Mayor Outerbridge & Argyle On $18 Million Loan

May 7, 2015

Hamilton Mayor Graeme Outerbridge 3Argyle Limited, Argyle UAE Limited and Mayor Graeme Outerbridge have released an extensive press statement over the circumstances surrounding the $18 million loan, saying the statement is to “correct matters stated to the press by Minister Fahy.”

Late last month, Minister of Home Affairs Michael Fahy issued a statement about the circumstances surrounding the $18 million loan, providing a breakdown of the situation, including information about some of the financial transactions.

Minister Fahy has previously said that “it appears that a substantial sum of the bridging loan was at some point paid to a company registered in Gibraltar called Argyle Limited as a fee to get access to a large line of credit to develop the financing for the hotel and residences development.”

The situation began last year when Mexico Infrastructure Finance LLC [MIF] extended an $18 million loan to Par-la-Ville Hotel and Residences Ltd [PLV], with the Corporation of Hamilton [CoH] signing on as the guarantors.

The loan was to be repaid by PLV by end of December 2014, however the loan was not paid back resulting in MIF initiating legal action against both the CoH and PLV principal Michael MacLean, and KPMG being appointed as Joint Receivers over the Par-La-Ville car park on March 31, 2015.

In practice this means that the CoH will still operate the Par-la-Ville car park, but income collected will be turned over to the Joint Receivers to pay down the debt owed by PLV to MIF.

The statement released this evening — which was signed by both Robert McKellar of Argyle Limited and Hamilton Mayor Graeme Outerbridge — comes in the final hours of the Mayor’s term, as the polls are set to close shortly in the Hamilton election, and Mayor Outerbridge is not standing for re-election.

In the statement, Mayor Outerbridge [pictured] states, “I was invited to attend a meeting in London with developer Mr Michael Maclean to have a discussion with a potential senior funder. I had attended a meeting earlier in the year in New York for the same purpose but no agreement could be structured between the potential funder and the developer at that time. Both trip expenses were to be recharged to PHRL.

“I contacted the Corporation Secretary who was already in London on unrelated business and requested he attend the meeting of October 16th as well. I wish to reiterate that there were no agreements made or contracts signed at the October 16th meeting.

“Upon return to Bermuda we reviewed information on Argyle, Mr. Robert McKellar, associated banks as well as the funding models discussed at the meeting. On 23rd October we received information from Mr Maclean’s lawyer that an agreement had been reached with Argyle to provide the senior funding and we received a draft copy of the Trade Agreement along with a draft copy of the escrow release letter.

“We were informed by Mr. Maclean’s lawyer that PHRL had assigned Michael and Yasmin Maclean as Senior Escrow agents to allow for a smooth transfer of funds in the very short period to try and meet the maximum return before the end of December 2014.

“The same account was being used as in the initial drawdown and it was confirmed that the alternative funding model met the requirements of the option in the escrow agreement. It was at this point that it was revealed that having taken legal opinion PHRL had created a Trust which would engage with Argyle to provide the capital funding.

“We were not aware that Argyle had been informed that these were private funds and that Argyle was not privy to the discussions of the escrow funds and the reasoning for the formation of the Trust. However, it is clear from subsequent communications that Argyle was not aware of the movement of funds between the escrow and the private trust.

“Once the funds were released from escrow in New York we were advised that the lenders, MIF, had been informed to the extent that the contract with Argyle would permit. It was with some surprise to receive allegations on December 3rd 2014 that the funds were not being used for the purpose they were intended and that PHRL had breached their agreement with MIF.

“Since that time a number of ex parte rulings and a number of statements have been made in the public realm, none by me or Argyle until now. In every conversation we have reiterated that the money was not lost and that Argyle had been attempting to get the funds, resulting from the now cancelled agreement, repatriated to Bermuda.

“It was also noted that the continued assault of ex parte rulings and multiple court actions had also completely halted any and all attempts to repatriate the funds in a manner that would release Argyle and the CoH from any liability. In virtually every occasion this information was ignored.

“I would like to thank Mr Robert McKellar for his unflinching response to our inquiries and for all his efforts to repatriate the funds and release the CoH from the liability of the loan guarantee,” Mayor Outerbridge added.

The full statement is below:

It has been reported in the press in Bermuda from statements made by Minister Michael Fahy that Argyle Limited and Robert McKellar of Argyle Limited have been involved in the Par La Ville development and the funding surrounding it. This statement is to correct matters stated to the press by Minister Fahy.

