Roadtown, Tortola BVI – July 29, 2009 – The BVI court battle to establish the government of Dominica as the majority owner of the controversial Shangri-La International Development Holdings has been adjourned to a date in October 2009 after an intensifying focus on the credibility of key defense witness Kieron Pinard-Byrne.
While Felix Chen of 40% Shangri-La shareholder Sino Union occupied the witness box for the entire day, deliberations were drawn with unavoidable regularity to the multiple conflicting roles of Pinard-Byrne in the failure to have a February 2006 share transfer instrument in favour of government duly registered.
Chen, who filed the action to have government registered as the 51% owner of Shangri-La, faced a barrage of questions from lead defense attorney Paul Chaisty about his knowledge of the circumstances surrounding government’s claim to the shares particularly in his capacity as chairman of the Company.
He was also grilled about the corporate governance record of the Shangri-La directors and his working relationships with Prime Minister Roosevelt Skerrit, former Ambassador to China David Hsiu and Pinard-Byrne
In his four hour encounter with Chaisty, the man who paid Hsiu’s Rich Victory 20 million dollars for a 40% stake in Shangri-La, referred over and over again to the frustrations he endured at the hands of Dominica’s former envoy in Beijing in the bid to get the international high school project going.
“I invested 20 million dollars in the company and I have not been able to do anything… I did not want them to wind up the company (as is being attempted in the Shangri-La liquidations proceedings filed in February 2008)… because it means I would lose everything…
“When I made the investment, I relied on the honesty of Ambassador Hsiu… He got my money and then he wanted to run away and keep me out of the project… So when I filed this rectification case I had no choice… I had been pushed to the corner…
“All along I wanted to work with government but I had a difficulty communicating with the Prime Minister because of his closeness with Hsiu”.
Chen told the BVI Commercial Court hearing before Justice Bannister that even though he filed the action which would help government secure its equity interest, he never discussed the matter with the Prime Minister because he was not sure whether he would get the government’s support.
The testimony of the accomplished industrialist was blunt in so far as it concerned the involvement of Pinard-Byrne in his various conflicting roles. Chen charged that given his blatant partiality towards the position of the Rich Victory players, the auditor did not rise to the high standards of independent professional conduct expected of him. In that regard, it was disclosed that as chairman of Shangri-La Chen had actually set aside, on the grounds of bias, an audit for the year 2005 prepared by Pinard-Byrne in favour of one from Deloitte and Touche.
The London based Queens Counsel appeared to have a crystal clear strategy in his cross examination of Chen directed for the most part at the credibility of the evidence presented by the Prime Minister. But Chen refused to budge from his basic positions that government is entitled to the shares, and while he has never had any difficulty per se with the Prime Minister, his injured relationship with Hsiu turned out to be a major obstacle to progress with the proposed investment project.
Chen flatly denied suggestions from Chaisty that he helped to create a political crisis in Dominica; threatened legal action against the Prime Minister personally in respect of the frustrated 20 million dollar investment; and thereby created “an ulterior motive for government to support” his current court action.
For just under an hour, head of government’s legal team, Senior Counsel Anthony Astaphan engaged a line of questioning in cross examination of the claimant that allowed him to attack key elements of the defense for which Pinard-Byrne holds direct responsibility.
It is the case of Rich Victory that Pinard-Byrne revoked in November 2006, the February 12, 2006 instrument of transfer for the 51% Shangri-La shareholding to government because the following conditions were not met:
1) Completed international high school
2) Unqualified audit statement for the Shangri-La
3) Due diligence on Felix Chen
Chen told the court that when he was advised of the Rich Victory decision to transfer its majority shareholding in Shangri-La in November 2005, and when he later signed the shareholders’ resolution authorizing the registration of the transfer on April 18, 2006, these conditions did not exist. He explained that he only became aware of the alleged conditions, seemingly concocted after the fact by Hsiu and Pinard-Byrne, when documents in the liquidation matter were served.
Astaphan submitted and Chen agreed that in his capacity as “corporate liaison, auditor or escrow agent” Pinard-Byrne never issued any letter to Shangri-La shareholders “setting out conditions for the transfer of shares to government”.
There are no more witnesses to be called for the claimant and Lawyers on both sides believe the trial has gone well so far. When the deliberations resume on a to-be-determined date in October 2009, defense witnesses Pinard-Byrne and David Hsiu will take the stand.
For these former trusted advisors who Prime Minister Skerrit heavily relied on for just about every move he made on this journey to remedy the investment misfortune of Layou, its all about the sincerity with which they can sell to the court about turns and behind-the-back maneuvering.
