Bulkan cites mystery deposit of $82m

-in breach of contract case against Republic Bank

Water company on the march: GWI workers during Tuesday’s May Day march.

Continuing testimony in his suit against Republic Bank (Guyana) Limited for alleged breach of contract, Managing Director of Precision Woodworking Limited Ronald Bulkan says that though the bank knew of its proposal to settle outstanding debts, it nonetheless reneged on what had been agreed  and he also referenced a mysterious deposit of $82m.

Even after releasing to the bank a cheque for $30 million from an agreement Precision had signed with Torginol Paints as a deposit for the latter to purchase the company, Bulkan explained that in a twist of events, the bank then indicated that it would not write off any portion of the company’s debt.

The witness said that after making all arrangements to settle its debt which the bank had accepted, he received from Managing Director of the bank John Alves, a letter dated August 9, 2011 detailing that Precision’s debt would not be written off.

The letter which was read to the court and which Bulkan said had been signed by Alves was headlined “without prejudice,” and captioned “proposal to revive the operations of Precision Woodworking Limited.”

From the letter, the court heard that while the bank would have reviewed the request made by Precision to settle its debt, it was “not prepared to write off any portion of the company’s debt without first exhausting its recourse to the assets pledged to secure the debt.”

Additionally, referencing the June 30, 2011 meeting between Precision and the bank at which the proposals for debt settlement had been discussed, the letter went on to add, “the injection of equity into the business is a prerequisite to the bank giving favourable consideration to any proposal made to revive the company.”

The letter then concluded by stating that as a result, “unless the bank is in receipt of an acceptable proposal by August 22, 2011 we will instruct the receiver to proceed to liquidate the assets of the company in order to repay the outstanding debt.”

Bulkan also testified at yesterday’s hearing of being made aware of a disparity in the balance of Precision’s account, and after attempting to seek clarifications, was told by senior officials of the bank that that should not concern him.

According to the witness, when initially asked for the balance of the account, Nigel Trotman, an official of the bank, gave him a figure of $193,689,617.

Bulkan said that it was after requesting a statement of his indebtedness from the bank that the disparity became apparent, as there was a difference in the interest as per percentage in relation to the principal loan.

He told the court that it was at that point that he called his account manager

Sase Jagnandan seeking an explanation which the man was unable to provide.

He said that at that point, he learnt the balance to be $275,757,691.

Bulkan testified that after enquiring, he was informed by another bank official whom he identified as Brenda Munroe, that the sum of $82,068,617 had been deposited into the account.

He said that Munroe told him that this amount represented a transaction which had been done, and for which he should not have been told, nor should it concern him.

Bulkan said he utterly disagreed with the woman’s contention.

The case continues on Monday afternoon at 1:30 when Bulkan will continue his testimony before Justice Navindra Singh at the High Court in Georgetown.

Once he completes his evidence-in-chief, his cross examination by attorneys for the bank and receiver will get underway.  Representing Bulkan is attorney Nigel Hughes. The bank, meanwhile, is being represented by Senior Counsel Robin Stoby, while the receiver is being represented by attorney Timothy Jonas.

Bulkan had previously testified that the bank was fully aware that it was in the process of settling its indebtedness when the financial institution nonetheless went ahead and appointed a receiver for the company.

He had outlined that following the dire financial straits in which his company had found itself at the end of 2010, he communicated to Alves an offer he had been made and accepted for the sale of Precision.

He said that in a correspondence of June 24th, 2011, he told Alves of the offer he had been made to the tune of US$1.15 million. He said that Alves acknowledged receipt of that e-mail which was copied to Jagnandan.

Thereafter, Bulkan said that he was invited by Alves to a meeting at the bank six days later to discuss his company’s financial status.

During that meeting, he said he informed Alves and other bank officials that he had signed an agreement with Torginol Paints and released to Alves, a cheque for $30 million.

According to Bulkan, he told Alves that that payment would allow for his company to continue manufacturing, given that the amount represented a considerable sum of the company’s indebtedness to the bank.

Bulkan told the court that based on the agreement of sale, he then requested that the remaining indebtedness be converted into a term loan and that his company be considered for partial debt forgiveness, owing to its previous unblemished standing as customers.

The witness said that Alves explained to him that he did not have the authority to so do, but would have made the recommendation to the Board.

Bulkan said that while he and the bank had had previous discussions about appointment of a receiver, he was never made aware at any time that one had actually been appointed, nor that his company had gone into receivership—especially given the purchase offers he had been made. According to the witness, while Kashir Khan (the receiver) was present at the June 30th, 2011 meeting, he was not made aware that that was the receiver until after the meeting had ended.

The letter of August 9, 2011 had been copied to Khan.

In its statement of claim, Precision advanced as unlawful, among other things, the bank’s appointment of Khan as receiver.

It has also argued that Khan failed to act honestly and in good faith in dealing with its property “in a commercially reasonably manner” and added that its assets were unlawfully disposed of.

It says it has suffered loss and damage as a result of the actions of the defendants.

It has also advanced that the bank breached the provisions of the Financial Institutions Act by attributing interest to the company’s outstanding indebtedness, when it was not permitted to do so.

It is also seeking a declaration that the appointment of Khan as receiver for Precision Woodworking Limited was unlawful, null, void and ultra vires to the Companies Act 1991.

It also seeks a declaration that Khan did not act in its best interest, given his role as agent of its company, nor did he exercise reasonable care in his dealings with its assets.

A declaration is also being sought that Khan has not acted and or conducted himself as the appointed receiver of Precision in accordance with the Companies Act 1991.

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