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Under fire, marijuana firm made up employee to respond
GRANT ROBERTSON
The Globe and Mail
Published Tuesday, Jan. 27 2015, 5:25 PM EST
Last updated Tuesday, Jan. 27 2015, 9:49 PM EST
An Ontario company facing serious allegations of misrepresenting itself to the public and to shareholders has been caught inventing a fake employee to dispute those claims.
CEN Biotech, which has applied to become Health Canada’s largest producer of medical marijuana under a new federal program, issued a press release after an investigation by The Globe and Mail in December detailed false or exaggerated claims by the company. In the response , a CEN Biotech official identified as Isak Weber called The Globe’s article “misleading,” and suggested the story was “created.”
The Globe had been requesting an interview with Isak Weber since Dec. 21, but the company had not owned up to his identity until Tuesday. Asked if Mr. Weber was real, chief executive officer Bill Chaaban said in an e-mail that Isak Weber was a “nom-de-plume” for an employee at CEN. He compared the situation to CEOs reading speeches written by others. “There are also many corporations that adopt an identity,” Mr. Chaaban said, giving “Ronald McDonald,” “Mr. Clean” and “Mr. Goodwrench” as examples.
The strange saga of CEN Biotech is fast becoming a blemish for Health Canada, which is building a privatized medical marijuana sector. CEN Biotech is the Canadian subsidiary of Michigan-based Creative Edge Nutrition, and is seeking a federal licence to grow 600,000 kilograms of medical marijuana in Lakeshore, Ont., which would make it the biggest in Canada. Despite questions about its conduct, CEN has made it to the final stage of a licensing process Health Canada describes as “rigorous.”
Over the past 14 months, CEN Biotech has made several inaccurate claims about its licence status with Health Canada, and has suggested to investors it was being favoured by Ottawa. These statements helped inflate the company’s stock price, while Mr. Chaaban sold millions of shares for at least $4.6-million (U.S.).
The revelation about Isak Weber casts further doubt on Health Canada’s oversight of the sector – which is estimated to be a multibillion-dollar industry in the making. The government is doling out licences worth as much as $70-million on the stock market, but there are questions on how much it knows about the companies. Health Canada says it does “extensive” checks on company personnel before issuing a licence, but the CEN Biotech situation calls this into question.
Health Canada officials have said the department is not responsible for looking into the company’s claims. Although Health Canada has sole authority for granting licences, government officials say the public must inform police of any concerns. It is not clear whether evidence of a fabricated company official is enough for Health Canada to question CEN Biotech’s application. A request for comment from Health Minister Rona Ambrose was not answered.
Health Canada opened the new medical marijuana market to large-scale private producers in April. At an investor conference in Denver in July, Mr. Chaaban said the company is close to Health Canada and that he had committed to “partner with them to build the industry.”
Pathway Group does not usually speak publicly about its clients, but Mr. Bangs said the circumstances required an explanation for severing ties with CEN Biotech to preserve his firm’s integrity. “Pathway Group resigned the CEN Biotech account on Jan. 23, and no longer has any affiliation with that company,” Mr. Bangs said.
It is the second time in less than a month that a public-relations firm has dropped CEN Biotech over concerns about the accuracy of its statements. New York-based 5WPR dropped the company on Dec. 31, after the firm learned the company issued press releases under 5WPR’s name without its knowledge or approval, one of which introduced the fictitious Isak Weber.
Some of the company’s claims helped push its shares up more than 2,000 per cent a year ago. Health Canada warned the company about its statements early last year, but never followed up on subsequent problems. It is not clear why Health Canada has not addressed further issues facing its largest licence applicant.
Beyond the fabrication of Isak Weber, documents filed with regulators over the past two years raise questions because they contain six distinctly different signatures for Mr. Chaaban.
Mr. Chaaban shrugged off questions about the signatures two weeks ago, saying the way he signs his name “depends on the mood I’m in.” He also joked about having multiple personalities, and questioned whether Canada had become communist for questioning the $4.6-million he made selling his shares as an insider. In an e-mail on Tuesday, Mr. Chaaban acknowledged his original statement was “flippant,” adding, “The simple reason [the signatures] differ is that I don’t want my signature to be forged and it could be if countless documents are publicly available with the same signature that I have on file elsewhere, such as at the bank.” However, senior executives at publicly traded companies routinely sign documents filed with regulators.
Mr. Chaaban said Isak Weber is an employee named Roger Glasel. It is not clear why the company did not identify him by his own name.
In recent weeks, NDP health critic Libby Davies and deputy Liberal leader Ralph Goodale called on the government to halt the company’s licence application to investigate the concerns.
