CannTrust Holdings Inc.'s (TRST.TO) recently-fired CEO expressed "fear" about the company's corporate governance practices at the end of last year, according to a letter obtained by BNN Bloomberg.

"This letter's sole purpose is to express my concerns about the Board and its corporate governance practices," Peter Aceto wrote to then-chairman Eric Paul in a letter dated Dec. 31, 2018.

"More specifically, there are no formal governance or delegation of authorities in place making decision making unclear to the CEO and his management team," Aceto added.

CannTrust has been engulfed in controversy since July 8, when it disclosed it had run afoul of federal regulations and deemed to be non-compliant by Health Canada as a result of unlicensed production at one of its facilities in Ontario between last October and March 2019. As a result, 12,700 kilograms of cannabis inventory was placed on hold, sales and shipments were later suspended, and, on July 25, the company said it had fired Aceto with cause and also demanded Paul, who co-founded the company, resign from his post as chairman.

While Aceto's letter from the end of last year makes no mention of the production scandal that recently came to light, it is a clear sign he was worried about the company's structure and accountability system.



"Management often receives conflicting instructions from board members. It is often unclear when and which board members need to be involved in decision making and when decisions are made they are often second-guessed [thus] delaying decisions and negatively impacting how CannTrust and its team are perceived," wrote Aceto, who was hired as CannTrust's CEO on Oct. 1, 2018 after having previously served as chief executive of Tangerine Bank.

"These governance issues will need to be resolved," he added. "I fear that the performance of management and my performance as the CEO in particular, cannot be properly measured or evaluated with the current lack of a clear governance framework."

A spokesperson for CannTrust said via email Aceto's letter was not shared with the company's board of directors, and that the board's special committee – which was established in the aftermath of the production scandal – received a copy of the letter on July 19.

The spokesperson said Robert Marcovitch, who was leading CannTrust’s independent committee before being named interim CEO after Aceto was fired, was not available to comment on the letter.

Aceto was not immediately available to respond to BNN Bloomberg's follow-up questions about his letter.

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