The Tribune

• Crowd-fund platform blasts regulator’s ‘callous disregard’

• Says Commission moves akin to ‘dime store Nancy Drew’

• Alleges BISX-listed bank’s settlement talks denial ‘false’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Securities Commission was yesterday accused of “callous disregard” for ArawakX’s interests by allegedly interfering with its demand for a $33m settlement from Bank of The Bahamas.

D’Arcy Rahming junior, a director of The Bahamas’ first-ever crowd-funding platform, also claimed that the BISX-listed bank had given a “false and misleading narrative” by denying it was in settlement discussions with ArawakX over the six-month freezing of the latter’s bank accounts.

The claims, contained in a November 8 affidavit, emerged just one day before Chief Justice Ian Winder is due to rule on the Securities Commission’s bid for the Supreme Court to appoint a provisional liquidator to take control of ArawakX as a first step towards winding-up the crowd-funding platform. Mr Rahming’s evidence is another, albeit late, step to rebut the capital markets regulator’s case.

Asserting that it was “axiomatic”, or unquestionable, that Bank of The Bahamas “will have to answer for the harm caused” in freezing ArawakX’s bank accounts, he argued it had “cynically” denied to the Securities Commission that the two parties were in settlement talks knowing this would strengthen the regulator’s case for the winding-up.

The Supreme Court’s appointment of a provisional liquidator, Mr Rahming added, would benefit Bank of The Bahamas because there was no guarantee that the crowd-funding platform’s legal claim against it would survive. However, Christina Rolle, the Securities Commission’s executive director, has previously reassured that a provisional liquidator would be mandated to pursue all such cases.

Nevertheless, Mr Rahming alleged that the regulator, through asking Bank of The Bahamas to confirm if it was in settlement negotiations, had sparked the BISX-listed institution’s “abrupt and calculated rejection” of ArawakX’s settlement proposal.

He also produced a September 7, 2023, e-mail from Michelle Deveaux, an attorney with McKinney, Bancroft & Hughes, in which she promised to send a settlement proposal on Bank of The Bahamas’ behalf as evidence the latter was seeking to negotiate a resolution to the Arawak dispute.

Khalil Parker KC, the Bahamas Bar Association’s president, in a September 15, 2023, letter set out ArawakX’s “position on settlement” in response to what he said was Bank of The Bahamas’ request. He argued that the account freeze, which stemmed from the Rahmings’ battle for control with the platform’s largest investor, James Campbell, had disrupted a $49.8m project to develop a government savings bond.

As a result of this, and other impacts, Mr Parker said his client was prepared to accept a $32.977m settlement plus legal costs of $824,426 and VAT levied on the latter sum. “As the defendant was at all material times aware, its conduct complained of has resulted in loss and damage to the claimant’s standing with its regulator and an interruption of the claimant’s use and enjoyment of its market place and clearing facility licence,” he wrote on ArawakX’s behalf.

“The claimant at all material times had commenced a project pursuant to a signed proposal with the Government of The Bahamas worth upwards of $49.8m, which the defendant’s conduct complained of herein frustrated, causing loss and damage to the claimant.

“The defendant’s conduct also damaged the claimant’s relationship with its creditors, whose claims it was prevented from satisfying, and has exposed it to claims from its third-party subscribers. The claimant suffered a seven-month loss of earnings, reflecting $560,159 in subscriptions and other income, and $4.182m in success fees,” Mr Parker continued.

“The claimant also seeks $420,000 with respect to the aggravated nature of the injuries caused in the circumstances. The claimant is prepared at present to accept $32.977m and $824,426 plus VAT with respect to its costs of and occasioned by this matter in full and final settlement.” Mr Parker added that the account freeze had also impacted ArawakX’s credit and reputation, plus interfered with its business relationships.

It is unclear how the $32.977m figure was derived, although a large chunk is likely related to loss of opportunity concerning the $49.8m government savings bond development. However, Simon Wilson, the Ministry of Finance’s financial secretary, previously said talks with ArawakX had not progressed beyond the “proposal” stage and there was no binding agreement or contract between the two sides.

