The board of directors of Bank of N.T. Butterfield & Son put its weight behind the bank's management after a series of controversial Press reports stated that they were allegedly "outraged'' about a deal struck with Bermudian businessman Wendell Brown.

A report in the Mid-Ocean News stated the boardroom of the bank would be "waist-deep in blood'' after they were not consulted over the multi-million dollar loan to buy out the Phoenix Group and Bermuda General Agency (BGA).

Yesterday the bank issued a statement that the board supported their CEO Calum Johnston and the management team and said they would never have been consulted on such a loan as a matter of policy.

The statement said: "Dr. James King, Chairman of the board of the Bank of Butterfield today stated that at a meeting of the board of directors the board discussed recent press reports and subsequently passed a resolution unanimously declaring the board's full confidence in the chief executive officer and the management team of the bank.

"Dr. King explained that for many years at Bank of Butterfield the authority to grant loans has been delegated to management. Directors play no part in the process, except in cases of loans in excess of 25 percent of the bank's capital (that is for loans in excess of about $46 million). Directors are not advised in advance of loans under consideration but all significant loans are presented to the board in writing and discussed at the first regular board meeting after they were granted, and presented and discussed annually thereafter. This enables directors to fulfil their role of supervising management and the actions of management.'' The first reports in the Mid-Ocean News at the beginning of December originally implied that the bank had given Mr. Brown a loan to buy the Phoenix Group and BGA in exchange for political favours. This was strongly denied by the Minister of Finance Eugene Cox and Mr. Johnston.

The second, a week later in the same weekly journal, said bank directors had been `blind-sided' by the BGA transaction and would quiz both Mr. Johnston and chairman Dr. James King at the board meeting yesterday on why they were kept in the dark over the deal.

Both stories quoted anonymous sources as the basis for the articles.

After first publication Mr. Johnston stated "categorically'' his bank had never been approached by any Government representative to finance the purchase of the Phoenix Group and BGA. He also said he was `outraged' at the Mid-Ocean News story.

He said they bankrolled the deal -- estimated to be worth well over $12 million -- on the merits of the business venture in which Ward Young sold the family business to black businessman Wendell Brown. The original Mid-Ocean News article implied that one of the banks (not naming the Bank of Butterfield) had been offered a "quid pro quo'' deal by the Progressive Labour Party Government.

Support for management team The article said that any lifting of the 60/40 rule -- which limits the foreign ownership of local companies to 40 percent -- involved the "banks facilitating the fast-tracking of black Bermudian entrepreneurs who want to enter the traditionally white-dominated retailing and wholesaling mainstream''.

A statement from the bank said Ward Young sold his family's company to Mr.

Brown because he had a `brush' with cancer and because no members of his family wanted to keep on the business.

Mr. Johnston is quoted as saying: "The transaction was authorised on its merits for the benefit of the vendor, the purchaser and the bank. Mr. Brown is a respected and successful businessman who owns several businesses. To categorise him as only someone who runs a betting shop is simply one more misleading impression to add to all the others in the article. I am shocked that a reporter would write such an article without contacting any of the participants in the deal and outraged that an editor would publish an article with such serious implications without any attempt at investigation and verification.'' It is believed Mr. Brown runs at least three very successful businesses -- the Sunshine Gas Company, Triple Crown Racing as well as the Sung Sing Chinese Restaurant, all located at the corner of Victoria and Court Street.

Dr. James King