Trial in SporTT's $34m LifeSport lawsuit against ex-directors begins

THE SPORT Company of TT (SporTT) is still pursuing its claim of negligence against its former CEO and 13 ex-board members arising out of the failed LifeSport programme and a $34 million contract to eBeam Interact Ltd.

On September 10, the trial began before Justice Ricky Rahim in a hybrid hearing at the Waterfront Judicial Centre, Port of Spain, and virtually.

SporTT’s corporate secretary Arlene George was the first witness in the hot seat and was cross-examined extensively by Senior Counsel Fyard Hosein and Jagdeo Singh, who represent two of the ex-directors.

SporTT’s claim of negligence is against its former CEO John Mollenthiel and ex-directors Sebastian Paddington, Chlea Lamsee-Ebanks, Reynold Bala, Morris Blanc, Nisa Dass, Anly Gopeesingh, Sabrenah Khayyam, Cheemattee Martin, Matthew Quamina, Annan Ramnansingh, Kent Samlal, Harnarine Seeram Singh and Milton Siboo.

In May 2023, the Appeal Court gave SporTT the green light to pursue the negligence claim over the failed LifeSport programme and the relief for the repayment of $34 million to eBeam Interact Ltd for literacy and numeracy services.

This followed a ruling by Rahim in November 2022 which struck out a major portion of SporTT’s lawsuit because “it could not be sustained in the absence of proof of actual loss or damage.”

He also struck out a claim for equitable compensation of $34 million which SporTT was seeking, concerning the eBeam contract signed by the former board in June 2013.

What was left for the trial was the allegation of breach of fiduciary duty. The Appeal Court overturned this.

On August 21, SporTT was successful in its claim for restitution against eBeam for the failed $34million contract.

SporTT brought both cases after the programme was shut down by then-prime minister Kamla Persad-Bissessar in July 2014. It claimed it should be reimbursed the $34 million it paid to eBeam and its now-deceased owner Adolphus Daniel to administer the numeracy and literacy and interactive technology components of the occupational skills training aspect of the programme.

It alleged that eBeam did not provide the services for the programme, which aimed to transition unemployed young men to responsible adulthood by providing sport training, occupational skills training and job placement.

It also claimed Mollenthiel and the former board members should be held liable for entering into the contract.

In her judgment, Justice Eleanor Donaldson-Honeywell rejected SporTT’s claims for breach of contract, as she pointed out that the contract did not sufficiently identify the services eBeam was required to perform.

However, she ruled that SporTT was entitled to restitution, as eBeam only provided nominal services, including procuring equipment valued at $4 million.

As part of the case, SporTT also claimed eBeam was overpaid, as the contract was for providing services at 38 centres, when in fact there were only 33 such locations.

While the judge upheld that aspect of the case, she said it was not entitled to an additional $4,473,684.20 in compensation, as this was already covered under the restitution award.

SporTT’s lead attorney Colin Kangaloo, SC, said the ruling in the eBeam case had no bearing on the company’s lawsuit against its former directors.

In an opening statement, Kangaloo said the case was “one of documents.”

“The documents tell the full story.”

He admitted SporTT did not have any witness from back in 2013 to give evidence, but urged Rahim to look at the documentation provided “and see what they say to determine the standard of the behaviour of the directors.”

He said the 14 breached their fiduciary duties and were negligent, as there was no justification for approving the eBeam sole-select contract. He also said all 14 had a duty of care which they breached when they did not thoroughly question the contract. “No one picked up on the errors (in the contract) or asked questions.” He said none of the directors saw the $34 million contract before it was entered or knew of the terms.

“I have it here. You can see it – but nobody looked at it. They went ahead and executed the contract for $34 million, in breach of their own protocols and regulations.”

He said when the two tranches of $17 million were paid, they raised no concern and went ahead because of legal advice they had received.

However, Kangaloo said, “They cannot be protected, because had they exercised proper due diligence, they would not have entered the contract in the first place…”

He also said they could not indemnify themselves with the justification that the decision that the contract should be a sole-select contract came from the Ministry of Sport.

“They needed to determine if what they did was harmful to the company or caused damage.

“They just decided the ministry wanted this, so we are going to do it without consideration of the contract.

“They take the position to execute the ministry policy but when things went bad, they then considered to get advice and investigate.

“Why were they now thinking of the harm to the company? They should have done so from the start.”

Kangaloo also maintained that some of the directors should not be allowed to succeed with their defence that they acted honestly and reasonably and were exonerated by the Companies Act.

“They were reckless, bordering on incompetence.”

In her testimony, George admitted a LifeSport committee, appointed by the Minister of Sport, authorised SporTT’s chairman to pay the committee.

Singh questioned her extensively on her attempts to get evidence from outside SporTT. She said she did not communicate with the then-chairman of the committee, former head of the public service and PS in the Office of the Prime Minister Reynold Cooper.

George also admitted she made no enquiries from the ministry, but relied on documents in SporTT’s possession.

She was also questioned about board minutes, one of which allegedly showed the Cabinet changed the requirements to make it easier to access LifeSport funding and draw down on it.

George admitted the LifeSport committee was not part of SporTT, as it reported directly to the ministry.

She also admitted whatever SporTT paid, it would get back from the ministry.

George did not agree with Hosein’s assertion that the Cabinet and the ministry were satisfied that work was done on the contract, so the $17 million could be paid.

She admitted that SporTT was a payment facilitator and should have been involved in the process of authorising payment when everyone – including the ministries of sport and finance – was satisfied work was done.

George returns on Wednesday to continue her evidence.