Former Yellowknife MLA and industry minister David Ramsay has connections through his directorships on two companies to a multi-million dollar lawsuit now before the courts.
Ramsay, whose term as Minister of Industry, Tourism and Investment (ITI) ended in November 2015, is a director with mineral exploration company Fortune Minerals Ltd. In 2016, the year Ramsay joined Fortune’s board, immigrant applicant Shengtang Wang purchased $1 million worth of Fortune Minerals shares.
Wang stated in court documents that he made the purchase following immigration consultant Liang Chen’s advice in hopes of becoming a permanent Canadian citizen through the GNWT’s immigration program.
All court documents referred to in this article contain allegations that have not been proven in court.
According to Chen’s statement of defence and counterclaim filed in court, Wang purchased $500,000 in Fortune stock on March 8, 2016, another $250,000-worth of shares on June 8, 2016 and the final $250,000 in stock on July 22, 2016. Ramsay’s appointment on Fortune’s board was made official on April 18, 2016, as referenced in the company’s September 30, 2016 management’s discussion and analysis of financial conditions and results of operations (MD&A) – a document filed to SEDAR, a mandatory document filing and retrieval system for Canadian public companies.
Chen and Ramsay are former business associates. Documents from the NWT corporate registry list Chen and Ramsay as the only two directors on a company called Northern Gateway Consulting Services Ltd. The documents show that Northern Gateway incorporated in September 2015, and Ramsay’s directorship became effective April 11, 2016.
Fortune Mineral’s September 2016 MD&A shows that $78,250 was paid to Northern Gateway in consulting fees. Ramsay also earned $34,000 in stock options from Fortune Minerals.
Ramsey and Chen have done consulting work together
Asked by NNSL Media about Northern Gateway, Ramsay said he and Chen had done some consulting work together a number of years ago but denies they were ever business partners. Ramsay said the two met when Ramsay was ITI Minister and “have been friends since.”
Ramsay said he’d be “crazy to comment” further because of the civil suit before the courts.
A representative of Fortune Minerals told Yellowknifer “it is not appropriate for us to comment or speculate on matters before the court.”
Chen and Wang are currently before the NWT Supreme Court in a civil dispute over millions of dollars.
Wang alleges Chen, while acting under C.L. Pacific Immigration Consulting Ltd., owes a total of $425,000 for a breach in currency exchange contract, failure to return an investment deposit and exemplary damages – an order used to penalize the defendant for outrageous conduct and to deter others from engaging in similar actions.
Chen says Wang’s remarks are slanderous and have cost him a direct loss of work and future income.
Chen could not be reached for comment.
In his statement of defence and counterclaim, referring to the purchase of Fortune Minerals shares, Chen alleges: “Mr. Wang understands if he makes $1 million in share purchase of a publicly-traded company (PTC), the company will support him for NTNP-ES (Northwest Territories Nominee Program – Employer Stream).”
He also alleges that an infrastructure project with commitment from the GNWT was set to “greatly enhance the value of the PTC share price,” though he did not specify the details of the project.
The Department of Infrastructure’s contractors began building the Tlicho Highway in 2019 – a 97-km all-season road improving access to Gameti and Wekweeti winter roads and year-round access to Whati. The Tlicho Government then signed an access agreement allowing Fortune Minerals to build and operate a 51-km access road connecting the highway to the company’s NICO cobalt, gold, bismuth and copper project.
Chen alleges that “Wang is very knowledgeable with the stock market,” and that he “had high confidence that the stock would at least triple in value within one to two years.”
Chen also alleges that Wang breached three different contracts, in addition to one verbal agreement, and owes him almost $1.8 million. He is also suing for more than $4.6 million in exemplary damages.
Chen’s court filings further allege that he and Wang engaged in a verbal agreement where if he earned at least 100 per cent profits on his shares, Wang would pay Chen a 30 per cent stock commission on his earnings. Chen cites a TD Bank online report that values the investment at $5,857,640. Chen said he is therefore owed $1,757,292 in stock commission.
Chen alleges a verbal agreement saying Wang, now owner of Northern Sky Films, committed to hire Northern Gateway Consulting Services “to act as his business consultant for three years.” Wang, represented by lawyer Christopher Buchanan, denies any such verbal agreement ever existed.
After Chen failed to appear in court on March 5, Buchanan said they are in the process of scheduling a show-cause hearing to find Chen in contempt of court – an appearance where one party seeks to prove the other has conducted him/herself in a way that is disrespectful of, or impedes, the functioning of the court or the administration of justice and the responding party has an opportunity to explain his or her actions.
The next court appearance has not yet been scheduled.
Stock options rationale
In regards to how Fortune Minerals’ compensation committee makes stock option recommendations, the company’s investor relations manager Troy Nazarewicz said the committee considers suggestions from management, workload and committee participation among other criteria before putting forth recommendations to the board.
“Directors are not paid a cash remuneration, so the grant of stock options is intended to compensate directors relative to their contribution to the firm,” he told Yellowknifer in an email.
In 2017, Ramsay was granted $41,400 in Fortune Minerals stock options and $13,050 in 2018. He was not listed on the company’s 2019 MD&A documents and in 2020 was stated to have made no earnings under benefits payable.