Plantation A Legal Thriller

by J M S Macfarlane

  Chapter 111

  The set of conditions imposed by the judge meant that Plantation’s accounts and annual report had to be in perfect order and available for the Inland Revenue, the LRE, the DTI and various business partners and shareholders to inspect within a matter of days. Aside from the company’s financial position having to be brought up to date, it needed to identify the reserves to pay future claims.

  This resulted in Ashby being stuck with Waring and Westbridge as there was not enough time to bring in another auditor at short notice. The trade-off was that Waring would remove his teams of consultants, place everything back in its proper order and then carry out a complete audit at no charge. Plantation would overlook the damage which had been done, re-organise its business and resume normal trading. The outcome was a ‘Mexican stand-off’ – neither side would be seeking any payment from the other for what had happened.

  As it turned out, Waring knew exactly what the company’s finances were and it didn’t take him long to produce a fully revised, updated set of figures. Hidden away at page 287 of the accounts, was a caveat that Plantation might not be a ‘going concern’.

  In his view, any of the five remaining mega-claims could vaporise Plantation overnight. This was undoubtedly true. There was only Ashby and his lawyers saying that all of the claims were unfounded. The courts might disagree with them. As auditor, Waring wasn’t going to stick his neck out for Plantation, even if the five claims suddenly disappeared altogether.

  Despite that, Plantation had enough money to pay all existing and anticipated claims. That much was certain. With the Captain Stratos out of the way, twenty million pounds had suddenly been released from the reserves. It would bolster the company against the next most urgent threat, the Victor 7 claim, which was due to be heard in a Manhattan court in a fortnight’s time.

  As soon as the new accounts had been checked and verified by Ashby, they were made publicly available. The DTI said nothing but the Inland Revenue demanded payment of its long outstanding tax bill without further delay. Plantation was on the hook for ten million. Between one and two million was deductible for the expense of defeating the fraudsters. In recognition of Plantation’s ordeal, the Revenue agreed that half of the balance should be paid immediately with the remainder due in the next financial year.

  With the Inland Revenue off his back for the time being, Ashby was able to restore Plantation to the Register of Companies. That only left resolving matters with the Risk Exchange and the other shareholders. These were mainly former employees and some retired pensioners who had been given shares as a long term investment.

  After arranging a meeting with the LRE, Ashby returned to the second floor of the Exchange building and was shown into an ornate eighteenth century boardroom.

  Occasionally, the room was used for signing up new syndicate members – these were investors who pledged their own personal wealth as security for their syndicate’s business. Most were millionaires. In return, they received a double bonus – low tax while their investment grew in value.

  But there was also a downside.

  At some of these ceremonies, the new member was asked to take out their cheque-book and remove a blank cheque.

  One day, they were told, if their syndicate had losses, an amount would be written in and the cheque would be cashed. The amount might be devastating – perhaps more than the value of everything they owned. All of their wealth might be called on to pay, right down to the shirt on their back and the links in their cuffs. In life, all was possible. Expect the unexpected.

  Everyone laughed. The cheque was torn up. No-one imagined it could happen. Who would ever invest in a scheme which could destroy them ? And yet none of them knew that their lives might turn on that fateful pledge – but that is a story for another day.

  Plantation’s syndicates at the LRE were different. The 98% majority member was Ashby by inheritance from his father. Minority shares were held by the underwriter of each syndicate. Jim Ashby knew the LRE system well and refused to bring in external investors. He wouldn’t subject them to the same risks which he himself accepted personally. Plantation used its syndicates as conduits for related business through the Exchange : Plantation had to be widely represented ; its spread of involvements in large international contracts had to be diverse ; other underwriters and brokers at the LRE often sought a reputable co-insurer ; until the merger with Stirling, Plantation’s security was rated highly at AA+.

  Before long, he was joined by the directors of the market committee whom he’d met weeks earlier.

  This time they behaved differently towards him. He was greeted with broad smiles, shaken violently by the hand and patted on the back. They’d misjudged Plantation, for which they apologised. It was commendable how he’d thwarted the criminals and saved his father’s company.

  “You’re going to try and talk me round, aren’t you ?” said Ashby.

  “Surely this is an opportune moment to end your dispute with Welch Wenders & Watmore ?” asked one of the directors.

  “My father was right to reject the Victor Oil claim. There’s nothing to persuade me that what we’re doing is wrong.”

  The others’ demeanour suddenly changed.

  “We had thought that you would begin to see sense.”

  “I’m only doing what I have to do.”

  “We don’t see it that way. Neither does Welch and neither do any of your underwriting colleagues downstairs.”

  “That can’t be helped.”

  “Well, I’m afraid you’re leaving us no choice. Plantation’s business at the LRE will be suspended forthwith. Until a final decision is made by the American courts, your syndicates will be unable to write any further business here.”

  “We’re not writing anything as it is.”

  “Well, it’s your own fault. If you weren’t so obstinate in refusing to back down to the brokers, you wouldn’t be in this position.”

  “I won’t go over old ground but as with the Greek shipping fraud, we will be vindicated when the jury in New York hears what we have to say.”

