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INTRODUCTION
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1.I am
Chief Executive Officer of Louison Consulting. On 24th July 2003
I was appointed by the court to be the Liquation of Bank Crozier Limited
(Bank)
2.This
is my Preliminary Report
3.The
objectives of my appointment are to
- Develop
a complete understanding of the circumstances surrounding the set up and
operation of the bank from its inception to it’s current Liquidation
status;
- Compile
and verify the complete list of depositors and creditors of the Bank and
to assess the extent of obligation due to them;
- Gather
in and control all assets of the Bank
- Determine
the value of those assets; and
- Assess
the likelihood of a distribution and to assess its manner and the quantum.
PREAMBLE
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4.
I was appointed liquidator of the bank on 24th July 2003 by the order
of the court (see
Appendix1)
5.
The Bank is an offshore Bank granted a license by the ministry of
finance under the Offshore Banking Act No.39 of 1996. On 31 July 2002
the minister of finance exercise the powers conferred upon him by
section 20 (1) of the Offshore Banking Act to appoint Daryl Sands of
Pricewaterhousecoopers (PWC) as the controller of the affairs of the
Bank for a period of (60) days effective 31 July 2002. This
appointment was further extended for a period of 90 days and a further
period of 180 days to 28 June 2003.
6.
Pursuant to my appointment I met with Mr.Marcus Wilde and David
Halukoff (PWC, agents of Daryl Sands) in the presence of Ms. Cora
Felix (Vice President of Bank). I requested of the PWC representative
the Following.
- Any matters that would have
come to their attention during their period as controllers that
needed to be brought to my attention
- Any report to the ministry of
Finance and the Grenada International Financial Services Authority
(GIFSA) and any other documents compiled during the period of
their control that may be of assistance or relevance to as
Liquidator; and
- Any physical items in their
possession that may legitimately belong to the Bank
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7. The PWC representative
answered all these matters in the negative. At this point Ms.Cora
Felix reminded them that they were holding the keys to the office. Mr.
Halukoff left the meeting and returned with the keys. Ms Felix then
reminded him that he was also holding the Swift Card, which he also
produced.
8. I declared meeting over
since it would appear that after one year, almost to the day, of
controllership PWC were unwilling or unable to provide any assistance
to the Liquidator.
9. The
PWC asked Ms. Felix to leave the room since they wanted to inform me
about an assets of the Bank, which they did not want Ms. Felix to be
aware of, Ms. Felix duly left the meeting.
10.
Mr. Marcus Wilde then informed me of two lawsuits involving MR. Daryl
Sands of PWC namely:
- · Bank Crozier International
Limited (BCIL); and
11.
His request was I sign an indemnity for Mr. Daryl sands in these
lawsuits and that as Liquidator I will set aside Funds for Mr. Sand's
defense. Mr. Marcus Wilde further inform me that if I were to fail to
accede to these demands PWC will hold on to the cash in the Bank at
that time held in the name of Daryl Sands as Controller Of bank
Crozier Limited.
12. My
own reaction was that since theses issues were before the court only a
ruling by the court could effectively discharge these matters. As for
the cash I told them that I could not see a legal way by which they
could hang on to depositors' funds
13.
I told the PWC Representatives that the legal advice I had, and I
verily believed, stated that at the appointment of a Liquidator the
appointment of the Controller under section 20 (1) by the minister
cease. And in any event the only document we had on file at the bank
stated that the Controller's appointment was until 28th June 2003.
14.
The PWC Representatives duly left repeating their intention to hang on
to the depositors' funds.
15. Towards
the end of July 2003 I received a letter dated 28th July 2003 from the
PWC (see Appendix 2).
In what appears to be dramatic change of heart PWC wrote to me again
on 14th August 2003 offering to be helpful as they can (Appendix
3).
The period prior to the appointment of
the Liquidator.
16.
The ACCA Rulebook provides guidance in that period. It would appeared
that the Administrative Receiver (Controller under section 20) should
establish appropriate accounting records as from the date of his
appointment RE: Smith Limited V Middleton (1979) 2 ALL ER 842.
