Alticor leaders cheated investors, suit says

The Grand Rapids Press/July 14, 2006
By Aaron Ogg

Grand Rapids -- The way three former Amway Corp. Asian subsidiary investors see it, Alticor Inc. President Doug DeVos, Chairman Steve Van Andel and former President Dick DeVos helped cheat them and others out of more than $1 billion seven years ago.

Alticor attorney Robert Yonker says the former stockholders had an opportunity to recover their presumed losses, and they failed to do so.

The investors sued Amway Asia Pacific, its executives and its New York investment firm, Goldman Sachs, nearly five years ago. They claim they were forced to sell shares when the company went private and before stockholders could reap rewards of China's huge consumer market.

Two years ago, their case was dismissed by a Kent County Circuit Court judge. Their appeal got a hearing Thursday by a three-judge panel of the Michigan Court of Appeals.

Former shareholders Robert F. Wardrop, a local attorney, and Donald and Nancee Turnwall, of Irons, believe Van Andel, Dick DeVos and Doug DeVos effectively forced shareholders to sell stock the day it was announced China would be admitted into the World Trade Organization.

The WTO decision helped open the lucrative Chinese market to Amway and other businesses. The ex-investors claim China's entrance into WTO was not factored into an $18 per-share offer, even though Goldman Sachs and Van Andel had information China likely would be admitted into the trade group.

"When you invite people to buy shares in a company, you have to treat them right," said Clinton Krislov, the trio's Chicago attorney. "You have to give them what's fair."

Yonker said Amway gave shareholders a fair share. And, if they had a problem with that, they had an opportunity to increase their take.

The shareholders should have sought an appraised value of their share with an appeal in the Supreme Court in Bermuda, where the company was incorporated, Yonker said.

"They had an efficient judicial mechanism to determine they had fair value of their shares," he said. "They had that opportunity, didn't exercise it, and failed to use the tools at their disposal."

With so much of the stock held by insiders, minority shareholders have claimed they had no choice in the matter. At the time, there were 56 million shares of Amway Asia Pacific, with about 47 million shares held by company insiders.

They figure they would have received the same share offer, regardless. While the per-share price was a 53 percent premium over market value at the time, Krislov believes the stock was worth nearly $40 then and would be valued much higher today.

"Whatever China was, it was big," he said.

Last year, Amway Corp. subsidiary Amway China Co. Ltd. had more than $2 billion in sales in China, the firm's top market.

Amway parent Alticor reported sales of $6.4 billion last year. Alticor operates primarily through Amway; Quixtar Inc., a North American Web-based firm; and Access Business Group LLC, which does product development, manufacturing and logistics for Amway, Quixtar and other firms. Alticor employs more than 13,000 people worldwide.

Appellate Judges David Sawyer, Bill Schuette, and Alton Davis presided over Thursday's hearing.

Dick DeVos is currently a Republican gubernatorial candidate for the post held by Gov. Jennifer Granholm.