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'Opaque' Dealings Hit City Markets Hq Sale

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

AML Foods is battling a series of “opaque” transactions as it seeks to uphold “the validity” of its $3m purchase of City Markets’ former headquarters building.

The BISX-listed food retail and franchise group, in legal filings supporting its bid for a Supreme Court declaration that its acquisition be confirmed, details alleged efforts to carve-up the 6.52-acre East-West Highway property via a series of related party deals.

These involved several “unrecorded and unstamped” conveyances purporting to transfer the now-derelict ruin and its associated warehouse to different corporate vehicles, many of which were “at least part owned or controlled” by the Finalyson family.

Mark Finlayson, via his Trans-Island Traders vehicle, and his family were the majority 78 percent owners of City Markets and its immediate parent, Bahamas Supermarkets, when the company collapsed and ceased operating in 2012.

The head office and warehouse remain the main assets owned by the former supermarket chain’s employee pension plan, and the sale to AML Foods - which would monetise the real estate - is critical to maximising recovery for the hundreds of beneficiaries who have been waiting eight years to recover their retirement savings.

However, AML Foods’ legal filings allege that some of the transactions set out in the “unrecorded” conveyances appear not to have been in the best interests of the former staff pension beneficiaries.

In particular, the BISX-listed group details a May 2014 scheme where the pension beneficiaries would agree to transfer the ex-City Markets headquarters building to a vehicle called BSL Retirement Plan Ltd in exchange for shares in that entity. In doing so, they would also give up their interest in the pension plan.

AML Foods alleged that BSL Retirement Plan Ltd was part-owned and controlled by Mark Finalyson’s family, with his father, Garet ‘Tiger’ Finalyson, mother and two sisters among the directors.

Even though a majority of beneficiaries voted against the BSL Retirement Plan transaction, AML Foods claims the then-pension trustees, Christine Turnquest-Knowles and Constance Rolle, breached their fiduciary duties to the former City Markets staff by proceeding to execute it anyway.

The BISX-listed group argued that the two former trustees were effectively exchanging the pension plan’s key asset for shares in a company that had no value, since BSL Retirement Plan Ltd had zero assets until it obtained the former head office property.

As a result, AML Foods is alleging that “no consideration” was paid for the 6.52 acre site and that “no benefits” were provided as a result of transaction that it wants the Supreme Court to rule “void”.

AML Foods’ concerns are laid out in a June 17, 2020, judgment by Justice Diane Stewart, who reproduced its statement of claim as she threw out a bid by the City Markets pension plan’s existing trustees, Dennis Williams and Rosalie McKenzie, to strike out their inclusion as defendants in the BISX-listed group’s action.

The Solomon’s, Cost Right and Domino’s Pizza owner wants Justice Stewart to find that its July 2017 purchase of the former City Markets property is valid, and should finally go through, while also finding that the previous “unrecorded and unstamped” transactions are “void and of no effect”.

Should Justice Stewart not provide the declarations sought, AML Foods wants her to order Mr Williams and Ms McKenzie to repay the $2.438m “net” purchase price already transferred to them. A 5 percent ‘first instalment’, or $150,000, was paid as far back as September 21, 2016, when the sales agreement was signed.

AML Foods alleged that the July 28, 2017, conveyance which transferred the property to it noted two other “unrecorded” documents - one of which “purported” to deal with the disposal of parts of the former City Markets head office property.

This conveyance was dated January 16, 2015, which was the same date that Mr Williams, the former Bahamas Electrical Workers Union (BEWU) president, and Ms McKenzie replaced Ms Turnquest-Knowles and Ms Rolle as trustees for the City Markets pension fund.

The two entities involved in the deal were Cellars Properties and ABDAB Properties. ABDAB, which stands for Associated Bahamian Distillers and Brewers, is a corporate entity controlled by the Finlayson family.

This conveyance was ultimately set aside by a Supreme Court “consent Order” on June 16, 2017, following legal action initiated by Mr Williams and Ms McKenzie. However, the documents dealing with the sale to AML Foods do not deal with the other purported transactions that occurred prior to their appointment.

Those deals include the May 2014 conveyance through which Ms Turnquest-Knowles and Ms Rolle “purported to convey the property to BSL Retirement Plan in consideration of the issue of an unspecified number of ordinary shares in BSL Retirement Plan in the name of the said trustees”.

Noting that Ms Rolle was also a director of BSL Retirement Plan as well as a pension plan trustee, AML Foods alleged: “In 2014 the then-trustees of Bahamas Supermarkets Employee Retirement Fund [the pension plan] come up with a scheme whereby they would transfer the property from the trust to BSL Retirement Plan.”

It described this as an “opaque arrangement whereby it was proposed that the beneficiaries [of the pension plan] would exchange their interest in the trust for shares in BSL Retirement Plan with each beneficiary receiving one common share in BSL Retirement Plan and preference shares would pay dividends to a maturity which matched the beneficiary’s 70th birthday”.

Although a majority of the City Market pension plan’s 299 beneficiaries, some 151, voted against the plan, AM Foods alleged: “The trustees were at all times under a duty to act in the best interest of the beneficiaries. In breach of that duty the then-trustees purported to implement the scheme including the execution of the 2014 conveyance.”

AML Foods alleged that then-trustees, Ms Turnquest-Knowles and Ms Rolle, “acted in breach of trust”, and added: “By entertaining the scheme the then-trustees were exchanging a certain interest in the property of shares which had no value as BSL Retirement Plan had no assets until after it acquired the property.

“The transaction did not provide, and could not provide, any benefits to the conveyance of the property. On a true analysis of the conveyance, no consideration was given for the conveyance of the property.”

Similar concerns arose for AML Foods over another “unrecorded and unstamped” conveyance, this one dated December 12, 2017, almost five months after its deal was supposedly completed.

This supposedly sold 1.52 acres of the former City Markets head office to ABDAB Properties, and the BISX-listed group wants the Supreme Court to also declare this “null and void”.

AML Foods wants the former headquarters site, located on the Soldier Road Industrial Park, as a new location for its Cost Right brand that is currently based in the Town Centre Mall. It was also hoping to use it as a warehouse and distribution facility.

Comments

themessenger 1 month ago

I wish AML Foods the best of luck, they'll need it. As has been amply demonstrated in the past there ain't no law for that other crew, ABC Motors, Cole Thompson Pharmacy City Markets the list goes on....

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tribanon 1 month ago

The Symonette Family and their friends vs The Finlayson Family and their friends.

The poor pension beneficiaries of the old City Markets/Bahamas Supermarkets group don't stand a chance in hell of ever getting what they were all along entitled to receive. The pension beneficiaries were fleeced of their interest in these real property assets and no doubt will forever remain royally screwed without any justice for the crimes committed against them.

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bogart 1 month ago

The saga needs to start from the point of 299 beneficiaries having their Pension Fund and why and under what reason moved the Pension money.

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