WASHINGTON – While preparing a run for the White House, former Florida Gov. Jeb Bush made headlines by resigning from several corporate positions at year’s end. Less noticed: One of the companies where he served on the board, Florida timber company Rayonier Inc., faced a flurry of lawsuits not long before his exit.
One case alleges a company facility in Georgia violated the Clean Water Act and contaminated the Altamaha River, and five others suits filed by investors contend the company made false and misleading statements that caused them losses. All are active in court.
Bush is not named as a defendant in the cases, but he is listed among Rayonier board members in court papers filed in the Georgia environmental case. The lawsuits could renew questions about the former Florida governor’s stewardship in the corporate world as he aspires to step back into public office. At least four times, Bush served on the board of companies sued by investors or the government.
“You are not going to find with board members a lot of successful lawsuits,” said Elizabeth Nowicki, an Albany Law School professor and former Securities and Exchange Commission lawyer. Still, she added: “The buck stops with the board members.”
Bush is “proud of his service on Rayonier’s board,” said his spokeswoman, Kristy Campbell.
A spokesman for Rayonier, Mike Bell, said there was no environmental harm. Both Bell and Campbell said the company’s board took decisive action when the financial issues surfaced.
Bush, appointed to Rayonier’s board in 2008, resigned effective Dec. 31. He earned nearly $198,000 in compensation from Rayonier in 2013, $99,750 in cash and $98,149 in stock value and dividends, the company said.
Just before his departure, investors filed the first of five securities cases alleging Rayonier made public misstatements that caused them significant losses and damages. The five cases — filed in November and December — have been consolidated into one class-action lawsuit in federal court in Jacksonville, Florida, where Rayonier is based.
The Clean Water Act case, filed in federal court nearly a year ago, contends that a Rayonier paper mill in Jesup, Georgia, a small city four hours downstate from Atlanta, fouled the Altamaha River. Altamaha Riverkeeper Inc., a Georgia environmental non-profit, filed the lawsuit and alleged company operations harmed a waterway that is home to 120 species of rare or endangered animals.
In 2008, responding to fishermen and others complaining of a smelly brown discharge from its mill, Rayonier entered into a pact with state regulators to spend millions on anti-pollution controls. A spokesman with the Georgia Environmental Protection Division, Kevin Chambers, said Rayonier is in compliance with that consent order.
Yet the lawsuit cited an “ongoing environmental calamity” and accused Rayonier of discharging more than 50 million gallons daily of “highly discolored, inescapably foul-smelling effluent” into the river.
The other cases involve investors — including the Lake Worth Firefighters’ Pension Trust Fund and others — who said Rayonier’s financial statements in 2014 overstated the company’s timber inventory and income from operations.
Rayonier restated its financial statements in November 2014, citing errors, and a company senior vice-president resigned. The day the news broke, company shares fell almost 15 per cent.
Rayonier and several executives, but not Bush, are defendants.
“The board, with management and independent advisers, moved quickly to conduct its review and took swift and decisive actions to realign Rayonier’s strategy and operations,” said Campbell, Bush’s spokeswoman.
The Rayonier case is not the first time Bush has served on the board of a private company sued by investors in federal court. Others include sanitation company Swisher Hygiene and, years earlier, credit card protection company Ideon Group Inc.
Bush also served on the board of InnoVida Holdings, a Miami Beach company that won a $10 million loan from the government’s Overseas Private Investment Corp. to help build prefabricated housing for victims of the 2010 Haiti earthquake. Bush served on the board when the loan was approved in January 2010.
Federal prosecutors and the SEC later charged that InnoVida’s owner, Claudio Osorio, defrauded investors. Osorio pleaded guilty in 2013 to wire fraud and money laundering and got a 12 1/2-year prison sentence. Bush left InnoVida’s board later in 2010 and was not accused of wrongdoing.