15 days of gruelling testimony ends at last!

ATL pension fraud case now turns to the forged letters

Sunday, June 23, 2013

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DAVID Davies, the global chief financial officer for the ATL Group, on Thursday ended what could turn out to be a legal record for the longest testimony, 15 days of grilling which prosecuting attorneys described as akin to "waterboarding", a form of torture.

For several days it was expected that the cross-examination of Davies by lawyers defending three former ATL executives accused of fraud would end. On Thursday when it seemed that the cross-examination was being dragged out further, lead prosecutor RNA Henriques, QC fumed.

"Mi Lady, I think it is unfair for Mr Davies to be subjected to 15 days in this (witness) box, with what is masquerading as a cross-examination," said Henriques who is one of, if not the most, senior legal lights in Jamaica and the foremost expert on pension law in the Caribbean

Apparently relieved, too, when attorney Frank Phipps, QC, the third lawyer to cross-examine Davies, finally took in his seat, Senior Resident Magistrate Lorna Shelly-Williams told Davies pleasantly: "I hope I don't have to see you again, Mr Davies."

"Thank you, Your Honour," a happy Davies responded, before she discharged him at 4:11 pm.

Queen's Counsel KD Knight questioned Davies for the first 12 days, followed by Deborah Martin and finally Phipps. During that time, Davies covered many miles, leaving the courtroom numerous times a day, as lawyers locked horns in objection. He also endured shouts, insulting descriptions and suggestions that he was in fear of his own boss. But the ATL finance man stuck to his guns throughout: that it was PricewaterhouseCoopers which brought the alleged fraud to his attention and he in turn to his boss, Gordon 'Butch' Stewart.

In the case being tried in the Corporate Area Resident Magistrate's Court, Half-Way-Tree, Patrick Lynch, former chairman of the ATL Pension Fund; Dr Jeffery Pyne, former managing director of Gorstew Limited; and Catherine Barber, former administrator of the fund, are accused of conspiring to have monies distributed from the surplus in the pension fund to workers and, in so doing, they allegedly benefited from the distribution, using four forged letters to commit the fraud. The letters were signed by Pyne in December when he was no longer employed to the ATL Group.

It is further alleged that the distribution was done without the approval of Gorstew Ltd, the holding company for Stewart's group of companies. The three were arrested in April 2011, after the alleged fraud was discovered in December 2010.

Towards the end of Davies' testimony which meandered through hundreds of documents, most of which prosecutors said were of no relevance to the case, the defence finally turned to the crux of the matter - four allegedly forged letters dated 1998, 2002, 2005 and 2008.

In a letter dated December 24 ,2010 Lynch wrote Davis stating that he did not know the persons who prepared the four allegedly forged letters dated 1998, 2002, 2005 and 2008.

On Monday, Davies testified under cross- examination from Knight who represents Pyne that he had part of his unauthorised allocation from the pension surplus of 2008 reversed, explaining that it was only partially reversed because he had been of the view that a portion of the money belonged to the employee.

Martin, who represents Barber, took up where Knight left off, trying to draw Davies into speculating on whether Stewart would have been aware of the unauthorised distribution of surplus based on his pension statements.

But at each turn Davies insisted "I do not wish to speculate" or "I can't speak for Mr Stewart".

Davies had the same response when asked by Martin if Stewart would have been aware of pension holidays filed by Gorstew Ltd, which is chaired by Stewart. Pension holidays are one possible use of pension surpluses.

At different intervals, prosecuting attorney Gayle Nelson, the man who earlier drew the analogy with 'waterboarding', objected to the line of questions, complaining to the magistrate that previous attorneys had thoroughly questioned Davies on those matters being raised by Martin.

Davies in responding to Martin said that consent of a company such as Gorstew Limited legally must be in writing and supported by Resolutions by the board of Gorstew after thorough discussion of the matter.

On Tuesday, Martin kept up the attack, making suggestions about Stewart that were dismissed by Davies who reiterated that it was Lynch whom Stewart had told to have the funds reversed after he (Lynch) told Stewart at a meeting in December 2010 that he was not aware that consent was needed for distribution of the surplus.

Martin suggested to Davies that it was Barber who had volunteered to show Stewart the letters at a December 16 meeting after the unauthorised distribution was discovered, but Davies told the court that Lynch had told the meeting the previous day that he was not aware that consent was required and subsequently a day later told a meeting that consent existed, leading to the belief that it was produced overnight. As a result, Stewart demanded to see the proof of consent from Gorstew and the letters were presented by Barber.

Martin concluded her examination of Davies on Tuesday opening the way for Phipps to continue his cross-examination, but the afternoon session was adjourned as the magistrate was indisposed.

Phipps resumed his cross-examination on Thursday. During that session, Davies again insisted that when Barber produced the four forged letters they appeared to be brand new, despite covering the years 1998, 2002, 2005 and 2008.

In the afternoon session, Davies was re-examined by prosecuting attorney Gayle Nelson, using the opportunity to explain in detail why he had come to the conclusion that the four forged letters purporting to give consent for the distribution were actually created on or about December 15, 2010. He cited the interim and final reports by PricewaterhouseCoopers (PwC) and conversations involving Lynch, Barber and Stewart.

Davies based his assertion that the letters were done in December 2010 on the following:

* The PwC discussed interim report with him in the second week of December 2010 and they reported that there was no consent, and that they asked Barber for the consent but she had none

* The final report of August 2011, stating that no evidence of consent was found by PwC during their review of the scheme

* That Barber had said that the Board of Trustee's resolution was the "evidence of sign off" on the distribution, the Board of Trustee was not the Founder and could not give consent

* That the letters of consent were requested on December 8, 2010 and were not shown to the auditors who were conducting the review of the pension scheme

* That when asked by Stewart on December 15, 2010, Lynch said he didn't know that Gorstew's consent was required for the surplus distribution

* That the following day Barber was called into a meeting by Stewart and went back to her office and returned with the letters. When Barber was asked about the said four letters of consent she refused to answer and said, "I defer to Chairman Lynch"

* That when asked by Stewart, at the meeting of December 16, when he first saw the letters, Lynch said it was the evening of December 15

* In a letter written by Patrick Lynch to David Davies on December 24, 2010, Lynch denied any knowledge of the person who created the four letters and stated that the letters weren't produced in his office.

Police charged Pyne with four more counts than the other two accused, although his part in the production of the four letters could be the least active. There is suspicion, based on the evidence, that one of the accused took the four letters to Pyne on the night of December 15, 2010 and requested him to sign them.

As they had done previously, defence lawyers last week took pot shots at the Jamaica Observer, with Phipps, Knight and Martin grousing to Magistrate Shelly-Williams about an article titled "Blame the accusers, not the accused", which they claimed contained portions of statements from witnesses who are yet to give evidence in the matter.

However, the lawyers made no reference to an opinion piece penned by attorney Bert Samuels and published that very morning in The Gleaner newspaper, which prosecuting QC RNA Henriques noted, appeared to be instructing and giving direction to the presiding magistrate on what she shouldn't read in the newspapers.

In his column which was supportive of the defence, Samuels failed to point out to readers that he was a partner in the law firm Knight Junor & Samuels, whose two top lawyers -Knight and John Junor - are representing one of the accused in the matter.

The trial is on a break and will continue on July 2 when a new witness will be called.

— Reporting by Desmond Allen and Paul Henry





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