Former eSense-Lab chairman Brendan de Kauwe has issued a stinging response to the board’s extraordinary attack on Wednesday.

The latest salvo in an increasingly savage battle includes a real estate agent in Bulgaria, Australian directors allegedly in the dark about the company’s Israeli operations and spending, and accusations of AGM postponements allegedly designed to retain board memberships.

Mr de Kauwe has responded to the board’s attack by creating his own website and publishing a 1500-word letter to shareholders titled “REPLY TO DEFAMATORY ASX RELEASES”.

On the website, Mr de Kauwe writes:

“It appears to me that Mr [Haim] Cohen, Mr [Ilan] Saad and Mr [Eran] Gilboa are more focused on protecting their own positions as directors of eSense than in running the company for the benefit of its investors,” Mr de Kauwe said on the website.

“Their deliberate attack on me is malicious and defamatory and I have commenced legal proceedings against them.”

In a boardroom stoush that became apparent in November last year, Mr de Kauwe, who remains on the board, is up against the company’s three other, Israel-based, directors.

On Wednesday those eSense directors in an ASX announcement accused Mr de Kauwe of using his influence to postpone the AGM in November over a remuneration dispute and disrupting a planned capital raising.

Other accusations in that public announcement included refusing to transfer funds from the company’s Australian bank account and ignoring a board resolution to change signature rights over that account.

They said they had appointed an auditor to investigate various aspects of Mr de Kauwe’s conduct in relation to the company, including his use of the company credit card.

On Thursday eSense launched a lawsuit in Israel against Mr de Kauwe to gain signing rights over the company’s Australian bank accounts.

Disputed spending

Mr de Kauwe says the three directors have spent about $4.5 million in seed and IPO funding and refused to tell the two Australian directors — himself and his Otsana Capital colleague Quentin Megson — what they spent it on.

He says the board refused to open the books or provide details of eSense’s Israeli operations, such as its payroll requirements, in spite of repeated requests.

“I acknowledge that Mr Cohen, Mr Saad and Mr Gilboa have requested me to co-sign authorising the release of funds from eSense’s Australian bank account to its Israeli bank accounts,” he said.

“However they have made several requests in respect of expenditure NOT included in eSense’s approved budget [such as a payment to a Bulgarian real estate agent].

“I have requested but they have FAILED to provide me with documentation supporting the asserted expenditure.

“I have taken advice that I would be breaching my duty to shareholders to transmit these funds to Israel when I have no knowledge of their spending and are denied access to financial reports.”

‘Bulgaria connection’

It was two deals that sent eSense-Lab spiralling last year.

One in September last year for UAE marketing firm IC Access to buy at least $1.1 million of eSense’s cannabis-like fragrant oils over three years, and another in October with a company called Advanced Technology Management to buy at least $540,000 of the oils in the first year of the deal.

These deals were considered by the other three board members as triggering a performance rights conversion. The Australian directors objected to this.

Mr de Kauwe says the IC Access deal was signed without knowledge of the board and they have yet to receive any information on who runs the company — in a country that Israel has no trade or diplomatic relations with — or what it does.

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Then there is the Bulgaria connection.

“Mr Cohen failed to announce an upfront “finder’s fee” of $US40,000 payable in respect of the IC Access agreement to a real-estate agent in Bulgaria which has NO involvement, clients or experience in the cannabis or terpenes industries, to my knowledge,” Mr de Kauwe said.

“Mr Cohen has refused to disclose to me whether the agent is a related party of him or the other directors. In any event, such a fee was not authorised by the board.”

AGM number four

eSense’s AGM will be held on March 29 as per an Israeli court directive, with all directors battling for control of the company.

Mr de Kauwe says the first was postponed to allowed shares issued to new investor MMJ Phytotech (ASX:MMJ) to be approved by shareholders, but the second and third AGMs were postponed then cancelled by the other three directors.

Mr de Kauwe alleges this happened because all three were up for re-election and based on proxy votes received before the December AGM date, Mr Gilboa would not have made it back onto the board.

“The Israeli Court proceedings commenced by me and Mr Megson (at no expense to eSense) were an effort to tie-down a date for the AGM,” Mr de Kauwe said.

“Unfortunately for eSense and its investors, Mr Cohen, Mr Saad and Mr Gilboa caused eSense to contest those proceedings (at its expense).

“Their ASX announcement trumpeting the Court findings as a ‘win’ for eSense was pure spin.”

eSense has been contacted for comment.