The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Supreme Court judge has branded the businessman behind the controversial Blackbeard’s Cay development as “evasive and untruthful”, dismissing his claim to own the project’s dolphins.

Justice Milton Evans, in a December 17, 2015, ruling, found that the eight dolphins belonged to their Honduran supplier, and not Samir Andrawos and his Blue Illusions vehicle.

Rejecting much of Mr Andrawos’s evidence, Justice Evans also suggested that some of the documentary evidence presented at trial implied that the dolphins’ importation into the Bahamas was structured to evade import taxes.

He told attorneys for both sides that the documents “could give rise to the conclusion” that the Government was defrauded of due Customs duty, given that the dolphins were not accurately valued.

Both Blue Illusions and the Honduran-based Instituto De Ciencias Marinas (IMS) denied “any knowledge or intent” to defraud, and Justice Evans confined his ruling to determining that the latter was the dolphins’ true owner.

The verdict is merely the latest headache for Mr Andrawos and Blue Illusions, who still face the threat of having their cruise passenger excursion destination shut down.

Tribune Business revealed on Friday how environmental activist group, reEarth, has obtained a ‘penal notice’ that will enable them to “apply to commit” Prime Minister Perry Christie and his fellow Cabinet minister, V Alfred Gray, to prison for ‘contempt of court’.

This situation has arisen because the Government has allowed Blackbeard’s Cay to remain open, and continue operating, for a further six months despite the Order by acting-Chief Justice, Stephen Isaacs, on August 31, 2015.

This was intended to enforce his earlier judgment in favour of reEarth’s Judicial Review application, which called for Messrs Christie and Gray, plus the Town Planning Committee, to use their offices to close the $12 million project down and restore Blackbeard’s Cay to its original condition.

The Government, though, has yet to act on both Justice Isaacs’ Order and the subsequent ruling by Justice Evans.

The latter’s judgment effectively paves the way for Blackbeard’s Cay’s dolphins to be returned to their supplier, and owner, in Honduras.

However, their passage back to Honduras requires the Government, in the shape of the Ministry of Agriculture and Marine Resources, to first sign export licences permitting their transfer back to Central America.

Tribune Business contacts have revealed to this newspaper that Mr Gray, as the minister responsible, has yet to sign these licences despite some two-and-a-half months passing since Mr Evans’s verdict.

This is despite Justice Isaacs, in his ruling, quashing the dolphins’ import licences and ordering Mr Gray to take possession of them - moving the animals to a different location.

The Government’s latest apparent stonewalling in relation to Blackbeard’s Cay is even more baffling given that it was the party that initiated the court action to determine the dolphins’ ownership.

Blue Illusions and its attorney, Wayne Munroe QC, filed an immediate ‘notice of appeal’ against Justice Evans’ verdict the day after it was rendered.

However, attorneys consulted by Tribune Business confirmed that Blue Illusions requires a ‘stay’, or injunction, of the Supreme Court’s ruling to prevent the Government returning the dolphins to Honduras.

A ‘notice of appeal’ will not halt such a process, this newspaper was told, meaning that the way is clear for the export licences to be signed.

Neither Mr Gray nor Michael Braynen, director of the department of marine resources, returned Tribune Business’s calls and phone messages seeking comment on Blackbeard’s Cay and the dolphins.

Mr Munroe did not return Tribune Business’s calls seeking comment either, despite this newspaper stating the nature of its inquiries. Employees at Munroe & Associates confirmed the message had been passed to him.

The dolphin attraction adds significant value to the $12 million Blackbeard’s Cay, and their potential loss would undermine its attractiveness to its main customer, Carnival Cruise Lines, and its passengers.

Justice Evans’ ruling confirmed how the business partnership between Blue Illusions and IMS over Blackbeard’s Cay, located on Balmoral Island off the north New Providence coast, broke down in 2014.

This was sparked by reEarth’s successful Judicial Review challenge, with IMS alleging that Blue Illusions misled it about having obtained all necessary permits and approvals to operate the facility.

Through the three agreements signed between the two sides, IMS was to inject $500,000 in equity capital into the Blackbeard’s Cay project and supply the dolphins.

The Hondurans were also to manage the dolphins and their facility, with Blue Illusions responsible for marketing the destination and other administrative aspects. Profits from the business were to be split 50/50 between the two sides.

After their relationship broke down, and IMS demanded the dolphins’ return in the wake of the Judicial Review ruling, the Government asked the Supreme Court on April 2, 2015, to determine the animals’ ownership.

Mr Andrawos and Blue Illusions argued that the import documents for the dolphins “clearly demonstrate” they owned the dolphins.

They added that all government agencies dealt with Blue Illusions as if it were the dolphins’ owner, and it was responsible for paying all fees in relation to them.

And the Blackbeard’s Cay facility never received a negative inspection report, despite being visited by government inspectors monthly.

“Notably, all inspection exercises were concluded exceptionally satisfactory, as the Balmoral Island facilities meet and exceed world-class standards,” Justice Evans said of Blue Illusions’ message.

IMS and its principal, Samir Galindo, alleged, though, that the agreements showed they remained the true owners. And the Honduran export certificate also confirmed this.