Mr Rahming, though, yesterday argued that Ms Deveaux’s September 7, 2023, e-mail to Mr Parker provided “clear evidence” that ArawakX and the bank were in settlement talks. “Additionally, a last reminder on any WOP (without prejudice) proposal from your side,” she wrote. “If not, my client has asked me to send one to you.”

Tribune Business was yesterday told that Bank of The Bahamas, which is 82 percent majority owned by the Government through NIB and the Public Treasury, and its Board and management would never agree to a near-$33m settlement of ArawakX’s claim.

And Neil Strachan, Bank of The Bahamas’ managing director, told Ms Rolle in an October 25, 2023, e-mail that no settlement has been agreed with the embattled crowd-funding platform as the latter’s offer was previously “rejected”.

“This is to formally advise that Bank of The Bahamas has not engaged in any negotiations of settlement terms, nor have we agreed to a settlement relative to MDollaz/ArawakX. An offer for settlement was sent to our attorneys. However, the offer was rejected,” he wrote.

The Securities Commission’s chief asserted that Bank of The Bahamas’ response contradicted previous sworn assertions by ArawakX executives and Mr Parker “that there are ongoing settlement discussions/negotiations” between the parties. The bank’s position also had implications for ArawakX’s hope that a damages payout could restore it to financial health amid claims it has a $2.4m solvency gap.

Mr Rahming, in his affidavit yesterday, alleged that the Securities Commission’s outreach to Bank of The Bahamas further showed it was on a “campaign to wholly commercially undermine” ArawakX and the “integrity of its sensitive negotiations with Bank of The Bahamas”.

ArawakX is seeking damages from Bank of The Bahamas for breach of contract, injury to its credit and reputation and alleged “unlawful interference” with its business relationships, plus aggravated damages. No dollar figure, though, is specified in the statement of claim.

“Bank of The Bahamas having acknowledged its interference with the respondent’s bank accounts in breach of the contract between the parties, the respondent maintains that it is axiomatic that Bank of The Bahamas will have to answer for the harm caused by means of an award of damages, which issue remains live before the court,” Mr Rahming alleged.

Bank of The Bahamas froze ArawakX’s bank accounts from November 1, 2022, to mid-May 2023 amid uncertainty over who held control and signatory authority over them - Mr Rahming and his father, or Mr Campbell. This was done to prevent the bank from exposure to potential liability from either party.

Mr Rahming yesterday accused the Securities Commission of acting as “a dime store Nancy Drew” in assuming the role of detective in seeking to find out whether there were active settlement talks with Bank of The Bahamas.

Alleging that the regulator was effectively playing “a game of ‘Gotcha’” with ArawakX, he branded Mr Strachan’s denial of negotiations as “false”. Mr Rahming said a letter from Bank of The Bahamas rejecting the crowd-funding platform’s offer was received on October 25, 2023 - the same day that Mr Strachan wrote to Ms Rolle.

Referring to Ms Deveaux’s e-mail, he added: “Not only was Bank of The Bahamas actively soliciting a ‘without prejudice’ proposal from the respondent, but counsel for Bank of The Bahamas clearly indicated that should the respondent not provide a proposal, Bank of The Bahamas had instructed her to send one to the respondent.

“It is therefore clear that the parties were engaged in settlement discussions, Bank of The Bahamas having had a proposal which they have yet to submit, and the respondent having submitted a proposal at Bank of The Bahamas’ request.

“Bank of The Bahamas, clearly and cynically, determined to present a false and misleading narrative to [the Securities Commission] aware that it would be presented to the court herein by the applicant with the expectation that should the applicant succeed upon its application herein Bank of The Bahamas may then not have to face a further serious and credible challenge on behalf of the respondent.”

Mr Rahming alleged that the Securities Commission’s intervention has caused “the commercial harm and litigious damage feared and telegraphed” in that it has “precipitated the abrupt and calculated rejection of the respondent’s settlement proposal by Bank of The Bahamas”.

He argued that, without the regulator’s “oppressive intervention”, Bank of The Bahamas would at the very least have submitted its own settlement proposal, and accused the Securities Commission of showing “callous disregard” for ArawakX’s financial interests.