Minister releases legal correspondence in defamation case

FRIDAY, FEB. 3 UPDATE: Minister Derrick Burgess has released legal correspondence which he says confirms that neither he nor ex-Premier Ewart Brown stood to gain from a $4 million civil suit in Canada launched with public money.

An extract from a letter confirms that the Attorney General’s Chambers was told in December last year that any proceeds from the case would go to Government, not the two men.

Mr Burgess spoke out after a report by Auditor General Heather Jacobs Matthews said that $31,000-plus in public cash paid out to a Canadian legal firm to fund the action should never have been handed over.

Former Public Works Minister Mr Burgess said Canadian lawyers acting for the two had responded to inquiries from the Attorney General’s office in August, 2011. (On Wednesday, The Bermuda Sun incorrectly reported that Mr Burgess himself had responded to the Attorney General in August, 2010).

At issue were bogus cheques purporting to be payments to Mr Burgess and ex-Premier Dr Brown that were found in Government files.

The letter, written and e-mailed to Dr Brown on December 16 last year by Charles Scott of Toronto law firm Lax O’Sullivan Scott Lisus, said that he had been contacted by the Attorney General’s Chambers, then headed by Michael Scott, about the case, in August, 2011.

Charles Scott told Dr Brown that he had confirmed to the Attorney General that neither man would profit if the action was successful and any damages would go to Government.

Charles Scott’s letter said: “As part of that response, I advised him that both the then ex-Premier and the Minister were not proceeding with the action for any personal gain and that they undertook to remit to the Government any proceeds from the legal action.”

We spoke to Michael Scott and current Attorney General Kim Wilson yesterday but neither responded by press time.

Mr Burgess said the faked cheques, discovered in Government files in 2009, were handed over to the then-Auditor General Larry Dennis after he requested them from the Works & Engineering Ministry, now Public Works.

An investigation into the forged cheques was carried out by Bermuda Police and their counterparts in Canada, but no one was ever charged in connection with the incident.

Attacked

Mr Burgess said no “evil-doer” had been brought to book to face criminal charges over the forging of the cheques — while he and Dr Brown had been unfairly attacked.

He said the then-Auditor General should have done more checks and determined whether or not any money had been paid into his or Dr Brown’s accounts.

Larry Dennis told us that “in accordance with generally accepted auditing standards” when the cheques were discovered, he informed Minister of Finance Paula Cox and Governor Sir Richard Gozney: “At that point, the Minister of Finance questioned Mr Burgess and Dr Brown. The next step would have been for us to speak to the two involved — but they went public before we could do that.”

Mr Burgess, now Transport Minister and Deputy Premier, added the current Auditor General Heather Jacobs Matthews had never approached the two men for an explanation, either. He said: “If the Auditor wanted to know why my name and Dr Brown’s name was on those cheques, she could have asked the question. She had every right to know. If she had asked, she would have got the answer.”

Mr Burgess said that — although the Canadian legal firm was engaged to take civil action for damages against Canadian architect Sam Spagnulo and Bermuda Government employee Lawrence Brady on behalf of the Bermuda Government — it was determined that a Government could not sue for defamation in Canada.

Mr Burgess said: “When the documents went to Canada, it was in the name of the Government. In Canada you can’t sue for defamation in the name of a Government, so it was in my and Dr Brown’s names.”

The bogus cheques were found in February, 2009.

We understand initial contact was made with the Canadian legal team in February, 2010. The Canadians, we understand, received an executed retainer letter in June, 2010 in which “the Government of Bermuda” was identified as their client.

They took the defamation case to the Ontario Superior Court, listing Dr Brown and Mr Burgess as plaintiffs.

But in May last year, according to the Auditor General’s report, the Acting Solicitor General confirmed to the Works & Engineering Permanent Secretary that he had been instructed by the Acting Financial Secretary to “terminate the engagement of the legal firm”.

So why end the agreement if the use of public finds was justified?

Mr Burgess said: “That’s something you need to ask the Premier or the Attorney General about.”

According to Ms Jacobs Matthews’ report, the retainer agreement with the Canadian law firm was terminated in September last year. Mr Burgess told us on Monday that the legal action would continue.

While the Auditor’s report quoted Government’s Financial Instructions rule book that it was a duty to “ensure that Government funds are not used for personal gain or profit”, she did not explicitly state that she believed any damages would go into the pockets of the two men.