'Big spending' company director awarded thousands in employment dispute

Doug Mende of Mende Biotechnology, Carterton, holds his Totarol - an alternative to antibiotics for dairy cows. Photo / Lynda Feringa

A director and major shareholder in his own company, accused of being a big spender and siphoning funds for hunting trips, has been awarded almost $31,000 in unpaid wages and holiday pay.

The Employment Relations Authority said in its February 21 decision that Mende Biotech Limited, must pay Douglas Mende $30,728.11 made up of $12,692.34 in unpaid wages and $18,035.77 in outstanding holiday pay.

The Carterton research company incorporated in 1999 with Doug Mende as its managing director gained notoriety for pioneering natural alternatives to antibiotics. The company claimed Mende walked out in 2020; Mende says he was frozen out by his fellow directors.

The ERA said Mende remained one of three directors and held more than 40 per cent of the company's shares.

Doug Mende of Mende Biotechnology, Carterton, holds his Totarol - an alternative to antibiotics for dairy cows. Photo / Lynda Feringa

Things began to sour with the arrival of a new director in 2017 followed by investment in a new firm.

Mende claimed that investment in Totara Bioscience Limited drained the company's resources, while fellow director David McConnell blamed Mende's "overspending and improperly siphoning funds for various non-business-related activities".

The company believed Mende's frequent absence on Thursdays and Fridays was because he would head out of town to go rifle shooting.

The backdrop to the dispute was a request for Mende to forfeit salary to help address the firm's crumbling financial situation. The dispute was not helped by what ERA member Michael Loftus described as "shambolic" record keeping.

He said matters were made more complicated by the fact Mendes threw his diaries in the rubbish when he left the company – on a date which was also disputed.

Mende sought payment of outstanding wages and holiday pay. The company accepted the claimed amounts had not been paid, but disputed they were rightfully due.

Mende argued he became an employee in April 2016, which the ERA noted was inconsistent with his earlier claim he had long been a managing director. It was also inconsistent with the company's view that nothing formally changed in April 2016, but there was no written employment agreement.

The directors met in December 2019 to talk about the company's precarious state of affairs. At the time they considered one way to help salvage it was to stop paying the managing director's wages – thought to be about $93,000 a year but payslips provided as evidence showed closer to $110,000 a year.

Mende's co-directors also felt they could stop paying him because they had invested heavily in it, while he had not.

Mende argued his contribution was the intellectual property upon which the company relied.

The company says Mende then walked out, thought to be between December 2019 and early to mid-January 2020.

The company claimed Doug Mende walked out, while he said he was frozen out, leading to him quitting. Photo / 123RF

Mende said it was more like March 2020, backed by a letter he wrote to his fellow directors, which said that at their request he was resigning as managing director of Mende Biotech Limited. He also said he was willing to resign as a director provided his son was appointed as a replacement in order to represent family interests.

The resignations were not accepted, due to the "outstanding company related issues".

The ERA said it was upon the company to justify the failure to pay Mende's wages, and it failed for one key reason: There was no proof to support the company's argument Mende had agreed to his wages being deducted.

The ERA said the second problem was the company's assertion it never accepted Mende's resignation, which undermined the argument he was not owed anything. It was further eroded by the fact Mende received some payment for wages between December 2019 and February 2020.

The ERA said the company's view of when Mende left was the basis of the issue with his holidays, again, not helped by poor bookkeeping.

"It is Mr McConnell's evidence that the ability to address concerns about Mr Mende's leave usage only arose after he left, as he then threw his diaries in a rubbish bin," Loftus wrote in his decision.

McConnell compiled dates when he believed Mende had taken leave, based on the contents of invoices paid by the company, especially accommodation which coincided with Mende's travels to "indulge his passion for rifle shooting".

The ERA said even though pay records were poor, they were still capable of establishing entitlement, next to Mende's shooting logs which he willingly provided. This allowed the ERA to weigh in his favour, against the company's failure to disprove the claims.

The company was given 28 days to pay, with costs reserved.