DOSSIER The Export-Import Bank of the Republic of China (“EXIM”) against Grenada (“GOG”) This information dossier is based on a review of our records. It provides a detail account of the circumstances leading up to the current state of play in the action in the United States District Court for the Southern District of New York, Docket # 06-CV-2469 (HB)(AJP), between the Export-Import Bank of the Republic of China, Plaintiff, and Grenada, Defendant.

EXIM v. Grenada Matter

Dossier EXIM V. GRENADA MATTER

Overview 1. The Government of Grenada contracted four loans from the Export Import Bank of the Republic of China (“EXIM”) during the period 1990 to 2000 amounting to US$28.0 million. The table below details the four loans and the outstanding balance as at August 23, 2009. Loan

Purpose

Repayment Terms

Principal Outstanding (Not including interest & penalties)

US$10 million

Technical co-operation

Interest Rate :2 %

EC$11,700,015.00 or

Period: 2001-2041

US$ 4,333,338.8

July 27, 1990

Repayable semi-annually over a 15 year period from Jan 27, 1996 US$6 million October10,1997

US$2 million April 27, 1997

EC$12,150,000.00 National Stadium & Interest Rate:2 % Roads Period: 2001 –2012. US$ 4,500,000.00 Repayable semi annually over 15 year period commencing Oct 24, 2000 Agricultural Development

Interest Rate : 2 %

EC$ 3,824,987.00

Period: 2000- 2012

US$ 1,416,661.00

Repayable semi-annually over 10 years commencing April 1, 2001 US$10 million January 21, 2000

Ministerial Complex

Interest Rate: 4.5 %

EC$27,000,000.00

Period: 2005-2020

US$10,000,000.00

Repayable semi annually commencing July 7 2005 Total million

:US$28

US$20,249,999.9 million

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EXIM v. Grenada Matter

2. All four loans were fully disbursed and repayment of principal and interest commenced. All four loans fell into a state of default during the course of 2004. The passage of Hurricane Ivan on September 7, 2004 gave rise to a situation where Government was unable to meet its basic operating requirements, including payment of its debts. Consequently, Grenada announced its intentions to seek the cooperation of its creditors to restructure its debts. 3. In November of 2005, Grenada successfully restructured 94% of all its commercial debts 4. Grenada also sought the assistance of its Paris Club Creditors and was able to restructure US$16.0m in debts owed to bilateral creditors. One of the main conditions for the restructuring was the concept of inter-creditor equity, which dictates comparable treatment of all creditors. In other words, Grenada could not offer more favourable treatment to other creditors. 5. Following the break in diplomatic relations with the Republic of China (“Taiwan”), EXIM Taiwan demanded full payment by July 1, 2005 on all four loans, including accrued interest and liquidated damages at a rate of 10% per annum. The reason cited for their demand was default on their loans. EXIM advised further that if their demands were not met in full by that date, they would institute legal proceedings without further notice (Demand Letters dated June 15, 2005). 6. Grenada could not meet this demand and EXIM commenced legal proceedings against Grenada (Letter dated April 5, 2006 advising of a Pre-Trial Conference on EXIM versus Grenada, 06 CV2469 Case). 7. Grenada engaged the services an attorney at law in the USA, Ms. Donzell Tucker (“Ms. Tucker”) to defend the Case on its behalf. 8. In August of 2006, Grenada communicated its willingness to arrive at an out of court settlement and submitted a proposal through its Attorney to EXIM on the basis of inter-creditor equity. An addendum to the original proposal was later submitted. 9. EXIM submitted a counterproposal on November 30, 2006 (Letter dated November 30, 2006 from Paul E. Summit of Sullivan & Worcester LLP (EXIM Attorneys). 10. EXIM indicated that although it was willing to negotiate, it would not halt legal proceedings against Grenada. EXIM pursued the matter in a US Court and judgment was entered in favour of EXIM on February 06, 2007.

