The government is in “confidential” mediation with BVI Airways representatives as part of efforts to recoup the $7.2 million in taxpayer money paid to the airline, which failed to keep its promise to establish direct flights between this territory and Miami, Premier Andrew Fahie said last week in the House of Assembly.
Currently, the dispute is playing out on two fronts, according to the premier: in New York, where the mediation proceedings are under way; and in a district court in Washington DC, where government awaits a ruling on its request to access bank records and other information about Lester Hyman, a DC-based attorney who allegedly helped broker the failed deal.
Government’s attorney, Martin Kenney & Co Solicitors, also has filed ethics complaints against Mr. Hyman at bar associations in DC and Massachusetts, Mr. Fahie said in a Feb. 25 HOA session.
The investigation
In October 2018, the previous government engaged MKS, a Virgin Islands-based firm that specialises in fraud and asset recovery, to probe the failed deal and try to recover the $7.2 million paid to the airline.
After Mr. Fahie’s administration took office in February 2019, the firm was instructed to continue with the investigation, the premier said last week.
But last June, in what Mr. Fahie called an “apparent response” to the probe, BVI Airways launched an arbitration claim against the government before the American Arbitration Association in New York.
“This claim seeks an unidentified sum of damages,” the premier said. “It is based on allegations which the government strongly refutes.”
In response, the government instructed MKS to file a defence and counterclaim seeking to recover the $7.2 million, he said.
“However, the arbitration proceedings have been placed on hold while the parties comply with the relevant terms of the framework agreement [with the airline] to attempt to compromise the dispute by way of mediation,” Mr. Fahie explained. “Due to the confidential nature of the mediation process, the BVI government is unable to omment further.”
No other details about BVI
Airways’ claim have been made public, and airline officials have not responded to requests for comment.
However, when the deal fell apart in 2017, airline executives
complained that they had run into trouble raising private capital because of the government’s “ill-timed” December 2016 announcement that a preferred bidder had been selected to expand the airport runway.
But then-Premier Dr. Orlando Smith questioned that claim, pointing out that the government’s plan to expand the runway — which has since been put on hold — had been in the works since at least 2012, and the government had provided several public updates on the process between that year and December 2016.
Preliminary report
Last July, MKS issued a preliminary report on its ongoing investigation, Mr. Fahie said last week.
“The firm determined that the two BAE Avro airplanes acquired in 2016 by [BVI Airways] for the project were sold to the original supplier of the planes, Tronosjet of Prince Edward Island, Canada,” the premier said. “These planes appear to have been resold in the market and are now being flown by operators based in Missoula, Montana and Australia.”
Lester Hyman
Last September, the government also took action against Mr. Hyman, who represented the VI in the United States between 1987 and 2017.
A pre-action discovery application filed on behalf of the government on Sept. 23 asked the US District Court for Washington DC for assistance to subpoena records about the DC-based lawyer in contemplation of civil proceedings against him.
Government suspects that the attorney — who earned a $100,000 annual retainer for much of the 30 years that he served as the territory’s counsel in the US — breached trust by accepting undisclosed payments from BVI Airways while acting as the government’s lawyer, according to the application.
In court filings opposing the government’s request, Mr. Hyman has denied the claims and insisted that he did nothing wrong.
The government now awaits a decision from Senior District Court Judge Royce Lamberth in DC, Mr. Fahie said last week.
“Following the conclusion of the discovery proceedings in Washington DC, the government intends to bring an action against Mr. Hyman before the BVI High Court for damages based on his conduct in representing the government in connection with events leading up to and following the signing of the framework agreement with [BVI Airways],” Mr. Fahie said.
In January, the premier added, MKS also filed complaints on government’s behalf against Mr. Hyman with the bars of Washington DC and the Commonwealth of Massachusetts.
These complaints, he explained, allege “a number of legal professional ethical violations on the part of Mr. Hyman in connection with his representation of government in respect of the [BVI Airways] matter.”
Attempts this week to reach Mr. Hyman were not immediately successful.