Argo expenses row flares up in war of words with investor Voce

The public row between Argo Group and investor Voce Capital Management flared up again yesterday, in an exchange of statements over allegations that the company and Argo CEO Mark Watson have misused corporate assets and filed excessive expenses. Voce Capital stuck by allegations first voiced in February in a letter to fellow shareholders and rejected Argo’s subsequent response earlier this month as “selective and hair-splitting ‘explanations’” that “mislead” shareholders. Voce Capital, which owns 5.8% of Argo shares, outlined several areas where it believes Argo’s statement to shareholders is “deficient”. Argo was quick to respond yesterday, refuting the renewed allegations as “misleading” and “simply wrong”. Voce Capital alleges a “deep-rooted culture of excess and obfuscation” at Argo, which it claims has used corporate assets to run a fleet of three aircraft and several corporate houses across the world for its CEO. Voce Capital said it believes Argo took out a lease on a luxury villa in Bermuda for Mr Watson, despite a relocation bonus of $2.9m. It also claims Argo ‘is “quibbling” over the existence of an apartment in New York for Mr Watson and said “questionable allocations of capital” have been used to acquire three apartments in the Setai Resort in Miami. “New York City, Bermuda, Miami... these are just the corporate residences we have discovered so far. Where else does Argo own similar properties? Argo fails to disclose in any of its public filings the locations of its many owned and leased property locations around the world,” Voce Capital said, adding: “Why doesn’t Argo reveal to investors the full extent of capital allocated to, and locations of, its real estate assets, so that we may judge for ourselves?” In response, Argo said the properties listed by Voce Capital are “not corporate housing, but rather part of our investment property portfolio: they are income-producing assets”. Voce Capital has also released a flight log dating back to 2016, which it claims is for Argo’s G-5 aircraft. Argo said the G-5 aircraft is “neither owned by Argo, nor exclusively used by Argo”, adding its executives pay for their own use of corporate aircraft for personal trips. Voce Capital questioned whether all 500 hours of flights per year were solely for business and questioned dates and locations as “suspicious”. “The multimillion-dollar annual expense for a company of Argo’s size to carry such aircraft is completely unjustified,” Voce Capital said. Argo said it has spent less than $1m per year for named sponsorship at several sporting events, which Voce Capital questioned as “obscenely expensive backstage passes for CEO [Mr] Watson as he follows his sporting idols around the world on Argo’s jet at shareholder expense”. Voce Capital said it will release a detailed plan next week “outlining how to unlock significant additional value at Argo by dramatically improving operations and capital allocation”, ahead of Argo’s AGM on 24 May, when Voce Capital will propose five independent candidates to the board. Voce Capital said two recent director appointments to the board by Argo are “invalid” and should be rescinded.

Argo expenses row flares up in war of words with investor Voce

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