By NEIL HARTNELL
Tribune Business Editor
The deputy prime minister on Thursday night branded claims that he “conspired” to defraud Sky Bahamas’ financier of almost $27m via sham loans as “categorically false”.
K Peter Turnquest hit back at allegations levied by two companies controlled by Fred Kaiser, a Canadian businessman with whom he previously enjoyed a long and close relationship, by saying he was “appalled” his name had been dragged into a dispute with another “former business partner”.
That business partner is Captain Randy Butler, chief executive of Sky Bahamas, which was forced to cease flying last year after the Bahamas Civil Aviation Authority refused to renew the air operator certificate that was required to carry fee-paying passengers. Mr Turnquest, though, noted that he is not named as a defendant in Mr Kaiser’s statement of claim - only Captain Butler.
Implying that the dispute has nothing to do with him, Mr Turnquest said: “The Writ does not name me as a defendant but makes several allegations in its statement of claim that are categorically false.
“I deny these false claims. I am appalled that my standing as a public servant made calling my name in this dispute between my former business partners worthwhile. There is no room for that kind of misuse of our judicial system in our society. I am confident that the facts will defend my integrity once presented.
“My record of transparency and accountability in my private and public life is a matter of record and reputation. My focus remains on further deepening our democracy by enacting legislation to reform and modernise the management of our economy and public finances as we work through this very challenging period in our country.”
It is unclear why the action brought by Mr Kaiser’s companies, Alpha Aviation and Advanced Aviation, does not also include Mr Turnquest as a defendant given that it calls the deputy prime minister’s name repeatedly.
It also notes that he acted as “a director and manager” of both entities, as well as “owning and/or controlling and/or managing the two companies listed as defendants, Sky Bahamas Airlines and Aviation Oversight Group. The latter is understood to be a Sky Bahamas affiliate.
Mr Kaiser, whose main business interest, Alpha Technologies, agreed in 2004 to pay some $36m to the Internal Revenue Service (IRS) after pleading guilty to tax fraud, is alleging that Captain Butler and Mr Turnquest engineered a decade-long conspiracy that lasted until 2017 “to enrich themselves” by defrauding his companies while concealing their activities.
The statement of claim, which has been seen by Tribune Business, claimed that the duo “dishonestly caused” Alpha Aviation and Advanced Aviation to “pay away” $20.68m and $5.917m, respectively, to Sky Bahamas via “some kind of bogus loans”.
No particulars were given to describe how the scheme worked, although Mr Kaiser’s companies alleged that Mr Turnquest and Captain Butler then used “some 39 fraudulent invoices and/or book entries, and for no adequate consideration”, to drain away some $3.8m paid by Alpha Aviation to Aviation Oversight Group via 39 separate cheque payments between February 2008 and July 2016.
A further $3.026m was also alleged to have been siphoned off by the duo “as at December 31, 2017, to AOG Maintenance Ltd, a company that owned Sky Bahamas’ maintenance hangar at Lynden Pindling International Airport.
“In breach of their duties of honesty and fidelity as directors and/or managers of both the plaintiffs (Alpha Aviation and Advanced Aviation) and of the second and third defendants (Sky Bahamas and Aviation Oversight Group), and their duties to act in the best interests of the companies, Turnquest and Butler failed to keep or to ensure that the companies kept any, or any adequate, financial books of account or financial records recording and/or documenting the companies’ financial transactions, failed to maintain or keep any proper or any proper management accounts or bank or cheque or wire transfer reconciliations and failed to put in place any or any adequate financial controls or systems,” the statement of claim by Mr Kaiser’s company alleged.
Further claiming that “none of the payments were documented properly, or at all”, the statement of claim alleged: “At all material times, Butler knew or must have known that the receipt by Sky Bahamas and Aviation Oversight from Alpha and Advanced were paid away by Turnquest in breach of his fiduciary duties and dishonestly, and were received by Sky Bahamas and Aviation Oversight... on behalf of Alpha and Advanced and held by them on resulting trust for the plaintiff.”
Kaiser and his companies, making it clear that they have come for the monies they believe are due and owing, are seeking a Supreme Court Order that an accounting be done to determine what is outstanding and that this money subsequently be paid to them.
Several observers on Thursday privately told Tribune Business they thought the nature of the allegations, consisting of financial irregularities and accounting improprieties, would make it difficult for Mr Turnquest to remain in his post as minister of finance - effectively the nation’s chief financial officer.
There was no sign of any such moves last night, though, as Mr Turnquest effectively sought to disassociate himself from a dispute that he sought to pin on Captain Butler and Mr Kaiser. This newspaper understands that senior members of the Free National Movement (FNM) were briefed that the lawsuit was imminent some weeks before it was filed.
However, Captain Butler, when contacted by The Tribune on Thursday, pointed the finger of blame at Mr Turnquest and denied any knowledge of the latter’s financial dealings with Mr Kaiser. While he “absolutely, categorically” denied the allegations against himself, the former Sky Bahamas chief questioned whether there was an effort “to protect” the deputy prime minister by not naming him as a defendant.
“Don’t forget I am not his director of finance,” Captain Butler said in reference to Mr Kaiser. “I don’t have any access to his money; never did. I think you could see whose name he called in all those places. He’s naming the of two of his companies who was his accountant, director and managing director.”
He acknowledged that it may look odd, when pressed by The Tribune, that as a shareholder and chief executive he “knew nothing” about Sky Bahamas’ finances, but said he had always insisted he was the “technical guy” who ran the airline’s operations and left the finances to Mr Turnquest before the latter left for government.
“I had nothing to do with money and that kind of stuff; the accounts and all that. I didn’t have anything to do with that. They go in every paragraph to the money man, and say I should know. How do you make allegations against him [Mr Turnquest] and protect him at the same time? Fred has put out there death by 1,000 pieces for me.”
Legal sources suggested that Captain Butler and his attorneys will likely apply to the Supreme Court to add Mr Turnquest as a third-party defendant, but the Sky Bahamas chief did not confirm that on Thursday.
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