Campbell
By McPherse Thompson, Staff Reporter
SOME 400 beneficiaries of the defunct Air Jamaica pension fund have agreed to suggestions that they mount public protests to register their anger at the Government for failing to pay over more that $1.4 billion due to them as at the end of April, 2001.
At the same time, they have approved a proposal by the fund's trustees that the Ministry of Finance pay over the undisputed portion of $927.2 million as an interim payment, without prejudice, until the resolution of the methodology used to calculate the surplus.
The Supreme Court-appointed trustees of the pension fund, CIBC Trust & Merchant Bank, represented by its vice-president Raymond Campbell, together with former Air Jamaica employees Joy Charlton and Ian Blair, have made a claim on the Ministry of Finance for more than $1.4 billion, but the Ministry offered just over $927.2 million in full and final settlement.
However, Mr. Campbell, addressing approximately 400 of the more than 3,000 expected beneficiaries at the first meeting called with them at Le Meridien Jamaica Pegasus Hotel, New Kingston on Wednesday evening, said the Ministry's offer was unacceptable and they have advised Finance and Planning Minister Dr. Omar Davies that they stand by their demand for the $1.4 billion.
INTERIM PAYMENT
Mr. Campbell said payment of the undisputed sum "would have the advantage of placing the trustees in a position to make an interim payment to beneficiaries of the defunct pension fund. It would also reduce the interest burden on the Government, which is accumulating at over J$1 million a day on the outstanding surplus."
However, according to Mr. Campbell, the Ministry's response to the demand for immediate payment of the undisputed sum was to invite the trustees to a meeting scheduled for Friday, May 11, without stating the purpose of the meeting.
A number of beneficiaries, some of whom lamented the plight of some of their colleagues who lost their jobs when Air Jamaica was sold in 1994, and some of whom have since died, were adamant in their support that the trustees should not accept anything less than ordered by the Judicial Committee of the United Kingdom Privy Council which handed down the final judgment in the case in April 1999.
Asking what action they could, as a group, take to embarrass the Government and force the Ministry into relenting, an evidently irate beneficiary declared, to thunderous applause, that "the message must go to them that we are accepting nothing less."
Other beneficiaries expressed similar sentiments, but the trustees and their lawyer Donnovan Walker of the firm Dunn Cox Orrett and Ashenheim, said it was now left to the expected recipients of the fund to choose whatever course of action they felt was necessary to force the Government into complying with the Privy Council judgment.
Beneficiaries were solidly in support of one of their members, who identified himself as a former casual worker, and who suggested: "Mek wi hol' de road tomorrow morning," meaning that they should mount streets protests to convey their disgust with the Government's action.
Mr. Campbell had earlier explained that while the trustees were insisting that the applicable rate of interest as prescribed by the court was 29.47 per cent compounded annually, the Ministry's legal advisor said it was his opinion that the rate referred to in the Privy Council's judgment was the average of the treasury bill rates for 1994, 1995 and 1996 and therefore the applicable rate of interest should also include the average of the treasury bill rates through to 2001.
"The trustees' view is that the Privy Council's judgment is clear in its reference to the rate used by the Court of Appeal," Mr. Campbell said. "The Privy Council's judgment does not refer to the method of calculation used by the Court of Appeal, nor does it refer to using an average of treasury bill rates until the date of repayment," he added.
Another issue, said Mr. Campbell, was that in determining the surplus applicable, the Ministry has apportioned a ratio of 56 per cent to the employer's contributions and 44 per cent to the employees' contributions.
However, he said that did not take account of the unpaid employer's contributions of $22.1 million. "The trustees have advised the Ministry that the effect of this unpaid sum can only be to reverse the ratio such that the employer's contribution would be 44.06 per cent and the employees' contributions would be 55.94 per cent" and to factor this ratio into their calculations, subject to information being sought from Life of Jamaica (LoJ), said Mr. Campbell.
He said LoJ continued to hold funds for beneficiaries who had not yet claimed their entitlements, but the insurance firm said it would take four months to provide actuarial records and valuation. "The trustees have told them that this time frame is unacceptable and that this information can be provided within three weeks," Mr. Campbell said.
Mr. Campbell said that because of a lack of co-operation from LoJ, the trustees would be writing to the company's chairman and its managing director "to bring quick resolution to this matter."
However, the Financial Gleaner obtained a copy of a recent letter sent by LoJ president and chief executive officer, Milverton Reynolds, to the trustees of the Air Jamaica pension fund, which said that the insurance firm currently has some $20 million of assets under management, and that all other assets were repaid to the trustees/government when the pension plan was wound up in 1994.
The letter said LoJ has reviewed the steps required to complete the valuation of the funds presently under management "and our best estimate is that this should be completed by 30th June 2001."
LoJ said its substantial role as administrators ceased in 1994 with the insurance company being responsible for some residual administrative duties to pay benefits to specific members. "We have retained some paper work records and so, as a gesture of goodwill, and given the sensitivity of the process, LoJ is willing to share with the trustees and their advisors the records in its possession." Mr. Reynolds said LoJ reserved the right to charge for any queries that are directed to the company since it required significant resources to be deployed to conduct the exercise.
Mr. Campbell had told the beneficiaries during the meeting that to date, about $3 million has been spent on legal, accounting and actuarial fees in their quest to resolve the issue.
DISPUTE
The pension payments due to the beneficiaries arose out of a dispute between Air Jamaica, the Attorney-General's Department and former employees of Air Jamaica as to who should benefit from the surplus in the pension fund.
In 1994, when Air Jamaica was sold, the Government, on behalf of the airline, had pledged the $400 million surplus to the new purchaser, Air Jamaica Acquisition Group as part of the current assets of the old company.
However, the former workers took the matter to court contending that they were entitled to the surplus in the fund. In April 1999, the Privy Council ruled that the surplus should be divided between Air Jamaica and its former workers. The Privy Council also ordered that the surplus of the contributions paid by members be repaid to the trustees along with compound interest at the rate of 29.47 per cent per annum.
In July last year, the Supreme Court appointed CIBC Trust & Merchant Bank, represented by Mr. Campbell, as a trustee of the pension fund, along with former employees Joy Charlton and Ian Blair. Mr. Campbell said more than 3,000 workers are expected to benefit from the surplus.
