The Official Version – Mystery of the Missing Money

As we enter the wrong side of the boom, it is a little like traveling to the dark side of the moon.  Familiar navigation points fade from view and we are forced to use bearings that are new.

Karen Nunez-Tesheira, MP, Minister of Finance. Photo courtesy Trinidad Guardian
Karen Nunez-Tesheira, MP, Minister of Finance
The quality of our political rulers has now joined in unholy matrimony with the sheer recklessness of their anointed deal-makers to put our economy into an entirely new and perilous place.

At these moments of turmoil and impending crisis, it is always interesting to observe closely what key people are not saying.  Yes, the pauses and silences can be very instructive in these situations.

I do believe that our national appetite for melodrama, bacchanal and commess is being played upon to distract us from the seriousness of the situations facing us.

The main example is the CL Financial bailout, which was announced a little over a year ago when the first Memorandum of Understanding (MoU) was signed on 30th January 2009.  Given the subsequent revelations as to the withdrawals of funds by important people and the shareholdings of the Minister of Finance in CLF, it is impossible to say exactly when the actual bailout began.  All we can say for sure is that we, the public, were told of a bailout on 30th January 2009.

There has been a cascade of bewildering and disturbing events – those are set out at my blog, www.afraraymond.com – and we are now at a position of deep confusion.  The resignations of three top-level executives of the group and the subsequent bald press releases are most disturbing.  They speak of disputes and jostling taking place in terms of this huge group we are now committed to rescue.  For the record, those resignations were –

  • 12th January – Steve Bideshi, CLF Group CEO, effective 31st January
  • 19th January – Michael Carballo, CLF Group Finance Director, also effective 31st January
  • 3rd February – Claude Musaib-Ali, CEO of CLICO, effective 14th February

The growing sound we are hearing is that the Bob Lindquist forensic report into the dealings of CLICO etc. is to be completed at the end of February.  Many people for whom I would normally hold some respect are anxiously awaiting that report to see what possible wrong-doing might be revealed.

In my view it is an error at this time for us to be awaiting the publication or selected leaking of such a document.

We need to press for the Audited Accounts of the CL Financial group as at 31st December 2008.  Those accounts should be signed-off by the same professional firm which did the 2007 audit, the internationally-renowned PriceWaterhouseCoopers.

That is the most important single document, since it will fix an asset value at the end of 2008.  That is –

  • 12 months after the last audited accounts, which showed a total asset value of $100.666Bn.  See – http://www.clico.com/pdf/AR07/CL%20Financial%20Annual%20Report%202009.pdf
  • 55 days after Michael Carballo, the then-Group Finance Director, gave statements to the Business Guardian that the group had assets of $100Bn and could weather any storm.  See – http://legacy.guardian.co.tt/archives/2008-11-07/bussguardian1.html
  • Lawrence Duprey. Photo courtesy the T&T Review
    Lawrence Duprey.
    13 days before Lawrence Duprey, the group’s Executive Chairman, wrote to the Governor of the Central Bank to request urgent financial assistance.  That letter was accompanied by a table setting out the group’s asset values – totaling $23.9Bn – and was read into the Hansard by the Minister of Finance on 4th February.  See – http://www.ttparliament.org/hansards/hh20090204.pdf at page 628.
  • 16 days before a dividend of $3.00 per share was paid to the CL Financial shareholders.
  • 30 days before the historic press conference to announce the bailout, at which it was repeatedly stated that the CL Financial group had $100Bn in assets.

Despite its obvious importance in the mystery of the missing money, there is complete silence as to the progress of the 2008 audit. It is almost a full year overdue and the only accounts we hear of are the forensic and confidential ones. The CL Financial group’s audited accounts were always published anyway, so why can we not have a clear, official statement as to when the 2008 audited accounts will be published?  What is the mystery?

This country is now bailing-out a group which has failed and/or refused to provide its annual audited accounts and that is unacceptable in terms of the proper expenditure of our taxpayers’ funds.

Let us mark this moment well, because if the 2008 audited accounts are allowed to fade into obscurity, please do not think that we, the citizens, will be treated any better with the 2009 accounts.  Please take note that this is a recipe for even greater levels of corruption than what besets us now.

There are also other facts, now in the record, which cry out for early attention, without need for special reports or melodrama.

Was the payment of a dividend to CL Financial shareholders, after writing to seek urgent financial assistance, an illegal act by its Board of Directors?  Yes or no?  If yes, then what actions are to be taken to both a) recover those sums of money and b) punish the Directors of CL Financial for their illegal act?  If no, we need to hear how that could possibly be the case.  If that dividend payment were legal, our tiny Republic would once again be setting a new precedent for the world to observe.  Is it possible, as incredible as it might seem, that the Board of CL Financial did not know that Duprey’s letter had been sent to the Central Bank?

The State is in control of the CL Financial group and ought to be able to present a picture as to who broke their deposits in the last 90 days.  That is guaranteed to be an interesting read and no need for any forensic report there, either.  Maybe more importantly, who borrowed from the floundering group in its last days and on what terms.  Another piece of the puzzle which is easily within grasp, but the mysterious silence is persistent.

The Governor of the Central Bank has, on several occasions, publicly and clearly stated his deep concern at the actions of the CL Financial chiefs – look at these 2 examples –

The Central Bank issued updated regulations as to the qualities of person considered to be fit and proper to serve as Directors or Senior Officials of Financial companies – that is at http://www.central-bank.org.tt/news/releases/2005/mr050510.pdf. At 3.1, it states –

In accordance with governing legislation a person is considered to be fit and proper if the person essentially is of good character, competent, honest, financially sound, reputable, reliable and discharges and is likely to discharge his/her responsibilities fairly.

The Governor of the Central bank has spoken, in unmistakable terms, about the conduct of these CL Financial officials – so what is the delay in exercising his powers under the fit and proper regulations?  If we are to believe his statements, and I have no reason to doubt the Governor’s word, there is no lack of evidence that the CL Financial chiefs were not operating in accordance with the official rules as to fit and proper conduct.

We do not need to wait for any forensic report to be leaked or any opinion from expensive foreign lawyers.  Sweet as the melodrama can be, it is a most dangerous distraction in this case.

SIDEBAR: The UDeCOTT element

As per the CL Financial fiasco, we are all waiting on the completion of the report of the Uff Commission of Enquiry into the Public Sector Construction Industry, with particular attention to UDeCOTT and Cleaver Heights.  That report is due to be presented to the President at the end of this month and, as important as it no doubt is, the primary issue is in danger of becoming conveniently obscured. I have raised the question before, is UDeCOTT insolvent?  Why the inordinate and unexplained delay in publishing their audited accounts?  The last time UDeCOTT published audited accounts was in 2006 – so no account for 2007, 2008 or 2009.  State guidelines require that State Enterprises publish their audited accounts by the end of April of the next year.

There is no good reason for the non-publication of any of these accounts.  They are bound to help us solve the mystery of the missing money.

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