THE EASTERN CARIBBEAN SUPREME COURT IN THE HIGH COURT OF JUSTICE. In the Matter of Stanford International Bank Limited (In Liquidation) And

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1 THE EASTERN CARIBBEAN SUPREME COURT IN THE HIGH COURT OF JUSTICE ANTIGUA AND BARBUDA CLAIM NO: ANUHCV In the Matter of Stanford International Bank Limited (In Liquidation) And In the Matter of the International Business Corporations Act (Cap 222) of the Laws of Antigua and Barbuda And In the Matter of an Application for the Removal of the Joint Liquidators SUBMISSIONS INTRODUCTON 1. The Applicant, Robert Allen Stanford of Barnacle Point, Saint George, Antigua, seeks from the Court an order or directive that the Joint liquidators grant his lawful agents access to all relevant records and data on accounts, depositors, deposits, withdrawals, cash flows, balance sheets, shares, shareholders, shareholdings, investments, transactions, interest accruals etc of the Stanford International Bank Ltd (in Liquidation) whether stored electronica"y or otherwise, primarily for the purpose that the law firm of Scardino &Fazel, Attorneys-at-Law of Houston Texas for the Applicant in the Jurisdiction of the United States of America be able to adequately prepare his Defence to charges of criminal conduct in the case of Cr. No. H S scheduled for trial in Houston, Texas. 2. Mr. Stanford was a Director and Shareholder of Stanford International Bank Ltd lrom 1990 to February, 2009 prior to the commencement of the Court-supervised Liquidation of the aforesaid Bank which was registered as an International Business Corporation ( hereinafter referred to as "IBC") under the International Business Corporations Act (CAP. 222) of the Laws of Antigua and Barbuda (hereinafter sometimes referred to as "the IBC Act"). The Applicant's directorship of the Bank was also prior to his incarceration and being charged with several criminal offences in the United States of America including but not limited to using the Company, Stanford International Bank Limited to defraud third parties. Regarding those charges the law firm of Scardino &Fazel, Attorneys-at-Law of Houston Texas 1

2 for the Applicant in the Jurisdiction of the United States of America presently preparing Mr. Stanford's Defence for his criminal trial in the case of Cr. No. H S, seeks an Order from the High Court of Justice in Antigua and Barbuda for the Applicant to have access from Stanford International Bank Ltd (in Liquidation) all relevant records and data on accounts, depositors, deposits, withdrawals, cash flows, balance sheets, shares, shareholders, shareholdings, investments, transactions, interest accruals etc whether stored electronically or otherwise. Accordingly acting upon instructions from Scardino &Fazel, these Submissions, an Application and an Affidavit in Support, are filed by Messrs Marshall & Co., Mr. Stanford's legal representatives within the Jurisdiction of the Eastern Caribbean Supreme Court. THE COURT'S POWERS 3. The powers of the High Court (Civil Division) are extensive. Under section 304 of the International Business Corporations Act (CAP. 222) of the Laws of Antigua and Barbuda, "In connection with the dissolution or the liquidation and dissolution of a corporation, the court may, if it is satisfied that the corporation is able to payor adequately provide for the discharge of all its obligations, make any order it thinks fit..." (emphasis added). In a later section of these Submissions, we further examine section 304 in the light of relevant principles of statutory interpretation. 4. Extensive latitude is also granted to the High Court under the "General Rules about Applications for Court Orders" at Part 11 of the Eastern Caribbean Supreme Court Civil Procedure Rules 2000 (hereinafter referred to as the "CPR"), Part (4) states: "The court may exercise any power which it might exercise at a case management conference." Part 26 of the Rules, "Case Management - The Court's Powers" expressly authorizes the High Court to do certain specific things without limiting the generality of the Court's discretionary authority. Part 26.1 (1), 26.1 (2) (0 and 26.1 (2) (w) are particularly relevant to the Application of which these Submissions are written by way of legal explanation (1) "The list of powers in this rule is in addition to any powers given to the court by any other rule, practice directions or any enactment" (emphasis added) 26.1 (2) (f) "Except where these rules provide otherwise, the court may - direct that any evidence be given in written form" (emphasis added). 2

