RESIGNED fRom firm:
Dr Allan Bachan
BLIND EYE TO FRAUD
Judge criticises EMA chief in $1.3m court case
Anika Gumbs CCN Senior Multimedia Investigative Journalist
Chairman of the Environmental Management Authority (EMA), Dr Allan Bachan, was the director of a company sued in a fraud case in the High Court and against which judgment was made to repay $1.3 million with interest to Grace Kennedy Ltd (GKL) (Trinidad and Tobago Ltd).
Project Management Consultancy Services Ltd (PMCSL) was named as the second defendant in a lawsuit filed by GKL to recover $3.1 million (after interest calculated) from PMCSL (second defendant) and Dhaneshwar Deolall, also known as Bhola Maraj (first defendant).
PMCSL is a limited liability company incorporated by Nadia Beharry and Sherry and Allan Bachan on December 17, 1997.
Established since 1922, GKL is involved in the provision of financial services of which foreign exchange trading is an authorised activity and is also listed on the stock exchange in Jamaica and T&T.
Evidence of how GKL was defrauded is detailed in a judgment handed down by Justice Charmaine Pemberton in the Port of Spain High Court on July 28, 2011, before whom the matter between GKL and Maraj and PMCSL was heard.
Maraj, who was known to Bachan, never entered an appearance or defence and as such a default judgment was secured against him.
GKL initiated legal proceedings against PMCSL to recover the sum of $1,356,830 with interest at the rate of 5.5 per cent per annum from September 19, 2005 until the judgment was handed down.
In delivering the ruling, Pemberton said: “What is significant is Dr Bachan’s business sense and astuteness as seen in his actions as principal of the company PMCSL. When Maraj asked if he could have endorsed cheques in the company’s favour, Dr Bachan refused and insisted that the cheques which were to be made payable to the company were to be in the form of manager’s cheques.
“In these modern times when commercial transactions are subject of heavy scrutiny I think it would have been incumbent upon Dr Bachan to question the source of funds from Maraj whom he met just prior to the transaction and with whom he claimed not to have a long relationship. I conclude that Dr Bachan sought to protect his business while at the same time, turning a blind eye to the transactions that PMSCL was asked to effect.”
The court heard that on September 14, 2005 employees of GKL were lured into preparing and parting with a Republic Bank Ltd certified cheque in the sum of $3,142,500 in the name of Bhola Maraj.
Maraj went to the office of GKL on that same day and presented a Royal Bank T&T (RBTT) manager’s cheque in the sum of US$500,000 in exchange for the Republic Bank cheque.
However, for reasons unknown, Maraj returned later that day and attempted to have the RBTT cheque returned to him. It was not.
On September 15, the court heard that Maraj went to Republic Bank and requested that the following transactions be made out on his behalf in the form of manager’s cheques:
•The sum of $785,625 paid to Maraj
•The sum of $571,295 paid to Maraj
•The sum of $785,625 paid to Ryan Singh
•Cash in the sum of $1 million
The following day, on September 16, Maraj returned to the Republic Bank branch and requested that the cheques made out to him be cancelled and instead made payable to PMSCL in the sum of $1,356,830.
The cheque was deposited at a branch of First Citizens (FCB) around September 19, 2005 by PMSCL.
Financial records showed that on that same day two cheques were issued by PMCSL to Laurie Diaz Construction Company (LDCCL) in the sum of $906,830 and to Junior Thomas for $60,000.
Some seven days later on September 26, 2005 GKL was informed that the RBTT cheque was fraudulent.
The statement of claim filed by GKL on May 22, 2009 to recover the monies from PMSCL stated:
•As money had and received by PMCSL to GKL’s use and/or repayment of the said sum by way of restitution;
•An order for the repayment of the said sum;
•Injunctive relief as against PMCSL from “parting with the said sum…or any part thereof to the Claimant”…
•Damages for conversion
In its defence, PMCSL admitted to receiving the cheque in the sum of $1,356,830.
Part of the sum, PMCSL said, was paid to LDCCL as principal in the amount of $906,830 and the other $60,000 was paid to Thomas upon instruction by LDCCL.
