Lucky: Digicel Contract Legally Flawed
Sun, Aug 21, '05
EDITOR'S NOTE: The following declaration from Trinidad & Tobago judge Anthony Lucky formed part of the Sponsorship Review Committee's report submitted to the West Indies Cricket Board (WICB).
I agree with all the points mentioned in the operative parts of the report. Nevertheless, I wish to make some observations on certain aspects that I consider important.
I refer specifically to the reasoning under the WICB/Digicel Sponsorship Agreement that, in my opinion, requires further development. For the purposes of completeness, I need to reiterate what has been set out in the report.
The events that led to the signing of the WICB/Digicel Sponsorship Agreement are not in conformity with company law and practice.
Accepted company law and practice require that agreements and contracts which bind a company should be placed on the agenda for discussion at board meetings, and after the agreement or contract has been examined and considered by the board, the board would approve same and, by resolution, agree that the contract or agreement should be signed by persons specified in the resolution.
The WICB Inc is a private company with a public image; that is, that of a cricket-loving West Indian community; Digicel is a well-known international company.
The negotiations that resulted in the finalisation of the agreement were conducted in secret under a guise of confidentiality.
Only the then president, the CEO and, at a later stage, the chairman of the marketing committee, knew the identity of the proposed sponsor, Digicel.
In fact, as set out above, Mr Brookes of ISM used another firm to mask the identity of Digicel so that C&W would not know whom the WICB was negotiating with.
This in effect was a breach of one of the clauses of the contract with C&W, which requires openness in negotiations.
The sponsorship agreement document was finalised in a marathon meeting in Kingston, Jamaica, and was concluded by the chairman of the marketing committee, Darren Millien, and lawyers representing the WICB.
Despite a meeting of the directors of the WICB on 22nd May 2004, in which it was decided, among other things, that the board agree that the WICB negotiating team should continue negotiations with the proposed sponsor and revert to the board, the negotiating team did not revert to the board.
Secondly, at that meeting, the directors agreed with the recommendation that the WICB should execute a letter of intent with the proposed sponsor, a draft of which was made available to each director.
The letter stated the intention of the parties to proceed to finalisation of the terms of a definitive agreement, which covered the terms of the sponsorship and bound the parties through 13th June 2004, in the first place, with a right of extension by either party to 16th July, 2004.
On a motion proposed by Mr Stephen Alleyne and seconded by Mr Chetram Singh, it was unanimously agreed that the letter of intent should be signed subject to clarification on two points.
Minutes examined after that meeting do not reflect that the negotiating team reverted to the board and, secondly, the definitive agreement mentioned was never brought back to the board and tabled at a board meeting for further discussion and approval.
It must be noted that there are no minutes whatsoever of a decision of approval or ratification.
The minutes that were inspected by the committee following that meeting do not reflect that a resolution was passed by the board authorising signatories to the document and that same should be sealed.
It was a requirement of the memorandum and articles of association that all minutes, decisions, correspondence and resolutions should be kept at the registered office of the board.
It is to be noted that this was an entirely important contract and some board members have indicated to us that they did not see the draft agreement and to date they have not seen the final document which we have seen after several requests.
The president, Mr Edward Griffith, and the chief executive officer signed this document.
No seal was affixed to the document that we saw, which was shown to us first at the head office after our request and at a meeting with Digicel officials.
It is therefore clear to me that there was a breach of the terms of the memorandum and articles of association of the WICB which specify quite clearly that the board of directors shall cause corporate records to be kept of meetings of the board of directors and committees of members and that copies of all resolutions consented to by members of the board of directors, committees of the board and members of committees, should be kept.
It is quite clear that that was not done.
The WICB/Digicel sponsorship agreement was never ratified and in these circumstances I am of the view that the contract can be declared null and void.
I have to add that I have sought and obtained legal opinion to this effect.
In summary, therefore, the sponsorship agreement with Digicel, together with the commission agreements referred to above, cannot be in the best interest of West Indian cricket, because, firstly, the negotiations were secret; secondly, only a few members knew and the board members were excluded.
In fact, board members never, according to the records we have seen, asked any questions relating to the agreement itself and, further, never questioned why matters were not reverted to the board.
In my view, the end result is that there is an impasse between the West Indian Players Association and the board, the association having complained before us that they were ?left in the dark? and are unable to negotiate because they do not know and have not seen the terms for players set out in the contract.
In those circumstances, I am of the firm view that the WICB/Digicel sponsorship agreement is legally flawed and may be null and void.
Therefore, the agreement should be renegotiated in accordance with the memorandum and articles of association and that all the stakeholders are given an opportunity to make an input.
* In association with Trinidad Guardian.