China Project Backfires on Pressured Seldon Executives
Windsor — Throughout much of 2015, Seldon executives and employees had been warned by Econet that the financial clock was ticking and the company needed to win a big contract.
And it was against this backdrop that Seldon’s two top executives took a gamble that ultimately backfired and undermined the board’s trust in its new management team.
In March, Shawn Montgomery, Seldon’s general manager, and Paul Gallagher, head of the water and fuel filtration division, set up Seldon Technologies APAC Ltd., a Hong Kong-based 50-50 joint venture with the Chinese government.
According to Gallagher’s LinkedIn profile, the $25 million, 30-year “build, operate and transfer” contract pertained to a municipal water treatment plant that was viewed by Seldon board members as outside Seldon’s expertise and capacity.
The board found out about the project at its April meeting.
Jim Myers, chairman of Seldon’s board, said the Chinese joint venture was set up “without the board’s knowledge and without the board’s approval.” He said the board didn’t want Seldon to have a municipal water project “in its focus.”
“We are not in municipal policy,” he said.
Seldon had transferred at least $225,000 into the joint venture that it appears unlikely to recover, according to Myers. “When we found out the money had gone, we pulled the plug,” he said.
Montgomery, in an interview, said certain members of the board had been made aware of the China initiative and “no one requested that I stop the project.”
He said he was acting on the mandate given to him by Econet to take aggressive steps to grow revenue. “When you’re running out of cash and running out of time, I thought it was a better use of my time to try and generate revenue and try to generate interest in the company,” he said. Montgomery said he resigned in September for family reasons and because he was “weary” from the 85-mile commute to Windsor from Hooksett, N.H.
Myers called Montgomery “a very competent guy and educated, but didn’t have the senior management experience before and was overwhelmed. Maybe we pushed him a little too high too quick. He really did his best.”
Gallagher resigned in July. The “uncertainty as to what was going to happen” at Seldon prompted him to grab an opportunity to join a Washington, D.C.-area tech company, he said.