Lindsay By Barbara Gayle,
Staff Reporter
DELROY LINDSAY, former head of the Workers Bank (now Union Bank), yesterday lost his appeal to have a Supreme Court order freezing his assets both locally and abroad, set aside.
Lindsay's assets were frozen in August 1999 following a suit brought against him and some of the directors arising from the sale of shares in the failed Friends Group of hotels.
National Investment Fund (NIF) and the Workers Bank had sued them in 1999 for alleged breaches of negligence and fiduciary duty arising from the May 21, 1993 Friends Group public offer which closed on June 7, 1993. There was an offer to the public of 100 million shares at a price of $3.50 per share. NIF is contending that it purchased 14,285,700 shares at a cost of $49,999,950.
It contends further that it was part of the contract that if the share issue had not been fully subscribed by the date of closing of the share issue, the money invested would have been returned. NIF is contending that Lindsay made false representations that the offer was fully subscribed.
The Court of Appeal, comprising Mr. Justice Henderson Downer, Mr. Justice Paul Harrison and Mr. Justice Seymour Panton, heard the appeal and dismissed it.
Mr. Justice Downer said "some of the facts which have emerged in this case are disturbing. In the face of a widespread failure in the banking system, it is odd that the National Insurance Fund did not monitor this large investment and make a move against Lindsay at an earlier date.
"As the evidence discloses, Lindsay was the dominant director in the Friends Group, Corporate Merchant Bank and Corporate Group Ltd. It is evident that Lindsay is not now within the jurisdiction yet he managed to sell a townhouse a few days before these proceedings were instituted. Further-more, Lindsay avers in his defence that the relevant authorities were guilty of aiding and abetting him."
The judge added that it was strange that the auditors did not detect the alleged fraud concerning the "full subscription". It is NIF's contention that on June 15, 1993, a total of 53 million shares were allotted to three Caymanian companies, in contravention of section 13 of the Financial Institutions Act. The companies were not incorporated in the Cayman Islands until June 28, 1993, NIF contends.
In response to those contentions, Mr. Justice Downer said "the polite language cannot conceal the fact that the allegation is that Lindsay or his nominees were the recipients of those funds. Be it noted that criminal sanctions can be imposed for breach of section 13 of the above Act." The judge said there did not seem to be any assets owned by Lindsay in Jamaica. He added that there was no evidence that efforts had been made to trace Lindsay or to ascertain if he had control over any assets.
After the Mareva injunction was granted freezing Lindsay's assets, he applied to the Supreme Court to set it aside. Mr. Justice Basil Reid turned down the application and Lindsay took the matter to the Court of Appeal.
