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Lawsuit Casts Lurid Light, from The
- Subject: Lawsuit Casts Lurid Light, from The
- From: brelief@xxxxxxx
- Date: Sat, 10 Feb 1996 03:28:00
Subject: Lawsuit Casts Lurid Light, from The Asian Wall Street Journal
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The Asian Wall Street Journal
January 24, 1996
LAWSUIT CASTS LURID LIGHT ON BURMA FRAY
Peregrine Files Documents That Chronicle a Partnership Gone
By Erik Guyot
The battle became public when a single fax wound up in the
Now, a messy tug - of - war over a Burmese prawn -
processing venture has hit the courts. Documents submitted
recently in a lawsuit in a New York federal court illustrate
how an American businesswoman allegedly called on her
formidable allies in Burma's military government in her efforts
to take over the joint venture. The documents go far beyond
previous reports on the fray, and include a claim by the
woman's erstwhile business partner that she even asked a top
Burmese official she called "my dear general" to "frame" a
rival employee and raid his house.
Peregrine Investments Holdings Ltd. alleges in the lawsuit that
last June Miriam Marshall Segal was involved in a plot to
wrest back control of the prawn venture she had sold to the
Hong Kong based investment bank the year before. The 55 -
year - old businesswoman appeared confident that she could
oust one of Asia's most aggressive investment banks from the
business she had founded. "Peregrine is about to put another
US$1.5 million in, . . . but they will not see the return
anticipated," Mrs. Segal wrote to a friend, according to
documents Peregrine filed in the court. Mrs. Segal advised her
friend that after Peregrine pumped in the cash, it would be time
to squeeze out the investment bank and take over the joint
venture, according to those documents.
There was just one hitch: Mrs. Segal's fax was mistakenly sent
to Peregrine, the investment bank says. The misguided fax
touched off a chain of events: Peregrine fired Mrs. Segal as
chairman of the prawn business in July. In September, it sued
her for US$20 million. The investment bank also sued Mrs.
Segal's alleged co-conspirators: Claude Charles, a retired
Peregrine director, and Michael Dobbs - Higginson, a former
chairman of Merrill Lynch Asia Pacific in Hong Kong. Mrs.
Segal hit back in December by filing a US$20 million
counterclaim against Peregrine in New York, alleging breach
of contract and defamation. Among other things, she questions
the authenticity of the crucial fax.
The widening legal tangle illustrates how, in frontier markets
like Burma, powerful international players can be tripped up
by much smaller local partners. Peregrine, which has offices in
16 Asian countries and prides itself on finding well connected
local partners in emerging markets, originally thought it had
found a valuable ally when it teamed up with Mrs. Segal in
1992. The diminutive blonde, who has divided her time
between New York and the Burmese capital of Rangoon for
the past 20 years, boasts of extraordinary access to Burma's top
At first, Peregrine bought only a minority stake in the cash -
starved prawn business that Mrs. Segal founded in 1990. But
Peregrine eventually took a bigger bite and in 1994 bought out
Mrs. Segal's privately held company, which owns 50% of
Myanmar American Fisheries Co., a joint venture with
Burma's Ministry of Livestock and Fisheries to process prawns
and other seafood. Although Peregrine hired Mrs. Segal as
chairman of the money - losing business and pumped in more
than US$3 million, the two sides squabbled about how the
business should be run.
The fighting didn't end when Peregrine received Mrs. Segal's
errant fax and fired her on July 11. Within weeks, the
businesswoman was able to seize control of the prawn
business, Peregrine's only direct investment in Burma so far.
The investment bank claims Mrs. Segal has taken over its two
prawn plants and barred Peregrine officials from entering.
Outgunned in Burma, Peregrine is fighting back in court. The
investment bank's US$20 million suit against Mrs. Segal
alleges that the businesswoman violated her employment
contract by pursuing other business deals and plotting to
undermine the prawn business so that Peregrine would be
forced to sell out.
The firm also alleges in a separate lawsuit in Hong Kong that
Messrs. Charles and Dobbs - Higginson conspired to aid Mrs.
Segal. Peregrine says it will seek "substantial" damages from
the two bankers similar to those it's claiming from Mrs. Segal.
How was Peregrine locked out of its joint venture?
Speaking from her Manhattan apartment, Mrs. Segal says in a
soft voice that the investment bank made the mistake of taking
her too lightly. "They thought that I'd just go away and
disappear," she says.
