Downer denies getting 'secret profits' from Thermo-Plastics receivership

McPherse Thompson, Assistant Editor - Business

Richard Downer, former receiver/ manager for Thermo-Plastics Jamaica and its subsidiary, Plas Pak, says receivership fees were assessed at J$111 million, but denies that either PricewaterhouseCoopers (PwC), of which he was a partner, or himself received any secret profits or committed any fraud in the management of those companies.

Responding to allegations made against him and the accounting firm by witnesses at the FINSAC Commission of Enquiry into the financial sector meltdown of the 1990s, Downer said any profits made was consistent with "our usual practice in receivership and consultancy assignments".

He was appointed receiver in March 1998 by National Commercial Bank (NCB) and Recon Trust, a subsidiary of FINSAC Limited, to recover a debt of J$650 million from Thermo-Plastics and Plas Pak.

In a statement submitted and read into the records of the enquiry in March, Douglas Chambers, the deceased former receiver of Thermo Plastics and Plas Pak, who was appointed to manage the companies in 2002, alleged that Downer committed fraud totalling J$29.455 million by marking up the cost of its employment of three contractors he had hired to work alongside him.

But Downer, testifying at the enquiry on Monday, said PwC uplifted the costs, as it was entitled to do, of engaging Vernon Meikle, a former chief executive officer of Esso Jamaica, as well as one Desmond Creary and Bevon Francis, as general managers responsible on behalf of the receiver for production, sales and customer relations, planning and strategy, finance and human resources under his direct supervision.

He said there was a long history of dealings with NCB, PwC and himself and, hence, familiarity with the rates structure of the auditing firm.

fully aware

In addition, he said records of the time spent by Meikle, Creary and Francis on the receivership were available to NCB, the then debenture holder.

"At no time did the firm nor I receive any secret profit," said Downer

"Any profit made was consistent with our usual practice in receivership and consultancy assignments and not objected to by the debenture holders who were fully aware that Mr Meikle and his successors (Creary and Francis) were part of the team supplied by Pricewaterhouse."

The chartered accountant added that for a variety of assignments, including receiverships, PwC has engaged and still engages contractors for certain aspects of assignments for which the company took the responsibility for delivery of service to clients, the costs of which are marked-up by the firm.

In Chambers' statement, Downer said, the "simple fact of the mark-up" was used to try and establish that "I facilitated fraud, I committed the fraud contained in the 'particulars of fraud', I showed intent to commit fraud, and that it was proof of fraud. These allegations are unsupported by the facts".

He said Chambers' statement was also set out to convey that "I took steps to conceal aspects of the receivership."

On the contrary, Downer said when Chambers replaced him as receiver and manager, he handed over all the documents in his possession and all others were left in the companies' building in Spanish Town, St Catherine, to which Chambers had complete access.

Downer, who is being represented by Stephen Shelton of the law firm Myers, Fletcher and Gordon, said he also voluntarily authorised his lawyers to give Chambers any document he required pertaining to the receiverships.

Downer also denied allegations made by Chambers that Meikle's hours were overstated.

He said Meikle worked at Thermo-Plastics and Plas Pak for about eight months and the total charged by PwC for his service was 1,456 hours, an average of 182 hours per month.

He said the misunderstanding might have arisen because Meikle was sometimes tardy in submitting monthly time reports and, at times, did not do so until some months had passed.

In the statement, Chambers had also claimed that he was offered US$500,000 by PwC to settle three lawsuits that he had brought against the company and Downer, alleging fraud and negligence.

Downer, who retired from PwC in 2005, said the cases before the Supreme Court which involved him were pending and was wary of commenting on those.

"I was not a part of any settlement offers which might have been made to the debenture holders by PwC and I have no details on such negotiations," he told the enquiry.

He also denied allegations made by Jean-Marie Desulme, former director, shareholder and chief executive officer of Thermo-Plastics and Plas Pak, charging that the receivership fees did not include padded bills as suggested.

"Any amounts paid toPrice Waterhouse or Price-waterhouseCoopers from the funds of the receivership were to pay receiver's fees, pursuant to the appointment of receiver and manager by the debenture holders in accordance with custom and practice in Jamaica," he said. "No other payment was made for the benefit of the firm, its partners or myself whatsoever."

Downer denied that the receivership fees totalled J$200 million over two years. Rather, he said, the fees totalled J$111 million over three and a half years, of which about J$5.5 million, which was due at the end of PwC's involvement, is outstanding.

mcpherse.thompson@gleanerjm.com