Argyle Limited was not involved in the funding arrangement surrounding Par La Ville. Robert McKellar was asked to host a meeting in London on 16th October, 2015 at the request of Alex Lamba of Lordstock Financial Services in Canada and Tsvi Guy of Vecron in Nevada who had prior to that meeting been in negotiations with Par La Ville Residences Limited and the City of Hamilton concerning a funding arrangement. These funding arrangements and any prior discussions surrounding them were conducted by Alex Lamba and Tsvi Guy. They had nothing whatsoever to do with Argyle Limited.

At the meeting on 16 October, 2014, at which Mayor Graeme Outerbridge, Secretary Ed Benevides, Michael Maclean and his lawyer from the UK were present as well as Alex Lamba and Tsvi Guy, the proposal by Alex Lamba and Tsvi Guy was that Par La Ville Residences and the City of Hamilton was to arrange for a payment to a company called Renaissance Capital in Switzerland to pay a fee of USD14 Million for a Credit of USD300 Million to be arranged in a Swiss bank as an initial fee and thereafter a further payment of USD3 Million per month for the Credit. Argyle Limited was asked at the meeting on 16th October 2014 if Argyle could arrange an investment of the Credit. However the Credit would have to remain in one bank in Switzerland and could only be invested through that bank.

Argyle was asked to comment on the risk involved in that matter and stated that the risk was that if the investment was not successful or the bank in Switzerland refused to conduct or cooperate with any investment proposals, then the Credit could not be used and there could, depending on the terms which Argyle had not seen, be an ongoing liability to the provider of the Credit to keep paying the USD3 Million per month depending on the terms of the contract. In view of those risks, Argyle stated very clearly at the meeting that it refused to become involved in the Renaissance financing arrangement proposed. Argyle was asked at the meeting by the Mayor and Michael MacLean if it were possible to arrange a more flexible Credit that could be invested outside of just one bank and Argyle said it would ask another company that it thought may be able to help.

Argyle was further asked by Michael MacLean if such a Credit, if it could be arranged, could be used to produce a profit of USD18 Million prior to the year end. Argyle stated that it was too late in the year for that timetable as it was already mid-October, unless the funds to pay the fees for the Credit were available immediately and the Credit could be confirmed immediately, certainly no later than Monday, 20th October, 2014. Even then Argyle stated it was highly unlikely that such an investment return could be achieved in the time available.

Argyle asked to see evidence of funding for the fees payable for the Credit and was sent a statement from Bank of New York Mellon in New York on 21st October, 2014 showing a sum of USD13.7 Million in the name of Par La Ville Residences Ltd. Argyle subsequently arranged on 27 October, 2014 for an independent company in London to verify to Michael MacLean that a Credit could be arranged to complete matched trades.

Argyle confirmed to the parties that it could utilise such a Credit to arrange returns on the Credit for a fee of 10% of the Credit to be arranged, profits to be divided above USD18 Million on an 80:20 basis, 80 to the investor, 20 to Argyle, over a one year investment period. A draft Agreement setting out the terms was sent to City of Hamilton and Michael MacLean for them to decide if they wished to proceed on that basis. However, the time had passed to make a return at the level requested of USD18 Million and this was stated repeatedly by Argyle to all parties.

By 3rd November no funds had been paid and no arrangements put into place. Tsvi Guy then wrote to Michael MacLean at Par La Ville Residences Ltd to inform them that the matter regarding Par La Ville Residences was closed and no further action was taken in that matter by Argyle.

On 28th October, 2014 Argyle received a signed Agreement from a Private Trust in Bermuda substantially in the same terms as the Agreement sent to Par La Ville and requesting if Argyle could arrange a Credit for the Trust. Argyle requested evidence of funding from the Trustees to show they had the ability to pay the fees and subsequently received a statement on 31st October 2014 from Clarien Bank in Bermuda showing the sum of USD 14.4 Million. Argyle was informed that these funds were private funds, which was independently verified by Argyle’s Bank officer directly with the Trustees. Therefore, as far as Argyle was concerned, based on all the evidence presented, the funding available to the Trustees was private funding held at Clarien Bank, particularly as the Clarien Bank Statement showed a higher account balance than the BNY Mellon funds for Par La Ville. Argyle, therefore, proceeded with the Trustees as Argyle’s counterparty accordingly.

