The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A former Cabinet minister yesterday said he had given an undertaking to hold off on enforcing a $6m default judgment against Bank of The Bahamas until July 16.

Damian Gomez, former minister of state for legal affairs under the former Christie government, told Tribune Business that the delay was “no big deal” given the likelihood he would be unable to secure court dates for hearings of related applications before month’s end.

“I have an undertaking not to do anything until the 16th,” Mr Gomez confirmed. “If they don’t get to court by the 16th I won’t be under any obligation to hold off. It’s very curious. All they’re [Bank of The Bahamas] doing is stalling for time. It’s rather strange.”

Pointing out that interest on any judgment would be higher than that currently available on bank deposits, Mr Gomez added that he was still awaiting court hearing dates on applications relating to the judgment he hopes to enforce.

“I have applications that are outstanding for the receivership and the charging order,” he said. “It needs to be before a judge. My undertaking is no big deal in the scheme of things. If we get a hearing before the end of the month I’ll be lucky.”

The $6m default judgment obtained by Mr Gomez on behalf of his family’s trust, and efforts to enforce it, plunged Bank of The Bahamas back into multi-million dollar losses and halted its financial recovery efforts.

The BISX-listed bank, which had been inching towards consistent profitability following five successive years of heavy losses prior to 2018, unveiled a $4.039m net loss for the three months to end-March 2019.

The “red ink”, which wiped out first-half profits worth more than $3.5m, drove Bank of The Bahamas into a $209,604 loss for the first nine months of a financial year that ends on June 30 - resulting in what management described as a 119.52 percent “decrease” in net income compared to the $1.074m earnings for the same period in 2018.

Kenrick Braithwaite, Bank of The Bahamas’ managing director, blamed the hike in operating expenses - and the institution’s return to making heavy losses - on provisions taken after the third quarter’s end for potential losses relating to the $6m default judgment.

“Subsequent to March 31, 2019, the bank was made aware of a judgment in default against the bank for approximately $6m plus interest and cost,” Mr Braithwaite wrote. “The bank has filed the applications to set aside the default judgment and the said damages, and also to stay or, in certain circumstances, strike out enforcement proceedings. Adequate provision has been made in the financial statements for any loss that might ultimately be determined.”

Mr Gomez, who resigned from the then-Cabinet to deal with the dispute with Bank of The Bahamas, subsequently confirmed that Mr Braithwaite’s statement referred to the judgment he had obtained. He explained that the dispute related to mortgage loans extended by the bank that were secured on real estate assets owned 50/50 by his family trust and that of David Jenrette.

Despite promising orally, and three times in writing, to extend further loans, he added that Bank of The Bahamas “never came through” and placed the properties acting as collateral for the existing loans in jeopardy.

“As a result of that, the companies had a period of defaulting on various amounts and lost several millions of dollars in properties,” Mr Gomez revealed previously. “We were left basically holding the bag.”

The ex-minister added that, “in the middle of litigation”, Bank of The Bahamas then assigned several of the mortgages to Bahamas Resolve, the Government-owned special purpose vehicle (SPV) created to facilitate the two taxpayer-funded bail-outs of the BISX-listed institution in 2014 and 2017.

Describing this as a “very peculiar way of doing business”, Mr Gomez said the two family trusts had “never contested the mortgage debt” to Bank of The Bahamas - only some assessments of interest and penalties.

He revealed that they had repeatedly urged Bank of The Bahamas to agree a “set-off” between the sums it, and the family trusts, were each claiming the other owed but to no avail.

Voicing surprise that Bank of The Bahamas had seemingly only suddenly become aware of the default judgment, Mr Gomez added that it had been served with all necessary legal papers the moment the judgment was first obtained. He added that the BISX-listed institution had initially succeeded in having it set aside, but he managed to have the ruling reinstated.