Four months after the Privy Council ruled that it would have been “inconceivable” for the Central Bank governor to have allowed Mohamed Harajchi’s Suisse Security Bank (SSBT) to continue operating, the Privy Council yesterday ordered the Iranian-born Bahamas permanent resident to pay costs in relation to the appeal.
The lords of the high court ruled on an application by the governor that the costs of the appeal should be borne by Mr. Harajchi, SSBT’s principal shareholder and chairman of its board, rather than by SSBT itself.
In support of the application, the governor referred to a passage of the Privy Council’s previous judgment which said, “At an interlocutory hearing before [Justice Austin Davis] on 15 July 2002, junior counsel (Mr. Gomez) then acting for SSBT told the judge that “Mr. Harajchi is the mover and shaker of the appellants and in real terms he is the appellant.”
In its March ruling, the Privy Council rejected the bank’s bid to have the decision of then governor Julian Francis to revoke the bank’s licence overturned.
The high court said in that earlier ruling that SSBT’s audited accounts and its most recent quarterly reports to the Central Bank were “evidently erroneous”.
“SSBT did not have cash on hand and in banks in the sums stated,” said the ruling, which was written by Lord Mance.
The ruling said “the state of affairs disclosed by the evidence before their Lordships makes it inconceivable that SSBT could be allowed to continue as an operating bank”, and the high court said it saw no basis on which to set aside or remit the governor’s decision to revoke SSBT’s licence and dismissed the appeal.
The bank’s licence was granted on July 20, 1993, and on March 5, 2001, Mr. Francis gave notice that he was of the opinion that the licence should be revoked on the ground that SSBT was carrying on its business in a Manner detrimental to the public interest and to the irterests of its depositors and other creditors.
Also on March 5, 2001, the governor appointed Raymond Winder as receiver of SSBT, but Mr. Winder had been unable to share the bank’s assets among its depositors and creditors because the appeal had been outstanding.
In its ruling yesterday, the Privy Council said, “Contrary to Mr. Harajchi’s submission, their lordships cannot regard this as a case where Mr. Harajchi was acting in the interests of SSBT or more especially its general body of creditors, as opposed to his own interests.”
The new ruling said that the inference from the way he was running SSBT before its licence was revoked and from his “silence and non-cooperation” after such revocation is that he was treating SSBT as his creature and preferring his own interests to its.
It added that SSBT’s major assets did not consist of “cash on hand and in banks” but of deposits with two companies given similar names to SSBT, but owned and controlled by Mr. Harajchi.
The ruling also said that the assets held with one of these companies were removed from the Bahamas after the revocation of SSBT’s licence and the appointment of its provisional liquidator; and it has been impossible to confirm the existence or the location of the funds held with the other company.
It also noted that the appeal was, nonetheless, pursued at Mr. Harajchi’s instance, although it was in these circumstances “inconceivable that SSBT could be allowed to continue as an operating bank”.
The ruling said the excuse is made on Mr. Harajchi’s behalf for not giving any explanation or assistance regarding any of these matters that “rightly or wrongly” he believed that “any substantive responses were a matter for the governor rather than for the courts of appeal.”
“Their lordships are also told that he strongly denies that the missing funds allegation has any substance whatsoever and, since their lordships’ decision has already met with and commenced co-operation with the provisional liquidator in relation to the outstanding matters,” the ruling said.
But the law lords ruled that the further general excuses now presented on Mr. Harajchi’s behalf are as unconvincing as the previous submissions.
By CANDIA DAMES, The Bahama Journal