The investment of the Credit was to be conducted by Argyle UAE Limited and the Trust was invoiced accordingly. The payment of the fees due under the terms of the Agreement were not received until 13th November, 2014 at which time the requirement to return the USD18 Million payment stated in the Agreement was not possible to achieve, which Argyle stated at the time and had continuously stated due to the late arrival of the funds from the Trustees’ bank.

On 30 December, 2014 the Trustees lawyer asked if Robert McKellar could confirm the current status of the investment of the Credit at that time. In a conference call on that day Robert McKellar brought the parties up to date on what had taken place. Mr. McKellar said it was not possible to return the USD18 Million by the year end due to the late payment to Argyle UAE of the USD12.5 Million fees but that Argyle UAE would endeavour to make that payment by end January 2015. An ex gratia payment, without liability on Argyle’s part, of USD375,000 was agreed to be paid by Argyle to the Trustees in order to extend the timing of the USD18 Million payment beyond 31st December 2014 and such payment made to the Trustees lawyers in January 2015.

On 10th February 2015 Argyle received a copy of a Court Order requesting details of any funds held by Argyle Limited for Par La Ville Residences Limited or Michael and Yasmine MacLean. Argyle responded correctly that Argyle Limited held no such monies. At no time did Argyle Limited receive any funds from Par La Ville Residences Limited nor from BNY Mellon. At no time did Argyle Limited conclude any agreement with Par La Ville Residence Ltd. Argyle Limited refused to act in the matter proposed in the meeting of 16 October, 2014 and the matter was closed after Tsvi Guy’s copied email to Argyle.

Argyle UAE has been requested to terminate the Agreement it entered into with the Private Trust and to return all monies. This will result in losses to Argyle as it will not be able to make profits under the remainder of the term of its Agreement. However, as there are issues which are unclear as to the correct beneficiary of the funds Argyle has instructed lawyers in Bermuda to receive the return of the funds which it is now in process to do. The recipient of those funds is to be determined as it is unclear to Argyle who is entitled to them. For that reason Argyle will receive advice from its lawyers and act in accordance with that advice.

It should be stated that at no time was Argyle contacted by Minister Michael Fahy prior to any statements he has made to the press. To date no communication has been received by Argyle from Minister Michael Fahy in this matter. It is for this reason that Argyle now wishes to clarify the position in conjunction with Mayor Outerbridge as set out in this Press Release by the Mayor.

Robert McKellar would like to thank Mayor Outerbridge and Ed Benevides with whom he has been in constant communication to update them on the status of this matter.

Mayor Outerbridge states, “I was invited to attend a meeting in London with developer Mr Michael Maclean to have a discussion with a potential senior funder. I had attended a meeting earlier in the year in New York for the same purpose but no agreement could be structured between the potential funder and the developer at that time. Both trip expenses were to be recharged to PHRL.

“I contacted the Corporation Secretary who was already in London on unrelated business and requested he attend the meeting of October 16th as well. I wish to reiterate that there were no agreements made or contracts signed at the October 16th meeting. Upon return to Bermuda we reviewed information on Argyle, Mr. Robert McKellar, associated banks as well as the funding models discussed at the meeting. On 23rd October we received information from Mr Maclean’s lawyer that an agreement had been reached with Argyle to provide the senior funding and we received a draft copy of the Trade Agreement along with a draft copy of the escrow release letter.

“We were informed by Mr. Maclean’s lawyer that PHRL had assigned Michael and Yasmin Maclean as Senior Escrow agents to allow for a smooth transfer of funds in the very short period to try and meet the maximum return before the end of December 2014. The same account was being used as in the initial drawdown and it was confirmed that the alternative funding model met the requirements of the option in the escrow agreement. It was at this point that it was revealed that having taken legal opinion PHRL had created a Trust which would engage with Argyle to provide the capital funding.

“We were not aware that Argyle had been informed that these were private funds and that Argyle was not privy to the discussions of the escrow funds and the reasoning for the formation of the Trust. However, it is clear from subsequent communications that Argyle was not aware of the movement of funds between the escrow and the private trust. Once the funds were released from escrow in New York we were advised that the lenders, MIF, had been informed to the extent that the contract with Argyle would permit. It was with some surprise to receive allegations on December 3rd 2014 that the funds were not being used for the purpose they were intended and that PHRL had breached their agreement with MIF.

