Exclusive: Aziz Attacks on Eve of Crytpo's Fourth-Quarter Results

16 March 2009
After this article was published, comments were added from CryptoLogic, as was additional background information on Mr. Aziz's decision to withdraw his EGM request.

In a letter obtained exclusively by IGamingNews Monday evening, Javaid Aziz, the former chief executive of CryptoLogic Ltd., redoubled attacks against the company's board ahead of its fourth-quarter results Tuesday.

Mr. Aziz and CryptoLogic's board, chaired by Robert K. Stikeman, have been at odds, publicly, since December 2008 over the company's weak performance during the 2008 fiscal year.

Where Mr. Aziz has challenged CryptoLogic to simplify its legal, tax and management structures -- even requisitioned an extraordinary general meeting for shareholders -- CryptoLogic has argued that Mr. Aziz's actions in recent months have come as a disruption to the recovery plan it's currently executing.

On Feb. 23, the company denied Mr. Aziz's EGM request because his shareholding -- or that part of his holding with the proper voting rights attached -- appeared below the 10-percent threshold required to call a meeting.

In Monday's letter, Mr. Aziz rebutted that claim: "As being able to requisition an EGM, I can do so lawfully at any time in the future as I own in excess of 10% of the voting shares of Cryptologic," he wrote.

In a March 10 e-mail to Mr. Stikeman that was included with Monday's letter, Mr. Aziz withdrew the EGM request given the company has shown "a sense of urgency" in instituting changes, including the removal of the chief technology officer's post and discontinuation of business between CryptoLogic and Mr. Stikeman's law firm, Stikeman Keeley Spiegel Pasternak.

"We welcome his change of view, and are glad that he now seems to agree with our focus on the growth and restructuring strategy we announced last fall, before he became a significant shareholder," Brian H. Hadfield, chief executive of CryptoLogic, told IGamingNews through the company's North American public relations firm, Argyle Communications.

Mr. Aziz also called for a profitable first quarter of the 2009 fiscal year, with growth in both revenue and profits to follow in the second.

"Anything less is unacceptable especially as an independent Board would have ensured that appropriate actions were taken earlier to stage a recovery," he wrote.

As for the board's independence, Mr. Aziz continued to push for the removal of both Mr. Stikeman and Wai Ming Yap, who is a director.

"I would suggest that the most elegant solution for the Board to consider would be to announce that these Directors (Robert Stikeman and Yap Wai Ming) have decided to retire and not to seek re-election at the next AGM, which would then give the Board the opportunity to seek appropriate replacements for confirmation at the next AGM," he wrote.

In his comments, however, Mr. Hadfield did not indicate whether CrytpoLogic was considering changing the board's composition.

"CryptoLogic continues to uphold high standards of corporate governance, and we note that we have more independent directors today than we did when he left the company," he said. "This trend will continue -- as will our focus on returning the company to profitability and growth."

In late February, CryptoLogic accused Mr. Aziz of having breached his contract, and was seeking the return of 1.54 million euros, held in escrow, that was to be paid to Mr. Aziz should the company undergo a change of control on or before April 30, 2009.

In Monday's letter, Mr. Aziz said that as a gesture of goodwill -- and to put himself on equal footing with the company's other shareholders -- he would waive that bonus payment.

To read Mr. Aziz's letter in its entirety, click here.

Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.