Full Copy Of Lawsuit Against Port Royal Trustees

March 2, 2017

A lawsuit has been filed by the Government against MP Zane DeSilva, Wendall Brown, Delano Bulford, Island Construction and S.A.L. in connection with the refurbishment of Port Royal Golf Course, with the lawsuit alleging they were in breach of their fiduciary duties.

Attorney General Files Writ In Supreme Court

Attorney General Moniz said that following the Auditor General’s report on the Port Royal Golf Course project, he “commenced an internal investigation into the matters noted in that report, in particular, the finding of self-dealing by trustees.”

“Trustees owe fiduciary duties to Government. As part of the refurbishment, goods and/or services were supplied to the Port Royal Project by companies linked to the first three defendants – all former trustees,” Attorney General Moniz said.

“At no point did they properly declare their interests or recuse themselves from the Board’s decision-making in respect of the refurbishment of Port Royal,” the AG said, and he also alleged that the “defendants profited at the expense of Government in breach of their fiduciary duties. At no point was Government’s permission sought or given for such a breach.”

PLP Says With Election Looming, Timing Raises Questions About Fairness

Last night, a PLP spokesperson said, “The PLP remains committed to truth, fairness and justice.

“The allegations made by the OBA are serious and, for the good of Bermuda and our international reputation as a modern, sophisticated jurisdiction, this process must be open, transparent and free of political interference.

“The actions taken by Trevor Moniz and the One Bermuda Alliance are reminiscent of dictators who used political power and influence to victimise their enemies and are alien to a modern, sophisticated jurisdiction like Bermuda.

“When it came to scandals like JetGate and the serious allegations that forced the resignation of the OBA’s first premier, where was Trevor Moniz? Where were the investigations and lawsuits?

“It must not be forgotten the AG’s last vendetta against former Premier Brown, risked our agreement with the US and has put our relationship with the Lahey Clinic in jeopardy. Furthermore, the OBA have used tax dollars to hire a political PR firm to push that agenda.

“With an election looming, the timing of this and other actions will raise questions about fairness, impartiality and whether the OBA’s approach is less about justice and more about political vendettas or distracting from their failure to create jobs and opportunities for Bermudians.“

General

The writ states, “The Government owns the Port Royal Golf Course [“Port Royal”], the Ocean View Golf Course and the St George’s Golf Course. By the Golf Courses [Consolidation] Act 1998 the Government established the Board of Trustees of the Golf Courses [“the Board of Trustees”]. The Board of Trustees consists of members who are appointed by the Government [“the Trustees”]. The Trustees owe fiduciary duties to the Government.”

Trustees

“The Board of Trustees’ functions [amongst others] are to have the general control, management and administration of Port Royal. The Board of Trustees must obtain the Government’s prior approval for capital development expenditure,” the writ says.

“The Board of Trustees must comply with any instructions or directions issued by the Minister of Finance, as set out in section 10[2] of the Golf Courses [Consolidation] Act 1998, in respect of any Government funds used for capital development or operation and maintenance expenditure.

“This requires the Board of Trustees to comply with the Financial Instructions issued by the Accountant General in the Ministry of Finance.

“At all material times the First, Second and Third Defendants were Trustees.

“The First Defendant was Deputy Chairman of the Board of Trustees from June 2006 until December 2009. At all material times the First Defendant was a director and owner of the Fourth Defendant and was one of its controlling minds and wills.

“The Second Defendant was Chairman of the Board of Trustees from June 2006 until on or about December 2010. At all material times the Second Defendant was a director and owner of the Fifth Defendant and was one of its controlling minds and wills.

“The Third Defendant was a Trustee from June 2006 until on or about December 2012. At all material times the Third Defendant was an agent of Miracle Steel Structures Limited [“Miracle Steel”].”

Nature of the Claims

The writ states, “This action arises out of the refurbishment of Port Royal that took place between 2007 and 2009, during which period the First, Second and Third Defendants were Trustees. The Defendants each participated in and were responsible for the decisions made by the Board of Trustees.

