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Former Port Royal trustees sued over ‘self-dealing’

Opposition MP Zane DeSilva and other former trustees of the Port Royal Golf Course are being sued by the Government over a taxpayer-funded refurbishment project which went $20 million over budget.

Attorney-General Trevor Moniz alleged in a statement yesterday that the trustees had breached their fiduciary duties and taken part in “self-dealing” during the construction project at the publicly owned Southampton facility, which hosted the PGA Grand Slam of Golf between 2009 and 2014.

A writ of summons obtained by this newspaper and signed on Monday by Ian Kawaley, the Chief Justice, launches civil proceedings against Mr DeSilva, Wendall Brown, Delano Bulford, Island Construction Services Limited and SAL Ltd in the Supreme Court of Bermuda in connection with the refurbishment of Port Royal Golf Course between 2007 and 2009.

Mr DeSilva, who was informed of the civil proceedings over the telephone by The Royal Gazette, said he would fight the lawsuit “to the end”.

The proceedings follow a raft of damning findings by former Auditor-General Heather Jacobs Matthews in her October 2014 Special Report on the Port Royal Golf Course Improvements Capital Development Project.

Mr Moniz said that the independent report led him to launch an internal investigation, particularly into her “finding of self-dealing by trustees”.

“Trustees owe fiduciary duties to Government,” said the Minister of Legal Affairs. “As part of the refurbishment, goods and/or services were supplied to the Port Royal project by companies linked to the first three defendants — all former trustees.

“At no point did they properly declare their interests or recuse themselves from the board's decision-making in respect of the refurbishment of Port Royal.

“The defendants profited at the expense of Government in breach of their fiduciary duties. At no point was Government's permission sought or given for such a breach. Accordingly, Government is entitled to any profits made from these arrangements and to obtain any secret commissions earned.”

He added: “I will not provide an ongoing commentary on these proceedings. I will robustly litigate this matter before the court, which is the appropriate forum. This is part of Government's efforts to protect taxpayers and to uphold and vindicate the rule of law.”

The writ alleges that the trustees failed to adopt any system for avoiding conflicts of interest in the project. It added: “Indeed, some trustees actively sought to promote the interests of trustees over other contractors.”

As an example, the document cites an e-mail on June 30, 2007, from Mr DeSilva to Bob Wilson, a trustee and chairman of the board's finance sub-committee, asking: “Was wendall and bulford on the list of bidders for the r o plant?” — referring to the reverse osmosis system.

It then quotes a reply from Mr Wilson, copying in Bill Pitt, the general manager of Port Royal, on July 2: “I don't know Zane and Daniel is now handling the process but Bill please ensure Consolidated Water are on the list and ask Mr Bulford if he wants to nominate anyone (please e-mail him directly).”

Elsewhere, the writ accuses Mr DeSilva of failing to declare his interest in Island Construction on the importation of thousands of tonnes of sand and gravel.

It further alleges that Mr DeSilva was privy to confidential details on the rates of competitor firms, which he shared with Island Construction — which “used that knowledge to adjust its prices to appear more competitive”.

Similar allegations are made against various trustees for purchases ranging from concrete to steel and the hiring of construction equipment.

The writ accuses Mr DeSilva of making false statements in July 2008, by responding to the Mid-Ocean News that Island Construction had offered the most competitive price for supplying sand and gravel, adding that he had “no day-to-day involvement with the project”.

Mr DeSilva is further accused of lying to the Public Accounts Committee in April 2016 in six different statements.

The writ alleges that he engaged in “a deliberate and repeated course of conduct to deceive the Government and the wider public about the true position for a substantial number of years”.

Among the claims sought from Mr DeSilva are an account of his profits from contracts for sand and gravel, the hiring of equipment and the provision of excavation services.

The refurbishment of the golf course was originally budgeted at $4.5 million, but Mrs Matthews detailed in her report how it ended up costing taxpayers $24.5 million.

The Auditor-General found “at least three instances where the interests of board of trustee members were, or appeared to be, in conflict with the interests of the board. On two occasions, major contracts were awarded to companies in which board of trustee members appear to have had personal interests.

“In another instance, it appears that a board of trustee member received a commission from a company which was awarded a contract by the board of trustees.”

Among Mrs Matthews's findings were that the Government failed to properly monitor the project, financial transactions were not recorded and processes to control the expenditure of public money were not followed.

After the report was released, the parliamentary Public Accounts Committee investigated the project, hearing evidence from businessman Mr Brown, who was chairman during the refurbishment.

He told MPs: “I make no apologies that we blew the budget. I think we delivered this so Bermuda could benefit from the PGA [Grand Slam of Golf].”

Last September, the Commission of Inquiry, as part of its investigation into the misuse of public funds, heard that actions carried out by the board of trustees of Port Royal were “straightforward fraud”.

That was the assessment of commission chairman Sir Anthony Evans, after the tribunal heard how the board of trustees paid $10,000 of public money to a company awarded a contract for goods, so the company could in turn pay that money to board of trustees member Mr Bulford as a “finder's fee”.

At the time of the payment, Mr DeSilva was a member of the Port Royal board. Progressive Labour Party politician Mr DeSilva became Minister without Portfolio at the end of 2009, before becoming health minister in November 2010.

Contacted yesterday, Mr DeSilva, who is overseas in the United States, said he was not surprised by the move, but staunchly defended the work done at Port Royal.

“I'm not surprised at all, but if that's the case, I will fight it to the end,” Mr DeSilva said.

He suggested its timing was election-related, saying the island was “jumping into silly season”.

“I'm very proud of the work that we did up at Port Royal,” Mr DeSilva added.

Asked if he had any cause to suspect fraudulent actions, he said: “I know who was sitting on the board; I know we did everything by the book. I have no fears at all.”

It is the second civil lawsuit issued by Mr Moniz in three weeks, after he filed an action with a Boston federal court last month, alleging the Lahey Clinic ran a bribery-based scheme with Ewart Brown, the former premier, to profit at the expense of Bermudians.

Responding last night, the PLP called for a transparent process to investigate the OBA's “serious” allegations, but continued: “The actions taken by Trevor Moniz and the One Bermuda Alliance are reminiscent of dictators who used political power and influence to victimise their enemies and are alien to a modern, sophisticated jurisdiction like Bermuda.

“When it came to scandals like Jetgate and the serious allegations that forced the resignation of the OBA's first premier, where was Trevor Moniz? Where were the investigations and lawsuits?

“With an election looming, the timing of this and other actions will raise questions about fairness, impartiality and whether the OBA's approach is less about justice and more about political vendettas or distracting from their failure to create jobs and opportunities for Bermudians.”

To read the Auditor-General's Special Report and the Writ of Summons, click on the PDF links under “Related Media”

It is The Royal Gazette's policy not to allow comments on stories regarding court cases. As we are legally liable for any slanderous or defamatory comments made on our website, this move is for our protection as well as that of our readers.

Attorney-General Trevor Moniz (File photograph)

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Published March 01, 2017 at 2:44 pm (Updated March 02, 2017 at 9:35 am)

Former Port Royal trustees sued over ‘self-dealing’

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