State-owned energy company Petrotrin has filed a statement of claim against its former executive chairman Malcolm Jones as the company seeks to recover roughly $1.2 billion from its failed gas-to-liquids (GTL) plant.
Petrotrin alleged that during Jones’ tenure as executive chairman, it was mismanaged by him and, in particular, the execution of a Joint and Several Guarantee between Petrotrin, World GTL Inc. and Credit Suisse.
That decision, in the face of mounting concerns about the validity of the project by Petrotrin’s senior staff and the financial burden it brought to the company, forms the basis of Petrotrin’s claim, which was filed last week in the High Court.
The decision to pursue civil proceedings against Jones was taken by the Petrotrin board and is being pursued by Attorney General Anand Ramlogan on behalf of the state company.
The company alleged that Jones breached his fiduciary duty and is seeking a payment of US$190,407,829, comprising US$97,107,993 on behalf of World GTL Inc, and US$93,299,836 on its own behalf, towards the cost of construction in excess of the budgeted cost of the GTL plant at its Pointe-a-Pierre refinery.
In October 2011, Petrotrin had sent pre-action letters to its former board, which included Jones and six former directors—Charmaine Baptiste, Jillian Stephens, Ramnarine Ramdass, Andrew Jupiter, Harry Pritheesingh and Garvin Chimming. However, that action was discontinued.
In the statement of case against Jones, Petrotrin claims Jones failed to heed multiple warnings on the GTL plant, which was a joint venture project between World GTL Inc and Petrotrin, which resulted in the establishment of WGTL Trinidad to construct and carry on the project.
The cost moved from an initial US$88 million to US$110 million and by March 2006 was at US$135.8 million without proper documentation or justification. It eventually reached US$240 million.
“No ‘final engineering assessment’ was carried out by Petrotrin, which resulted in a detailed capital cost for the project prior to any of the contractual agreements between WGTL Inc and Petrotrin set out hereinafter,” the statement of case stated.
It outlined concerns raised by executives Imtiaz Ali, Kevin Singh and Anthony Chan Tack and questioned why Petrotrin had been willing to expend huge sums of money without a proper guarantee from WGTL.
“If it was not clear before December 7, 2005, that WGTL Inc could not finance the project if loan financing did not become available to WGTL Inc., it became clear at that date. Without such financing it was clear that anyone entering into a joint and several guarantee of WGTL Inc.’s obligation in respect of the GTL plant could have no assurance that WGTL Inc could reimburse Petrotrin if the guarantee was called upon.” it said.
“No director and executive chairman exercising care diligence and skill would have executed the Joint and Several Guarantee in the light of the warnings set out above and, further, would not have executed a Joint and Several Guarantee in the light of those warnings when the company was unable to exercise any or any effective control over the cost of construction of a major project such as the GTL plant,” it said.
Current Petrotrin chairman Lindsay Gillette recently described the plant as “scrap iron”.
Apart from monetary compensation, Petrotrin is seeking a declaration from Jones that he was in breach of his duty to the company.
In this matter, Ramlogan will come up against his predecessor, former attorney general John Jeremie, who has been retained by Jones.