Attorney General v de São Vicente and AAA International Ltd

• Jurisdiction: Bermuda
• Judgment Date: 28 June 2024
• Court: Supreme Court (Bermuda)
• Docket Number: Civil Jurisdiction 2022 No 22

Between:

Attorney General

Applicant

and

Carlos Manuel de São Vicente

Defendant

2024 Bda L.R. 42

Civil Jurisdiction 2022 No 22

In The Supreme Court of Bermuda

Restraint orders and freezing orders — Proceeds of Crime application — Application to vary or discharge interim restraint order — Piercing the corporate veil — Risk of dissipation of assets — Exemption for the payment of reasonable legal fees

The following cases were referred to in the judgment:

R v Rees (unreported, 19 July 1990, Auld J)

USA v Montgomery[2001] UKHL 3

Jennings v Crown Prosecution Service[2006] 1 WLR 182

Jennings v Crown Prosection Service[2008] 1 AC 1046

Re AJ and DJ (unreported, 1992 9 December)

Minister of Finance v AP[2016] Bda LR 117

Bank Mellat v Nikpour[1985] FSR 87

Minister of Finance v AP[2016] Bda LR 34

Wastell v Stanford International Bank Ltd (Serious Fraud Office intervening)[2010] EWCA Civ 137

R v Seager & Blatch[2009] EWCA Crim 1303

Prest v Petrodel Resources[2013] UKSC 34

Trustor AB v Smallbone & ors[2001] 1 WLR 1177

Stanley Leslie Miller v R[2022] EWCA Crim 1589

Doraville Properties Corp v HM Attorney General[2016] JRC 128

Short v Treasury Commissioners[1948] 1 KB 116

Gramophone & Typewriter Ltd v Stanley[1908] 2 KB 89

R v Boyle Transport (Northern Ireland) Ltd[2016] EWCA Crim 19

Memory Corp plc v Sidhu (No 2)[2000] EWCA Civ 9

Glenn & Co (Essex) Ltd v HM Commissioners for Revenue and Customs[2011] EWHC 2998

Wood v North Avon Magistrates Court[2009] EWHC 3614

R v Crown Court at Lewes, ex parte Hill(1991) 93 Cr App R 60

Ms S Dill-Francois for the Applicant

No appearance for the 1^st Defendant

Mr R Hawthorne for the 2^nd Defendant

JUDGMENT ofSubair Williams J

Introduction

1. This is an application by the Second Defendant, AAA International Limited (“AAAIL”) and AAA Risk Solutions Limited (“AAARSL” / the “Second Applicant”)1 to discharge or vary the restraint order made by Hargun CJ dated 1 February 2022 (the “Restraint Order”) in favor of the Attorney General's Ex Parte Notice of Originating Motion dated 28 January 2022 (the “ex parte application”).

2. The ex parte application, made without notice to the Second Defendant, was supported by the affidavit evidence of Detective Constable 2152 Shannon Trott.

3. Then represented by law firm Appleby (Bermuda) Limited, a summons dated 7 April 2022 for the variation of the Restraint Order was filed on behalf of the Second Defendant. That summons application was disposed of by way of a Consent Order signed by Hargun CJ (as he then was) dated 7 April 2022.

4. A Notice of Change of Attorney dated 17 June 2022 was filed by the attorneys of Trott & Duncan Limited in respect of the Second Defendant.

5. A further summons of 29 September 2022 for a variation of the Restraint Order was filed on behalf of the Second Defendant to which a second Consent Order signed by Hargun CJ followed. That Consent Order is dated 29 September 2022.

6. On 19 May 2023 the Second Defendant filed a third summons (the “third summons”) for the variation of the Restraint Order. This was supported by the First Affidavit of Mr Nicholas Millar, the Director of AAAIL. A Directions Order of 15 June 2023 was made on this summons for the filing of further evidence and a hearing date.

7. The Attorney General filed evidence from Detective Inspector 2210 Paul Ridley sworn on 18 August 2023 in reply to the third summons as provided for in the Directions Order of the Court. In rejoinder, the Second Defendant filed the Second Affidavit of Ms. Sonja Maeder Morvant, the Second Defendant's Swiss attorney.

8. Of note, the following documents were before the Court when the Restraint Order was made by Hargun CJ:

The Requests for Mutual Legal Assistance:

• (i) a Letter Rogatory of the Office of the Prosecutor-General National Asset Forfeiture Unit for the Republic of Angola, dated 17 November 2020 (the “Request”)

• (ii) an “Adendum [sic] Letter Rogatory” dated 6 August 2021 of the Angolan Prosecutor-General (the “August 2021 Addendum”)

• (iii) an “Adendum [sic] Letter Rogatory” dated 9 November 2021 of the Angolan Prosecutor-General (the “November 2021 Addendum”)

• (iv) a “Letter Rogatory Addendum” dated 26 January 2021 of the Angolan Prosecutor-General (the “January 2021 Addendum”)

The Request for Judicial Assistance:

• (v) A 1 April 2021 Court Order was made by Trial Court Judge Pedro Faustino Chilicuessue of Angola's Court of Judicial Circuit of Luanda 5th District Court. This Order was made as a request for judicial assistance (the “Judicial Request”).

