Court hears…Brassington “willfully restricted credit” from Guyana Stores

May 14, 2014 News

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– caused company to lose sales and goodwill

By Latoya Giles
The court heard yesterday that the head of the National Industrial and Commercial Investments Limited (NICIL) Winston Brassington restricted credit from Guyana Stores Limited (GSL) which caused the company to lose sales and goodwill. This piece of evidence came out yesterday as the owner Tony Yassin continued to give his evidence in chief.

Senior Counsel Edward Luckhoo continued his session yesterday by reminding the witness (Yassin) that during cross examination of Brassington, he had said that a loan was taken out so as to finance the hire purchase business of the Company – cash. He then asked whether the hire purchase business of GSL was maintained. Yassin replied in the affirmative, but said that it was declining since 1997.
Luckhoo asked how the hire purchase business was accounted for in the accounts of the Company. The witness told the court that it was accounted for under Debtors/Receivables and Deferred Receivables.  He further explained that Debtors/Receivables were monies owed within twelve months and Deferred Receivables were monies owed after twelve months.
He was questioned if apart from those two, there was any other, to which he said yes – and  those were mainly on a cash basis in which customers were given 15 – 30 days credit.
Luckhoo questioned the witness about whether the business was a cash business except for hire purchase and Yassin again answered in the affirmative.
The lawyer continued to question Yassin about Royal Investments Incorporated, and when it took over GSL in October 2000, if they were able to assess the state of the assets of the Company. The witness answered yes.  He was further asked if he was able to assess if good business practices were in effect and he again said yes.
Yassin told the court that the Company had no cash available to purchase inventory for both the hire purchase and local sales.  The inventory was declining from over $500,000,000 in 1997 to $152,000,000 in 1999.
He was asked whether he was able to assess the inventory that was there, and according to Yassin, the inventory was old, obsolete and hardly selling.
Yassin was asked to give examples of his findings, which he did. According to the witness, goods in the Hardware, Children World, Home Furnishing, Household Appliances, Gift Items, Houseware and all the sections of GSL were being depleted and there was no replenishment to keep the business going.  There was low morale among the employees and the customers and the goodwill of the company was declining over the period 1997 – 2000.
Luckhoo questioned Yassin about after taking over the Company, whether he observed any correspondence relating to the issue of inadequate financing to keep the business going.
Mr. Yassin replied, “Yes.”  He said that he observed correspondence from both the Chairman of the Board and the Chief Executive Officer, which discussed the issue of inadequate capital to keep the business going and the need for finance to support the business activities of the Company.
Yassin said that the complaint from the Chairman of the Board of Directors of the Company was that the reduction of the Net Current Assets from $400M to $200M was causing a devastating effect on the Company, the loss of sales and on the profitability of the Company.
The lawyer further questioned Yassin if apart from the correspondence already tendered, he ever observed a correspondence from Mr. W. Fries, Managing Director, to Mr. Manniram. Prashad relating to the effect of the credit restrictions imposed on the Company.
In reply, Yassin said, “Yes.”
A copy of a letter dated 22nd November 1999 addressed to Mr. M. Prashad, Chairman of the Board of Directors of GSL and written by Mr. Winfried Fries was shown to him and he identified same. The letter was tendered into evidence as NICIL #47 – A – B.
The witness was reminded that he had said that when he took over the business, it was declining.
Yassin then reiterated that the business was declining. He explained that when customers came to purchase, the company did not have the goods to sell, and when the customers left they were not coming back.  There were hardly any customers in the stores, the witness stated.
Although in early 2001 more than US$1M was added to resuscitate the business, Mr. Yassin noted, customers were still not coming.  The witness said that it seemed as though an indelible mark was left on the customers as they were not coming as they used to in the past.
Sales had declined to more than half from 2000–2014, Yassin said.
The matter was later adjourned until next month.

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