3 26.1 (2) (w) "Except where these rules provide otherwise, the court may - take any other step, give any other direction, or make any other order for the purpose of managing the case and furthering the overriding objective" (emphasis added). 5. The 'overriding objective' is the fundamental basis of the entire CPR and is the very first principle mentioned therein. It is explored below in some relative depth during these Submissions in relation and relevance to the power of the High Court to make any order for the purpose of managing the case and furthering the overriding objective vis-a-vis this Application on behalf of Mr. R. Allen Stanford. 6. "1.1 (1) The overriding objective of these Rules is to enable the court to deal with cases justly. (2) Dealing justly with the case includes (a) ensuring, so far as is practicable, that the parties are on an equal footing; (b) saving expense; (c) dealing with cases in ways which are proportionate to the (i) amount of money involved; (ii) importance of the case; (iii) complexity of the issues; and (iv) financial position of each party; (d) ensuring that it is dealt with expeditiously; and (e) allotting to it an appropriate share of the court's resources, while taking into account the need to allot resources to other cases." 7. Briefly, although the Applicant is not, strictly speaking, a Party in this Matter, by reason of his positions of Director and Shareholder of the Bank (prior to the Court-supervised liquidation and also prior to his arrest and charge in the United States of America), it is submitted that he has sufficient locus standi to make an Application to the Court in this Matter and on that basis, together with the fact he has been deprived of his liberty pending trial, that it is only fair the Applicant know the charges he is required to answer and be given adequate time and facilities for the preparation of his defence. Further in that regard, that the vast resources, powers and information available to the federal prosecutors in the United States of America against the Applicant, a citizen of Antigua and Barbuda who is guaranteed the Constitutional rights enshrined in the Antigua and Barbuda Constitution Order, 1981 (CAP. 23) aught to be appropriately and justly counterbalanced by the High Court granting this Application, thereby ensuring that the parties are on an equal footing. 3

4 8. It is further submitted on behalf of the Applicant in relation to the overriding objective that granting him access to the relevant financial records currently in the possession of the Joint Liquidators, would not be particularly onerous in terms of expense on the Liquidators. All they would have to do is provide the Applicant's lawful agents with access to the documentation. The amount of money involved is a highly relevant factor in that the aforementioned criminal charges laid abroad against the Applicant pertain to in excess of $7,000,000, United States Currency. 9. This Application is of extreme importance in the eyes of not only the Applicant primarily and to the exercise of his Constitutionally protected fundamental rights enshrined specifically to protect the citizen from arbitrary, oppressive, discriminatory or otherwise sufficiently egregious breaches of human rights by the organs of the State, of which the Judiciary is a part, the Legislature and the Executive being the other two (the Executive being extended by Administrative actions taken pursuant to legislation). The Courts of Law have developed the concept of Judicial Review to maintain its supervisory role over the expanding concept of 'Executive' actions). In the United Kingdom it is common to refer to "the Rule of Law as a legal principle and a Constitutional convention. However, here in Antigua and Barbuda, the Constitution's enshrinement of some basic human rights negates an interpretation and extrapolation of other general principles to achieve justice. Here, the citizen can receive protection from the State and also exercise, assert, implement and judicially vindicate his Constitutional rights. 10. It is the Applicant's stance that the issues of law, fact and equity appurtenant to this Application are not particularly complex, the basic principle being that the Applicant should not be unduly hindered in the preparation of his Defence to charges alleging criminal conduct on his part. The nearest thing to an equivalent would be a Search Order, in that it would be necessary on this Application to ensure that, within a period of time set by the Court, all relevant files, records and documents, whether stored electronically or otherwise, are made available for inspection by representatives of the Applicant, under supervision from the Respondent. 11. Generally speaking, the Respondents have access to the assets of the Stanford International Bank Ltd (in Liquidation), subject to the rights of the shareholders thereof under the International Business Corporation Act (CAP. 222). The Respondents also have equitable rules governing them in their capacity of fiduciaries and trustees towards the beneficiary shareholders in the liquidation. In fact, at law and in equity, the Applicant was and is a shareholder of the Bank to the extent that he has not been by operation(s) of law or declaration(s) by a Court of competent Civil Jurisdiction declared not to be legally and/or beneficially so entitled to be categorized. Nonetheless, the de facto situation is that 4