  “We very much doubt that.”

  “You should be more worried than us if we left the Exchange. At the time of my father’s death, we were one of the biggest operators in the London market. Our syndicates at the LRE are small but that might easily change. It would be to your disadvantage if we left for good. There are other options available to us.”

  “The last time we met, you mentioned Bermuda – ha, ha – why don’t you go there instead ? Everyone downstairs would say that it’s probably remote enough, in the middle of the Atlantic.”

  “Or what about Gibraltar ? Perhaps you could open an office there ? On the Rock,” said the other director as they both laughed when Ashby made his exit.

  Back at Fenchurch Street, he called a meeting of everyone still working at Plantation, after Waring and his management consultants had taken their leave. There was only a handful of people including Simon Wells, Roger Grenville and Nigel Black. All of the former Stirling directors had resigned or found jobs elsewhere. There were still the core accounting and claims handling teams along with one or two junior underwriters and a receptionist. Ashby’s secretary, Tara had stayed on. Everyone else had either been dismissed, given redundancy or gone off to work in other companies. The staff count had been reduced from two hundred to twenty.

  Ashby stood on a chair so that he could see everyone and they could see him.

  “I’m not much of a public speaker.....but I wanted to let you know the current situation with Plantation, as it affects not just all of you but also your families, your careers.....and your future. All of you will have heard or read in the papers that we fought off the criminals who were trying to destroy the company. I never doubted that we’d overcome them. And we were only able to do that through the hard work of all of you – and especially, Simon Wells here – who I would add, is joining us as a director.” To this, Grenville and Black both thought to themselves that the position
would be short-lived. “But, there are another five claims of the same magnitude as the Captain Stratos, each of which could still wipe us out. Now, I’ve looked very carefully at all of them – and so has our solicitor who will also be one of our new directors – and we are absolutely convinced that Plantation should not have to pay any of them. This morning I had a meeting with the market committee of the LRE. Our underwriting syndicates have been suspended there until further notice.” Hearing this, Black was unable to restrain a faint smile. “That doesn’t matter so much because the syndicates’ members are mostly myself and one or two of the underwriters. Anyway, the LRE isn’t the only place where we do business. We still do our main underwriting in the companies market. And there’s also our brokerage and overseas businesses. But because of our dispute with Welch Wenders, all of the other brokers have closed ranks on us and are not bringing us any new business. We can go on for a while with a lot of our existing clients which are automatically renewed but that won’t last forever. And that is why I have decided we will be looking for new markets, as soon as our financial position has stabilised and the five claims are resolved.”

  “Which new markets were you thinking of, Robert ?” asked Grenville.

  “We’ve always had a close association with Texas Alamo Fire & Guaranty where I was working until recently. If any of the five claims are proved against us – and I have no reason to think that they will – then Texas Fire are ready to support us if we need additional capital. So, to answer your question, we could begin to bring in a lot more business from the US, Canada and possibly also South America.”

  “How can you be sure that none of the five claims won’t be proven against Plantation ? Isn’t that unrealistic ? Shouldn’t we have a contingency plan in case any of them succeed ?” asked Black.

  “What did you have in mind ?” responded Ashby.

  “Well, uh.....it’s not important. Please continue.”

  “An Extraordinary General Meeting of Shareholders was called a month ago before I went to Athens. Letters went out to all of our shareholders so we’ll be going into that in half an hour downstairs. Afterwards, there will be a board meeting with our new directors and then it’s back to completing our preparations for the hearing in New York in early April. I’m grateful to all of you for your loyalty throughout these difficulties and I’m convinced we will be successful.”

  When the meeting dispersed, Ashby approached Black and said, “I should forewarn you that one of the resolutions to be put to the EGM will be that we, as a board, explore a reversal of the merger with Stirling. You may recall that I mentioned this at the last full board meeting.”

  “Yes, I remember it well – and as I said at the time, you can’t be serious. Without Stirling, Plantation wouldn’t have survived. We all know that. So, what exactly are you trying to prove ?”

  “Just this – that the merger had a number of – shall we say, unusual features about it which I’m sure my father would never have agreed, such as the severity of Stirling’s claims position. If we have to go through it all, then we may uncover things which you might wish we hadn’t. If we have to do that, things may become rather unpleasant.”

  “Is that a threat ?”

  “Not in the least. I’m stating the facts as I see them. At the last board meeting, I said I wanted out – and I mean that. One of the resolutions to be voted on downstairs will be that the board examine how to achieve a de-merger and then to report that to the next Annual General Meeting of Shareholders. The writing is on the wall. It’s for you to consider where you stand and then put a proposal to us. You hold the largest number of shares after me.”

  “Yes, I do and I can tell you now that I won’t be going anywhere. Your threats don’t frighten me. Your own majority shareholding may be less secure than you think.”

  And with that, Black made his way to his office. Later, he was joined by Grenville who was interested to know their next move.

  “Were you thinking of mentioning the take-over rumours ?”

  “How well you know me,” said Black. “Yes, I was tempted to spoil his plans but thought better of it – for the moment, anyway.”