Since that time a number of ex parte rulings and a number of statements have been made in the public realm, none by me or Argyle until now. In every conversation we have reiterated that the money was not lost and that Argyle had been attempting to get the funds, resulting from the now cancelled agreement, repatriated to Bermuda. It was also noted that the continued assault of ex parte rulings and multiple court actions had also completely halted any and all attempts to repatriate the funds in a manner that would release Argyle and the CoH from any liability. In virtually every occasion this information was ignored.

“I would like to thank Mr Robert McKellar for his unflinching response to our inquiries and for all his efforts to repatriate the funds and release the CoH from the liability of the loan guarantee.”

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Comments (24)

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  1. hmm says:

    This guy is in big trouble

  2. Double D says:

    So where is the money?

  3. Family Man says:

    The last middle finger salute from the worst mayor in Bermuda’s history.

    The whole drivel simply boils down to “Don’t blame me, I was too stupid to understand what was going on. I offered to give back what money was left if you released me from any further liability but they declined to do that.”

    Where is the money? How much is left.

    • Purple Koolaid says:

      Donal has been very quiet during this whole affair? Wasn’t he the original person behind the PLV Hotel and passed it on to McLean shortly after becoming Deputy Mayor. As someone that was involved on both sides (financially and as part of the governing body) I would have thought he would have many answers.

  4. Blankman says:

    Not sure what the issue is. After all, Mr Outerbridge was assured that there was a very nice gentleman in Nigeria who was going to wire funds to the account of the Corporation. What more could he have asked for?

  5. MAKE MY DAY says:

    If you BELIEVE anything that Outerbridge has to say… Then I have a “Bridge-for-Sale”!!

    I look forward to the impending International police investigations – on where these *Millions* of $$$ actually are!! There are going to be some-eyes-opened!!

  6. Confused says:

    Early on in his Reign of Ineptitude someone coined the title “Night Mayor”; pretty well sums him up!

  7. I can only “pray” you all get what you all rightfully deserve Graeme Outerbridge!

    • Mockingjay says:

      And the outstanding Gate issues.

      • serengeti says:

        What, like Swizzlegate? Ganga to 2-year-old gate? Taking down parking signs gate? Port Royal gate?

  8. Barracuda says:

    You are gone , that is all that matters .

    • Huh? says:

      Hardly.

      Greame and friends may not have been able to do as much damage as the Dr. Brown government did but they were pretty damaging all the same. We will be suffering from these mistakes for many years before it is all resolved.

  9. On de Hill says:

    How did team Hamiltom get elected? Oh yeah, in the guise of greater democracy. Remember that? Just one of the former PLP Government’s hoodwinks of the people. Please carefully examine what has happened as a result and think twice the next time the PLP spout their divisive nonsense. They don’t care about what is best for Bermuda, only what is best for them. Shameful…

    • smh says:

      And OBA does? LOFL…your the one obviously hoodwinked mate.

  10. Stuntman says:

    Am I missing something? Does this explain why the Mayor and Secretary acted without the consent of the full CoH council/board?

    The trustafarian will now slink back up west, as he had no real investment in the City. Being Mayor was to serve his damaged ego.

    So what about the Secretary? Does he not have a lot of explaining to do? Inquiring minds want to know.

    • Who will now be responsible for the millions of dollars that belong to, “we the people” And that former Deputy Mayor, what is he going to answer for / to who? Heads must roll and charges must be laid where they must!

      • By the way, “mums” is the word of the day from the former Mayor and his close associates. Please, “turn over the stones to reveal the worms” We / Government mustn’t allow them to get away!

  11. mumbojumbo says:

    Sole de parking lot…lease de front street for thirty years…clamp de cars (basically endangering old infirm or disabled or diabetic people by removing their transport by taking possetion of “their” private property)…..wow………………..wow…

  12. clearasmud says:

    I note with interest that he does not mention meeting with the Minister at all. We were told by the Minister that proper procedures and safeguards were put in place so how did this mess happen? Why was the minister satisfied with what the corporation had done so that he gave his support to using the property as collateral? Still lots of unanswered questions and this drivell does not help at all.

  13. Kim Smith says:

    Who and where are Michael and Yasmin MacLean?

  14. serengeti says:

    Unfortunately I don’t believe it’s illegal to be a totally incompetent nincompoop.

  15. swing voter says:

    these detailed press releases appear to be legal statements similar to sworn affidavits….is everyone involved lawyered up (including the lawyers)?

  16. Truth is killin' me... says:

    What happens in shady back offices comes out in the light. This statement is just trying to deflect blame from him as he knows the hounds will be let loose when Mayor Gosling looks into all this. His time is up.