5 the Respondents have frozen and or otherwise taken control, authority over and possession of the Applicant's shares, accounts, investments etc, utilizing them to fund as a first priority the conduct of the liquidation itself. These facts outline the relative financial positions of each party. 12. It is submitted that this Application is of a nature which can be dealt with expeditiously, apart from the time it would take if only a small team from the Applicant's American legal representatives in Cr. No. H S is able to inspect what might be voluminous paper documentation. However, the vast majority of the information so[.lght via this Application should be in a computer database, hard drive, or stored in portable formats such as DVDs thereby limiting the time necessary for the Applicant to effect the Order so[.lght. 13. Finally as to the overriding objective of dealing with cases justly, the High Court's granting an Order of the type sought in this Application is not likely to involve protracted litigation. There should not be many, if any further Applications over the way the information sought in this Application is released to the Law Firm of Scardino &Fazel, Attorneys-at-Law of Houston, Texas acting on behalf of Mr. R. Allen Stanford there. It is submitted on behalf of liar. Stanford, the Applicant herein, that the High Court of Justice here can readily allot an appropriate share of its resources to this Application while taking into account the need to allot resources to other cases. Relevant resources include, for example, time to consider the merits of this Application and to supervise the effecting of the Order, thereby ensuring that all relevant information on depositors, deposits, withdrawals, cash flows, balance sheets, shares, shareholders, shareholdings, investments, transactions, interest accruals etc of the Stanford International Bank Ltd (in Liquidation) are provided by the Respondents to the Applicant for the proper conduct of the latter's Defence to allegations of criminal conduct. THE CONSTITUTION 14. Directly relevant to the High Court's 'dealing justly' with the present Application is subsection 15 (2) (c) of the Antigua and Barbuda Constitution Order 1981 (CAP.23). It provides as follows: "Every person who is charged with a criminal offence - shall be given adequate time and facilities for the preparation of his defence". Considering that subsection 15 (2) (c) contains a basic fundamental right in the highest law of our land and that the Applicant, Mr. Robert Allen Stanford, is a citizen of Antigua and Barbuda it is submitted that the subsection as drafted is directly applicable to this Application and is a factor for the Court's consideration. 5

6 EXERCISE OF THE COURT'S DISCRETIONARY POWERS 15. In England, under the Regulations made pursuant to the Insolvency Act 1976, provisions were made whereby a liquidator in a winding up by the Court must allow any creditor or contributory to inspect the books of account, administrative records, financial records etc. Although those provisions appear to refer to records as to the conduct of the liquidation per se, it seems perfectly logical that under those Regulations, a Company's liquidator compelled to allow a creditor or contributory to inspect books would have to allow access to the financial records and accounts of the Company prior to the liquidation, those being a necessary contextual aspect of the inspection. 16. The joint liquidator Respondents in the present Application, as a matter of principle in the ordinary and natural course of a Court-supervised liquidation, not only can and may be compelled by Order of the High Court of Justice pursuant to the hereinbefore-mentioned discretionary powers to allow the Applicant herein access to the requested records and other documentation, but rather and further, based on the reasons mentioned herein, should grant this Application given the injustice that is likely to occur if the Applicant cannot have proper access to the crucial documentary evidence emanating from his own Companies to prepare his Defence to the criminal case against him. The following extract from PALMER'S COMPANY LAW (24th Edition) Volume 1 - by C.M. Schmitthoff with specialist editors, pages 1416 and 1417, paragraph is quoted as persuasive authority for the exercise by the High Court of it's discretionary powers under section 304 of the International Business Corporations Act (CAP. 222) of the Laws of Antigua and Barbuda. 17. "The liquidator's books and accounts The liquidator must keep proper books of account and minute books and any creditor or contributory may, subject to the control of the court, inspect them (Insolvency Regulations 1986, reg.13. cf.ss.143(2), 170). The Insolvency Regulations 1986 specify the books and records which he must keep. These are: 1. Administrative records in which he must keep all minutes of proceedings and resolutions of any meeting of creditors or contributories or of the liquidation committee and a correct record of his administration of the company's affairs (reg. 8). 2. Financial records in which he must enter particulars of receipts and payments on a daily basis. The liquidator must submit the record book and cash book to the liquidation committee when required (reg. 9). If the committee are not satisfied with the contents of the financial records they may so inform the Secretary of State, giving the reasons for their 6

