Canadian Lawyer

and institutional investors who were now missing at least $159 million. Even before its demise, Norshield had been a source of controversy, having been tied to the scandal that had engulfed Cinar a few years earlier. In 1999, the co-CEOs of Cinar, Ronald Weinberg and Micheline Charest, had invested US$108 million in one of Norshield's funds based in the Bahamas. There was one glaring prob- lem, however: they had failed to inform Cinar's board about the transaction, let alone get its approval. When this offshore transaction was discovered, Weinberg and Charest were pushed out of the company and Cinar's board demanded the hedge fund give back the money. Of the US$108 million, as much as US$30 million was never recovered. In 2004, Cinar was sold to a con- sortium and the new owners strongly suspected Weinberg, Charest, and the company's former chief financial officer had hidden as much as $100 million in offshore accounts, including in Norshield. They set up a committee, led by Voorheis, to hunt for the cash. One of the lawyers tasked to find this money was William Brock, a Montreal- based partner with Davies, who has sought money in offshore havens many times during his career. "It's not always as easy to get effective recourse in those foreign countries," explains Brock. "The reality is if the defendant is willing to lie it's very difficult to track the assets. . . . If you're smart it's very, very easy to move funds. And it's fast to move funds. Assuming that you're moving funds from Canada to some Caribbean country or to a Swiss bank, faster than a blink of an eye you can wire the money again. I have seen cases where there've been multiple trans- fers of funds. And you're always playing catch-up." GETTING MISSING MONEY BACK H ow do lawyers like Brock find money offshore? For one thing, you have to establish that someone has hid- den money inappropriately — money that belongs to someone else, in other words. This means obtaining a court order in Canada that spells this out, convincing a judge that money is owed and needs to be returned to its rightful owners. To this end, if you can get the perpetrator on the stand in a Canadian court and force them to divulge under oath the extent of their assets and where they went, this can help enormously in finding the money. It also ensures that if they lie, it's on the record. Secondly, Brock recommends obtain- ing a worldwide Mareva injunction, which freezes the perpetrator's assets wherever those monies are hidden. In the case of Weinberg, Cinar's lawyers were able to get an injunction in 2005 freezing his accounts, convincing a judge he was mov- ing his assets out of the country to the Caribbean to keep it out of reach from his creditors. But proving someone owes you money in Canada is one thing. Getting that order implemented in another country is a whole other matter. Canadian law- yers have to hire local counsel in the country where they think the money has vanished. "So, for instance, you have to retain lawyers in the Bahamas to obtain an order to get access to the Bahamian bank account," explains Brock. "But if the money was immediately transferred to a bank account in the Turks and Caicos, you then go to the Turks and Caicos and retain lawyers there." Moreover, the quality of the counsel in these island countries can vary enormously. Says Brock: "There are great lawyers and there are not great lawyers." Either way, it becomes an expensive and time-consuming process. Indeed, the wheels of justice in these foreign lands can be slow and unpredict- able. The search for Weinberg's money eventually led Brock to Bahamas-based Barrington Bank International and Lochaven Financial Ltd. in Turks and Caicos. Brian Trowbridge, a Canadian lawyer, is the CEO of both Lochaven and a another financial institution, Hallmark Trust Ltd. Cinar has claimed in court doc- uments that Weinberg and Charest, after the company sued the couple over missing money, put $11.3 million in Barrington Bank and nearly $2 million in Lochaven — which was why Cinar's lawyers sub- poenaed Michael Morris at the Toronto Starbucks outlet in 2006. Trowbridge's company Hallmark, in particular, has been tied to its share of scan- dals in recent years. A Ponzi scheme was run out of it by David Smith, a Jamaican national who pled guilty in 2011 for mas- terminding a US$220-million scam that defrauded 6,000 investors (he received a 30-year sentence). In a civil lawsuit filed in 2007 in Hawaii, the U.S. Internal Revenue Service also alleged that two American accounting firms advised clients to evade taxes by moving money out of the coun- try by means of MasterCards issued by Hallmark. In the end, the pressure brought to bear on Weinberg led to the settlement in 2008. Even then, Cinar continues to pursue Weinberg's lawyers based on the suspicion that the former CEO may have misled them about the extent of his assets. THE NEED FOR CRIMINAL LINKS T he nightmare of trying to obtain money in offshore jurisdictions is one Allan Bell is very familiar with. A Canadian lawyer based out of Hong Kong, he advises the World Bank and Government of Indonesia on asset recov- ery. One case that Bell has studied is the missing fortune of former Indonesian dictator Suharto, who was ousted from power in 1998 and accused of pillag- ing US$15 billion to $35 billion of state assets during his 32-year reign. One of Suharto's sons, Hutomo Mandala Putra, known as Tommy, was accused of pocket- ing US$800 million of this sum. In 1994, Tommy Suharto had bought a controlling interest in the sports car company Lamborghini. In 1998, as his family was being pushed out of power in Indonesia, Tommy sold his share in the company for US$48 million and parked it in a French bank subsidiary located in the offshore banking haven of Guernsey, one of the Channel Islands. In 2000, Tommy was convicted in Indonesia of corrup- tion and, two years later, of assassinating a supreme court judge. He was jailed. At that time, one of Tommy's holding com- panies, which was registered in the British Virgin Islands, ordered the French bank to transfer €36 million out of Guernsey. The bank refused, and Guernsey's Financial Intelligence Service (FIS), which had been set up to combat the illegal use of offshore accounts, also refused to allow Tommy's account to be emptied. In 2006, Tommy launched a case in the Guernsey courts demanding the money be released. After lengthy legal battles, last year, over the objections of the Indonesian government, the Guernsey courts allowed www.CANADIAN Lawyermag.com FEBRUA R Y 2012 29

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