Oct 16, 2010 News
By Leonard Gildarie
More than nine years after authorities seized the operations of Globe Trust and Investments Company Limited (GTICL), there is light at the end of the tunnel for depositors with some payments expected as early as next week.
According to Liquidator, Nizam Ali, Chief Justice (ag), Ian Chang, late last month made a ruling paving the way for payments to start.
In the coming days, letters will be going out to over 3,000 depositors who had savings accounts with balances under $100,000 when the Bank of Guyana had stepped in and took control back in 2001.
Cheques could be issued as early as next week, a somewhat relieved Ali told Kaieteur News yesterday.
While this would be good news for the estimated 3,050 depositors whose accumulated payments would see Globe Trust doling out around $45M, there are still 1,000 more account holders to be paid. And they will have to wait, as Guyana’s liquidation laws are specific on how payments are to be made at this time of the winding up process.
A number of these 1,000 account holders have significant savings. In one case an account held as much as $35M at the time of seizure. And the news is not good since all indications are that only a fraction would be paid.
In 2001, when the regulator, Bank of Guyana, had stepped in, Globe Trust’s finances were in tatters with investigations unearthing several cases of unsecured loans and non-payments.
Since being placed in the hands of liquidators, previously under former banker, Conrad Plummer, and then under Ali, attempts were made to recover outstanding loans but with little success.
Kaieteur News understands that out of the almost $800M in loans outstanding in 2001, just over $100M would have been recovered.
Already, the head office of Globe Trust in Middle Street has been sold to an overseas buyer for just under $50M.
“Debtors are being pursued relentlessly. Some of the matters we have been able to resolve.”
Ali explained that as part of the legal requirements, the Liquidator was tasked with filing what is known as the ‘Schedule of Steps’.
Before this, in early September, it was published in the newspapers. It was filed in the courts in September and the Chief Justice, in his rulings, cleared the way for the first set of depositors to start receiving payments.
“This is significant to the liquidation process since people will actually start receiving their monies.”
The Financial Institutions Act (FIA) also gives 30 days for objections to the Schedule of Steps for the liquidation process. After this, it is unlikely there would be any hurdles in the winding up.
A few weeks ago, payments were made to holders of Education Trust Accounts which totals around $40M with 1,220 depositors involved. Only half of these have come forward despite letters being sent to the last known addresses.
Under the liquidation process, expenses incurred by the Liquidator have to be met. Then there are the unpaid claims for taxes. These are followed by wages and salaries and outstanding fees to the regulators-Bank of Guyana.
At this time, the Liquidator is at the point of making the payments to account holders under $100,000.
After this, the account with the larger balances will be addressed.
Yesterday, Ali pointed out that even though the liquidation process is coming to an end fast. The other issues like outstanding loans by former Directors of Globe Trust are still being pursued at the court level.
In November, cases will be heard against former Chief Executive Officer, Stephen Backer, and Directors, Loaknauth Persaud, Peter Britton and Jonas Sampson. The last two are dead. However, Ali revealed, there is evidence that some form of collateral was used to secure the loans to the directors and as such there may by judgment with some monies likely to be recovered.
Between the directors, it is estimated that an estimated $100M may be owed to the institution, Ali disclosed.
Questioned yesterday about possible legal actions against the directors for possible mismanagement, the Liquidator was quick to point out that this does not fall within his mandate and may have to be addressed at the level of the regulator- the Bank of Guyana.
Regarding the depositors whose accounts were over $100,000, Ali stressed that these would be paid out whatever is left in a “proportionate” manner.
During the liquidation process, several attempts were made to first find an investor and then liquidation. However, the process to find the investors fell through and the process began earnestly within the last several months to wind up Globe Trust.
More than 5,000 investors who had their life savings at the institution were said to be left in the cold after the Bank of Guyana stepped in on Globe Trust in 2001. There have also been several calls for prosecutions for the former management.
Last year October, Chang had ordered compulsory liquidation of the entity after an application by the Bank of Guyana.
It was the second such application—the first was filed in 2002 when numerous depositors had attempted to intervene in the case.
Globe Trust began operating in April 1991 and was licensed in 1999 to conduct depository financial business with authority to engage in Trust business. However, in 2000 and again in 2001 a series of inspections by the BOG found the institution to be in breach of the Financial Institutions Act, and the BOG, with the intention to liquidate, seized the institution in September 2001.
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