New Law Resurrects Rochamel Controversy!

Anthony Astaphan (left) affords Sir Ramsahoye a laugh during a break in the 2009 inquiry into the payment of debts owed by Frenwell Limited.

Just when it seemed we’d heard the last of the famous Rochamel-Frenwell debacle, with its still unanswered several questions, the issue came in for much comment on Tuesday this week, following another protest walk-out since the June 6, 2016 general elections by the opposition Saint Lucia Labour Party led by the MP for Castries East, Philip J. Pierre. Prime Minister Allen Chastanet having introduced the Crown Proceedings Act, Guy Joseph, the MP for Southeast Castries, took the floor.  Addressing the Speaker, he said: “I support this bill because I am fearless. I know our laws are not retroactive. Still I want it known that from here on we will deal with those who abuse public office.” He said the day’s amendment proved his government colleagues (some of whom had been accused of various abuses by the previous administration), really had nothing themselves to fear. He then cited the Ramsahoye Inquiry that had resulted from a 1997 arrangement between the Kenny Anthony government and two foreign hotel developers. The matter forms a major part of my book Lapses & Infelicities which includes the following.   

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With Kenny Anthony and his legal representative Anthony Astaphan in attendance, the Ramsahoye inquiry opened with the following declaration by its chairman: “There is one thing I want the public to know and it is that the former prime minister is not in the dock of a civil or criminal court. This is an inquiry. The former prime minister was responsible for making the development agreement by which he hoped there would be a new resort for Saint Lucia. He was an elected prime minister with the command of a majority in parliament and he had the authority to set about this kind of business. The Commission of Inquiry is limited to investigating whether the government of Saint Lucia suffered any loss by the introduction of Frenwell into the transaction and the events thereafter.”

As if to leave no room for misunderstanding, Ramsahoye repeated himself: “This inquiry is not litigation. Nobody is charged. We are not a court and do not have the authority to pass judgment on anyone. We are here only to inquire into the facts and matters stated in our terms of reference. If we express an opinion at the end of the day as to whether there are breaches of civil or criminal rules, we will be careful not to say anything that would offend the character, credit or reputation of anyone, unless they are given an opportunity to speak before we speak.”

Directly addressing Kenny Anthony’s legal representative, Ramsahoye said: “Mr. Astaphan, you will see that in the one matter that concerns your client—the sum of US$17 million paid to the Royal Merchant Bank of Trinidad and Tobago—we are to inquire into the government’s financial involvement. Let me know if there is anything you want from us. The truth is that the former prime minister was the responsible minister and is in the best position to tell us what happened when he sought to have that project go ahead in Saint Lucia. If there is any help you can give, or if you want anything from the commission that would help you better represent your client—remembering your client is not on trial—I would be happy if you let me know.”

Astaphan had an immediate concern: “We received three bundles of documents from counsel for the commission. They do not contain any allegations. We have this morning received two statutory declarations from the RBTT that say they have nothing, no documents, no recollection. Yet Dr Anthony is being informed by the secretary to the commission that he is to be regarded as implicated and as a subject of this inquiry. It seems there is a contradiction, seeing that Mr. Armour is going to recommend to the commission two things: whether the sum agreed by the government of Saint Lucia was paid under the guarantee enforceable by law or by some other contractual obligation.”

Disbelief was all over Ramsahoye’s countenance as he said: “Mr. Astaphan, you know very well that whether somebody is implicated or concerned depends upon the circumstances of the case. It depends on what information we have and what accusations are made against a particular person. I’ve said, over and over, that I do not consider your client to be in the dock or on trial. The commission has not heard all the evidence in the matter and what they have so far seen, you have. I know your client is concerned in the inquiry because he was the responsible minister when the events occurred. But if you say implicated, meaning he committed an offense, then the commission would take offense to that, for we have certainly said no such thing.”