Justice Evans said the agreements between the two sides “clearly stated” that IMS was to retain ownership after the dolphins were transferred from Roatan to Nassau.

He found there was no written evidence to support Blue Illusions’ contention of an ownership change, or Mr Andrawos’s argument that the original agreements had been terminated.

“This was denied by Mr Galindo, and of the two I prefer the evidence of Mr Galindo on this point and all other points where there was a dispute between the two,” Justice Evans written ruling states.

“I did not find Mr Andrawos to be a credible witness, as he was from my observation of him evasive and, in some cases, it was evident that he was not prepared to tell the truth.”

Citing one such example, Mr Evans said there was no evidence of any discussion about selling the dolphins until September 3, 2013, when a lease-to-buy arrangement was proposed by Mr Andrawos.

With no evidence to suggest this proposal was accepted by IMS, Justice Evans noted that Mr Andrawos “denied the authenticity” of the e-mail proposal under cross-examination by IMS’s attorney, Brian Moree QC.

Justice Evans did “not accept his explanation”, as Mr Andrawos and Mr Munroe had previously failed to allege the document was supposedly “fraudulent” despite being served with it three months’ before.

“Mr Moree submits, and I agree, that if Mr Andrawos genuinely did not write the aforesaid e-mail then this would have been promptly and categorically denied,” the judge wrote.

“Instead, it was not until Mr Andrawos appreciated the importance of the timing of the e-mail did he try to distance himself from it. This was an instance where I was satisfied that Mr Andrawos was not prepared to tell the truth.”

Mr Evans added that “one of the primary documents” used by Blue Illusions to make its ownership case was dated July 16, 2013, and entitled ‘FACTURA’.

Describing it as an “invoice or possible receipt”, Justice Evans said it never acknowledged a payment. Instead, it listed the eight dolphins by name at a price of $5,000 each, giving a total of $40,000.

Mr Andrawos alleged that the FACTURA was an invoice for the sales price paid by Blue Illusions for the dolphins, but Justice Evans said there was no evidence to support a payment being made.

And Mr Moree described the $40,000 price as “not credible”, given that transportation costs to Nassau exceeded this sum.

He argued that any such deal did not make commercial sense for IMS, something that Justice Evans agreed with.

Noting that Mr Andrawos relied on the right to manage the facility “as justifying the grossly undervalued” $40,000 purchase price for the dolphins, the judge wrote: “Mr Andrawos’ alleged new agreement is substantially less attractive to IMS, and it is simply unbelievable that anyone would agree to replace the agreements with such a proposition.

“The evidence is that IMS did in fact inject the $500,000 into the business, and there is no logical reason why they would want to make any further concessions by parting with valuable assets like the dolphins.”

Finding that the FACTURA did not show an ownership change, Justice Evans also wrote: “During submissions, I raised witjh counsel the possibility that the evidence relative to the FACTURA could give rise to the conclusion that the document was prepared with the intent of avoiding the payment of the proper import duties to the Government of the Bahamas.”

Noting that the Customs and brokerage bill totalled $24,225, inclusive of duty, Justice Evans said both parties never made any admission “as to any knowledge or intent to defraud the Bahamian government of Customs duty”.

However, Blue Illusions handled all permits and tax payments in the Bahamas, and IMS alleged its former partner would be the only one “to benefit from a fraudulent declaration”.

Mr Galindo’s affidavit alleged that he prepared the FACTURA based upon instructions received from Mr Andrawos, and he “had no suspicions of anything untoward”.

An e-mail chain between the two showed Mr Galindo telling Mr Andrawos that he had drafted the FACTURA as a Microsoft Word file, so that the latter and his broker could make necessary corrections.

In his reply, Mr Andrawos appears to tell Mr Galindo that the dolphins’ importation to the Bahamas has to be shown as a ‘related party transfer’ - a transaction between two companies with the same or similar ownership.

He told Mr Galindo: “Samir, the invoice has to look that it is coming from the same company from Roatan to Nassau. Nassau has to look something like this.”

Mr Galindo is then given an address, which reads: Blue Illusions, DBA (doing business as) ‘the same trade name as Roatan’. The rest of the address is Shirlaw House, Shirley Street, Nassau, Bahamas.

Mr Moree, for IMS, argued that such an arrangement (Blue Illusions DBA) was “impossible” because Blue Illusions and the Hondurans were two separate entities.

Justice Evans declined to determine “whether there was a deliberate attempt to defraud the Government out of its revenue”.

However, he wrote: “I am satisfied, however, that Mr Galindo as well as Mr Andrawos must have been aware that the figures inserted in the FACTURA did not represent an accurate reflection of the true value of the dolphins.

“The evidence before the court does not show a definitive value for the dolphins, but all parties acknowledge that what was in the FACTURA does not reflect the true value, and that the value is far greater.”

Blue Illusions is now asking the Court of Appeal to overturn the Supreme Court’s decision, and declare it to be the dolphins’ true owner.

It is arguing that the FACTURA, and a power of attorney executed in favour of IMS, show that ownership of the mammals was transferred to Blue Illusions.