Wednesday 20 June 2018

Irish Madoff case will take 'third of a year' in court

Bernard Madoff walks back to his apartment in New York December 17, 2008
Bernard Madoff walks back to his apartment in New York December 17, 2008

Tim Healy

A High Court claim against the Irish arm of HSBC bank for US$333m (€284m) connected to the Ponzi scheme run by jailed US fraudster Bernie Madoff is expected to take one-third of a year to hear, a judge said when he made directions in relation to pre-trial discovery.

Mr Justice Twomey made the comment as part of his ruling on discovery which he said will help reduce court time and, though remote, may even facilitate settlement of the dispute prior to the trial.

"It is this court's view that due to the shortage of judges in Ireland there is a need for judges to use court resources efficiently," he said.

He was ruling in relation to a case taken by British Virgin Islands (BVI)-registered investment fund Defender Ltd against HSBC Institutional Trust Services Ireland Ltd, with registered officers in Grand Canal Square, Dublin.

Defender is claiming US$333m against HSBC for negligence and breach of contract regarding HSBC's alleged role as a custodian of funds which were lost as a result of fraud by its alleged sub-custodian Bernie L Madoff Securities LLC.

The judge said that company was operated by the "notorious" Mr Madoff who was involved in a €65bn Ponzi scheme in the US which is alleged to be the biggest fraud in history.

HSBC joined Reliance Management BVI Ltd and Reliance International Reseach LLC as third parties in the case.

HSBC alleges that these two companies are a single group entity and, as Defender's investment manager, had full knowledge of all the risks associated with funds being entrusted to the Madoff company.

In this regard, HSBC had received 53,000 documents from Reliance as part of the pre-trial discovery process. However, HSBC applied to the court in relation to Defender's failure to reply to around 650 questions under the pre-trial system known as "interrogatories" which are a device used, usually by defendants, to learn facts that are the basis for the claim against them.

Defender opposed the application, saying many of the interrogatories sought by HSBC were flawed.

Mr Justice Twomey said that the court sustained two out of seven objections made by Defender and will hear from the parties later this month on the precise terms of any order to be made.

The main case is due to start in October.

Irish Independent

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