Cornerstone hearing set for Supreme Court today
The quest by private investment firm Cornerstone to have over $2-billion worth of transactions involving businesswoman Rita Humphries-Lewin, declared legal, starts today with the hearing of its application in the Supreme Court.
The case is set for 10 a.m. before Justice David Batts in chambers, meaning that, for now, the public will not be privy to the proceedings.
Mordecai Edwards and Humphries-Lewin are the first and second respondents, respectively. A committee managing Humphries-Lewin’s affairs has asked the court to reverse the transactions.
Cornerstone said it was forced to apply to the court in May after Humphries-Lewin’s niece Deborah Mordecai Edwards alleged that two transactions in September 2021 involved “some level of deception, coercion and/or fraud” as her 87-year-old aunt had no independent legal advice and was by then diagnosed with dementia.
Cornerstone, its president and founder Paul Simpson and Chief Investment Officer Jason Chambers have rejected the allegations against them,
Simpson said Cornerstone wants the court to declare the transactions legal because Mordecai Edwards “has repeatedly threatened to bring civil and criminal proceedings” against himself, the company or Chief Investment Officer Jason Chambers.
But Mordecai Edwards says Simpson’s assertion “is not true”.
“At no time have I personally threatened or asked any attorney to bring civil and criminal proceedings against one or more of the applicants,” she said in her affidavit filed on September 28, in opposition to the declarations sought by Cornerstone.
According to Mordecai Edwards, contrary to Simpson’s claims, she has been the one threatened by Cornerstone.
She pointed to a letter dated December 5, 2022 in which she claimed the company said the offence of public mischief was under consideration; threatened to go after her US law licence and accused her of extortion and seeking to manipulate regulatory and criminal processes.
“The statements of the applicants’ attorney ... are incendiary and defamatory,” she said, adding that the letter was “an act of retaliation because settlement discussions between the attorneys proved to be unsuccessful”.
Mordecai Edwards did not speak to the details of the purported settlement.
But in a September 26 statement, Cornerstone said “out of deep respect” for Humphries-Lewin, it had offered to reverse her $2-billion (US$15 million) purchase of shares in the company “if there was buyer’s remorse”.
“Mordecai Edwards’ response was to reject the return of Barita shares and to attempt enforcement of a cash payment of US$20 million amounting to 30 per cent more than the US$15 million transaction value,” the private company said.
Humphries-Lewin sold $2 billion worth of shares in the publicly traded Barita Investments to pay for the acquisition of 1.4 million shares in Cornerstone. She sold Barita to Cornerstone in 2018 but kept a minority stake.
Mordecai Edwards has insisted that she sent a letter of complaint in March 2022 to the Bank of Jamaica only. She said the central bank referred the letter to the Financial Services Commission which then forwarded it to the country’s financial crimes agency the Financial Investigations Division (FID). The agency is probing the allegations.
In the December 2022 letter, Cornerstone said it learnt of the letter of complaint in September 2022, and this was followed by a series of exchanges between lawyers for both sides.
POSSIBLE CONFLICT OF INTEREST
Meanwhile, Mordecai Edwards has questioned whether Sonia Owens may have been involved in a conflict of interest owing to her employment situation. Owen has been with Barita since 1984 and became a vice president in 2022.
Owens admitted to recommending the Cornerstone shares acquisition to Humphries-Lewin after meeting with Chambers and Ramon Small-Ferguson, a Barita executive.
“With regard to Cornerstone transactions, any advice or activity by Sonia relating to analysing the proposed investment and influencing Rita to participate in the Cornerstone transactions is a conflict of interest,” Mordecai Edwards said.
Mordecai Edwards has also questioned the comparisons Chambers said were done with four major Jamaican financial institutions to help determine the share price offered to Humphries-Lewin.
“The comparison of Cornerstone with the companies listed… is not an appropriate comparison, given that unlike Cornerstone, these established public companies are publicly traded established companies with ascertainable books of business,” she contended.
She has also alleged that the transactions had no financial benefit to her aunt, whom she said has lost approximately $72 million in dividends by selling the Barita stocks.
Chartered accountant John Bell, whose opinion was sought by the Humphries-Lewin committee, claims the retired businesswoman ‘wasted’ over $900 million on “overpriced” Cornerstone shares which she bought at US$10.80 per unit.
Cornerstone said a rights issue of its shares for $1.40 around the same time as the deal with Humphries-Lewin was a different transaction that involved existing shareholders.
Mordecai Edwards has also said she will be making an application for the court to strike out Cornerstone’s claim against her because “these proceedings do not disclose any cause of action against me and [are] an attempt to secure an opinion of the court without showing any legitimate reasons for doing so”.
EDITOR’S NOTE: Cornerstone, its senior executives Paul Simpson and Jason Chambers, along with Barita, have filed a lawsuit against The Gleaner alleging defamation associated with the coverage of the matters filed in court.