Two former executives at a Kelowna firm are claiming in lawsuits the company fired them in retaliation for raising concerns about its financial status and the management of one of its founders.
Former chief people officer Parviz Karmali and former CFO Rob Morin were two of four executives dismissed Jan. 6 from Ecora Engineering & Resource Group Ltd. They’re claiming the firings largely arose out of conflicts with one of the company’s four founders: Kelly Sherman.
Ecora is a natural resources and engineering consulting firm.
The pair filed separate lawsuits over their firings, naming Ecora and Sherman, along with company managers and other co-founders.
But the lawsuits largely target Sherman, who had acted as president and CEO of Ecora until a November 2022 board meeting, when he resigned to avoid a no-confidence vote, according to the lawsuits.
After being hired as CFO in late July 2022, Morin claimed he quickly became aware of financial hardships at the company, including an “urgent” need of $2 million to meet obligations, according to the lawsuit. Those obligations allegedly involved unpaid subcontractors threatening litigation over a Grand Forks Development as well as lenders.
Morin said he also identified issues in the company’s business plan, particularly its ability to collect on old debts.
The fired executives claim they heard from board members that they weren’t happy with Sherman’s “irresponsible spending habits and repeated investments in unprofitable land development projects.”
Morin and Karmali alleged Sherman downplayed or denied the company’s financial hardships, and Morin further alleged Sherman pressured accountants to make changes to the books to paint a better picture.
In October, Morin and Karmali claimed Sherman encouraged employees to buy shares in lieu of raises to pay down the company’s debt at a share price set in 2019, despite financial hardships since then, and that Sherman denied that the share price was too high.
Morin claimed the 2019 valuation was prepared by Sherman himself and that the then-CFO also believed the valuation was too high.
Morin and Karmali claim they pushed for an independent share valuation, something that began to gain steam with the board, which had allegedly begun to talk about ousting Sherman.
Even after resigning, Sherman allegedly continued advocating against an independent share valuation before pushing for a valuator of his choosing.
On Jan. 3, the company officially engaged a different accounting firm to do the valuation. Three days later, four executive team members were fired – something Morin and Karmali claim was retaliation.
Morin and Karmali also claim Sherman and various others involved at Ecora, including co-founders and company managers, made defamatory statements about the two in the lead-up to and after their firings. Particularly, that Morin and Karmali colluded to lower the share value so they could buy low, that they were “going rogue” or “should be in jail,” and that they were going to drive the company into bankruptcy.
The two lawsuits are seeking damages for wrongful dismissal against the company, and against the individual defendants for damages and an order that the individual defendants stop making allegedly defamatory statements about them.
Responses to the lawsuits had not been filed by press time.