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re: Ann: CMA Appoints Chairman and CEO as Res... CMA ex-boss in court action
Ian McIlwraith
August 16, 2010

CMA Corporation is suing former chief executive Doug Rowe.

CMA Corporation is suing former chief executive Doug Rowe.

SACKED CMA Corporation chief executive Doug Rowe, already being sued by the company for millions of dollars in allegedly misleading and deceptive deals, has tempted further court action by setting up a similarly named rival group.

Mr Rowe, who sold his business Southern Rocycling to CMA for more than $40 million in cash and shares three years ago, last month used a chain of family-owned companies to set up SouthernRo, a scrap metal operation in the Melbourne suburb of Greensborough.

The name of the new business was reserved by accounting firm Pitcher Partners, which acts for Mr Rowe's private companies, barely a month after CMA dismissed him.
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On a website that is still under construction, southernro.net, Mr Rowe and his personal assistant at CMA, Glenys Rojo, are named as contact points for the new operation. CMA also has a similarly named website: southern-ro.com.au.

Mr Rowe's Southernro site includes pictures and names of people who are listed on the official CMA site. The new company also appears to claim its Queensland operation is at the same address as CMA's Lytton Road address in the port of Brisbane.

Mr Rowe and Ms Rojo, along with her husband and their family company Desperate Fix Pty Ltd, feature in an extensive claim lodged in the Federal Court last month alleging a series of extraordinary deals that apparently took large amounts of cash out of the sharemarket-listed CMA.

It is six months this week since CMA's shares were suspended from trading while it attempts to renegotiate its finances with bankers and major shareholders. A new chief executive and chairman were appointed last week.

The new chairman, Parag-Johannes Bhatt, is the chief financial officer of German recycling giant Scholz AG which has become CMA's largest shareholder and financial benefactor over the last two years.

In a statement to the market after his appointment, Mr Bhatt said CMA was ''now in a good position to ensure that the corporate restructuring proceeds smoothly''.

When CMA bought Mr Rowe's business in mid-2007, for $25 million in cash and 47 million heavily discounted shares, it only bought the business. That meant Mr Rowe effectively became CMA's largest landlord, retaining ownership of most of the land on which the recycling operations were carried out.

According to the statement of claim filed by CMA's lawyers, Minter Ellison, in his role as an executive director of the company Mr Rowe bought additional properties and then arranged leases over three of them in Tasmania, South Australia and Western Australia.

CMA claims that the rent charged in all three cases was well above the commercial rate. It said that Mr Rowe agreed, on CMA's behalf, to increase the rent on the SA property, paid to his private company, from $800,000 to $1.2 million a year even though a specialist metal recycling plant to justify the increase was not actually built. CMA said the value of the entire property around the time that the rent was increased, was about $1 million.

In Tasmania, CMA said it paid $360,000 a year rent on a site it did not use for recycling, and a market rent would have been closer to $7700 a year. A second Tasmanian property is leased by Mr Rowe's WMR Investments from the St Vincent de Paul Society, and sub-let to CMA. While the rent on that property is only $30,000, CMA argues that Mr Rowe owed a duty to CMA to lease it directly.

CMA is also claiming that Mr Rowe entered into other non-commercial deals that cost CMA nearly $2 million, and accuses him of ''skimming''.

Mr Rowe nor Ms Rojo could be contacted yesterday.

Source: The Age