The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Hannes Babak allegedly engineered the removal of two trustees safeguarding the Hayward family assets because they were negotiating “silly deals” to sell the Grand Bahama Port Authority (GBPA).

But Tribune Business can reveal that one such ‘silly deal’ was the potential purchase of Freeport’s quasi-governmental authority by BlackRock, a global private equity firm with more than $4.5 trillion in assets under management.

Court documents obtained by Tribune Business claim that two of the three trustees for the Sir Jack Hayward Discretionary Settlement 1993 were removed by Mr Babak because his interests in a sale of the GBPA and its Port Group Ltd affiliate “may well not coincide” with those of the Hayward family.

And the latter are alleging that Mr Babak, an ex-GBPA chairman, and his Freeport-based attorney, Andre Feldman, exploited the deteriorating health of the ‘Settlement’s’ protector to persuade him to sign documents ‘authorising’ the two trustees’ removal.

Keith Griffiths, a UK-based architect and long-time confidant of Sir Jack, is alleged in court papers to be “so mentally and physically frail” that he spoke of getting a friend “to DRIVE him from Freeport to Miami”.

Neither Mr Babak nor Mr Feldman responded to messages left for them by Tribune Business on their cell phones prior to the end of the working week. However, sources close to both men have dismissed the new claims against them as nothing more than a power/money ‘grab’ by the Hayward children/grandchildren.

They alleged that Mr Babak was typically resurrected as a ‘bogeyman’ by the Hayward family whenever they felt dissatisfied with their share of the estate/trust assets.

However, the documents obtained by Tribune Business provide a fascinating insight into the GBPA’s second instalment of ‘happy families’. And, again, they show how the alleged manoeverings for personal gain by a few can effectively hold Freeport, and its 60,000 residents, hostage by ‘locking up’ the GBPA’s ownership and decision-making.

While it appears the Hayward and St George camps have indeed been working together on a GBPA ‘exit strategy’, it also seems that no deal will occur unless the buyer is introduced - and the price and terms approved - by Mr Babak, who is supposed to be paid $20 million once a purchase is concluded.

The ‘skeleton arguments’ employed by the Hayward family’s attorneys, Harry B. Sands & Lobosky, expose the details of a ‘battle for control’ of the late Sir Jack’s family assets that will, together with its outcome, be a major influence on Freeport future.

For the “major asset” being fought over is the ‘Settlement’s’ 50 per cent stake in the GBPA and Port Group Ltd, the latter of which holds half the equity ownership in key Freeport infrastructure assets such as the airport, harbour and real estate (DEVCO).

The papers obtained by Tribune Business reveal that Sir Jack’s children, and grandchildren, are alleging that the purported removal of Richard DeVries and Ian Barry would have left just Prometheus Services Ltd as the sole trustee of their late father’s ‘Discretionary Settlement’.

They are claiming that Mr Babak, who has been negotiating with them on behalf of the late Sir Jack’s companion, Patty Bloom, “appears able to influence” all decisions that Prometheus makes.

Thus the Hayward children, and grandchildren’s, fear that Prometheus would favour the interests of Ms Bloom and her children over their own in terms of how the family’s estate (via the trusts) is managed.

Tribune Business understands that Prometheus has requested more time to respond to the document production demanded by the October 5 Order. It has also filed papers indicating it will soon attempt to have the Order set aside. Harvey Tynes QC is understood to be representing Prometheus.

But the documents obtained by Tribune Business effectively amount to a summary of the case that convinced the Supreme Court, on October 5, 2015, to appoint ex-financial services minister, Ryan Pinder, and his Deltec Bank & Trust colleague, Paul Winder, as Judicial Trustees of the ‘Settlement’ and its underlying Seashells Investments vehicle.

“The plaintiffs first learned of the purported removal of Mr DeVries and Mr Barry from an e-mail sent by Mr Babak to Rupert Hayward [Sir Jack’s grandson] on May 19, 2015,” the arguments allege.

“Mr Babak stated that the Protector [Mr Griffiths] had removed the individual trustees and, when asked why, Mr Babak indicated that the Protector did not have to give a reason.

“This was reiterated in a conversation between Rupert Hayward and Mr Babak on the same day, during which Mr Babak revealed what the plaintiffs take to be the reason why the removal had been sought,” the papers added.

“He said that the individual trustees were negotiating ‘silly deals’ with the St George family (owners of the other 50 per cent interest in GBPA) concerning a partial sale of IDC or its subsidiary companies.”

IDC, or Intercontinental Diversified Corporation (IDC), is the immediate holding company for its GBPA and Port Group Ltd subsidiaries. The Hayward and St George families each own 50 per cent of IDC.

