Attorneys for Director of the National Insurance Board (NIB) Algernon Cargill have filed in the Supreme Court a very detailed affidavit with a dossier of evidence, which, among other things, documents instances where Minister of Labour and National Insurance Shane Gibson and NIB Chairman Gregory Moss were allegedly at odds over policy decisions and management of NIB. In one instance, Gibson blocked a directive from Moss that NIB write a $42,000 check for an energy study to be performed by a newly incorporated company when NIB had several offers for free studies, and had also completed a similar study in 2011 for approximately $3,000, the affidavit alleges.
According to Cargill, the company was owned by Gregory Smith, a former executive with Star General Insurance Company in Grand Bahama. In another instance, the affidavit says, Gibson questioned why Moss had issued a directive for NIB to provide Doctors Hospital with a $15,000 guarantee to help pay for the heart surgery of a Grand Bahama resident, when such a guarantee fell outside the National Insurance Act and regulations.
In another example, Cargill also states that Moss, without consultation or any prior discussion with him or the Board of Directors, wrote to him on August 27, 2012, and requested that he provide NIB actuary Derek Osborne with 90 days' notice and terminate his contract with NIB. Cargill says Gibson advised that Moss' instructions to terminate Osborne's contract should not be carried out and further, should not even be considered unless NIB had a replacement actuary in place. Cargill also outlines concerns he says were raised in NIB about Moss' use of a corporate platinum Visa credit card. The director says in his affidavit he discussed concerns relating to the credit card charges with NIB executive Theresa Burrows who advised that the minister was not aware Moss was in possession of the card and the expenses that raised concerns should not be paid.
The affidavit responds to the damning allegations made by Moss against Cargill in a 22-page letter Moss wrote Gibson on November 8, and which was leaked to the popular Bahamas Press website by a source who has not been publicly identified. Moss advised in the letter to Gibson that the Board has voted to terminate Cargill. The leak of that letter pushed NIB into the spotlight and has been followed by the minister's decision to place Cargill on administrative leave pending the outcome of an investigation into the allegations against the director.
Now, Cargill is suing Moss and NIB for defamation, wrongful and unfair dismissal and breach of the Data Protection Act. Insurance One of the more contentious issues Cargill addresses in the 33-page affidavit is the matter involving the award of a general insurance contract to Bahamas First through Nassau Underwriters Insurance Agents & Brokers (NUA) to insure NIB properties. In the 22-page letter, Moss writes, "The issue is the obvious conflict of interest involved in the award of that contract since the then chairman of NIB (Patrick Ward) was the president of Bahamas First."
Moss alleges that Cargill refused to follow the instructions of the Cabinet to re-tender the contract and to exclude Bahamas First from the re-tender exercise; provided the Board with incompetent advice in relation to the Bahamas First policy by advising that it was for a fixed three-year term and could not be terminated in the interim; provided the Board with incompetent advice by advising that substantially all of the premium would be lost if the policy were terminated, and caused NIB to be saddled with the Bahamas First policy until May 31, 2013 when such a policy should never have been effected in the first place because of conflict of interest on Ward's part.
Moss wrote in his letter to Gibson, "Upon review of the Bahamas First policy it became obvious that the comments by Director Cargill and Phaedra Mackey-Knowles (NIB's vice president for investments and risks) to the Board to the effect that the policy was for a fixed term of three years and that even if it could be canceled the short rate premium would be substantially the same as the annual premium, were incorrect..." But Cargill says in his affidavit, "Each and every one of these allegations is false". He says NIB had a relationship with NUA since 1987. NUA is a subsidiary of Bahamas First Group of Companies (BFG). "In every year that Mr. Ward was chairman of NIB, he declared his related party interest and recused himself from any Board discussion and deliberations involving NUA/BFG," Cargill states.
As part of his dossier of evidence, he attached a June 28 letter Ward wrote Prime Minister Perry Christie, two days before Ward's term as chairman came to an end. Ward advises Christie that he had no involvement whatsoever in the recent decision-making process regarding the award of the insurance contract. Cargill states in his affidavit that during the initial meeting of the newly-appointed Board of Directors of NIB on July 26, 2012, the management was asked whether the insurance contract with NUA could be canceled and the next closest bidders be requested to tender in what would be a third tender exercise for the placement of NIB's general insurance business due to the apparent conflict of Ward.
He says that after NIB had invited the next two closest bidders to participate, Star General Insurance Company and J. S. Johnson Insurance Company, he subsequently received a request from Moss on September 5 to appoint Star General Insurance as a broker for NIB's insurance business. "I immediately advised Mr. Moss on September 5, 2012 in writing that it was improper for NIB to appoint Star General as J. S. Johnson had not yet responded to the tender," Cargill states. "Again on September 5, I advised Mr. Moss that management's job was to provide the Board of Directors with the best advice we could, given all of the circumstances and facts and bearing in mind our previous history on certain matters."
