Vancouver junior mining company Spanish Mountain Gold Ltd. (TSX-V:SPA) is suing former CEO and CFO Larry Yau for damages related to Yau allegedly paying himself $439,750 in unapproved housing benefits when he was on the job.
Spanish Mountain fired Yau without cause in March 2023, when the company was oblivious to Yau's alleged funnelling of corporate money to himself without approval, it noted in a July 10 notice of civil claim filed at BC Supreme Court. He had been on the job starting on an interim basis in 2015.
"Had Spanish Mountain been aware of Yau's misconduct described above at the time of his termination, Spanish Mountain would have terminated Yau for cause," the company said in its lawsuit.
Spanish Mountain paid Yau $240,000, less statutory deductions, which was the equivalent of 12 months' pay, as severance. Had the dismissal been for cause, the severance would have been less, the company said.
None of the allegations in the lawsuit have been proven in court and Spanish Mountain last year alerted investors of discrepancies in previously reported CEO pay.
The lawsuit alleges that Yau created "a false duplicate set of meeting minutes for a meeting of the board of directors held on Sept. 23, 2016, which purports to record the approval of the unapproved housing benefits by the board of directors."
Yau, the company alleges, then either directed the false set of meeting minutes be distributed to external parties or he was aware that this was happening, according to the lawsuit.
Spanish Mountain also alleges that Yau collected Canada Emergency Response Benefit (CERB) payments during the pandemic. He was not entitled to those benefits because he was performing normal duties as CEO and CFO of the company, the lawsuit alleges.
The company has refiled statements of executive compensation and been in touch with Canada Revenue Agency to report the irregularities.
Spanish Mountain also alleges that Yau had granted himself "personal expenses" which were also not approved by the board of directors.
The company is seeking a tracing order to determine what property Yau has an interest in. It is also seeking a series of declarations against Yau, including for breaching his fiduciary duties and for committing "the tort of civil fraud."
Yau has yet to file a response to the notice of civil claim and the lawsuit did not contain an email or phone number for him. BIV was not able to find that contact information for him to try to get his side of this dispute. There were also no Larry Yaus or Lawrence Yaus on LinkedIn who matched Yau's employment history.
