Elpert Ftzwarren, Business Writer

Endorsing a ruling by Jamaican courts, the Privy Council has held that entrepreneur Paul Geddes' widow, Margie, conspired with Caymanian businessman Albun Whittaker to fraudulently frustrate attempts by Geddes' offsprings to get their hands on assets valued at over US$4 million at his death in June 1999.

The November 8 ruling by the UK law lords is not only likely to halt the purported sale of 11 million Desnoes & Geddes (Red Stripe) shares to Bastion Holdings Limited, a company ostensibly owned by Whittaker, but Geddes daughters and their children are also entitled to payouts of over US$4.4, plus interest at 12 per cent a year, dating back to August 1999.

Apparently, too, the Geddes siblings and their offsprings are also entitled to share splits made by Desnoes & Geddes over the past eight years, as well as any dividends on all share issues by the inconic Jamaican firm over the period.

Geddes family members were not immediately available for comment on the court's ruling, but rejecting a claim by Bastion that it had been unfairly treated in the local courts. The U.K. judges said the allegation against Whittaker and Mrs. Geddes was a grave one.

Falsely dated document

"It was an allegation that they had conspired to put forward a falsely dated document in endeavour to frustrate the purpose of the Mareva injunction (prohibiting transfer of assets) that had been granted on 8 November 1999," said the UK panel.

"Mr. Whittaker may have been well advised not to present himself to be cross-examined but, whether that is so or not, his refusal to do so unquestionably made it more difficult for the judge to decide whether or not the allegation was made out. She was obliged to relay on inferences from documents instead of hearing the oral evidence of the parties to the alleged conspiracy.

"In their Lordships' judgment (Justice Marva) McIntosh's decision to decline to hear submissions (from Whittaker's lawyer after Whittaker had been cited for contempt of court) was a decision that, in her discretion, she was entitled to take. Their Lordships agree with the Court of Appeal's rejection of Bastion's appeal on this point."

The Geddes case was classic theatre of family distrust, and of a younger woman who marries an old man, who then dies, triggering a dispute over his fortune.

By the time he married Margie, a Caymanian, in 1991, Geddes was well into his eighties. She was 36. Geddes had two adult daughters, who in turn had their own children.

Paul Geddes was a master blender and scion of the Geddes family who helped found D&G, the company that brewed Red Stripe beer and soft drinks. Desnoes & Geddes was sold to British food and drinks company, Diageo in late 1993 and Paul Geddes was reported to have netted over US$10 million for his personal stake in the company.

But according to court documents, Geddes had a company called Bardi Limited, in which he and Margie held one share each. Bardi held 11 million D&G shares as its primary asset.

Promissory notes

Between June and August 1994 Bardi issued to Geddes the promissory notes, for US$4,474,326, at the 12 per cent interest and payable on demand. Geddes in turn endorsed the notes to Securities Trust and Management Services, which later changed its name to Coverale Trust Services Limited. "It seems clear, therefore, and the contrary has been suggested, that Mr. Geddes intended his daughters and grandchildren to have the benefit of the assets held by Bardi, subject to any future appreciation in the value of those assets over and above the amount outstanding under the promissory notes," the Privy Council judges said.

"The benefit of any such appreciation would, of course, accrue to Bardi and, thus, to Bardi's shareholders."

When Geddes died in June 1999 his will named Margie, his young wife, the sole beneficiary of his estate. She, therefore, had control of Bardi.

Payout

Two months after Geddes' death, JFI, the trust holding assets for his children and grandchildren, wrote to Bardi demanding a payout of US$7,280,987 under the terms of the promissory notes - that amount representing the principal and accrued interest.

Bardi was given 14 days to pay, a timetable which was not met.

On November 8, 1999 JFI went to court for a writ to have Bardi pay and at the same time gained a Mareva injunction restraining Bardi from disposing or dealing in any of assets, wherever they were held and whatever the kind.

Attempts at negotiating a settlement apparently failed and approximately a year later, on November 1, 2000, JFI sought a summary judgment from the courts to execute the payment.

JFI also sought an extension of the Mareva injunction until the resolution of the matter.

Then in late 2001 it emerged that something was amiss.

Proof

In an affidavit sworn in mid October, Paul Jackson, described as Bardi's manager swore an affidavit asking for proof that the promissory notes had been endorsed to Coverdale Trust, but further, presenting a purported agreement for the sale of the 11 million D&G shares to Whittaker's Bastion holding for J$76,646,122.

That agreement was claimed to have been signed on October 1, 1999, preceding the date of the original injunction preventing any dealing in Bardi's assets.

On November 16, Bardi sought an order to vary the injunction so that it could complete the sale of the shares, which it was said was necessary to satisfy a substantial part of any debt to JFI.

The mangers of JFI, the Geddes family trust, described the deal between Bardi, now controlled by Margie and Whittaker's Bastion, as "a fraudulent shame designed to put the D&G shares beyond the reach of [JFI]" and, by extension, the Geddes siblings and their children.

It was also claimed that Margie Geddes was in possession of market sensitive information about D&G's decision to pay a dividend in December 1999 that would have returned nearly J$5.5 million on the Bardi-held equities, as well as plans for a share split, which, coupled with market movements, would have meant a significant real increase in the value of the D&G stock.

In other words, the purported sale price of the shares to Bastion would be about J$4 million below stock market valuation.

When the issue came up in court before Justice McIntosh, Bastion asked to join the case as an interested party and Whittaker swore an affidavit, claiming that his company would suffer "irrepearble harm" if it was not allowed to complete the purchase deal.

But amidst lawyers quarreling about procedural issues, Whittaker twice refused to appear in court to be cross-examined and was held in contempt by Justice McIntosh.

It, however, emerged from Margie Geddes, during cross examination, as well as from documents, that there was no correspondence on the sale prior to agreement. Further, Margie Geddes and Whittaker witnessed each other's signature on the sale agreement.

While Whittaker was said to have paid down J$20 million on the payment of the shares and issued a promissory note for the remainder, the effect of the deal was that failure to pay the balance would mean that Bardi, according to the Privy Council judge, should "obtain payment by recourse to the D&G shares standing in the name of Bastion."

Said the Privy council judges: "It is important to bear in mind that the existence of the agreement did not become known to the JFI and issues relating to the agreement did not become apparent until Bardie applied for a variation of the Mareva injunction so as to complete the sale of the D&G shares ... JFI's objection to the requested variation was based on the contentions that the agreement was for the sale of the shares at an undervalue, for a consideration fixed after other than arms' length negotiations and that the agreement had been backdated."