Astaphan was “happy to hear” his client was “not implicated but merely concerned because he was the Minister of Finance at the time.” Still there was subsequent cause for him to apologize after he issued to reporters the following statement: “In twenty minutes this morning the commission made it clear that to date there is nothing on the ministers resembling either civil or criminal responsibility or liability. Most tellingly, Sir Fenton Ramsahoye made the telling statement this morning that he had read the Rochamel documents filed in the high court and came to the conclusion that there was absolutely nothing wrong with the government, that it should have pursued, or was right in pursuing, the guarantees signed by Dr Anthony, a significant vindication, and that the only issue may be calculation of figures which had nothing to do with Dr Anthony. So in twenty minutes the political intent, whatever it was, on the part of the present government appears to have fallen flat.”

At his first opportunity, Astaphan addressed the commission on the matter of his publicized statement. “I made a mistake,” he acknowledged. “I called Mr. Amour and he pointed out to me that the commission is most upset about what I said. I told him what I thought I had heard. After checking the transcript I realized it was not what Commissioner Ramsahoye had said.” He said he was sorry for having misled the public, even though he didn’t think he had “caused too much damage.” He never intended to embarrass the commission. He thought the commissioner referred to court documents when in fact he had cited “guarantee documents” related only to the inquiry.

Curiously, Kenny Anthony—a lawyer by profession—let his representative speak for him throughout the inquiry, even when it seemed Astaphan had not a clue what to say in answer to questions about the necessity for Frenwell Limited. However, the former prime minister had much to say after the Ramsahoye Commission had submitted its report to the governor general. At any rate, much to say about the cost to the taxpayer and about Ramsahoye personally, none of it flattering. As for the 74-page report, Anthony dismissed it as containing “nothing new.”

He misspoke. The report revealed for the very first time that notwithstanding Kenny Anthony’s repeated contrary assertions “the guarantees in the development and concession agreement, the Deed of Guarantee and Indemnity and the Put Option agreements were never put before parliament for approval by resolution.” Consequently, “there was no direct authority for money payable under the guarantees to be taken out of the Consolidated Fund—as is contemplated by sections 41 and 42 of the Finance (Administration) Act.”

The back story according the report: In December 2002 the government of Saint Lucia wanted to borrow US$41 million from the Royal Merchant Bank to meet capital expenditure and to pay the debt incurred by Frenwell Limited. A motion to enable the money to be borrowed was put before parliament. It was approved by the House of Assembly on the motion of Dr Kenny Anthony, the prime minister and Minister of Finance, on 17 December 2002. The motion was passed by the Senate on 20 December 2002. The motion presented to parliament invoked as its authority the provisions of Section 39 of the Finance (Administration) Act, subsection 1(a). The reason for invoking the section was because a part of the US$41 million was intended to meet expenditure on capital works which the government of Saint Lucia had undertaken. But it was also intended that the other part should be used to refinance government’s obligations in respect of the former Hyatt hotel.

“The truth was that the obligations which the government intended to meet were the loan monies which Frenwell had borrowed and the interest which the government was obliged to pay to the Royal Merchant Bank under the Deed of Guarantee and Indemnity and the Put Option agreements. It was presumed that the members of the legislature knew the loan monies were used to support Pigeon Point Hotel Limited. We conclude that the nature of the proceeding, by virtue of which the resolution was passed, were irregular. But since members of parliament must have known the government was borrowing money to satisfy obligations it undertook in connection with the resort, the payment—although done through an irregular procedure—was not unlawful.”

The commission also concluded that “the money paid was lost and that the government and people of Saint Lucia received nothing in return for the money paid to the Royal Merchant Bank, even though it was intended, by the terms of the development and concession agreement of 17 December 1997, that if indeed the government was called upon to pay it would receive a corresponding equity in the hotel.”

Also new was this tidbit: “After the resolution was passed and the government assumed thereby the authority to borrow US$41 million from the RBTT, it did so. However, the bank did not pay the US$41 million to the government. The bank purported to deal with the sum which it was lending to the government of Saint Lucia in the following manner: (a) It deducted US$17,092,350 for the debt of Frenwell Limited, comprising the loans plus interest; b) It deducted a further US$584,000 for fees; c) It paid the balance US$23,323,000 to the government.

