By Lynford Simpson, Staff ReporterTHE GOVERNMENT has agreed to pay US$150,000 (J$7 million) to NetServ Global in return for the company dropping its claim to intellectual property incorporated in equipment owned by NetServ Jamaica and an "alleged debt" of US$3.5 million.
Information Minister Colin Campbell told Parliament the suit was settled in a Florida court on Monday. Intellectual property or intangible property speaks to issues such as copyright, patents, trademarks and design.
According to Mr. Campbell, the Government agreed to settle to prevent a "lengthy and expensive" court case.
Despite his statement, the Government seemed uncertain about whether it would be able to recover any of the J$180 million it pumped into the failed entity.
Apart from outlining the sequence of events leading to the settlement, Mr. Campbell either was unable to answer questions posed by the Opposition or outright refused to answer.
He was unable to state who owned equipment in Miami which was purchased for NetServ Jamaica and was at the centre of the dispute.
Although the questions were not posed to him, Opposition members were upset by the refusal of Phillip Paulwell, Industry, Commerce and Technology Minister, to provide any clarification.
Mr. Paulwell has portfolio responsibility for the Intec Fund from which the $180 million was pumped into NetServ which folded within six months of the massive capital injection. With its collapse, the Government's hopes of creating 40,000 jobs in the information technology sector over three years were dashed. Netserv was to have provided a quarter of those jobs.
Throughout the questioning, Mr. Paulwell sat directly behind Mr. Campbell who himself was a Minister of State in Mr. Paulwell's Ministry at the time the money was disbursed, despite a due diligence report that urged caution in dealing with NetServ and its CEO, Paul Pereira.
Mr. Campbell could not name the principals of NetServ Global when the question was posed by Karl Samuda, the Jamaica Labour Party's spokesman on Industry and Commerce.
Mr. Samuda wanted to know whether the National Investment Bank of Jamaica (NIBJ) had "first charge" over the intellectual property and equipment owned by NetServ Jamaica. He also questioned why the US$150,000 claim was not used to offset the money owed to NetServ Jamaica.
"I'm not discussing qualitative decisions. What I'm prepared to do is to provide a sequence of actions which can clarify in the public's mind something that was reported yesterday," Mr. Camp-bell responded.
He was referring to an earlier statement he made on the court case when he addressed reporters at the weekly post-Cabinet press briefing at Jamaica House on Monday.
In explaining the sequence of the events leading up to the lawsuit, he said some of NetServ Jamaica's equipment was in the offices of NetServ Global in Miami, Florida.
The equipment was reportedly purchased by Paul Pereira, CEO of NetServ Global, the purchase was made in the name of Netserv Global instead of NetServ Jamaica.
On December 19, 2001, Pereira signed an acknowledgement that the equipment belonged to NetServ Jamaica but made an "unsubstantiated claim" to certain intellectual property incorporated into the equipment," Mr. Campbell said.
According to Mr. Campbell, NetServ Global, while acknowledging NetServ Jamaica's ownership of the equipment, denied John Wesley Lee who was appointed receiver on December 11 after the company collapsed, access to the equipment.
On January 25, Mr. Lee filed a suit in the Florida State Courts for civil theft and damages. This was followed by a complaint on January 28 claiming damages for breach of contract and for obstructing his right to access the equipment.
On February 1, the court granted an emergency injunction for access to the equipment subject to certain conditions, including an independent evaluation of the intellectual property claim made by NetServ Global.
The parties were scheduled to return to court on February 4 for the written order. Mr. Campbell charged that before the order could be obtained, NetServ Global filed for chapter 7 bankruptcy "in an obvious attempt to frustrate the process". The action, Mr. Campbell said, meant that the Florida State Court had no further jurisdiction over the matter.
Mr. Pereira reportedly retracted his acknowledgement that NetServ Jamaica owned the assets, claiming such acknowledgement was made under duress.
An emergency motion was filed with the Federal courts by Mr. Lee seeking an early date for a hearing to determine ownership of the equipment. The Trustee who was appointed for NetServ Global by the bankruptcy court reportedly expressed a willingness to settle the issue on the condition that a payment of US$150,000 is made to the trustee.
"As a result of such a payment, the trustee would no longer pursue any claims against the equipment, the intellectual property residing therein, or claims to an alleged debt of US$3.5 million," Mr. Campbell said.
