Friday, 30 September 2016
Last updated 18 min ago
Oct 8 2013 | 10:35am ET
Just two weeks after the ouster of a LightSquared board member from the special committee overseeing its planned bankruptcy auction, would-be buyer Dish Network is facing similar accusations about the independence of members of its own special committee.
The Jacksonville Police and Fire Pension Fund has taken issue with two members of Dish's special committee to look into the questions raised by its lawsuit. The pension has questioned Dish's $2.2 billion bid for LightSquared and the huge personal profits that Dish Chairman Charles Ergen—who owns about $1 billion in LightSquared debt—stands to make if it succeeds.
In a court filing Friday, the pension noted that two of the directors named to the special committee, set up last month, have close ties to Dish. One, Tom Ortolf, has a daughter who works at the company, and the other, George Brokaw, selected Ergen's wife to serve as his son's godmother. Meanwhile, the pension says, Dish rejected the director it recommended for the board.
In addition, the pension said that the special committee had refused to provide it with information it sought, which "further confirms its lack of independence, its lack of effectiveness, and its desire to shut down this litigation rather than actually pursue potential claims against Ergen," the filing said.
Ergen has acknowledged that the deal puts him in an "awkward position" but denies any wrongdoing. He is also being sued by hedge fund Harbinger Capital Management, which owns LightSquared and alleges that Ergen bought up its debt illegally.
The Jacksonville pension isn't the first to question possible conflicts of interest in Dish's bid for LightSquared. Longtime director Gary Howard resigned after Dish dissolved the special committee of independent directors that had approved of the LightSquared bid. Howard had pushed for that committee to remain involved in the deal, The Wall Street Journal reports.
Last month, LightSquared creditors in favor of Dish's bid won the removal of a LightSquared board member from its auction committee after complaining about her lack of independence. The creditors alleged that Donna Alderman, who formerly worked for a company acquired by Dish, had made clear her antipathy for the company and for Ergen.