11. The Court amended the Judgment on March 16, 2007 to include prejudgment interest costs and disbursements, and attorney fees. According to the Amended Judgment, Grenada was required to pay the following:

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EXIM v. Grenada Matter

•

US$21,586,057.38 plus a sum of prejudgment interest in the amount of US$3,323,586.90 which reflects prejudgment interest calculated at the Contract Default Rate of 10% from July 1st 2005 – February 6th 2007. This reflects interest calculated on the Contract Default Rate on unpaid principal from July 1, 2005 – February 6, 2007 at a rate of US$5,671.65 per diem.

•

Costs and disbursements, taxes in the amount of US$5,727.56

•

Attorney Fees in the amount of US$82,225.00

•

Prejudgment interest (calculated at the Contract Default Rate of 10% on unpaid principal at the rate of US$5,671.65 per diem) from February 7, 2007 to the date of amended Judgment and post judgment interest at the statutory rate from the date of the Amended Judgment forward.

12. Negotiations in respect of a settlement outside of the Court system continued even after Judgment was entered in favour of the Plaintiff. A settlement in respect of the restructuring was not reached by August 15, 2007 (the final date set by EXIM). 13. EXIM, through its Solicitors, served a first set of post-judgment interrogatories on Grenada dated October 3, 2007. The following is a sample of the specific request: 1. Interrogatory No. 1: Identify and describe the location of any bank accounts maintained by Grenada or by any instrumentality [statutory bodies] of Grenada, within or without Grenada, including, but not limited to accounts at the Federal Reserve Bank and accounts at the ECCB. For each account, set forth the following: i. The name, address and telephone number of the bank or entity where the asset is located; ii. The name of the account holder; iii. The account number; iv. The value of the account as of the date these interrogatories are received by Grenada; v. The value of the account as of the date these interrogatories are answered by Grenada; vi. A detailed description of the purpose for the funds in the account; and vii. A detailed description of the account’s activity from January 1, 1990 to the present date. 2. Interrogatory No. 4: Identify and describe the location, ownership (including name and address) and purpose of any and all tangible assets owned by Grenada or by any Instrumentality of Grenada, located within or without Grenada. 3. Interrogatory No. 12: Identify and describe any commercial contract, agreement or relationship with any Foreign entity (including any foreign nation, business, corporation, consortium, or person) concerning Grenada’s exportation of agricultural goods, including

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EXIM v. Grenada Matter

but not limited to, spice exports, banana exports, cocoa and coconuts. For each commercial contract, agreement or relationship, identify the following: i. The date of execution of any contract or agreement, or of initiation of the relationship and the current status of the contract, agreement or relationship ii. The location and custodian of a copy of any contract or agreement iii. A description of the terms of any contracts, including, but not limited to, the obligations and liabilities of the Foreign entity to Grenada or Instrumentality of Grenada, including any payment of royal obligations to Grenada or Instrumentality of Grenada iv. A description of any and all transfer of funds that have taken place under any contract, agreement or relationship, including an identification of any bank or financial institution that participated in the transfer of funds; v. A description of any and all transfers of funds intended to take place within the next five years, including an identification of the name and location of any bank or financial institution that will participate in the transfer of the funds; and vi. A description of the ownership or interest, if any, of Grenada or an Instrumentality of Grenada in the foreign entity. 4. Interrogatory No. 14: Identify and describe Peter De Savary’s investment projects in Grenada, including but not limited to the Port Louis Project and Mount Cinnamon. For each, identify: i. The name of the project ii. The purpose of the project iii. The location and custodian of a copy of any contract or agreement iv. A description of the terms of any contract, including but not limited to Peter De Savary’s obligation and liabilities to Grenada or an Instrumentality of Grenada including any payment or royalty obligations to Grenada or an Instrumentality of Grenada; v. A description of any and all transfer of funds that have taken place under any contract, agreement, or relationship including an identification of any bank or financial institution that participated in the transfer of funds; vi. A description of any and all transfers of funds intended to take place within the next five years, including an identification of the name and location of any bank or financial institution that will participate in the transfer of funds vii. A description of the ownership or interest; if any, of Grenada or an Instrumentality of Grenada in the project; and viii. Any other persons, entities or states that either have invested in the project or have promised to invest in the project.