GRANT ROBERTSON
The Globe and Mail
Published Tuesday, Jan. 27 2015, 5:25 PM EST
Last updated Tuesday, Jan. 27 2015, 9:49 PM EST
An Ontario company facing serious allegations of misrepresenting itself to the public and to shareholders has been caught inventing a fake employee to dispute those claims.
CEN Biotech, which has applied to become Health Canada’s largest producer of medical marijuana under a new federal program, issued a press release after an investigation by The Globe and Mail in December detailed false or exaggerated claims by the company. In the response , a CEN Biotech official identified as Isak Weber called The Globe’s article “misleading,” and suggested the story was “created.”
The Globe had been requesting an interview with Isak Weber since Dec. 21, but the company had not owned up to his identity until Tuesday. Asked if Mr. Weber was real, chief executive officer Bill Chaaban said in an e-mail that Isak Weber was a “nom-de-plume” for an employee at CEN. He compared the situation to CEOs reading speeches written by others. “There are also many corporations that adopt an identity,” Mr. Chaaban said, giving “Ronald McDonald,” “Mr. Clean” and “Mr. Goodwrench” as examples.
The strange saga of CEN Biotech is fast becoming a blemish for Health Canada, which is building a privatized medical marijuana sector. CEN Biotech is the Canadian subsidiary of Michigan-based Creative Edge Nutrition, and is seeking a federal licence to grow 600,000 kilograms of medical marijuana in Lakeshore, Ont., which would make it the biggest in Canada. Despite questions about its conduct, CEN has made it to the final stage of a licensing process Health Canada describes as “rigorous.”
Over the past 14 months, CEN Biotech has made several inaccurate claims about its licence status with Health Canada, and has suggested to investors it was being favoured by Ottawa. These statements helped inflate the company’s stock price, while Mr. Chaaban sold millions of shares for at least $4.6-million (U.S.).
The revelation about Isak Weber casts further doubt on Health Canada’s oversight of the sector – which is estimated to be a multibillion-dollar industry in the making. The government is doling out licences worth as much as $70-million on the stock market, but there are questions on how much it knows about the companies. Health Canada says it does “extensive” checks on company personnel before issuing a licence, but the CEN Biotech situation calls this into question.
Health Canada officials have said the department is not responsible for looking into the company’s claims. Although Health Canada has sole authority for granting licences, government officials say the public must inform police of any concerns. It is not clear whether evidence of a fabricated company official is enough for Health Canada to question CEN Biotech’s application. A request for comment from Health Minister Rona Ambrose was not answered.
Health Canada opened the new medical marijuana market to large-scale private producers in April. At an investor conference in Denver in July, Mr. Chaaban said the company is close to Health Canada and that he had committed to “partner with them to build the industry.”
Pathway Group does not usually speak publicly about its clients, but Mr. Bangs said the circumstances required an explanation for severing ties with CEN Biotech to preserve his firm’s integrity. “Pathway Group resigned the CEN Biotech account on Jan. 23, and no longer has any affiliation with that company,” Mr. Bangs said.
It is the second time in less than a month that a public-relations firm has dropped CEN Biotech over concerns about the accuracy of its statements. New York-based 5WPR dropped the company on Dec. 31, after the firm learned the company issued press releases under 5WPR’s name without its knowledge or approval, one of which introduced the fictitious Isak Weber.
Some of the company’s claims helped push its shares up more than 2,000 per cent a year ago. Health Canada warned the company about its statements early last year, but never followed up on subsequent problems. It is not clear why Health Canada has not addressed further issues facing its largest licence applicant.
Beyond the fabrication of Isak Weber, documents filed with regulators over the past two years raise questions because they contain six distinctly different signatures for Mr. Chaaban.
Mr. Chaaban shrugged off questions about the signatures two weeks ago, saying the way he signs his name “depends on the mood I’m in.” He also joked about having multiple personalities, and questioned whether Canada had become communist for questioning the $4.6-million he made selling his shares as an insider. In an e-mail on Tuesday, Mr. Chaaban acknowledged his original statement was “flippant,” adding, “The simple reason [the signatures] differ is that I don’t want my signature to be forged and it could be if countless documents are publicly available with the same signature that I have on file elsewhere, such as at the bank.” However, senior executives at publicly traded companies routinely sign documents filed with regulators.
Mr. Chaaban said Isak Weber is an employee named Roger Glasel. It is not clear why the company did not identify him by his own name.
In recent weeks, NDP health critic Libby Davies and deputy Liberal leader Ralph Goodale called on the government to halt the company’s licence application to investigate the concerns.
