The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The principal of a defunct Bahamian bank, who claimed to have financed the PLP’s 2002 election win, has been accused of using a sham mortgage “to defeat legitimate creditors”.

Raymond Winder, Deloitte & Touche (Bahamas) managing partner, is alleging that Mohammed Harajchi has “contrived a paper transaction” with his wife in a bid to sell his $20 million-plus Paradise Island mansion and exit the country without returning depositors’ funds.

Mr Winder, the court-appointed liquidator for Mr Harajchi’s Suisse Security Bank & Trust, said he has “made strong and detailed representations” to the Government’s Investment Board in an effort to block the Harajchis’ alleged scheme.

However, Tribune Business sources have confirmed that his position has weakened, and that Mr Harajchi’s wife has made progress towards obtaining a Certificate of Validation for two mortgage loans - allegedly made to her husband - which are secured on the Paradise Island properties.

Mr Winder, in his latest report to the Supreme Court, revealed that Sonja Harajchi obtained a Supreme Court Order on July 30, 2012, that gives her permission to foreclose on loans that are allegedly worth a combined $9.5 million.

Detailing his suspicions, the Bahamian accountant said the Paradise Island properties were supposedly mortgaged “without proper regulatory permission being granted” under either the Immovable Property (Acquisition by Foreign Persons) Act 1993 or its successor, the International Persons Landholding Act.

The latter Act, though, allows a foreign mortgagee such as Mrs Harajchi to apply for a Certificate of Validation if prior approval from the Government is not obtained.

“Mrs Harajchi did not apply at the time of the alleged mortgage, but she has now applied for a Certificate to validate the purported mortgages,” Mr Winder alleged. “I have made strong and detailed representations to the Investment Board (the Cabinet) opposing the grant of the Certificate of Validation requested by Mrs Harajchi.

“In my opinion, the alleged mortgages are no more than a paper transaction contrived to defeat legitimate creditors of Mohammed Harajchi. My position in this regard is reinforced by the fact that both Mr and Mrs Harajchi were aware of the requirement for approval under the 1983 Act and failed to seek or request this.

“Further, both of them failed to advise the Central Bank of the Bahamas of the payment of the sum being loaned/borrowed, and there is no paper trail evidencing the actual payment by Mrs Harajchi to Mohammed Harajchi.”

The outcome of this battle is critical to Mr Winder’s efforts to recover $17.717 million in depositor funds that the Harajchis spirited out of the Bahamas in 2001, prior to the liquidator and his team taking control at Suisse Security.

Clients had been directed to deposit funds with two International Business Companies (IBCs), Suisse Security Holdings (SSH) and Suisse Security Investments (SSI), rather than the bank itself.

The two IBC’s held $12.176 million and $5.54 million, respectively, when Suisse Security was placed into court-supervised liquidation, and the funds have remained under the Harajchi family’s control to this very day.

Mr Winder has effectively been engaged in a near decade-long stand-off with Mr Harajchi, having obtained a lien over his Paradise Island properties in a bid to block their sale and the Suisse Security chief’s exit from the Bahamas.

This remains the only leverage he has to force the return of depositor funds, but this will likely be lost if Mrs Harajchi is able to foreclose on the two mortgages allegedly secured on that real estate.

Should that happen, there is every likelihood that Suisse Security depositors will never see their funds again, inflicting a further ‘black eye’ and reputational damage from a saga that has already hurt the Bahamas. Responsibility for preventing this now largely rests with the Minnis Cabinet (which acts as the Investments Board).

Mr Winder’s latest Supreme Court report exposes how the 17-year Suisse Security saga continues to haunt this jurisdiction and overshadow the ‘blue chip’ image the Government and financial services sector are eager to present.

The Central Bank suspended, then revoked, Suisse Security’s licence in 2001 after it allegedly failed to respond to its regulatory directives, with then-governor Julian Francis determining that the bank was “badly run”.

The move triggered a furious six-year onslaught by Mr Harajchi and his family, through the courts and using other means, in an ultimately futile attempt to regain their banking licence.

Mr Harajchi, who was called ‘The Sheik’ by some Bahamians, even went to the extent of starting his own tabloid newspaper, The Confidential Source, solely to bash the then-FNM government for the ‘sin’ of closing down Suisse Security.

He made little secret of his 2002 election donation to the Progressive Liberal Party (PLP), hoping that this would result in his bank’s return. This, though, was not in the then-Christie administration’s power to effect, as the sole authority lay with the Central Bank.

Believing he had been ‘swung’, Mr Harajchi quickly turned his newspaper’s fire on the PLP government as he sought revenge. Its long-running campaign eventually came to an end after Mr Harajchi lost all legal appeals against Suisse Security’s licence revocation, resulting in his decision to leave the Bahamas in 2006-2007, only his real estate assets remaining behind.

The Suisse Security chief is understood to have substantial assets in Europe, including a hotel on France’s Cote D’Azur near Nice, and he is thought to spend much of his time between there and Geneva.

Mr Winder’s Supreme Court meanwhile, reveals that Suisse Security’s estate continues to suffer from a $21.547 million solvency deficiency, largely due to the depositor funds still in the Harajchis’ possession.

And less than 13 per cent of Suisse Security’s clients have submitted claims against the bank’s estate, with more than one-third of its $56.29 million liabilities seemingly having no owner.

Out of 3,070 clients when Suisse Security was placed into liquidation, some 2,685 have yet to claim a collective $19.535 million said to be due to them from the bank. The latter figure is equivalent to 34 per cent of liabilities.

Just 44 clients, representing less than 1 per cent of the total, have submitted claims which have been accepted by Mr Winder. These, though, appear to be Suisse Security’s larger depositors, as their claims are for a collective $12.97 million or 23 per cent of the bank’s liabilities.

A further 80 claims, worth $3.629 million, were approved but Mr Winder has lost contact with those clients. And the final 261 claims, valued at a combined $21.394 million or 37 per cent of the total, were rejected.

Mr Winder said most of the approved claims have been paid a 10 per cent dividend, and he anticipates making a further distribution that “should not be less than 10 per cent” of claims amounts imminently.

As for fiduciary assets that were held by Suisse Security, the liquidator said he had been unable to contact 74 per cent of those clients.