14. In sum, the interrogatory request totaled some eighteen (18) questions with as many as eight parts in some cases, touching and concerning details of cash, bank balances, other liquid assets, tangible assets, Grenada’s creditors and debtors, commercial contracts, agreements or

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EXIM v. Grenada Matter

relationships, investment in tourism, agriculture, foreign assistance, among other areas dating as far back as January 1, 1990 in some cases. 15. Grenada did not respond to the interrogatory request during 2008. 16. EXIM through their attorneys wrote several letters demanding that Government honour the Judgment or respond to its interrogatory request. 17. On February 29, 2009, EXIM attorney’s wrote to the Judge seeking the Court’s permission to file a motion to compel Grenada to respond to the interrogatories. 18. An additional US$10,000 in attorney fees was granted by the Court on April 8th as a consequence of Grenada not responding the interrogatories 19. On April 23, 2009, EXIM wrote the Hon. Nazim Burke, the current Minister of Finance advising of the Judgment obtained in the Court in March of 2007 and the lack of response from Grenada and EXIM’s intention to proceed vigorously to enforce this Judgment, within the US and throughout the world to recover its monies. 20. On May 20, 2009, the Minister of Finance wrote to EXIM acknowledging Grenada’s indebtedness as well as its commitment to cooperate with the Bank with a view to resolving the matter amicably. 21. Grenada engaged new attorneys in the firm of Frankfurt Kurnit Klein and Selz to handle the Case. 22. Grenada resubmitted a proposal to refinance the loans for consideration on August 26, 2009. 23. EXIM indicated that they welcomed the proposal but “the present proceedings in the US (New York) Court will proceed without interruption; “indeed, the Bank will proceed with further judicial proceedings both within and without the US until final resolution has been reached.” In other words, it was not willing to consider any proposal for restructuring until such time that it is reasonably satisfied that Grenada had no assets which can be used to pay off the debt. 24. Grenada submitted a response to the interrogatories through its solicitors on September 4, 2009. In effect, Grenada’s response to the interrogatories highlighted the following: 1. That Grenada’s bank balances were always in overdraft 2. That Grenada does not maintain any accounts outside of Grenada except for accounts which are held by its missions (evidence of the balances of these accounts was provided). 3. Grenada’s tangible assets includes roads, bridges, school buildings and office buildings and that Grenada owns a building in Washington DC which houses its diplomatic mission as well as official vehicles used by the embassies.

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EXIM v. Grenada Matter

4. A list of all Grenada’s creditors 5. A list of Grenada’s debtors, including amounts “owed” on the Cinnamon 88 and Levera Projects for lands to undertake the Project and to meet compensation claims for private lands acquired. 6. All foreign assistance received in grants 7. Grenada objected to the request for information on investment projects citing that these were private investment and the only relationship that exists, is the grant of waiver of certain duties and taxes on the basis of overall economic benefits to the Country. 25. EXIM subsequently responded that the interrogatory request was incomplete and inadequate and filed a motion compelling Grenada to provide additional information on Cinnamon 88 and Levera Projects. 26. In March of 2010, we were advised by our Attorneys that the Judge had issued an order compelling Grenada to provide additional information on the debts owed to it by Cinnamon 88 and Levera Development. 27. We responded by providing a “reconstructed” history of these Project, advising that the Projects were in fact stalled due to the ongoing economic and financial crisis and that Government was working with developers to get these project back on stream. 28. The Government also took the principled position that existing and potential foreign direct investors should not be dragged into this conflict. 29. The Judge granted EXIM the authority to serve deposition notice on Grenada. On March 4, 2010 EXIM attorneys served a Rule 30-b-6 deposition notice compelling Grenada to designate a witness to investigate and prepare to testify on the designated topics. At great expense, Grenada sent Mr. Mike Sylvester, Deputy Permanent Secretary to New York who provided a clear picture of the financial affairs of the Government of Grenada. 30. EXIM was not satisfied and continued to make demands for information which Grenada does not have and/or are not relevant to the EXIM’s proper efforts to enforce its Judgment. 31. Grenada agreed to another Rule 30-b-6 deposition witness who was expected to travel to New York to testify on Grenada’s behalf. 32. By Letter dated February 15, 2011, we were advised that EXIM had cancelled the deposition and that the matter would be taken back to Court asking the Judge to implement Sanctions as well as additional forms of relief against Grenada. 33. In June 2011, EXIM Bank served a document production request. As to Cinnamon 88 and Levera, it demanded:

