The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian bank holds the key to any chance defrauded Canadian investors have of recovering their collective $69 million investment, with liquidators for both parties engaged in delicate negotiations over access to the institution's banking records.

Liquidators for Cayman-domiciled Focus Management are seeking access to the files of BNP Paribas (Bahamas), which went into voluntary liquidation in this nation in February 2011.

For the last four year of Focus’s existence, BNP Paribas (Bahamas) acted as its bank, and the former's co-liquidators, Hugh Dickson and Nicolas Bolly, want to examine its records in the hope of identifying improper payments to third parties. These would likely represent the best source of recovery for Focus investors, with the liquidators suing recipients of such payments in a bid to regain them.

Having in August 2011 threatened to “take legal action” against BNP Paribas (Bahamas) and its estate unless the relevant documentation was handed over, the Focus co-liquidators have since spent their time in delicate negotiations over a complex 'information exchange' agreement with the French-owned bank.

In their fourth report to Focus's creditors in late 2012, the co-liquidators said: “Since January 17, 2012, the joint liquidators' lawyers have been negotiating the said conditions with BNP's lawyers.

“In brief, efforts are ongoing to reach an agreement whereby BNP would produce relevant banking information under limited guarantee from its parent company, in exchange for the joint official liquidators' agreement to either initiate legal action against them within a limited period of time or abandon any such claim.”

BNP Paribas (Bahamas) effectively represents the last hope of recovery for Focus's creditors, the liquidators having warned “there is no prospect” of regaining their $69 million without litigation recoveries.

The Bahamian bank was solvent when it went into voluntary liquidation in this nation almost two years ago, in February 2011. The move was unconnected to the Focus situation, and there is no suggestion the institution, nor its officers, directors or shareholders, did anything wrong.

BNP Paribas sold its Bahamian book of banking business to Scotiabank, and it was not until August 30, 2011, that the Focus liquidators requested “bank records, correspondence and 'Know Your Client' files” from the former Bahamian institution.

Legal action was threatened if these were not handed over, since they were vital to determining if litigation against recipients of Focus funds could generate material recoveries for creditors.

“On December 20, 2011, the joint liquidators further advised BNP of BNP's potential liability for knowing assistance or negligence,” the report said. “The joint liquidators also requested that BNP suspend all liquidation payments until the joint liquidators' investigations are completed.

“On January 17, 2012, BNP acknowledged the request for information but would continue the liquidation of BNP. However, its ultimate parent company would undertake any liability determined by the Bahamian court on the part of BNP under certain conditions.”

The liquidators added that if an “information sharing” agreement was worked out with BNP Paribas, both the Bahamian and Cayman courts would be informed. Access to the records would place them “in a better position to assess the potential liability of BNP for knowing assistance or negligence”.

Focus Management's collapse into court-supervised liquidation has numerous connections to the Bahamas other than BNP Paribas (Bahamas). The Cayman company was one of the ultimate destinations for monies raised by an investment scheme operated by a Canadian broker-dealer, Triglobal Capital Management, whose principals were Mario Bright and Themistoklis Papadopoulos.

The duo also placed 48 million dollars worth of Canadian investors' monies with Ivest, a Bahamian mutual fund, which Tribune Business previously reported as being placed in supervised liquidation by the Supreme Court in early 2008.

Messrs Dickson and Bolly, the Focus co-liquidators, alleged in an earlier report that Ivest subsequently invested 31 million Canadian dollars of the funds it received into Focus. “Our analysis indicates...... that Ivest monies appear to have been used to repay Focus clients,” they alleged.

“There appears to be a pattern in which Ivest... monies are lodged and paid out in a short timeframe, largely to Focus investors or as yet unidentified parties, consistent with a Ponzi scheme.”

All this has made Ivest, the Bahamian mutual fund, the largest creditor of Focus Management. Maria Ferrere, of FT Consultants, who is Ivest's liquidator, sits on the Focus creditors committee.

Ivest`s financial statements at end-2005 showed that it had $51 million in assets under management, with $22 million or 40 per cent invested with Focus. Another $27 million was allegedly held in cash.

As at September 30, 2007, Ivest was shown as having 101 investors who had paid in $47.7 million, the amounts ranging from $40,000 to $10 million. Its Bahamian fund administrator, Genesis Fund Services, had resigned from its role prior to Ivest going into liquidation. There is nothing to suggest that Genesis, its officers, directors or staff, have done anything wrong in relation to the Ivest-Focus situation.

Other connections to this nation come from a Bahamian company, Revest, allegedly holding title to a property that Focus owned at the Cayman Reef Resort. Messrs Dickson and Bolly have demanded from Revest the repayment of $25,546 in monies spent by Focus on the condo property.