According to the affidavit, in a September 18, 2012 communication to Minister Gibson, Moss wrote that the tender exercise carried out by executives at NIB can "best be described as ineptitude (and which should probably accurately be described as complicity) by various executive members of NIB in presenting the Board with misleading, distorted, and materially inaccurate statements with regards to the NUA policy..." Cargill states that it was Mackey-Knowles, NIB's vice president for investments and risks, who informed the Board that, based on written advice that she had received from NUA, that if NIB sought to cancel the insurance policy, in the middle of the hurricane season, that in addition to the short rate applying, NIB could also be penalized to the full extent of the premium paid.
"This information was not misleading or inaccurate and reflected the written and verbal communications held with NUA," Cargill wrote. "In fact, all communication with the chairman and/or the Board with regards to the terms of the insurance coverage and/or clarifying any of the questions raised by Mr. Gregory Moss were executed by Ms. Phaedra Mackey-Knowles and not me. At odds "I received instructions from Minister Shane Gibson to re-tender the general insurance contract. "I neither received written nor oral instructions from the Cabinet or any other source to exclude Bahamas First/NUA from the re-tender exercise.
"A second public tender exercise was undertaken on June 13, 2012 and at no time after the publication of the public tender exercise and the opening of the bids was management advised by the minister or the chairman, or any other Board member that the notice should exclude NUA. "The bids were publicly opened in the presence of all of the bidders on June 22, 2012 at NIB's Board Room. The results of this tender were the same as the previous public tender: NUA provided the best price offer, with a savings of approximately $800,000 from its nearest competitor, Star General Insurance.
"Notwithstanding the outcome of the re-tender process, I continued to receive directions from Mr. Gregory Moss and [Board member] Patrick Davis to cancel the general insurance contract with NUA and award the same to Star General Insurance Company, in spite of the outcome of the public re-tender exercise." Cargill says he informed Minister Gibson of these directives from Moss and Davis and was instructed by Gibson not to follow those directives, and/or the directives of the Board of Directors to cancel the NUA/Bahamas First policy and effect payment of approximately $800,000 to Star General for the same insurance coverage."
Cargill also says in his affidavit that the communication between Moss and Patrick Davis to Phaedra Mackey-Knowles and himself, and Minister Gibson continuously ignored the recommendation of the minister to not terminate the NUA/Bahamas First Insurance contract. In an email to Cargill and other executives dated September 17 and filed as part of the dossier of evidence, Minister Gibson wrote, "Notwithstanding the board's view on terminating this contract, it is my position that this contract is not to be terminated if it is going to cost NIB more than we've expended already.
"If it is the position of the board to consider terminating this contract before the one year, then before any action is taken, I want to meet with the relevant board members." But Chairman Moss wrote back on September 18 expressing "grave concern" over the minister's view that "the Bahamas First insurance policy should not be canceled for the current year notwithstanding that the Board of Directors has unanimously resolved to cancel the same..." Moss wrote, "...The Board and the Committee have worked assiduously and painstakingly to become fully informed on this and many other troubling matters at NIB.
"And the reality is that if we are prevented from [rectifying] such a glaring and obvious matter as this, there shall remain no credible prospect of our being able to address other similar issues at NIB in fulfillment of our mandate and for the good of NIB and people we are charged to protect." He also wrote to Minister Gibson, "I implore you to reconsider your comments below. In the event that you remain of that view, I will, of course convene the Board pursuant to Section 7 of the Act, in order that you may act in 'consultation with the Board' in issuing whatever directive you may choose to issue in this matter.
"Regrettably, I will also be compelled at such a meeting to record my view as expressed above and to formally express my dissent from such a directive although I shall, of course, thereafter carry out your directive." Cargill says in his affidavit that with the assistance of Justice Ricardo Marques, consultant at law reform, and Deborah Fraser, director of legal affairs, an addendum to the general insurance agreement with Bahamas First was agreed on October 3 to address the concerns of the Board. "I was caught between directives from Mr. Gregory Moss and Mr. Patrick Davis, on the one hand, and a contrary direction from Minister Shane Gibson to respect the outcome of the public re-tender," he states.
"Consequently, Minister Shane Gibson convened a specially called Board of Directors meeting on Sunday October 7, 2012 attended by Minister Shane Gibson, in which I was threatened in the presence of the entire Board of Directors, members of the executive management team, and Minister Shane Gibson, with termination for refusing to cancel the general insurance contract with Bahamas First and awarding the same to Star General."
Prior to that meeting, Minister Gibson appointed Nick Dewar of McClarens Young International to review the general insurance policy with Bahamas First, communicate with the reinsurers to confirm that coverage was indeed in place, and confirm that the policy was a "good policy", according to the affidavit. It says Dewar confirmed that reinsurance was indeed in place, and secondly that he found no concerns with the insurance contract issued by Bahamas First.
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