2degrees founder ousted ahead of case

Tex Edwards loses bid to remain employed at mobile telco

The "visionary" entrepreneur credited with creating Kiwi telecommunications company 2degrees faces his final day at the company on Friday.

Simon "Tex" Edwards has failed to gain an injunction against the company's decision to disestablish his position as strategist with 2degrees.

A decision by the Employment Relations Authority said it would hear substantive arguments from Edwards and 2degrees in August, but until then the company could go ahead with its plan to disestablish his position.

Edwards was "a founder, financier, visionary, 'ambassador', 'entrepreneur', and person of great drive who played a substantial and pivotal role in creating the business", according to the ERA's published decision.

Lawyers for Edwards have argued before the authority that the decision to make him redundant was motivated by "an adverse view taken of Mr Edwards personally rather than by considering his position of employment and whether that position was one needed by the business".

Edwards argued that the reasoning for the dismissal was "a pretext to cover up a different motive" held by the company's management.

Edwards fell out with the company's majority owner, American investment firm Trilogy International, after it refused to lend him money to maintain his shareholding, according to a sympathiser who believes Edwards was "screwed over" both by Trilogy and another shareholder, the Hautaki Trust.

Edwards currently owns almost one per cent of 2degrees.

The source said Edwards had lent money to Hautaki to maintain its shareholding in 2degrees in the past, but the Maori trust failed to reciprocate by helping him out during later funding rounds.

Trilogy extended a $2.6 million loan to the Hautaki Trust last year to allow it to subscribe for new shares, without offering similar support to Edwards, the source said.

During the ERA hearing, Edwards' counsel cited an email written by 2degrees chief executive Eric Hertz the day before the disestablishment proposal was put to Edwards in which Hertz said the company "was not well served by his presence inside the business".

"My intention is to drive this to a place, within NZ employment law, where he obtains a formal support or legal representative who will guide Tex to a solution [on his wish to maintain his shareholding].

"If that is not possible, then we will likely be eliminating his position or entering a performance disciplinary process that will end up in a mediated negotiation of settlement or an employment court proceeding."

Hertz's impartiality was called into question and he handed the decision to 2degrees chairman William Sherriff.

However, Edwards' lawyers believed Sherriff was effectively rubber stamping the decision that had already been made by Hertz.

The ERA determined that Edwards had an arguable case, albeit weak, that a "genuine redundancy is not the reason why his position has been declared disestablished and that therefore, arguably, his dismissal will be shown to be unjustifiable".

It also said Edwards had alternative remedies available other than being reinstated to the job such as compensation for loss of remuneration, as well as for hurt feelings and humiliation.

The substantive hearing before the ERA is set down for three days from August 22.

The ERA decision also indicated Edwards and his investment company KLR were taking action against 2degrees in the High Court.

2degrees is 58 per cent owned by Trilogy. The Hautaki Trust owns 10 per cent and Edwards 1 per cent. Most of the remaining shares are owned by Tesbrit, an investment company registered in Holland.

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