UPDATED | Financial Services Commission engages 'internal processes' in Barita-Cornerstone saga

The Financial Services Commission (FSC) says it has engaged its "internal processes" in response to its awareness of allegations that retired 87-year-old businesswoman Rita Humphries-Lewin, who is reportedly battling dementia, was pressured to spend $2 billion to buy shares in investment firm Cornerstone. 

The FSC is the government entity that regulates investment houses including Barita Investments Limited, the publicly listed Cornerstone company at the centre of the controversy.  

In a statement, the FSC said it is aware of a complaint by Deborah Mordecai Edwards, Humphries-Lewin's niece, who has alleged that Cornerstone and two of its top executives used "some level of deception, coercion and/or fraud” to get her aunt to sell J$2 billion (US$15 million) worth of shares in Barita to acquire stocks Cornerstone in 2021.  

"Our internal processes to treat with this matter have been engaged and policy dictates that we cannot provide further comment at this time," the FSC told The Gleaner.  

Cornerstone, its founder and CEO Paul Simpson, and Chief Investment Officer Jason Chambers have denied the allegations and filed a claim in the Supreme Court in May seeking a declaration that the 2021 transaction is legal. 

On August 5, the Financial Investigations Division (FID) said there may be “some merit” to the claims.

But, the agency's principal director, Keith Darien, said investigators are “nowhere near the stage of saying that the allegations are valid and whether anyone will be charged criminally.” 

Humphries-Lewin sold her ownership stake in Barita to Cornerstone in a $3-billion deal in 2018.  

In 2021, she sold some of her remaining Barita stocks to pay for 1.4 million shares in Cornerstone at US$10.80 per unit through a private offer involving only her. 

Mordecai Edwards wrote the authorities in March 2022 claiming that her aunt was diagnosed with dementia in 2019 and Simpson and Chambers were aware; she did not have a lawyer, and that around the same time as the deal, Cornerstone sold shares at a far lower price of US$1.40.  

Mordecai Edwards said her aunt gave her power of attorney in August 2022.  

But, Cornerstone has rejected the allegations, arguing that the lower price was made to existing shareholders in a separate and unrelated transaction.  

Simpson and Chambers also said they were not aware of the dementia diagnosis and that Humphries-Lewin appeared sound throughout the negotiations between April and September 2021.  

“They (the allegations) impugn our character, given that they raise questions as to our honesty, which will be of concern to a regulator,” Simpson said.

Sonia Owens, Humphries-Lewin's financial advisor, who is an executive at Barita, acknowledged in court documents that she recommended the investment after discussions with Chambers, whom Simpson had instructed to prepare the offer.  

Owens said she was not aware of any dementia status and that Humphries-Lewin did not show any signs of being unwell.    

Cornerstone is also contending that Mordecai Edwards made a possibly "extortionate" request of them in 2022 in a letter about a fraud complaint and a US$20 million money settlement. 

In a separate development, Humphries-Lewin husband, Karl, asked the Supreme Court in June for permission for him and two relatives to be legally responsible for his wife's affairs.  

The 86-year-old retired financial management consultant said his wife has been having memory problems since at least 2016 and that it got worse leading to a formal diagnosis of dementia in January 2019. 

Karl was reportedly part of the 2021 investment discussions and there is no evidence so far to suggest that he revealed the dementia diagnosis and associated medical reports he has now submitted in the application for guardianship.  

- Jovan Johnson 

Editor's Note: A previous version of this story said the FSC opened an investigation into the Barita-Cornerstone matter. However, the FSC, in fact, said that it has engaged its "internal processes" in response to its awareness of a complaint. The FSC was responding to questions asked by The Gleaner. 

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