7 dissatisfaction, and request him to cause any relevant account to be audited (reg. 9(2)}. The liquidator must send an annual account to the Secretary of State, who may require any such account to be audited (reg. 12). 3. If the liquidator carries on the business of the company he must keep a separate account of trading and must incorporate in the financial records the total weekly amounts of the receipts and payments on the trading account (reg. 10}." STATUTORY INTERPRETATION 18. Earlier herein, at paragraph 2, the statement was made that "[i]n a later section of these Submissions, we further examine section 304 in the light of relevant principles of statutory interpretation." The International Business Corporations Act (CAP.222) is the enabling statute governing International Business Corporations (distinguished from other Companies registered under the Companies Act, 1995 (as amended)) which clothes the High Court with general and specific powers and authority when supervising a liquidation of an International Business Corporation registered under CAP.222. The specific powers are contained in subsections (a) through (0) of section 304. This Application is based on the general power and in examining the Court's powers and discretion it seems right to repeat it here and mention some applicable principles of law. 19. Section 304 of the International Business Corporations Act (CAP. 222) of the Laws of Antigua and Barbuda provides in part as follows: "In connection with the dissolution or the liquidation and dissolution of a corporation, the court may, if it is satisfied that the corporation is able to payor adequately provide for the discharge of all its obligations, make any order it thinks fit..." (emphasis added). For the most part this statutory provision poses little to no difficulty as to its meaning. It is respectfully submitted that rightly applying common sense will make its meaning, as proposed on behalf of the Applicant, logical, reasonable and very clear. 20. It is prudent to consider section 304 of the International Business Corporations Act in the light of several applicable rules for statutory interpretation. Ut res magis valeat quam pereat is a principle of law that the legislator intends the interpreter of an enactment to construe it in such a way as to implement rather than defeat, the legislative intention. 1 Looking at the Court's general power in section 304 to, in certain circumstances which we shall discuss immediately following this paragraph, "make any order it thinks fit", it is clear that the legislative intention is to grant a supervisory authority on the I STATUTORY INTERPRETATION by: F.A.R. Bennion MA, London, Butterworths 1984, page 270 7

8 High Court so as to provide for the many differing legal problems which could arise in connection with the dissolution or the liquidation and dissolution of a corporation but which would not be covered by a particular discretionary power. 21. Next, is what can be called the plain meaning rule. It is that "where, in relation to the facts of the instant case (a) the enactment under inquiry is grammatically capable of one meaning only, and (b) on an informed interpretation of that enactment the interpretive criteria raise no real doubt as to whether that grammatical meaning is the one intended by the legislator, the legal meaning of the enactment corresponds to that grammatical meaning, and is to be applied accordingly."2 It is submitted on behalf of the Applicant here that on an informed interpretation of section 304, a very real doubt exists as to whether the grammatical meaning is the one intended by the legislator. The problematic words to which common sense must be applied by the trained lawyer are that: "the court may, if it is satisfied that the corporation is able to payor adequately provide for the discharge of all its obligations, make any order it thinks fil" (emphasis added). By the time a Company has reached the point of being in a Court-supervised liquidation, that Company would have already been insolvent, passed through the phase of receivership and basically (apart from the formalities of dissolution following a pari passu distribution to its creditors and possibly subject to certain operations in bankruptcy) the Company would already be irretrievably financially lifeless in corporate terms. 22. It is submitted on behalf of the Applicant that the Stanford International Bank Ltd, being subject to a Court-supervised liquidation is in fact, as any and every other Company in the same situation, inescapably and necessarily "unable to payor adequately provide for the discharge of all of its obligations". Therefore, on this informed interpretation of the problematic aspects of section 304 of the International Business Corporations Act (CAP 222), for the Court's general power enshrined therein to ever have any legislative effect, the meaning of the words "able to payor adequately provide for the discharge ofall its obligations" must mean something other than the ordinary grammatical meaning. What the alternative meaning intended by the legislators is could be gleaned from the Parliamentary debates. In the absence of access to Hansard records on the IBC Act it is submitted on behalf of the Applicant herein that a reasonable interpretation of those words is that the corporation should be able to payor adequately provide for the discharge of all its obligations contained in an Order of the High Court made pursuant to section 304. This interpretation is not exclusive of any other reasonable possibility but based on the submissions in this and the immediately preceding paragraph, it 2 Ibid, page 264 8

