APPLIANCE Traders Limited (ATL) Chairman Gordon ‘Butch’ Stewart had taken steps to reverse funds credited to his account from the alleged unauthorised surplus distribution, the court was told yesterday during the fraud trial of three former ATL executives.
The evidence was given by ATL Global Chief Financial Officer David Davies under cross-examination by Queen’s Counsel Frank Phipps in the Corporate Area Resident Magistrate’s Court, Half-Way-Tree.
Davies had told Phipps earlier that he felt a “moral obligation” to have the funds that was credited to his own account in 2008 reversed after he learnt two years later that the distribution from the ATL pension scheme was done without the consent of founder Gorstew Limited, the holding company for Stewart’s companies.
He said he wrote to the general manager of the fund in July 2011 asking that steps be taken to have the process reversed.
Questioned further, Davies said he spoke with ATL corporate lawyer Dmitri Singh about the issue and that Singh too agreed to a reversal.
Asked if he had advised the other beneficiaries by circular or any other means that they were to return their portion of the distributed surplus, Davies said ‘no’ because it was made clear by himself and accused Patrick Lynch at a meeting of the Board of Trustees of the ATL pension fund that the $1.7 billion distribution was done without proper authorisation and should be reversed.
But Davies’ response drew a suggestion from Phipps, who is representing Lynch, that his response wasn’t true. “To the best of my knowledge,” Davies said, “that is what was said.”
Phipps was continuing his cross examination of Davies following a break in the trial early last week.
Lynch, former chairman of the ATL Pension Fund; Dr Jeffery Pyne, former managing director of Gorstew Limited; and Catherine Barber, former administrator of the fund, are accused of conspiring to have $1.73 billion distributed from the surplus in the pension fund to workers and, in so doing, they allegedly benefited from the distribution, using forged documents to commit the alleged fraud.
Davies had testified during his examination-in-chief that he was “shocked and surprised” that the Trustees didn’t seek Gorstew’s consent for the distribution of the surplus from the funds, as stated by the Trust Deed and Rules, and at the “significant jump” in the amount that was distributed.
Yesterday, Phipps asked him if his shock and surprise were over the fact that the amount in the pension fund had moved from $14.8 million in December 1990 to $6.2 billion in December 2009. In response, Davies reiterated the reason for being “shocked and surprised” after explaining that he knew of the $6.2 billion figure but not what the figure was in December of 1990.
On another note, Phipps tackled Davies over whether or not there was anything in the Trust Deed that specified how Gorstew’s consent should be obtained in relation to surplus distribution. Davies said it was obvious to him that consent was to be given on writing, adding,” “That’s why the auditors were looking for consent on the files.”
In subsequent follow-up questions on the issue, Davies agreed that the Financial Services Commission had said in a report that a decision must be taken on the procedure to be taken in obtaining consent from founder Gorstew Limited.
Phipps ended his examination of Davies following the luncheon adjournment, but he’s to continue with him when the prosecution makes available undisclosed documents.
Phipps also made heavy weather of the Observer’s use of “pay out” instead of “distribution” of the pension surplus in previous news reports, asking Davies to agree that the two terms were not the same.
This cleared the way for Davies to be questioned by Queen’s Counsel KD Knight, who appears for Pyne.
Knight suggested that the case against the three was about “fear, power, greed and evil”, and that it had nothing to do with criminal activities, to which Davies disagreed.
In relation to a PricewaterhouseCoopers review of the pension fund towards the ending of 2010, Davies testified that the audit firm didn’t “ascribe fraud” to the fact that no written consent was found for the distribution.
Knight is to continue his examination of Davies when the trial resumes tomorrow.
