Turbulence Over HABDI

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HABDI's need for operating money has become a major source of friction among board members. The group has had to spend nearly one million dollars in legal fees alone. Dick Judy's consulting contract with HABDI costs the group $10,000 a month. In addition Herrera is drawing a salary from HABDI of $350,000 a year, according to sources familiar with his contract. HABDI is also leasing a Mercedes for Herrera. "That's really brutal," says one source. "Some of these guys are barely hanging on, trying to maintain their investment in HABDI, while Carlos is drawing such a large salary." Herrera reportedly demanded that the board pay him the salary, and boasted to the board that it was his political contacts that won HABDI the lease. None of the other partners are drawing a salary from HABDI.

Jaime says he believes that Herrera, working in concert with Adrian, is trying to force the group's other investors off the board so they can control the company. Rudd last week confirmed that he has reached a deal to sell his stock to ALS. "I felt that it was not prudent for any one particular group to have a majority. I didn't want to have Pedro and the --" Rudd pauses, deciding not to finish his thought about Adrian and Herrera. Later, in what appeared to be another reference to Herrera and Adrian, he adds, "I have an agreement with ALS, and I believe that the concepts of ALS are more closely aligned with my development theories." (But even ALS is not the same ALS it was back in January 1996. Several months after the commission vote, Raytheon sold its interest in ALS.)

After the tumultuous March board meeting, the group met again last week, and Jaime acknowledges that Adrian and Herrera were going to buy out his shares in the company. Jaime says his previous attempts to sell to other possible investors were stymied by Herrera and Adrian. "By buying my stock they will now have a majority of the stock and the board," he notes. The group also voted to make Judy a board member.

Yet despite the apparent reconciliation, the underlying tension that led Herrera and Jaime nearly to blows remains. Indeed, Jaime announced to the board last week that he recently went out and bought a bullet-proof vest.

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Jim DeFede
Contact: Jim DeFede