9. At the close of the inter partes hearing, having heard Counsel on their oral and written submissions, I reserved my decision which I now provide with these written reasons.

The Impugned Restraint Order

10. The Second Defendant, seeking for it and AAARSL to be discharged entirely from the Order, otherwise takes issue with the prohibition barring both entities from dealing with all of their assets in respect of all of their accounts, whether held at Bank of N.T. Butterfield, HSBC (Bermuda) or elsewhere.

11. By way of an alternative application for a variation of the Restraint Order, the Second Defendant also objects to being formally named as a Defendant in these proceedings. It is argued that this exceeds the scope of the Request.

12. Also, by way of variation, the Second Defendant seeks for the scope of the exclusions applicable to the Restraint Order to include terms permitting it deal with its assets to cover the reasonable costs of legal fees for these proceedings in Bermuda in addition to defending the legal proceedings in Switzerland.

13. In the 7 April 2022 Consent Order the Restraint Order was varied to exclude the sum of $20,000.00 “for the purpose of the Second Defendant paying for legal expenses incurred by the Defendants in relation to these proceedings.” In the 29 September 2022 Consent Order the Restraint Order was varied to exclude an additional sum of $50,000.00 “for the purpose of the Second Defendant paying for legal expenses incurred by the Defendants in relation to these proceedings.”

The Alleged Facts for Trial in Angola:

14. The below narrative is my summary of the facts relied on by the Angolan Court, via the Attorney-General, in seeking the Restraint Order and resisting its discharge. In my description of these facts, I make no factual findings which are reserved for the trial process in Angola.

15. It is said that Angola granted sole control over its risk management of petroleum operations to Sonangol EP (“Sonangol”), a State-owned public entity. Mr de São Vicente is said to have been a pay-rolled employee of Sonangol, serving as a Director of a Sonangol unit termed the Risk Management Department. I shall refer to this as “Sonangol's RMD”. Sonangol's RMD purportedly handled the insurance of both the employees and all the petroleum operations of Sonangol.

16. Sonangol established a holding company named AAA Serviços Financeiros which was parent to four State-capital subsidiaries. As the Director of Sonangol Mr de São Vicente arranged for Sonangol's insurance premiums to be paid in inordinate sums to one of the four subsidiaries, namely AAA Seguros LDA.

17. Sonangol was the sole shareholder of a Bermuda incorporated reinsurance company initially named Mirabilis Insurance Limited (“MIL”) with paid-up capital in the sum of US$250,000.00. MIL fit into Sonangol's risk management strategy to generate significant net earnings in order to compete with good standing on the international reinsurance market.

18. MIL was renamed Mirabilis Reinsurance Limited (“MRL”) and subsequently, at the behest of Mr de São Vicente, AAA Reinsurance Limited (“AAARL”). The Angolan prosecution alleged that Mr de São Vicente used the holding company, AAA Serviços Financeiros, as a vehicle to transfer the entire shareholding of AAARL to himself. Similarly, Mr de São Vicente is accused of having wrongfully transferred shares in an associated company, AAA Insurance & Reinsurance Brokers Limited, to himself. The alleged result was that he became the owner of companies which were formerly and, by right, property solely of the Angolan State which was left with a mere 10% of the shareholding.

19. It is said to be the prosecution's case that Mr de São Vicente colluded with other senior officials by setting up a series of companies, being, inter alia, the Second Defendant, AAAIL and AAARSL, the other applicant for the variation of the Restraint Order. The prosecutor's case, on the First Letter of Request, is that Mr de São Vicente embezzled the income from these businesses, which would otherwise be public money, through AAAIL and AAARSL. More so, the prosecution says that in 2003 the shares held by the holding company, AAA Serviços Financeiros, were transferred as a “gift” to AAAIL. Mr Nick Millar is described by the Angolan Prosecutor-General's office as one of a number of Mr de São Vicente's accomplices.

20. The estimated loss caused by Mr de São Vicente is alleged to be in excess of US$4 Billion. This resulted in the prosecution's pursuit of a wholesale seizure of Mr de São Vicente's assets and an investigation and indictment on charges of embezzlement, money laundering and a charge of profiting from economic interest in business and influence peddling. Mr de São Vicente was also remanded into custody for these offences.

The Terms Requested for a Restraint Order and the stated Grounds for the Request

21. In the opening paragraphs of the Request, the principle of ‘reciprocity’ is relied on:

“This request for mutual legal assistance is submitted pursuant to the United Nations Convention against Corruption and the United Nations Convention against Transnational Organized Crime, to which the Republic of Angola and the United Kingdom are parties;

The cooperation request takes into account the principle of reciprocity enshrined in Article 5 of Law No. 13/15 of 19 June, the Law on International...