Mrs. Segal says Myanmar American Fisheries, known as
Mafco, reverted to her control in accordance with Burmese
law. She also disputes Peregrine's allegations that she violated
her contract, saying it gave her the right to pursue other
business opportunities. Even so, she says in her counterclaim,
she didn't begin to do so until Peregrine breached her contract
by not paying her expenses in early 1995.
Mrs. Segal's lawyer alleges that Peregrine failed to pay the
businesswoman more than US$100,000 in expenses. The
lawyer also claims that after Mrs. Segal was fired, Peregrine
defamed her and interfered in her rightful attempts to pursue
other business opportunities.
Peregrine disputes all of Mrs. Segal's allegations. A lawyer for
the investment bank denies that it owes her any money or that
it defamed her. Messrs. Charles and Dobbs - Higginson also
reject Peregrine's allegations against them.
At the heart of Peregrine's allegations are computer printouts
of 12 memos, including Mrs. Segal's fax that went astray,
which Peregrine obtained from Mrs. Segal's assistant in New
York. Mrs. Segal's assistant swears in an affidavit that she
faxed the memos. But Mrs. Segal's attorney denies the
authenticity of the errant fax and the other memos, noting that
Peregrine hasn't produced the original faxes.
Even so, the New York judge presiding over Peregrine's
lawsuit, Robert Patterson Jr., has accepted the memos as
reliable enough to enjoin Mrs. Segal from asking Burmese
military officials to raid the houses of Peregrine employees or
otherwise interfere with Peregrine's business.
The saga began early last year, when the prawn business was
still losing money and Mrs. Segal was furious with Peregrine,
which she felt was limiting her say in running the company.
It looked like help was on the way from her good friend Mr.
Dobbs - Higginson, who retired as chairman of Merrill Lynch
Asia Pacific in 1990 after an adventure - filled career that
included a stint as a lay Buddhist monk in Japan. The 54 -
year-old banker, author of the book "Asia Pacific: Its role in
the New World Disorder," credits Mrs. Segal with persuading
him that Burma is ruled by a forward - looking "collegiate
Mr. Dobbs - Higginson, who also works as a consultant to the
Japanese trading firm Mitsui & Co., says he introduced Mitsui
officials to Mrs. Segal and Peregrine Chairman Philip Tose.
Mitsui wanted new sources of seafood and was interested in
taking a stake in the prawn business. (Peregrine says it
connected with Mitsui on its own.)
Mrs. Segal apparently realized that a bid by Mitsui could
provide a means to regain control of the prawn business. The
businesswoman began firing off memos to Mr. Charles, whom
she had befriended before his retirement as Peregrine's head of
regional corporate finance in mid - March 1995. On May 31,
according to memos that Peregrine submitted in court, Mrs.
Segal allegedly wrote: "I really do hope you and Michael
(Dobbs - Higginson) come up with something creative by
which Mitsui buys all of Peregrine's stake in Mafco and then
we are able to buy 35% - 40% back."
Mr. Charles denies he was in any sort of a conspiracy with
Mrs. Segal, adding that he "always acted properly for
Peregrine." Mr. Charles says he isn't sure whether he received
a fax from Mrs. Segal on May 31; he says he often ignored her
faxes and never wrote back.
Mr. Dobbs - Higginson says that his dealings with Mrs. Segal
were completely aboveboard and that she told him her contract
with Peregrine allowed her to enter into deals with other
parties. The banker says Mrs. Segal came up "with a number
of absurd schemes" that he strongly advised against. He adds
that Mitsui had decided in April or May not to buy Peregrine's
interest in Mafco. But, he says, Mrs. Segal persisted in her
belief that Mitsui was interested despite his repeated statements
that Mitsui wasn't.
Mr. Dobbs - Higginson defends Mrs. Segal's behavior as
"understandable" because "Miriam Segal was obsessed with
Peregrine's failure to manage Mafco properly and realize its
true value." Peregrine says it has managed the business well
considering that it was in disarray when Peregrine took over in
On June 12, Peregrine claims, Mrs. Segal dictated a three -
page memo to Burma's Brig. Gen. Maung Maung, head of the
Fisheries Ministry, which is in partnership with Peregrine. Mrs.
Segal urged him to expel a Peregrine employee and U.S.
citizen named Hector Lwin. "Hector's very active - pin
something on him, frame him - anything. . . . I would raid
Hector's house!" the letter said, according to documents filed in
The businesswoman also provided the man she called "my dear
general" with advice on a range of issues such as handling re-
lations with the U.S. or how to spot potential dissidents in
Burma. "Watch for expats or returning nationals in trading
businesses," the June 12 letter allegedly said. "They are your
most active organizers and invisible. Any you know or suspect
- harass a lot."