9 is much more reasonable than an interpretation that preconditions an insolvent corporation which has been through receivership and is currently in liquidation to be in a position to pay for "all its obligations" in the literal ordinary grammatical sense of those words. 23. Thirdly, under our consideration is the contextual approach to statutory interpretation. It is succinctly applied in the Judgment of Chief Justice Sir Vincent Floissac in the Appeal case from Dominica of Charles Savarin v John Williams 3 where the Chief Justice stated: "... 1 start with the basic principle that the interpretation of every word or phrase of a statutory provision is derived from the legislative intention in regard to the meaning which that word or phrase should bear. That legislative intention is an inference drawn from the primary meaning of the word or phrase with such modifications to that meaning as may be necessary to make it concordant with the statutory context. In this regard, the statutory context comprises every other word or phrase used in the statute, all implications therefrom and all relevant surrounding circumstances which may properly be regarded as indications of the legislative intention."4 An aspect of the contextual approach which concerns these Submissions is that of the external context provided by subsection 15 (2) (c) of the Antigua and Barbuda Constitution Order 1981 (CAP.23) hereinbefore mentioned. 5 CONCLUSION 24. Based on the assertions in these Submissions made on behalf of the Applicant, Robert Allen Stanford, it is prayed and submitted here in conclusion that the High Court ought to grant the Applicant an Order that the Joint liquidators grant his lawful agents access to all relevant records and data on accounts, depositors, deposits, withdrawals, cash flows, balance sheets, shares, shareholders, shareholdings, investments, transactions, interest accruals etc of the Stanford International Bank Ltd (in Liquidation) whether stored electronically or otherwise, primarily for the purpose that the law firm of Scardino & Fazel, Attorneys-at-Law of Houston Texas for the Applicant in the Jurisdiction of the United States of America be able to adequately prepare his Defence to charges of criminal conduct in the case of Cr. No. H S scheduled for trial in Houston, Texas later this year. LIST OF AUTHORITIES 1. Section 304 of the International Business Corporations Act (CAP. 222) of the Laws of Antigua and Barbuda; 3 (1995) 51 W.I.R (1995) 51 W.I.R. 75 at 79 5 See paragraph 13 ofthese Submissions. 9

10 2. Subsection 15 (2) (c) of the Antigua and Barbuda Constitution Order 1981 (CAP.23) of the Laws of Antigua and Barbuda; 3. Parts 1.1 (1), (2) (a) (b) (c) (d) and (e); Part (4); Parts 26.1 (1),26.1 (2) (f) and 26.1 (2) (w) of the Eastern Caribbean Supreme Court Civil Procedure Rules 2000; 4. PALMER'S COMPANY LAW (24th Edition) Volume 1 - by C.M. Schmitthoff with specialist editors, pages 1416 and 1417, paragraph 88-41; 5. STATUTORY INTERPRETATION by: FAR. Bennion MA, London, Butterworths 1984, pages 264, Charles Savarin v John Williams (1995) 51 W-I.R. 75 at page 79. t1- DATED thez1 day of June, 2011 Settled: ~'tid =...:::::::::::::::... MAR. HARRIS MARSHALL & CO. Attorneys-at-Law for the Appellant These Submissions were filed by Messrs. MARSHALL & CO., Attorneys-at-Law, Ann-Rebecca House, Factory Road, St. John's, Antigua Telephone Nos. 1(268) Fax mco@hcmlaw.com Attorneys for the above named Applicant whose address for service is the same. 10

11 THE EASTERN CARIBBEAN SUPREME COURT IN THE HIGH COURT OF JUSTICE ANTIGUA AND BARBUDA CLAIM NO: ANUHCV2011/0149 In the Matter of Stanford International Bank Limited (In Liquidation) And In the Matter of the International Business Corporations Act (Cap 222) of the Laws of Antigua and Barbuda And In the Matter of an Application for the Removal of the Joint Liquidators ************************************** SUBMISSIONS ************************************** MARSHALL & CO Attorney-at-Law