17.
When a Liquidator is appointed Engel v South Metropolitan Brawing
& Bottling Co. (1892) ch.442 seems to apply so that the Liquidator
becomes entitled to possession of records. 18. Indeed in his
instrument of appointment of the Controller under section 20 (1) the
Minister of Finance instructs the license (Bank) to pays all costs,
fees, charges, and expenses incurred by the appointee, it would be
duplication to insist that the Liquidator must also be paid to
re-perform routines done and finalized during the period of control.
The appointment of a Liquidator
19.
On the commencement of the appointment of a Liquidator the Controller
(Administrative Receiver) loses his status as agents of the company
although his obligation to render a full account of his receipts and
payments remain in force.
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HISTORICAL
BACKGROUND
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20.
Bank Crozier Limited was incorporated as an International Business
Corporation (IBC) on 2nd October 1997. The Bank was granted class ( I)
Banking license on 6th October 1997, and commence operation in
November of 1998.
21.
The Bank is wholly owned by Mr. Peter Johansson. Mr. Johansson
purchase the remaining 50% of shares in the Bank from the other
shareholders Olof Hofstrom
22.
Mr. Peter Johansson also appears to be the sole member of the Board Of
Directors.
23.
On 31 July 2002 the minister
of Finance appointed a controller of the Bank since he was of the
opinion that the carrying on:
24.
On 25 April 2000 the Minister of Finance issued his intention to
revoke the license of the Bank since he was of the opinion that the
Bank:
25.
on 7th August 2003 the Minister of Finance exercised his powers under
section 20 (10) (b) of the Offshore Banking Act 1996 and revoke the
license of the Bank.
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SCOPE
OF WORK
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26.
I have performed the following task at this point:
Correspondence
27.
Letters were issued to all depositors and creditors of the Bank. A
letter was also sent to the single shareholder and member of the Board
of Directors Mr. Peter Johansson ( see
Appendix 4). In addition I have several email messages sent to me
by various creditors. My website, bankcroziergd.com
will be operational by 3rd September 2003.
28.
I have also performed an extensive review of the bank in an effort to
develop an understanding of its set-up, operations and ultimate
liquidation status (see Appendix
5) This review is ongoing.
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Bank
Crozier Staff
29.
I performed an interview of Ms.Cora Felix, Vice-President of the Bank
and the only management employee available for discussion to this day.
Ms. Felix was as co-operative and informative as possible and the full
record of that interview is provided in appended (see Appendix
6)
30.
I also interviewed the entire staff of the Bank with a view to:
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31.
At the end of July 2003 all staff were severed and paid their relevant
severance packages in accordance with the laws of Grenada. Four staff
reassigned to the Liquidation process and provided with new terms and
conditions of work.
| Name |
Job Title |
Comments |
| Ms. Cora Felix |
Vice President/Manager |
|
| Ms. Heather Scotland |
Senior Clerk |
|
| Mr. Raphael Hamilton |
IT Administrator |
|
| Mrs. Leah Orgias |
Customer Service Clerk |
Reassigned |
| Ms. Bernadette Clark |
General Assistant |
Reassigned |
| Ms Dottie Coutain |
Debit Card Admin |
Reassigned |
| Mrs. Silvie Williams |
Customer Service Admin |
|
| Mrs. Ann DuBissette |
Accounts Admin |
Reassigned |
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Assets
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32.
As far as I have been able to determine at this point the Bank's
assets seems to consist of the following:
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Cash
At Bank
33.
The cash at Bank Grenada is a Sum of US $5,304,629.85 at RBTT Bank
Grenada Ltd. of which the high court has frozen US $5 million pending
the outcome of two court actions (namely BCIL & Bella), and US$
81,305.13 at the Grenada Co-operative Bank Ltd (see Appendix
7).
34.