On July 14, Mr. Lwin, an ethnic Burmese, was interrogated by
military intelligence officials and quickly deported for
traveling on an illegal passport, Peregrine says. The investment
bank admits there's no evidence that Mrs. Segal caused Mr.
Lwin's deportation. Mrs. Segal's lawyer denies that she asked
that Mr. Lwin's house be raided or that he be deported, adding:
"Mrs. Segal has not encouraged the government to interfere"
By late June, relations between Peregrine and Mrs. Segal were
stretched to the breaking point. Mrs. Segal apparently worried
that Peregrine's chairman, Mr. Tose felt snubbed by her. Mr.
Tose and a senior Mitsui official had just visited Burma. Mrs.
Segal set up a rare meeting between the Mitsui official and Lt.
Gen. Khin Nyunt, Burma's intelligence chief. Mr. Tose was
In a fax to Mr. Dobbs - Higginson on June 22, according to
documents Peregrine filed in court, Mrs. Segal allegedly
thanked him for his faxes that she received on the same day,
discussed other business proposals, and stated: "I am making
sure that nothing is achieved by PCM (Peregrine Capital
Myanmar) in Yangon (Rangoon)."
Mr. Dobbs - Higginson recalls that after receiving the fax, "I
rang her up and said, 'Miriam. Miriam. For God's sake be
realistic!" The banker says he urged Mrs. Segal to solve her
problems with Peregrine. Mr. Dobbs - Higginson declined to
provide copies of his June 22 faxes to Mrs. Segal.
A week later, Peregrine says, it received another alleged fax
from Mrs. Segal addressed to Mr. Dobbs - Higginson.
Reacting swiftly, the investment bank on July 3 eased out an
ally of Mrs. Segal's who had been managing Mafco. The
investment bank fired Mrs. Segal the next week.
It looked like clear sailing for Peregrine. Alan Mercer,
Peregrine's in - house lawyer who has taken the lead in
cleaning up the mess in Burma, told this newspaper in mid
July that the business would soon be making a profit and
predicted annual sales of US$60 million in two to three years.
Mr. Mercer dismissed the possibility that Mrs. Segal could
cause trouble, stating "she has an overinflated idea" of her
But in Mrs. Segal's darkest hour, she played her trump card.
Back in April, Mrs. Segal had apparently learned that the Min-
istry of Fisheries was questioning the validity of Peregrine's
acquisition of her half of the joint venture. Mrs. Segal says that
although she sold Peregrine her shares of MMA Financo
Fisheries Co.. which held a 50% stake in the prawn venture,
Peregrine failed to properly register its ownership of the shares
with Burmese authorities.
Peregrine heard the news two months after it sacked Mrs.
Segal. On Sept. 12, the Ministry of Fisheries wrote to
Peregrine, stating that the transfer of MMA Financo Fisheries
was subject to Burmese law, even though the company was
incorporated in Hong Kong.
The businesswoman moved even faster. On about Sept. 6 and
7, Mrs. Segal entered Mafco's two prawn - processing plants in
Rangoon and told staff that she had been reinstated as a
director, Peregrine alleges. Peregrine claims that at one of the
plants, Mrs. Segal and a Burmese ally who she reinstated as
Mafco's managing director told staff that Peregrine personnel
entering the plant would be prosecuted.
Mrs. Segal's lawyer says her actions were justified under
Burmese law because the Ministry of Fisheries found that the
share transfer was invalid. Peregrine claims that its purchase of
Mrs. Segal's Hong Kong - registered company doesn't come
under Burmese jurisdiction and that it properly registered the
On Dec. 7, Judge Patterson in New York issued an order that
would have reopened the prawn plants to Peregrine. The judge
permanently enjoined Mrs. Segal from asking Burmese
military officials to "raid" the houses of Peregrine employees
or otherwise interfere with Peregrine's interest in the prawn
business. Nevertheless, Peregrine's Mr. Mercer says the
investment bank's staff have given up trying to go into the
prawn processing plants since October, when Mr. Mercer says
he was barred from entering. The lawyer says Peregrine is no
longer talking with its joint - venture partner, the Ministry of
A trial isn't set to begin in New York for several months on
Peregrine's claims and Mrs. Segal's counterclaims. Nor are
Peregrine's lawsuits in Hong Kong against Messrs. Charles and
Dobbs - Higginson expected to go to trial any time soon.
Meanwhile, Peregrine wants to put the prawn business behind
it and move on to other possible ventures in Burma.
As for Mrs. Segal, she vows that despite the lawsuit, she'll
continue to do business in Burma. "I'm not about to walk away
from it," she says.