signed, rendering it invalid.

"The sole director company and the super fund also completed further hard copy Usasz/Penn proxies. These forms were properly signed by the director of the sole director company and a trustee of the super fund," the company said. 

Smiles Inclusive chief executive officer Tony McCormack tells Business News Australia both the director and trustee are indeed the same person, and the proxy forms that were ultimately provided to Link Market Services were valid and included in the count.

"Smiles has asked Mr Timoney who signed the proxy form that he provided for the company shareholder but has not received a response. It does not appear to have been the director of the company," says McCormack.

"There is absolutely no evidence that any electronic votes have been tampered with," he says.

Smiles has expressed concern about Timoney's conduct in collecting and storing proxy forms, which it alleges "appears to have been a broad scale attempt to undermine the electoral process".

"Smiles' legal advice is that similar conduct has been found by Courts to invalidate resolutions in the past. Luckily it did not change the outcome of any of the resolutions at the EGM," the company said.

"Notwithstanding these concerns Smiles has in good faith written to Mr Timoney's lawyer responding to questions about the EGM, and offering a fulsome independent review (including as to the accuracy and validity of proxy results and votes cast).

"The lack of interest of the Timoney Associates in the independent review is indicative of them realising that they lost the vote at the EGM fair and square."

Timoney has also urged Smiles Inclusive to provide "unfettered access" to all the vote count data, asking the company what it has to hide. However, McCormack argues there were valid reasons not to show everything to Timoney Associates.

"Smiles has explained to Mr Timoney that a number of its shareholders have expressed concerns as to his behaviour during his campaign leading up to the EGM and asked the company not to provide him with details of how they voted," says McCormack.

"For these reasons, Smiles is not willing to provide Mr Timoney or his associates with unfettered access to voting information but we have offered for a fulsome independent third party to review."

Link has confirmed with Business News Australia it has processed all votes in accordance with its business rules, the Smiles Inclusive constitution and the Corporations Act 2001.

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