Yes Cayman directors can get away with wilful default and that is the official standard.

Read on:

“On 12 February 2015 the Cayman Islands Court of Appeal handed down its long-awaited judgment in Weavering Macro Fixed Income Fund Ltd v Peterson and Ekstrom. The case, which measured the liability of directors, sent shock-waves through the funds industry in Cayman and the offshore world when it was decided at first instance. The Court of Appeal’s long-awaited judgment allowed the appeal and set aside the order of the trial judge which had ordered the directors to pay damages of $111 million.” From iNews Cayman story published February 18 2015 “Cayman Islands Weavering: Appeal Court judgment clears directors of wilful default” – Article from Harneys

“When you think about it, it cannot be equitable for directors who captain and steer the ship to get off scot free through the use of those obnoxious indemnities whilst auditors cough up millions through their particular negligence.

“I have campaigned for years that it must be a matter of public interested to have them outlawed. The UK did it years ago as did many of commonwealth countries. Guernsey did it as late as 2008 and Cayman now needs to do the same. CIMA [Cayman Islands Monetary Authority] with whom I have addressed the matter need be pro-active, take the lead and demonstrate that Cayman is no longer prepared to tolerate wayward directors.

From Chris Johnson Cayman Islands Liquidator

David Butler and Sean Scott in the Harney article said, “The Court of Appeal’s reiteration of the test for wilful neglect and default reminds us that the bar for liability is set very high and that professional service providers can escape liability even where they have been responsible for the grossest default, as long as it was not wilful. The question which may now become the focus of debate is whether wilful default remains the appropriate standard for the Cayman Islands’ sophisticated professional funds industry in the 21st century.”

Now Weavering Macro Fixed Income Fund Limited have issued a Writ of Summons dated March 2^nd 2015 against the Chartered Accountants firm Ernst & Young

The Summons says:

AND THE PLAINTIFF [Weavering] claims

Against the Defendants [Ernst & Young Chartered Accountants, Block 1 Harcourt Centre, Harcourt Street, Dublin 2 Dublin, Ireland; Ernst & Young Ltd., PO Box 510 GT Suite 6401, 62 Forum Lane, Camana Bay, Grand Cayman, Cayman Islands; Ernst & Young, Suite 6401, 62 Forum Lane, Camana Bay, Grand Cayman, Cayman Islands], and each of them:

1. Damages for deceit in and in relation to their audits and auditors’ reports as auditors of the Plaintiff for the years ended 31 December 2005 and 31 December 2006

2. Further or alternatively if and so far as the First Defendant and/or the Second Defendant would not otherwise be responsible for meeting any liability arising under paragraph 1 hereof inclusive, they irrevocably agreed to be responsible for such liability by and as provided in clause 4.1 of Deeds made between the Plaintiff and the Defendants and dated on or about 9 May 2012, 20 June 2012, 12 September 2012 and 21 October 2012
3. Interest pursuant to section 34 of the Judicature Law (2007 Revision) and/or in equity

END

It is all going to get very nasty and expensive and it does not throw the Cayman Islands into good light.

There has been to date no statement from the CIMA regarding Messrs. Johnson, Butler and Scott’s reasonable questioning why directors can easily get away with negligence.

Cayman should no longer tolerate wayward directors and why on earth is wilful default by Cayman directors the appropriate standard here in the Cayman Islands?