The following amounts have been expended to date:
Table No: 2 Expenditure to date:
| Description |
Expenditure US$ |
Income US$ |
| Sale of Motor Vehicle |
|
4,416.80 |
| Personnel |
23,889.16 |
|
| Severance Benefits |
25,555.14 |
|
| National Insurance |
465.60 |
|
| Legal & Accounting Fees |
20,000.00 |
|
| Electricity |
3,349.95 |
|
| telephone |
13,213.99 |
|
| Office Supplies |
86.27 |
|
| other Expenses |
256.36 |
|
|
|
|
| Total |
86,807.47 |
4,416.80 |
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Master
Card Deposit
35.
My
contact with MasterCard suggests that this represents a returnable
deposit of US$600,000 subject to some small deductions. However it
would appear that these funds would not be returned to the Bank
immediately, the time period appears to be between three to six months
of formal notification of closure. I have issued MasterCard with such
notifications.
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Stourbridge Ltd
36.
Stourbridge Ltd is a 100% owned subsidiary of the Bank whose only
asset is an investment in Exchange Bank and Trust (EBT). It would
appear that EBT is in Liquidation by KPMG appointed by the Vancouver
Court. I am Unable at this time to assess the Value of any realization
from the liquidation and as such the possible benefit to the creditors
of the Bank.
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Investment
37.
The bank holds essentially three positions with Bear, Stearns & Co
Inc.
Table No3 Summary Bank Crozier Accounts at Bear, Stearns & Co Inc:
| Account Held |
|
US $ |
| Account 1 |
Balance |
0.00 |
| Account 2 |
Net Equity |
119.00 |
| Account 3 |
Total Value of Securities |
3,360.00 |
38.
This does not include an additional investment that the Bank made at
Bear Stearns in January 2000. The Bank committed to invest US$
1,000,000 to the Bear Stearns Venture Partners, LP (BSVP) BSVP is a
Fund of FUND which invests its assets in private equity funds in the
technology and healthcare sectors.
39.
To date the bank has funded US$ 600,000 to the BSVP and has an
outstanding unfounded commitment of $400,000, which is due within the
next two years. My detailed discussions with Bear Stearns revealed
that there are several options open to a participant who want to opt
out of the fund including the following:
-
Invest
the additional US$ 400,000 and await a cashing out opportunity;
-
Sell
the existing US$600,000 position as is;
-
Find
a joint venture partner to invest the additional US$ 400,00; or
-
Find
several small partners who are willing to team up to build up
US$1,000,000;
40.
The legal opinion suggests
that the Bank must terminate it's relationship with Bear Stearns &
Co. at this time. All existing accounts are to be closed and no new
orders or instruction are to be taken except as necessary to deliver
all eligible assets out of the accounts. It would also appear that the
market is now extremely depressed and one can only expect marginal
repayments of the sum invested so far.
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Loans
And Overdrafts
41.The
Bank holds over US$5 million in loans and overdrafts of which over
US$3 million is in the hands of related parties (companies and friends
of MR. Peter Johansson). At this point I am unable to comment on the
collectability of these amounts.
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Blue
Ocean Properties
42.
The main assets of the company consist of a house and land in Grenada
i have not yet obtained independent valuations of those. These assets
can be sold to realize funds to be made available to the creditors of
the Bank.
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Fixed
Assets
43.
The fixed Assets consist of
two motor vehicles, fixtures and fittings and furniture and computer
equipment. I have sold one vehicle and I am in position to dispose of
the other.
44.
There are good prospects for disposal of the remaining fixed assets
based on enquires received to date:
Table No.4 Motor vehicles
| Motor Vehicle Registration |
Year Of Manufacture |
Description |
Book Value |
Realized Value |
| PL597 |
1994 |
Toyota Corolla |
NIL |
4,500 |
| p3720 |
1997 |
Ford Explorer |
----- |
----- |
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Conclusion
45.
Apart form the observation stated above and given the preliminary
status of my enquires I do not consider it appropriate to state any
further conclusion regarding the likelihood of recovery of assets and
the extend to which the claims of depositors, creditors and investors
in the bank are likely to be met at this stage.
Garvey
Louison
Liquidator
For bank Crozier
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