“The Plaintiff make claims of breaches of fiduciary and other duties against the Defendants –

“The First Defendant [a] caused or permitted the Board of Trustees to award contracts to the Fourth Defendant so that the First Defendant made a profit by reason of his position as a Trustee; [b] made use of confidential information that had come into his possession in his capacity as a Trustee in order to assist the Fourth Defendant to devise terms that would enhance its prospects of securing those contracts with the Board of Trustees that it in fact secured; [c] caused or permitted the Third Defendant to receive a secret commission.

“The Second Defendant [a] caused or permitted the Board of Trustees to award a contract to the Fifth Defendant so that the Second Defendant made a profit by reason of his position as a Trustee; [b] caused or permitted the Third Defendant to receive a secret commission.

“The Third Defendant received a secret commission from the Board of Trustees in respect of a contract awarded by the Board of Trustees to Miracle Steel.

“The Fourth Defendant dishonestly assisted the First Defendant to secure the award of contracts to it. The Fifth Defendant dishonestly assisted the Second Defendant to secure the award of a contract to it,” the writ alleges.

Trustees Did Not Avoid Conflicts Of Interest, Some Trustees Alleged To Sought To Promote Interests

“In June 2006 the then Trustees were removed and the Defendants and others were appointed in their places. Following the appointment of the Defendants the Board of Trustees decided to proceed with the refurbishment of Port Royal. The cost of the refurbishment, as the Defendants and each of them knew, was to be borne by the Plaintiff,” the legal document said.

“Planning of the refurbishment works began before the Board had appointed a project manager to oversee the refurbishment. The planning was undertaken by the Trustees. There was no system for the awarding of contracts for the refurbishment works.

“The Trustees did not adopt any procedure for avoiding conflicts of interest or of withdrawing from discussions in which their personal interests might conflict with those of the Plaintiff. Indeed, some Trustees actively sought to promote the interests of Trustees over other contractors,” the writ alleged.

Writ Alleges First Defendant [DeSilva] Made False Statements To PAC

The writ alleges that Mr DeSilva made false statements, saying: “In evidence before the Public Accounts Committee [“PAC”] on or around 27 April 2016, the First Defendant falsely stated that:

He was not involved in determining the equipment rates;
He was not involved in the award of any contracts to the Fourth Defendant;
He did not participate in any meetings with Mr Lemoine and his brother Allan De Silva regarding the equipment hire contract;
He recused himself from the Board’s discussions regarding the equipment hire contract;
He had declared his conflict as a principal of the Fourth Defendant and a Trustee of the Board of Trustees;

“The Board had received rates for excavation costs from D&J Excavating, which were higher than the Fourth Defendant’s rates.

“The First Defendant knew all of those statements to be false, but deliberately proceeded falsely to perpetuate the idea that he had not participated in, indeed had absented himself from, the award of contracts to the Fourth Defendant which had been awarded after proper and full competitive tendering processes.”

The Plaintiff Claims

“Against the First Defendant –

An account of the profits made as a consequence of the making of the contracts for the supply of sand and gravel, and the contracts for the hire of equipment and the provision of excavation services; or
Equitable compensation for the breach of fiduciary duty; and
Compound interest; and
Costs.

“Against the Second Defendant –

An account of the profits made as a consequence of the making of the contract for the supply of concrete for the cart paths; or
Equitable compensation for the breach of fiduciary duty; and
Compound interest.
Costs.

“Against the Third Defendant –

Repayment of the secret commission of $10,000; or
Equitable compensation for the breach of fiduciary duty; and
Compound interest; and
Costs.

“Against the Fourth Defendant –

An account of the profits made as a consequence of the making of the contracts for the supply of sand and gravel, and the contracts for the hire of equipment and the provision of excavation services; or
Equitable compensation for dishonestly assisting the breach of fiduciary duty by the First Defendant; and
Compound interest; and
Costs.

“Against the Fifth Defendant –

An account of the profits made as a consequence of the making of the contract for the supply of concrete for the cart paths; or
Equitable compensation for dishonestly assisting the breach of fiduciary duty by the Second Defendant; and
Compound interest; and
Costs.

“Against any or all of the Defendants, such further or other relief as the Court thinks fit.”

The full report is below [PDF here]