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EXIM v. Grenada Matter

i. Any and all documents, electronically stored information, and things relating to any relationships, contracts, commercial activity, or other agreements between Grenada or any instrumentality of Grenada and Peter De Savary, Cinnamon 88, Levera Development Ltd….(emp added) 34. The matter was taken back to Court on August 10, 2011 in which the Court ordered a complete document production on Cinnamon 88 and Levera including an affidavit “from whoever that is at the highest level who is going to put their, you know, signature and neck on the line that everything has been produced. And soon.” 35. On August 23, 2011 the deposition of the Mr. Timothy Antoine, Permanent Secretary, Ministry of Finance was taken in New York in which he testified on all the topics listed in the EXIM Bank’s deposition notice except topics 10 – 12 that related to development activities and contracts. 36. This was followed by the deposition of Mr. Rohan Phillip, Attorney General on September 7, 2011 concerning issues raised by topics 10 – 12 with a particular focus on the current status of Cinnamon 88 and Levera Projects. 37. Several additional documents were produced in support of EXIM’s discovery request. 38. On September 13, 2011, EXIM served information Subpoenas on various airlines and cruise lines including Carnival Cruise Lines Ltd, Princess Cruise Lines Ltd, Continental Airlines Inc, Delta Airlines Inc, American Airlines Inc, and Caribbean Airlines Ltd. 39. On September 16, 2011, Chief Magistrate Judge Peck issued an order compelling Grenada to fulfill its discovery obligations by October 17, 2011. 40. On October 6, 2011, EXIM served a restraining notice on the assets of Princess Cruise Lines, Ltd. Conclusion 41. The main issues in the matter are as follows: 1. This is one of the problems inherited by this Government; Judgment was entered in default in 2007. 2. In 2009, the debt was acknowledged by the Government who signaled its intention to commence payment once the debt was restructured on terms that Government could afford. Grenada simply does not have in excess of US$23.0 million in cash to pay off this debt nor any assets that we can sell to so do.

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EXIM v. Grenada Matter

3. Grenada has made good faith efforts to honour this debt. In August of 2009, we submitted a proposal for the repayment of the debt obligation based on the principle of inter-creditor equity – a condition of the 2005 Debt Restructuring Exercise. 4. Since 2008, Grenada has been battling the negative effects of the global financial and economic crisis. 5. In the midst of the Crisis, Grenada has been paying its debts to its commercial and bilateral creditors. 6. It appears that EXIM is not interested in money but rather to embarrass Grenada. 7. Grenada has spent thousands of dollars in taxpayers’ money on legal fees, including sending three senior Government Officials, including a member of Cabinet to New York knowing full well that this would not satisfy the EXIM Bank. These monies could have gone into repaying the loans. 8. This latest action by EXIM to serve Information Subpoenas and Restraining Order(s) on various airlines and cruise lines that do business with Grenada will have serious negative repercussions on the domestic economy. We have been reliably informed by the agents for Princess Cruise Lines Ltd in Grenada that the Company has threatened to cancel all future calls to Grenada unless Government agrees that all Government imposed taxes, fees and charges be paid to the Import-Export Bank of China. The Company’s next call is scheduled for October 24, 2011 and adequate notice of Government’s decisions will have to be given to the cruise line. Last updated: October 17, 2011 Ministry of Finance, Grenada

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