More than a conflict of interest, did Brassington breach his legal and fiduciary duties as a NICIL director?
The transaction Winston Brassington conducted for his brother, Jonathan Brassington, has prompted me to consult a few legal luminaries in the region, including a few who have appeared before the Caribbean Court of Justice. Brassington’s case may be more than a conflict of interest. The issue is whether Winston Brassington also breached his legal and fiduciary duties as a director under the law.
Brassington’s legal and fiduciary duties as a director under the law in Guyana require him to (1) act honestly (2) act in good faith (3) act in the best interest of the company and (4) exercise reasonable care, diligence and skill. These duties as a NICIL director trump obligations to anyone else, including his brother.
NICIL has to come first as long as Winston Brassington served as director of NICIL. Any frank analysis of the facts strongly suggests NICIL and the people of Guyana came last in this transaction.
Winston Brassington was in a conflict of interest and his legal and fiduciary duties were on thin ice the moment he purchased those 50,000 shares for NICIL and then also bought 2.25 million shares for his brother, Jonathan Brassington. A director’s decision-making process must always be in the best interest of the company, in good faith, and to the benefit the company.
Winston Brassington buying 50,000 shares for NICIL and Guyana, while buying 2.25 million shares for Jonathan Brassington, was not a transaction in the best interest of NICIL and Guyana. Winston Brassington was obviously motivated by the reasonable belief and expectation of some profit, gain, benefit or advantage to NICIL by virtue of acquiring those 50,000 shares, which is why he bought them. Once there was the belief, potential or the possibility of profit, gain, advantage or benefit to NICIL in this transaction, Winston Brassington legally and fiduciarially could not act for Jonathan Brassington.
Winston Brassington’s actions benefited Jonathan Brassington at the expense of NICIL and the Guyanese taxpayers. Once Winston Brassington was aware of the shares on offer and had first option to buy those shares on NICIL’s behalf, Winston Brassington had no choice but to buy those shares for NICIL and no one else. To buy those 2.25 million shares for anyone else while buying only 50,000 for NICIL meant that the profit, gain, advantage and benefit Brassington saw in buying those same shares for NICIL went to another individual while NICIL loses that profit, advantage, gain or benefit.
When NICIL loses the people of Guyana lose. Winston Brassington cannot act in a manner that undermines NICIL. He was bound by law to act in NICIL’s interest. Acting honestly and in good faith required Winston Brassington tell Jonathan Brassington that he cannot act for him. Acting in good faith required Winston Brassington to buy those 2.25 million shares for NICIL so that NICIL and the Guyanese people get the benefit, profit, advantage and gain of those shares.
Instead, what Winston Brassington did was not only to acquire 2.25 million shares for his brother, but in doing so he weakened NICIL’s stake in the Trust Corporation from 10% to 4% while his brother’s stake increased from 0% to 30%. Furthermore, NICIL went from being one of only two shareholders to one of at least three shareholders and ended up holding the lowest stake in the Trust Corporation.
Jonathan Brassington now enjoys more clout in the Trust Corporation than NICIL and its director, Winston Brassington. Hand-in-Hand must tell the Guyanese people whether Jonathan Brassington and NICIL obtained preferred shares in this transaction. When Brassington bought those shares for his brother, he enabled his brother to benefit from that potential profit, gain, benefit or advantage he calculated when he decided to buy the 50,000 shares for NICIL. That benefit to Jonathan Brassington came at the expense of NICIL and the Guyanese people.
There was nothing that prevented NICIL from acquiring those 2.25 million shares ahead of Jonathan Brassington. NICIL had the capacity to buy those shares without blinking before Jonathan Brassington became aware of them. NICIL is a multi-billion-dollar company with hundreds of millions of cash at its disposal and the ability to borrow billions more if needed. Winston Brassington simply could not act for Jonathan Brassington once he bought those 50,000 shares for NICIL. Winston Brassington’s actions not only benefited his brother but it weakened NICIL and the Guyanese nation’s interests by creating a disadvantage, loss, detriment and weakening of NICIL’s interest.
By no measure is this acting in the best interest of NICIL and the nation. It struggles to meet the test for good faith actions by a director. There is little hint of reasonableness of diligence, skill and care in this transaction. No reasonable director who sees profit in buying shares in a company and possesses the first option to buy would surrender that advantage to another person or entity. To do so, amounts to the creation of a potential loss, disadvantage or detriment to the company and its shareholders, the Guyanese people.
It is difficult to comprehend how a foreigner who never sets foot in Guyana for the deal sees value in acquiring 2.25 million shares, while his brother who has intimate knowledge of the corporation selling those shares and has first right of refusal, simply cannot see that value.
How could Winston Brassington act as an agent in a transaction that he knows or ought to know created or would create a potential loss, disadvantage, detriment and weakening of NICIL’s interests while his family member benefits? This smacks of reprehensibility of the highest nature, particularly when one considers that thousands of Guyanese have their life savings and assets staked in the Hand-in-Hand Trust Corporation and its parent company, which is its largest shareholder.
That a director of a public company tasked with handling the nation’s assets would surrender the ability to secure a potential profit, gain, advantage and benefit and also a bigger stake in an entity that holds the life savings, investments and assets of thousands of Guyanese taxpayers screams of insanity and raises legitimate issues of whether there has been a breach of legal and fiduciary duties.
One would think that a public company answerable to the Guyanese public would seize an opportunity for potential profit, gain, advantage and benefit in a private corporation that directly and indirectly holds the investments, holdings, assets and life savings of thousands of Guyanese.
NICIL and the Guyanese taxpayers trumped and should have trumped Jonathan Brassington. Winston Brassington’s barefaced temerity to suggest that his brother who got those 2.25 million shares saved the Hand-in-Hand Trust Corporation which holds the entire life holdings of many Guyanese fails to admit that the Guyanese people through their public company, NICIL, had the money, opportunity and clear chance to save their own investments and to make a profit, gain, benefit or advantage while doing so didn’t, because Winston Brassington seemingly failed to act in the best interest of NICIL.
The passage of time does not matter. It is what NICIL and Winston Brassington did or failed to do that matters. The very public and national nature of some of these issues is sufficient reason for Parliament to order an independent audit of NICIL and for NICIL’s books to be opened to comprehensive scrutiny.