Chief Justice Carl Singh made the dramatic order yesterday after disagreeing with arguments by Senior Counsel Mr. Rex McKay and Mr. Keith Massiah for the Bank, and upholding arguments by Mr. Stephen Fraser for Globe Trust, Mr. Basil Williams for Depositors, Mr. Robin Stoby for employees of the Globe Trust Pension Scheme, and Mr. James Bovell-Drakes for GNIC.

Delivering his ruling yesterday morning, the Chief Justice said, "These proceedings have been particularly worrying. They raised the spectre of huge financial loss of varying degrees for countless number of persons. They were commenced by the Bank of Guyana, which under the provisions of the Financial Institutions Act, 1995, has responsibility for the supervision of licensed financial institutions.

"The respondent, Globe Trust and Investment Company Limited, is one such licensed financial institution, offering such services as property management, unit trust, pension and thrift plans, management and pension schemes and Education Trust Funds.

"Utilising its statutory powers to conduct special inspections of the affairs of any licensed financial institution, the Bank of Guyana...between the years 1997 and 2001 conducted inspections of the business of Globe Trust. These inspections unveiled many statutory violations were being committed by Globe Trust.

"It seems however, that the Bank of Guyana remained largely inactive in the face of the infringements of the Financial Institutions Act, unearthed by its inspections. For the year 2000, consequent upon one such statutory inspection, the Bank of Guyana drew up a list of the violations it discovered and submitted these to Mr. Steve Backer, then the Chief Executive Officer of Globe Trust and invited his comments.

"Mr. Backer in response, wrote to the Governor of the Bank of Guyana on 27th April, 2001, in which letter he disclosed that Globe Trust had not achieved full compliance with the statutory requirements of the Financial Institutions Act, 1995 because:

1. The Courts were moving at an extremely slow pace.

2. Documents were disappearing from the Court system.

3. The Guyana economy was not performing.

"He assured the Governor that the efforts of Globe Trust to inject capital into its system (were) continuing. On the 14th May, 2001, the Bank of Guyana served notice on Mr. Backer and the other Directors of Globe Trust to attend a hearing at which it hoped to determine whether to issue any orders or give directions to Globe Trust, dependent on its findings.

"The findings of the Bank of Guyana were that Globe Trust had committed the following violations of Section 42 of the Financial Institutions Act, namely:

1. That Globe Trust's capital was substantially exhausted with no reasonable prospects for its timely restoration.

2. That a substantial dissipation of Globe Trust's assets and earnings had taken place as a result of violations of law and regulations as well as unsafe and unsound practices.

3. That Globe Trust's assets were not sufficient to satisfy its depositors.

4. That Globe Trust was unable to meet its obligations and pay its depositors' demands in the normal course of business.

5. That Globe Trust had engaged in a course of conduct, which had caused its insolvency.

"On the July 18th, 2001, the Bank of Guyana issued wide ranging directions to Globe Trust touching many aspects of its operations, which were intended to be remedial measures. Implementation of the remedial measures was to be achieved over a period of between three to 30 days," the Chief Justice said.

Continuing, the Chief Justice pointed out that on July 27, 2001, the Bank of Guyana wrote Globe Trust asking them to show cause why the Bank should not take possession of Globe Trust as provided for by section 42 of the Financial Institutions Act, 1995. There followed a hearing, at which Globe Trust through Mr. Christopher Ram, chartered accountant, presented on its behalf, what has come to be known as the Ram and McRae plan. The focus of the presentation was to impress upon the Bank of Guyana, that despite the bleak outlook, the plan offered a reasonable prospect for the resuscitation of Globe Trust.

"Incidental to the enquiry, there passed between the Governor of the Bank, Ms. Dolly Singh and Dr. Clive Thomas, then performing the duties of Chairman of Globe Trust an exchange of correspondence," the Chief Justice said.

He added, "All the parties to these proceedings recognise and accept that liquidation was an option for the Court only. But the decision points me in another direction. It demonstrates for me, that at the time the Bank of Guyana made its decision to take possession of Globe Trust, it had a mindset, which was to have the assets of Globe Trust liquidated."

Among other things, the Chief Justice spoke about the Bank acting unfairly in relation to Globe Trust.

"What then is the way forward? I agonised in this case over the realisation that liquidation would result in many people possibly losing their life's savings. Ramnarine Lall, Director of the Bank Supervision Department of the Bank of Guyana, in evidence said, the Bank of Guyana was very concerned about the depositors' money, but went on to say that the Bank of Guyana rejected the Ram and McRae plan but did not consider a reorganisation plan of its own.

"I have carefully reviewed the evidence of both Dr. Clive Thomas and Mr. Christopher Ram and I accept their evidence that with a properly crafted plan, there are reasonable prospects for Globe Trust's restoration to financial soundness. From a complete reading of the options available to the Court in these proceedings, I do not agree with Messrs McKay and Massiah that in the absence of the submission of a reorganisation plan by the Bank of Guyana the Court cannot order the reorganisation of Globe Trust. It is my view that the law clearly authorises the Court to make such a decision.

"Pursuant therefore to the provisions of Section 49 (4) (b) I would order the reorganisation of Globe Trust, which reorganisation as the section directs will be proceeded with by the Bank of Guyana as set out in Section 50 of the Financial Institutions Act, 1995.