City Applies To Overturn $18 Million Judgement
An application has been submitted to the Courts asking that the consent order of the Chief Justice ordering the payment of the $18 million guarantee be overturned, Hamilton Mayor Charles Gosling said today.
$18 Million Loan Not Paid Back
MIF, an overseas company, extended an $18 million loan to Par-la-Ville Hotel and Residences Ltd [PLV], with the Corporation of Hamilton apparently signing on as the guarantor.
PLV was supposed to develop a hotel on the Par-La-Ville car park, and the $18 million was a bridging loan which was supposed to be used to secure financing for the hotel development.
The loan was supposed to be be repaid in December 2014, however it was not paid back resulting in MIF initiating legal action against PLV principal Michael MacLean and the Corporation.
The police previously confirmed they are conducting a “criminal investigation into an allegation of misappropriation of funds amounting to approximately $18 million,” and, in January 2016, confirmed that a 41-year-old man “has been arrested on suspicion of theft.”
Since this occurred, the CoH has been through an election and is now being run by a new administration.
City’s Comments
The City said, “Mayor Charles Gosling issued this update to City staff today in his continuous effort to keep employees up to date on the proceedings which ultimately may affect their livelihood.”
Major Gosling said, “Since the last Municipal Election in May 2015, the Corporation of Hamilton has been actively pursuing a number of revenue opportunities in order to fund the obligations it is said to have pursuant to the $18 million guarantee purportedly given to Mexico Infrastructure Finance LLC by the prior administration, in support of the Par la Ville Hotel development.
“In reviewing the capacity of the Corporation to enter into certain financial transactions, legal counsel had advised us the Corporation did not have the remit to do so.
“When asked about the guarantee, our counsel came to the same opinion, which is supported by senior U.K. counsel, namely that the Corporation did not have the power to give such a guarantee to Mexico Infrastructure Finance LLC.
“We do not relish this action. However it is clear that the members of the Corporation have an underlying fiduciary obligation to their ratepayers with respect to the application of the funds to which the ratepayers contribute, and for the breach of which they can be held liable; and that, therefore, in accepting the responsibility of office there is little choice but to raise this issue.
“Our advice from senior counsel even goes so far as to rule out any possible part settlement of this matter, even were such an offer to be presented.
“An application has accordingly been submitted to the Courts asking that the consent order of the Chief Justice made in May 2015 ordering the payment of the guarantee be overturned. This matter is now before the courts and we do not feel it appropriate to make any further comment at this time.”
