Rousseau states case on WICB investments

Pat Rousseau

The following is the text of the statement issued yesterday by attorney-at-law Patrick Rousseau, former president of the West Indies Cricket Board:

I HAVE noticed from reports in the press that Mr. Richard Jodhan is a member of the Committee appointed to manage the affairs of the West Indies Cricket Board (WICB) until the new President and Vice President are elected. I consider the appointment of Mr. Jodhan improper and irregular.

Clarvis Joseph and I were removed by the Board because they said we acted without authority of the Board.

In examining the abuse of authority, one has to look at the case involving Richard Jodhan and Andrew Sealy, two senior managers.

Richard Jodhan as Chief Financial Officer, brought to an Executive Committee meeting in late 1999 (October 29) a proposal to invest US$100,000 of the WICB's funds in the equities market through Merrill Lynch & Co. The recollection of the Vice President and myself, is that the request was refused. The minutes of the meeting have not been produced. The investment was made in January 2000. Instead of US$100,000, Mr. Jodhan invests $496,000. A large difference. It is most unlikely that he would ask the Executive Committee for US$100,000 and instead they would authorise US$496,000.

Subsequently, in October 2000, Mr. Jodhan invests US$3 million in equities through Merrill Lynch. In his budget proposal to the board meeting in May 2000, he indicates an intention to invest this sum, but makes it clear that he will seek the approval of the Executive Committee. This approval is neither sought nor obtained, but the investment is made. The investment is unauthorised because no approval was ever given.

"Merrill Lynch, as part of their procedure, requires a Board Resolution to accept this investment. Messrs. Jodhan and Sealy proceed to execute a formal Board Resolution confirming they are authorised by the WICB to make the investment and to sign on behalf of the WICB. This is in clear breach of the Articles of Association and is unauthorised.

Subsequently, Mr. Jodhan borrows US$2 million from Merrill Lynch against the security of the investment in equities. Messrs Jodhan and Sealy then sign on behalf of the WICB, a new resolution authorising the borrowing and confirming they are authorised to sign on behalf of the board. Both acts are unauthorised, the borrowing of the funds and the execution of the Board Resolution.

Mr. Jodhan verbally tendered his resignation to the Board at the meeting in Barbados on Saturday, June 2, 2001. Prior to that, he had indicated he intended to resign and had made a claim for substantial compensation, both for acting as CEO and in respect of his departure from the WICB.

"The Vice President discussed the claim with me and I rejected any consideration of the compensation for acting as CEO and for the 6 months' termination pay. I indicated I would consider two months as an ex-gratia, although I felt the WICB should not be required to pay compensation in the circumstances. The Vice-President met with him and could not agree a basis.

The reason for my rejection of Mr. Jodhan's request was, he had committed a serious breach of his duties by making an un-authorised investment and falsifying resolutions of the board and I did not think any employee should receive a reward for such behaviour. My position would be the same for Mr. Sealy.

A report on this investment was, at my insistence, put before the board meeting on April 10, 2001 in Antigua. I expected Mr. Jodhan's brother-in-law, Richard DeSouza, to declare interest and take no part in the debate. Instead, he was the main person defending Jodhan and his decision to invest, claiming it was authorised because it was referred to in the budget presented to the meeting in May 2000.

He persisted, despite being told of the reference in the budget to an approval by the Executive Committee as a pre-condition. Another director argued we had no written procedure, so it was unreasonable to lay the blame on Jodhan. He was told that a previous Investment Committee had agreed to invest through Merrill Lynch, but only in US treasury notes and bonds.

No change had been made in that investment policy. A committee of the board, chaired by Enoch Lewis, was appointed at the meeting to investigate the matter and recommend how the investment should be dealt with, in view of the large loss on the portfolio at the time.

Merrill Lynch

The report of the Enoch Lewis Committee dated May 8, 2001 was presented to the board meeting of June 1-2, 2001. The report stated that there was no authority to sign documents on behalf of the WICB, either in relation to the investments or the loans. Despite my pressing for action to be taken, no action has been taken so far against Messrs. Jodhan and Sealy.

It will be interesting to see if in the face of their investing without authority and the signing and filing with Merrill Lynch of a false set of resolutions, if these two gentlemen are allowed to continue in their post and/or receive substantial compensation for the termination of their offices. I am pursuing this matter vigorously not because I wish to pillory any individuals, but because of a desire to see action taken on the very important principle of accountability.

The board members who led the complaint against Clarvis Joseph and myself on the ground that we had no authority to act, do not seem to have the same fervour to act against Messrs. Jodhan and Sealy for the very serious offences of:

i. Acting without authority in making the investment

ii. Investing the WICB's short-term funding in long-term equities.

iii. Falsifying Board Resolutions and delivering them to Merrill Lynch.

iv. Losing a substantial amount of the WICB's funds.

Since resigning, I have written to the board members asking for firm action to be taken and for full disclosure to the public. This has not occurred, although they had my memorandum before their meeting on June 5, 2001.

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