It appears that one of the ‘silly deals’ that Mr Babak was allegedly referring to was the potential purchase of the GBPA and Port Group Ltd by BlackRock, the asset manager that employe more than 12,000 employees in 30 countries.

The documents reveal that both Messrs DeVries and Barry, plus the St George family, “had been interested in dealing” with BlackRock.

“The potential purchaser was BlackRock, a very substantial private equity company,” the papers said.

The Hayward children are alleging that Mr Babak’s interests over a GBPA sale ‘conflict’ with their own because he is due $20 million immediately a sale is consummated.

The payment to the ex-GBPA chair is supposed to be split 50/50, with $10 million coming from both the Hayward and St George families.

Yet, based on the documents, it appears that the BlackRock deal would have seen the St George family continue with their involvement in the GBPA’s management, while the purchase price was tied to the company’s future performance. These terms, it was alleged, were not to Mr Babak’s suiting.

“The plaintiffs believe from what Rupert Hayward was told by Mr Babak, who appears to be connected to Prometheus in the sense that he appears able to influence its decisions it makes, that Mr Babak wanted Mr DeVries and Mr Barry removed as trustees because they took a different approach to him in relation to the sale of the major trust asset - being effectively a 50 per cent shareholding in the GBPA and Port Group Ltd,” the documents allege.

“Mr Babak has his own interest in a sale, which interest may not coincide with the interests of the beneficiaries of the Settlement. He appears to exercise an influence over Prometheus, and possibly over Mrs Bloom.... Sir Jack had placed confidence in him, and he had been involved in negotiating a settlement of outstanding issues relating to the [Hayward trusts] on behalf of Mrs Bloom.”

The Hayward family attorneys, in their arguments, continued: “It appears from the evidence of Rupert Hayward that Mr Babak arranged for the removal of the individual trustees because they wished to deal with a purchaser of the Settlement’s interest in the GBPA who was not introduced by him, and which proposed a partial sale of assets of the Settlement and deferral of consideration [purchase price].

“That proposal was not in Mr Babak’s interests because he claims to be entitled to $20 million upon the sale of the GBPA.

“Rupert Hayward formed the impression that Mr Babak was opposed to the proposal because under it the St George family would continue their involvement in running of the GBPA, and because the purchase price depended on the future performance of the relevant companies. These were terms which might not have suited Mr Babak.”

The arguments employed before Justice Indra Charles also alleged that Mr Babak, in his May 19 call to Rupert Hayward, while disclosing that he was calling from London, made no mention of his and Mr Feldman’s meeting with Mr Griffiths two days’ earlier.

The Hayward children and grandchildren claimed they on;y became aware of the duo’s presence at the trustee document removal ‘signing’ one month later, on July 16, 2015, when the papers were formally delivered to them.

“Once the plaintiffs had sight of the Removal Documents, they realised that the documents had been witnessed by Mr Babak and Mr Andre Feldman, who is not only Mr Babak’s attorney but is also attorney of record acting in these proceedings for Prometheus, Mr DeVries and Mr Griffiths,” the arguments allege.

Implying that Mr Feldman may be ‘conflicted’ because he is wearing ‘too many hats’, the Hayward children/grandchildren’s attorneys reiterated: “The plaintiffs are extremely concerned that the removal of Mr DeVries and Mr Barry has been attempted by Mr Babak and Mr Feldman, the latter of whom must have been acting on the instructions of one of his other clients and against the interests of Mr DeVries and Mr Barry.”

They alleged that “the value of the trust assets is in jeopardy in the hands of Prometheus”, given the differences over a potential GBPA sale, and the fact it might deter potential purchasers whose proposals were in the Hayward estate’s - but not Mr Babak’s - interest to accept.

Tribune Business understands that Prometheus Services Ltd is a corporate trustee for the Hayward Discretionary Settlement, with three directors. They are Felix Stubbs, the IBM (Bahamas) executive; Tony Adderley; and Robert Ungulade.

The Hayward children thus fear that Prometheus could negotiate “a sale on terms which might not be advantageous to the Settlement as they might be, due to the conflict of interest of Mr Babak, or turning away potential purchasers because they do not suit Mr Babak or because he does not consider that the terms which the potential purchaser might offer would be in his interest”.

The arguments advanced by the attorneys acting for the Hayward children/grandchildren recalled Mr Babak’s own bid to acquire the family’s GBPA interest when Sir Jack was alive, plus his introduction of various offers from Fleming Family & Partners, Mid-Atlantic Projects and Bluewater. All were allegedly represented by Mr Feldman.