Rs880 million Fraud at the MCB
It will be recalled that there came out in public in early 2003 a case of alleged fraud at the Mauritius Commercial Bank (MCB). It involved the loss of deposits amounting to some Rs 880 million belonging to the National Pensions Fund/National Savings Fund held at the bank. According to the court case instituted by the MCB in this regard, the funds had been siphoned off and/or misappropriated by means of complex transactions with the objective to foil the bank’s internal and external audit trails.
According to information which became public, this “fraud” had spanned over several years only to be uncovered in 2003. It was claimed by the bank’s top management that, unknown to itself, a senior manager of the bank, Robert Lesage would have acted to divert those funds without the knowledge of the bank. In the court case, which began in 2004, Robert Lesage and other defendants were stood up as accused parties by the MCB. On his part, Robert Lesage claimed that all the transactions had been conducted by him with prior instruction from his superiors, i.e., the top management, of the bank so that he had no case to answer.
It was clear that the case would be determined on the basis of concrete evidence to the extent available but more so on the credibility in the court of the two sides. Judgment was delivered by a two-judge commercial division court of the Supreme Court on 30 June 2010. Robert Lesage was condemned to pay in solido with other defendants a sum of Rs 436 million and a further sum of Rs 245 million on his sole count, together with interest and costs incurred by the MCB. Robert Lesage decided to appeal against this judgement on the grounds that he had been denied a fair hearing during the trial. In the event, given that the trial had been conducted by a two-judge court, Robert Lesage could appeal solely to the Board of the Judicial Committee of the Privy Council (Privy Council).
Conclusions of the Privy Council
The appeal was heard by the Privy Council on 9th and 10th October. In a communication dated 10th July 2013, the Registrar of the Privy Council has confirmed that, after hearing the appeal, the Privy Council has ordered that –
1. The appeal be allowed and the decision of the Supreme Court of Mauritius be quashed,
2. There be a retrial before a differently constituted court,
3. The respondent (MCB) pay 60% of the Appellant’s (Robert Lesage) costs before the Board,
4. The cost of the trial be deferred until the outcome of the retrial, this itself to be determined by the differently constituted retrial court.
The Principle of Fair Trial
The order issued by the Privy Council would have constituted yet another case of overturning of a decision taken by our courts. However, there are important issues at stake. These relate to the principle of judicial impartiality. The Lords have laboured at length, considering all the points of appeal put forward by Robert Lesage in his appeal.
They have disposed of certain items of the appeal with surgical precision. They have thrown out some of the arguments, e.g., the denial of the right of appeal before a court in Mauritius in view of the fact that there is no recourse at present to appeal within Mauritius against a two-judge court whereas that would have been possible if it had been a differently constituted court. They have come to the conclusion that the two-judge constitution of the commercial court did not stand in the way of Robert Lesage to have nevertheless recourse to an alternative appeal mechanism, such as the Privy Council, even though more costly. His constitutional rights to fair trial have therefore not been violated.
But the finer points have come out in their analysis of whether Robert Lesage received an impartial trial at the commercial court. They set aside a number of points such as the rough treatment received at the hands of the court by the replacing counsel after Robert Lesage’s original counsel asked permission to withdraw from the case. At one stage the two judges of the commercial court received a letter from Robert Lesage informing them that his original counsel, Mr Rex Stephen, had decided to withdraw as he (Robert Lesage) did not agree with the latter’s advice that he should go for a settlement with the MCB. The Lords asked the question as to why, after receiving this letter, the two judges did not raise the question as to whether they should continue to conduct the trial despite the prejudice and unfairness visiting upon them in the circumstances.
They state that the court knew that the defendant (Lesage) had refused to accept his original counsel’s strong advice that he should go for a settlement, rather than going on defending his case in court. Knowing this, the Lords state again that “an objective person would necessarily come to the conclusion that the way in which the case was conducted (thereafter) was at least indicative of a possible lack of complete impartiality on the part of the court”.
They have drawn attention to this element of absence of impartiality also from “the most damning piece of evidence” the commercial court had found when condemning Lesage was his “confession” to ICAC under oath in 2003 to the effect that he would have given a statement to ICAC that he would have acted on his own in a particular transaction from out of the NPF/NSF deposits at the bank. The Lords have drawn attention to the hostility to which Lesage was treated when answering MCB’s counsel’s question during the trial in the commercial court on this point. He was allowed a strictly “yes or no” answer to part only of what he had stated to ICAC as if to make him admit that he was solely in charge when he has stated in his so-called “confession” before ICAC. In fact he had stated before ICAC that he took one initiative to identify the account from which to do the transaction as he was instructed by MCB’s top management. But he was not allowed to make the latter part of this statement.
In the Meantime
There is no end in view so far of the financial scandal which broke out at the MCB in 2003. The remarks made in their order by the Lords of the Privy Council make it clear that the trial has not been fair. There is now even a suggestion that the person who is being stood up as the principal actor behind the whole mischief by the MCB, namely Robert Lesage, has been unfairly treated during the trial at the commercial court. The Lords have not minced words when they have stated in their decision on the appeal that “the court displayed obvious hostility to Mr Lesage and his new counsel”.
In the light of the Privy Council’s decision to go for a retrial, the MCB case will take some time to unwind. Clearly, the opinion of the Lords is that the trial has not be fair and impartial. They have stated that a trial which is free from even the appearance of unfairness is the indispensable right of all parties and is fundamental to the proper administration of justice. Have we failed this test?
In the meantime, the case which came to the surface as far back as in 2003 stands in limbo today. It was indispensable to deal with the matter without going to all this length for the sake of stifling an embarrassing situation erupting all of a sudden in the bank. Decisiveness was required at the administrative level. The matter would not have ended in court if action was taken promptly to set right what had systemically gone wrong in the financial institution and to collect back, to the extent possible, funds which had landed in wrong hands.
In the process, the bank (and perhaps also its insurer) has lost time and resources to defend a case that looked rather straightforward to all intents and purposes.
* Published in print edition on 27 July 2013