“Taking into account the Anthony-negotiated reduction of interest by US$2.5million, the report noted, “the total sum that the government lost was US$14,592,350 together with fees included in the sum of US$584,000, part of the last mentioned amount being attributable to that portion of the US$41 million loan which went to settle the debt of Frenwell.” As a result of the manner in which the transaction was done, “the government had no recourse in equity against Pigeon Point Hotel Limited because it did not as a guarantor pay Pigeon Point Hotel’s debt.” Shockingly: “The government had no agreement whereby the cumulative preference shares purchased by Frenwell from Pigeon Point Hotel Limited could be claimed by the government from Frenwell. No shares were passed by Frenwell to the government and people of Saint Lucia.”

Details of the company’s inception were heard for the very first time. To quote from the Ramsahoye Report, Frenwell was “allegedly formed at the request of the government of Saint Lucia as a device to deal with payment of the sum of US$12,750,000 which was the total amount the government agreed to guarantee under the development and concession agreement of 17 December 1997.” In any event, the necessity for the Frenwell device was never clearly established, despite repeated questions put to Anthony Astaphan in the presence of his client the former Prime Minister and Minister of Finance.

In contradiction of Kenny Anthony’s persistent assertion over the years that Saint Lucia gained by the Rochamel project (renamed Sandals Grande), which is now a source of income and employment for workers in Saint Lucia and the government, Ramsahoye observed: “It appears to the commission that those benefits would in any event have been gained, and that the monetary loss suffered by the government and people of Saint Lucia ought not to have occurred if efforts had been made to protect the government and people from uncompensated loss when it paid the debts of Frenwell Limited.”

Moreover: “We did not discern any attempt to protect the government and people from this loss. The Prime Minister and Minister of Finance had the responsibility for this transaction whereby the money was lost. There was no supervision or control by the government over the construction, equipping and management of the resort. There was no evidence that high-level public servants who were engaged in the office of Dr Anthony were involved in the decision-making process concerning this transaction. All the relevant documents that supported the liability of the government and people of Saint Lucia to pay monies in connection with the [Hyatt] resort were signed by the prime minister, who intervened when the interest charges were thought to be excessive, as indeed they were. The commission endeavored without success to get information from Mr Gavin French who was the moving figure behind the establishment of the resort, but without any success whatsoever. He gave no statement and supplied no information to the commission but we feel he was in a position to say why the project failed in the hands of the hotel company and how it came about that the government and people of Saint Lucia were left to carry the burden of considerable uncompensated financial loss.”

This was the commission’s final word on the controversy that began shortly after the Kenny Anthony government took office in 1997: “We consider that the loss which the government and people of Saint Lucia suffered in this matter was the result of maladministration and we would recommend that where the government enters into contracts for the procurement of goods and services, the law regulating such agreements should be strictly followed. The government paid money to the Royal Merchant Bank of Trinidad and Tobago in the sum of US$14,592,350 for the debts of Frenwell Limited—with which it had no contractual or other relationship and the money so spent was irrecoverable.”

Among the commission’s recommendations: “There should be no time limit in law for the recovery of public funds and appropriate legislation should be enacted to remove any time bar against recovery. Public officers at the highest departmental level should be involved in the executing and monitoring of agreements made with government and no liability of government should be sanctioned without the express agreement of law officers of Saint Lucia.” The Crown Proceedings Amendment accepted by the House on Tuesday, in the absence of the opposition, takes care of the first recommendation—offered initially in 2009 but never implemented until now. In all events, the Rochamel-Frenwell matter will not be affected by Tuesday’s House decision.

Postscript: During his appearance on TALK two evenings ago, the MP for Southeast Castries referred to a most unusual Cabinet Conclusion that seemed to give Prime Minister Kenny Anthony free rein to make government decisions without necessarily discussing them in advance with his Cabinet colleagues!

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