Last week, Dryships (NYSE:DRYS) chief financial officer Christopher Thomas resigned, according to the company, "to pursue other shipping interests." This, combined with the quiet departure of two members of the board of directors and this afternoon's surprise earnings warning, leaves me more bearish than ever on the Greek dry bulk shipper.

Just a few days after my Sept. 1 article criticizing management and questioning the company's valuation, then-CFO Thomas issued a statement, titled "Dryships Dismisses 'Fool,'" via the industry newspaper TradeWinds. Calling my article "old news, at least one year old," he told TradeWinds that it did "not contain any new information that investors are not already aware of, or that we have not addressed in the past through formal SEC reporting or press releases. Indeed we have received very complimentary letters from investors praising us for the transparency of our reporting."

So rather than taking the opportunity to rebut my critique, the company chose to whiff on the opportunity to put shareholders' minds at ease. Do these shareholders have reason to worry? You bet.

Pay close attention to Mr. Thomas's choice to highlight Dryships' supposed transparency for investors. It is true that the company has mentioned its conflicts of interest in SEC filings. Nevertheless, perhaps it could review its own ethics policy, where it clearly states that employees must avoid any interests that conflict or appear to conflict with the interests of the company. I couldn't find the small print that excluded CEO George Economou from this, so I assume it must apply to him, as well as his Cardiff Marine operations. What the heck happens to a CEO who violates his own company's ethics policy? For Mr. Economou -- who, holding both the CEO and interim CFO positions, is now the company's only employee -- the answer appears to be "absolutely nothing." Are you shareholders nervous yet?

But there's even more. Did you know that Nikolas Tsakos, CEO of Tsakos Energy (NYSE:TNP), resigned from Dryships' board last month? Mr. Tsakos helped lead Global Ocean into bankruptcy, so perhaps exchanging stories with Mr. Economou (who did the same with Alpha Shipping) became boring. Since Dryships did not issue a press release, shareholders would have had no way of knowing of the resignation unless they happened to scan the SEC filings. Does that qualify as "transparency"?

At least Dryships noted on its website that another director, Prokopios Tsirigakis, left the company earlier this year. For such a pathetically small board (currently numbering three) to lose two directors and a CFO in the last six months must qualify as alarming.

It certainly makes one hope that Mr. Economou is thinking of his shareholders. Unfortunately for shareholders, he's involved in a huge conflict of interest. He is the founder and 70% owner of Cardiff Marine, the company that manages all of Dryships' fleet. Cardiff also currently manages five ships that are competitors to Dryships, with nine more competitor ships scheduled to come on in the future. Thus, if it benefits Mr. Economou's own economic interests, he could influence Cardiff to make decisions that would harm Dryships' business.

Shareholders beware.

More seafaring Foolishness:

  • Should Fools consider General Maritime (NYSE:GMR)? Perhaps.
  • What about Eagle Bulk Shipping (NASDAQ:EGLE) or Excel Maritime Carriers (NYSE:EXM)? Philip Durell cautions investors.

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Fool contributor Stephen Ellis doesn't hold shares in any companies mentioned. You can see his holdings for yourself. The Motley Fool actually knows what transparency means, as evidenced by its disclosure policy.

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