Judge slams ex-SporTT CEO, directors over $34m LifeSport contract

IN a stinging rebuke, a High Court judge awarded $40,000 in nominal damages against each of 14 ex-directors and ex-CEO of the Sport Company (SporTT), finding they failed their duty when rubber-stamping a $34 million contract for the failed LifeSport programme that went largely undelivered.

Justice Ricky Rahim gave his ruling on July 23.

“Through their actions the board permitted a programme which had the potential to radically change the lives of the youths of this country to degenerate into a debacle.

“Boards of state enterprises are not rubber stamps. These boards provide a very important function and service once their members adhere to their duties.

“In so doing they complement the policies of the government of the day which is the ultimate goal in a real sense.”

The matter centred around SporTT and its 2012 award of a $34 million sole-source contract to eBeam Interact Ltd for literacy, numeracy and technology training under the LifeSport programme, a Cabinet-approved youth initiative.

SporTT’s alleged the former board ignored tender rules, breached its duty of care and authorised two $17 million payments without sufficient oversight.

Rahim stressed that the ex-directors’ fiduciary duty was not in opposition to the government but was actually a safeguard against poor decisions.

He said had they fulfilled their legal duties properly, they would have identified critical errors, warned the Ministry of Sport about the risks of contracting with eBeam Interact Ltd, and potentially stopped the flawed contract’s progression.

He noted that by pausing and raising concerns, the board could have protected the company’s and the public’s interests, aligning with the cabinet’s original goal for the programme.

In a summary of his findings, Rahim said the Ministry of Sport had “essentially and effectively” instructed SporTT to select eBeam.

Although SporTT acted as the key implementation agency for LifeSport and had the ultimate duty to choose service providers, the cabinet-appointed LifeSport committee and the ministry’s permanent secretary sometimes usurped SporTT’s role, often without providing the board full information.

“It is also the finding of the court that despite the clearly defined relationship between the SporTT and the Ministry of Sport, the cabinet-appointed LifeSport Committee appeared to be making decisions for the SporTT company, thereby usurping their functions at times not even notifying the board of its decisions.

“The lines were, therefore, blurred between the SporTT company and the LifeSport Committee.

“Further the court finds that on the evidence before it, the duties of the SporTT company in relation to LifeSport seemed also to be usurped by the permanent secretary of the Ministry of Sport from time to time without providing the required information to the board, so as to secure an informed decision from it.”

He also said the evidence pointed to the conclusion that the board did receive directions to sole-select eBeam.

Rahim: Directors not automatically bound to obey ministers

Addressing fiduciary obligations, Rahim stressed that directors were not automatically bound to follow ministerial instructions. Under the Companies Act and SporTT’s by-laws, directors and the CEO must act honestly, in good faith and in the company’s best interests, exercising the care, diligence and skill of a reasonably prudent person, even when government shareholders or the ministry direct a course of action, he said.

Rahim found that the board breached those duties.

The judge noted that while the urgent need for a provider might have justified sole selection in principle, the decision to award the contract specifically to eBeam ignored major errors and inconsistencies that should have raised doubts about eBeam’s competence.

He stressed that the board’s fiduciary obligations remained unchanged despite ministerial directives to sole-select eBeam.

Rahim said most of the directors “threw caution to the wind” and approved eBeam largely because the ministry directed it, without independent, good-faith consideration of the company’s best interests.

“Most of the board took the view that they were simply there to abide the decision of the Ministry of Sport and so threw caution to the wind thereby approving the selection and engagement of eBeam without full and proper consideration.

“This, of course, amounted to a clear breach of the duty to the company.

“Much has been said about whether the board could have acted contrary to the decision of the Ministry of Sport to engage eBeam. In the court’s view, much of what has been offered in that regard ignores a fundamental facet of the decision-making process. Namely, that a decision can be postponed until one is satisfied that it is in the best interests of the company to make the decision.

“In other words, there would have been nothing which prevented the board from reverting to the Ministry of Sport in relation to its concerns about what the documents before it were clearly showing and asking for further information or clarification or any matter whatsoever that would have been in keeping with their duty. This simply was not done.”

The civil trial began September 10, 2024 and evidence in the case ended September 26.

The claim alleged negligence by ex-CEO John Mollenthiel and former board members 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.

SporTT argued that the group approved a sole-select $34 million contract for literacy and numeracy services at 38 centres under LifeSport, even though only 33 centres operated.

Its lead attorney, Colin Kangaloo, SC, called the case “one of documents,” alleging that none of the defendants reviewed the contract before it was signed or questioned two $17 million payments made under it.

Defence: Board followed government directives

Lawyers for the defence argued the directors acted on government directives and that SporTT suffered no financial loss, since the programme was funded through two state-guaranteed loans.

They contended that SporTT acted only as the ministry's paying agent and followed instructions from the permanent secretary.

A counterclaim by one of the defendants, who sought indemnity under the Companies Act, was dismissed. The court found he, like the other defendants, failed to act in good faith and in SporTT’s best interests.

The court declared that all defendants breached their statutory and common-law duties by permitting the contract.

He also found that there was evidence of non-performance supporting a finding of loss.

Although some technology equipment was delivered, the court found no records showing that eBeam had carried out the literacy and numeracy training, ordering each defendant to pay nominal damages of $40,000 because the loss could not be precisely quantified.

He also ordered they pay SporTT's costs and allowed a 42 day stay of execution of his orders.

The full written judgment is expected to be released later. The case against the former board appointed under the People's Partnership Government led by current Prime Minister Kamla Persad-Bissessar was initiated by the company under the tenure of the former People's National Movement (PNM).

LifeSport, designed to help at-risk young men transition to jobs and adulthood, was shut down in July 2014 by Persad-Bissessar.

The shuttering of the controversial programme came after an audit revealed fraud, theft, overpayments, procurement breaches, and possible criminal infiltration.

The report was sent to the Police Commissioner, DPP, Integrity Commission, and Public Service for investigation, including possible ministry complicity.

The audit found poor oversight, widespread irregularities, and breaches of the Proceeds of Crime Act.

At the time, Persad-Bissessar expressed disappointment that a programme meant to protect at-risk youth was hijacked for personal gain but promised new initiatives to support young men and stressed the need for strong procurement laws.

In August 2024, High Court Judge Eleanor Donaldson-Honeywell reportedly dismissed SporTT's breach of contract claim against eBeam but ordered the company to repay $30 million, finding that it had been unjustly enriched for services it failed to deliver.

She noted that while SporTT sought the full $34 million contract sum, $4 million was deducted to account for nominal services, including equipment procurement. The judge was said that it would be legally unjust for eBeam to keep the entire sum when only minimal, insubstantial services were provided, which did not deliver the benefit intended under the contract.

In SporTT’s claim against its ex-directors, their lawyers included Fyard Hosein, SC, Anthony Vieira, SC, Rishi Dass, SC, Jagdeo Singh, Karina Singh, Keston Lewis, Roger Kawalsingh, Ravi Mungalsingh, Tara Bhariosingh, Nicole de Verteuil-Milne, Adrian Ramoutar, Sushma Gopeesingh, Kamini Persaud-Maraj, Neal Bisnath, Lydia Mendonca, Richard Jagai, Andrea Bhagwandeen, and Dharmendra Punwassee. SporTT was also represented by John Lee and Stephanie Moe.