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Pension Fund Trust Deed calls for written consent to pay out surplus

BY PAUL HENRY Co-ordinator – Crime/Court Desk henryp@jamaicaobserver.com

Saturday, May 11, 2013    

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THE defence yesterday started its cross-examination of the second witness in the Appliance Traders Limited (ATL) Pension Fund fraud trial, embarking on a line of questions to show precedence for the distribution of surplus from the pension fund without the written consent of Gorstew Limited.

Queen's Counsel Frank Phipps opted first to question ATL's global chief financial officer, David Davies and sought to establish that the accused in the case never acted out of line when they caused the distribution of more than a billion dollars in surplus from the ATL Group pension fund without written consent.

Phipps asked Davies if he was aware of the practice, dating back to 1998, of the Board of Trustee approving the distribution of surplus without written consent, but Davies said he was not aware of it, adding that he had only been a trustee since 2010.

Phipps then asked: “Were you ever aware that there was a distribution in 1998?”

“No sir. I joined the ATL Pension Fund in 2000 so I wasn't aware of that 1998 distribution or the practice,” Davies said.

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 $1.73 billion distributed from the surplus in the pension fund to workers and, in so doing, they allegedly benefited from the distribution, using forged documents to commit the fraud.

It is further alleged that the distribution, in 2008, was done without the approval of Gorstew Ltd, the holding company for Gordon 'Butch' Stewart's group of companies. The three were arrested in April 2011 after the alleged fraud was discovered in December 2010.

While the blistering pace of objections continued yesterday, the sitting was less eventful than Thursday when defence attorneys sought unsuccessfully to get a gag order against the Jamaica Observer newspaper, citing a description of them as “high-priced lawyers” by the paper’s executive editor - special assignment, Desmond Allen, and “special interest” by the ownership of the paper, Gorstew.

Davies, during his earlier examination-in-chief, spoke of a meeting of the Board of Trustees on December 20, 2010 where he said Lynch had explained that Stewart had insisted that he had not been consulted and that the surplus was distributed without his consent “and was therefore unauthorised”.

Davies added that he himself told the meeting that audit firm PricewaterhouseCoopers had stated in an interim report of a review of the pension scheme that the Trust Deed governing the scheme clearly states that written consent must be given for the surplus to be distributed.

On the heels of those comments Phipps, who is representing Lynch, commenced his cross-examination of Davies, asking him if he, when the whole issue of the distribution arose, went back to look at what was done in 1998 as it related to those distributions but Davies said 'no' because he had brought the matter to Stewart who immediately called a meeting in his effort to address the situation.

Pressed on the matter, Davies said, “I wasn't aware of an issue in 1998.”

Asked about the 2005 surplus distributions, Davies said he wasn't aware that “it didn't comply with the Trust Deed regulation" even though he had benefited from the distribution.

Phipps also put to Davies that directors of Gorstew Limited were also on the Board of Trustees of the pension fund and therefore Gorstew must have known that a decision was taken by the Board to distribute the funds, Davies said that that didn't amount to consent.

The trial is to continue on May 20 when Davies is expected to show his monetary benefit from the questionable distribution. The trial will then run to the 22nd and adjourn until May 28.

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