The company stated that it acted as an agent that received the sums and described LDCCL as “its client” who it “afforded limited office accommodation” at its offices.
Thomas was described as one who “did odd jobs and errands” for PMCSL.
It was also disclosed that a balance of $389,563.69 remained in the FCB bank account held by PMCSL.
However, PMSCL was unable to prove that the company had no part to play in the fraudulent scheme.
Justice Pemberton said the “undisputed facts” showed the following:
•That Maraj was a fraudster and he, Diaz, LDCCL, Lindhurst Ishmael and Thomas were known to each other
•Ishmael, Bachan’s business associate at PMCSL, was known to Maraj, Diaz, LDCCL and Thomas. He was the common link between them and Bachan and PMCSL.
•That Maraj, Diaz, LDCCL and Thomas engineered the plot to convert funds belonging to GKL
•That PMCSL was the conduit through which the funds were to be sanitised.
The ruling stated inter alia: “There is no evidence of any bona fide, good or valuable consideration passing between LDCCL and PMCSL for the service rendered of collection and disbursement of funds under the tainted transaction. There is no evidence that the sums retained represent that consideration. I can safely find that no good and valuable consideration exists and the consulting and retainer agreement is a sham. Thus in all of the circumstances of this case PMCSL cannot avail itself of the defence of change of position in good faith.
“On balancing the equities, GKL’s carelessness or negligence in parting with its monies, the TTD equivalent of US$500,000 did not tilt the balance away from it. It is clear that I can order PMSCL to repay the entire sum of $1,356,830 by way of restitution to GKL in the terms to follow. The sums of $906,830 and $60,000 are to be treated differently from the sum of $390,000 (which the parties have agreed is due and owing and did not form part of this deliberation) in terms of the interest and costs.”
Pemberton also noted that the $60,000 paid to Thomas for messenger and handyman services seems to be incompatible with his stated duties as no evidence was produced for the period over which these duties were performed or the rate of payment.
It was also noted that PMCSL did not have a licence to operate as a financial institution, contrary to the Financial Institutions Act.
Questioned whether he disclosed his involvement with PMSCL before receiving his instrument of appointment from President Anthony Carmona on June 5 to lead the EMA board, Bachan said: “Declare what? That is right, PMSCL was incorporated by me in 1997. At the end of the day the company made decisions. It was then sold to other directors. There were other directors on the board who bought into the company. There were investors who were willing to invest in the company to move the business forward. At the end of the day, it was a business transaction and I entered into the business transaction at the time. I resigned before the judgment was given.”
Asked when he resigned from PMSCL, Bachan said: “It was a long time, I cannot remember. I was working with the company and at the end of the day the judgment was against the company. At the end of the day I resigned from the company. I got involved in the thing and I am no longer a director of the company. The company has new directors.”
Company records show Bachan ceased being a director of PMSCL on March 22, 2013. Another director, listed as Wayne Lucky, also resigned on the same day.
Laurie Diaz and Ishmael are listed as directors of the company.
Line minister Ganga Singh, under whose purview the EMA falls, could not be contacted for comment as telephone calls went unanswered.
The judge’s order
(1) That there be judgment for the claimant against the second defendant (PMSCL) in the sum of $1,356,830.
(2) That interest be paid on the said sum at the rate of 5.5 per cent per annum from September 19, 2005 until the date of trial.
(3) Thereafter, interest be paid on the sum of $966,830 at the rate of 5.5 per cent from the date of the trial until the date of judgment and thereafter at the rate of 12 per cent per annum from the date of judgment to the date of payment.
(4) That interest be paid on the sum of $389,563 at the rate of eight per cent per annum from the date of trial to the date of payment.
(5) That the cost be paid in the sum of $45,375 on the sum of $390,000 up to the stage of the pre-trial review as prescribed and in the sum of $94,341 on the sum of $966,830 to trial as prescribed.
(6) That the payment of the said sum of $389,563 standing in the name of PMCSL at FCB standing in the account number 1084228 be paid to GKL after the outcome of the proceedings CV 2005-06001.