CORNERSTONE, the parent company of Barita Investments Limited, said it is welcoming a possible probe from the Financial Investigations Division (FID) into the circumstances surrounding the US$15-million transaction it conducted in September 2021 with former Barita Chairman Rita Humphries-Lewin, calling claims of wrong doing in relation to the transaction “unfounded and unsubstantiated”.

The issue surrounds allegations raised by Humphries-Lewin’s niece, Deborah Mordecai Edwards — an attorney and director of BPM Financial Limited, a competitor to Barita Investments — who charged that the transaction in which her aunt sold just over half her remaining shares in Barita Investments in September 2021 for about $2.26 billion, to purchase a stake in its parent company Cornerstone, should be declared null and void. Humphries-Lewin sold 28,231,734 shares at $80 each, to purchase 1,388,889 shares in Cornerstone at US$10.80 each. The prices for both transactions are also under scrutiny.

Edwards, who claims to have gotten power of attorney from Humphries-Lewin in August 2022 to examine the transactions, wrote to the Bank of Jamaica (BOJ), the FID, and the Financial Services Commission (FSC) in March last year, saying the transactions involved “deception, coercion and/or fraud.” Indications of an FID probe into the transaction were first reported by the Sunday Gleaner as a follow-up to its story from the previous Sunday.

But Mark Myers, chairman of the Cornerstone companies, in a release which was shared with the Jamaica Observer said the company “welcomes the involvement of the Financial Investigations Division (FID)” in probing what it calls “baseless claims pertaining to the transaction”.

Cornerstone, it added, “is confident that through this further avenue of enquiry that these unfounded accusations can quickly be revealed to be groundless and without merit”.

It follows the Sunday Gleaner quoting the principal director of the FID Keith Darien as saying, “The allegations warrant this investigation because there appears to be some merit to what has been outlined to us.” Darien was further quoted, “We are nowhere near the stage of saying that the allegations are valid and whether anyone will be charged criminally.”

What has been outlined by Edwards is that her aunt, Humphries-Lewin, was diagnosed with dementia in or around 2019, a fact she claimed is known to both Paul Simpson, the CEO of Cornerstone, and Jason Chambers, the entity’s chief investment officer, and that she should have had legal/financial advice prior to completing the transaction. The transaction started in April 2021, three months after Humphries-Lewin retired from the board of Barita Investments, citing among the reasons that it was to allow for “succession planning and personal reasons”. Those personal reasons were not specified. It ended in September 2021.

But Chambers and Simpson, in their affidavits accompanying the request for the court to settle the matter quickly by declaring the transaction as being “valid and enforceable”, said they were unaware that Humphries-Lewin was diagnosed with dementia, even adding that “prior to and at the time of the transaction” they observed that she “was of sound mind and/or did not exhibit or indicate any mental illness or mental capacity”. Chambers added that it was not until February 2022, five months after the transaction was completed, that he first heard of Humphries-Lewin’s mental incapacity.

Yet it was the niece’s push to get money from the transaction which led Cornerstone to take the matter to court.

“In a letter dated December 5, 2022 Cornerstone roundly rejected a request by Mrs Humphries-Lewin’s niece for monies totalling US$20 million in relation to the transaction, a copy of which was shared with certain regulators including the FID,” Myers added in the release shared with the Business Observer.

It was then that the company abandoned talks with the niece and took the matter to court, asking for a speedy adjudication on the matter. It filed affidavits and a fixed date claim form to help the court in making a decision in October this year.

The Business Observer reached out to Paul Simpson and Jason Chambers about the allegations but was told they were instructed not to speak on the matter before it is heard in court in October.

Cornerstone is seeking to defend and protect its business and reputation by asking the Supreme Court to rule on several matters, including the legality and enforceability of certain documents entered into between itself and Humphries-Lewin with respect to a transaction which it said is the subject of “these baseless allegations”.

It said its court action is not targeting Humphries-Lewin, which it said it has “the utmost respect” for.

“We want to make it clear that the legal action is not directed at Mrs Humphries-Lewin but those who are using the transaction to damage the organisation that she has worked so hard to build.”

It went on to outline that “the Cornerstone boards and the senior officers in question fully understand their fiduciary responsibilities, and the boards (including the Barita Board) wish to reaffirm that the officers are persons of sound character and integrity”.

Myers said Simpson and Chambers “maintain the complete confidence of said boards”.

It said the transaction was not only “legitimately and validly undertaken, properly executed, and done to the highest standards of ethics and integrity”, but that it was also presented to shareholders at an extraordinary general meeting of Cornerstone where all shareholders, except one, and the board of directors approved it.

“With the matter now before the courts we are refraining from making additional comments. Nevertheless, we wish to highlight that our boards have received legal advice from highly esteemed senior attorneys within Jamaica who have confirmed that our position is a strong one, and therefore reasonably believe that the courts will vindicate our position.”

The release added that, “Cornerstone and its two portfolio companies, Barita Investments Limited and Cornerstone Trust & Merchant Bank Limited, stand resolute and remain two of the strongest players in the financial sector. Our unwavering strength and resilience will enable us to continue to significantly contribute to the industry’s stability and to the nation-building process. Rest assured that, notwithstanding these and other unfounded allegations, claims and attacks directed at the group and its senior officers, Cornerstone will not be deterred from its mission and commitment to serving its customers and stakeholders with the highest levels of dedication and integrity.”