Sagicor Bank has assured its clients that it is not financially exposed by Thursday's Privy Council ruling that will result in billions paid to Jamaican businessman YP Seaton in a decades-long legal battle that started with the bank's predecessor Eagle Commercial Bank Ltd.
Sagicor Group Jamaica explained in a statement that it had acquired the business and operations of RBC Royal Bank (Jamaica) Limited (formerly RBTT Bank Jamaica Limited) and RBTT Securities Jamaica Limited through a share purchase agreement in 2014.
"This Privy Council case involves accounts held at Eagle Commercial Bank and deductions made by that institution from these accounts in 1992," Sagicor stated, adding that the assets and liabilities of Eagle Commercial Bank were acquired by Union Bank of Jamaica Limited.
Those Union Bank shares were then sold to RBTT International Limited in 2001 by the Financial Sector Adjustment Company (Finsac), the vehicle established by the Jamaican Government in 1997 to intervene in the financial sector which had collapsed at the time.
Sagicor said it is indemnified by the Government of Jamaica and Finsac based on a guarantee and indemnity dated March 5, 2001.
"In this guarantee and indemnity the Government of Jamaica accepted responsibility for any cost or liabilities which arose prior to the 2001 share purchase by RBTT. The guarantee and indemnity applies to any subsequent purchasers, such as Sagicor Group Jamaica," the company said.
The Privy Council, in its ruling on Thursday, outlined that the events that gave rise to the dispute occurred approximately 30 years ago and the parties have faced significant difficulties in assembling evidence as to what occurred because Eagle failed as an enterprise and Sagicor as its successor has not, to date, been able to find all the relevant bank records.
The dispute was initially about whether Eagle Commercial Bank was entitled to freeze foreign currency accounts held in Seaton's name and to debit his accounts and those of two appellant companies in his control for a sum of $15,254,583.69, of which $9,200,000 was debited from the foreign currency accounts in his name.
The Supreme Court of Jamaica had held that the debits were unlawful and ordered an account to be taken of the frozen foreign currency accounts.
The matter was taken to the Court of Appeal which allowed the appeal in part, including reducing the amount payable and substituting the award of compound interest for simple interest.
The Court of Appeal then granted permission to appeal to the Judicial Committee of the Privy Council on October 26, 2020 as Seaton sought a remedy for the bank's breach of contract.
The British law lords were asked to determine whether the Court of Appeal erred in finding that the appellants were due repayment of $9,200,000 rather than $15,254,583.69; not awarding compound interest on that sum; and not ordering account to be taken of the bank accounts from which the wrongful debits were made on the basis that those accounts accrued compound interest.
In its ruling the Privy Council said it was satisfied that the simplest means of giving effect to Seaton's contractual entitlements is to set aside the order for payment of $9.2 million and to reconstitute the accounts in US dollars from May 7, 1992 in an accounting to be performed by the registrar.