The CL Financial bailout and the Special Purpose Entity fiasco – Joining the dots

Here we are…In the Land of the Mimic-Men,
You run from the pain,
But the jokes pull you back again,
But home is home,
So you say ‘Hail la Trinity!’,
Then yuh talk about the Love of Liberty,
But then ‘Forge’ is the first word of we Anthem,
Yuh see we so damn corrupt,
That is the problem,
So now dey tief but you ignore,
So now you workin,
And for yuh Children sake, man yuh eh jokin…
–David Rudder – ‘Another Day in Paradise’.
Lyrics © 1996, Lypsoland Music. Used by permission. All Rights Reserved.

On 12th March 2009, the Business Guardian published ‘Sagacity and Veracity’ as my attempt to compare the aspects being revealed by the unfolding collapse of CL Financial and the Uff Enquiry into the public sector construction industry.  At the time, quite frankly, it felt like a bit of a stretch to compare the two….what do we know now?
No need to burden readers, the last few months have been crammed full of shocking details of these situations.  Time for me to try putting them into some perspective.

Some threads to start pulling together –

  • CLICO, the biggest part of the Caribbean’s largest and most successful conglomerate, had not reconciled its bank statements for 3 years or established an audit committee.
  • UDeCOTT, the exemplary Special Purpose Entity, ‘back-fits’ invoices and is unable to publish its accounts for three years.
  • The Housing Development Corporation knowingly and massively over-states the numbers of new homes they have built – they have no signed contracts for any of their projects.
  • We have an entire Integrity Commission resign; having ignored expert advice only to lose a damaging court case, yet to date there is not even an attempt to offer an explanation for their bizarre, unseemly actions.
  • To cap it all, we have the sitting President of our Republic appoint a slate of candidates to replace that Integrity Commission.  That slate was questionable, including an intellectual accused of flagrant plagiarism and a prohibited person (being Chief of a State-controlled Agency).  So much so in fact that it caused me to question seriously, for the first time, the mental capacity of that office-holder.  I could scarcely believe my ears, when the President, addressing the nation after his month-long holiday in some undisclosed location, told us all that he did not have to explain anything.

In addition to the absence of consequence, there exists a potent Code of Silence…Only whistleblowers are punished in our Republic…Is almost like gangster business, where witnesses need special protection. Gangster politics.


What is obvious to me is that the absence of consequences is proving inimical to our national development.

In addition to the absence of consequence, there exists a potent Code of Silence which prevents us from getting a reliable account of what really went on inside any of these many situations.  I am speaking here of attributed interviews which can form part of our understanding the problems.  Nobody on the CL Financial or UDeCOTT or HDC Boards has spoken openly.  No one in any of the previous Cabinets.  Is like we walking in de dark (Thanks, Brigo).

There is no point in citing Cabinet secrecy or commercial confidentiality as reasons for the silence.  That would involve an attachment to principle which is not part of our situation.  In other countries with far more at stake – USA in its ‘War on Terror’, for example – it is normal to see detailed, open accounts of what has taken place at Cabinet and other top-level commercial meetings.  Our Code of Silence is a different thing.

One thing, we all know for sure, even with the national absence of consequence, is that one type of person will definitely be punished.  Yes, that is the ‘whistleblower’, the seeker after truth.  Only whistleblowers are punished in our Republic.

Is almost like gangster business, where witnesses need special protection.  Gangster politics.

Can we escape our culture?  Can we escape our culture?  Can we eclipse ourselves?

Do we need a big Witness Protection program?  Who is to Guard those guards?

A good example is worth a thousand words’, so my teachers used to say.  What kind of example are we setting for our young people?

The people responsible for this mess are our Leadership Class.  These are the people – yes, I know that I am one of them – who had the best schooling and opportunities.  We are witnessing a lack of responsible behavior by our leadership class – the best and the brightest.

We are living with the consequences of an absence of consequence.

Careless Chiefs

Imagine a parent, becoming aware that something improper is happening between one of their children and a responsible adult, someone like a teacher or coach.  Someone whose job it is to nurture your child in a responsible fashion.

A responsible parent will take immediate steps to deal with the problem.  Try to imagine what kind of parent will deal with a coach behaving improperly with one child, but leave their other children in that class, with the said ‘interfering’ coach.

Yes, we have a ‘Father of the Nation’ who has done just such a thing.  The fact is that the dismissed UDeCOTT Directors have not been removed from their other positions at State-controlled organizations.

That is the scale of the problem.

For the Party People

Some readers might see these columns as being critical of the PNM government and to some extent they would be right, since that is the party in power during these various episodes.  It being election season, nobody should be surprised that this stream of damaging revelations – on UDeCOTT, HDC, CL Financial etc – is very useful to the Peoples’ Partnership in the campaign.

As bad as the revelations of corruption, I am not at all sure, given their recent and indisputable record on these questions, whether the UNC would have done differently had they been in power in the last 8 years or so.  I can clearly recall the rejection suffered by Maharaj, Sudama and Maraj when they spoke out against corruption in the last UNC government.  The dissolution of Parliament and the calling of fresh elections soon followed, just like in this rounds.

No, this is not a political column, just an attempt to set out some points of view on our situation.  To stay on point, I agree with Transparency’s Chairman, Victor Hart, that the non-publication of the Bernard Report into the Piarco Airport project was a pity.  Hart, who was a Commissioner on that Enquiry, has also said that, had it been published, we would have been unlikely to have had the UDeCOTT situation.  Interestingly enough, PM Manning promised to publish it, but over 6 years later it remains concealed, for whatever reason.

The Peoples’ Partnership seems to be forging ahead on the winds of public disgust with large-scale corruption, so I am now calling on the leader to make us a public pledge to publish the Bernard Report into the Piarco Airport project immediately upon taking office.

The outline from ‘Sagacity and Veracity

An easy guide to the CL Financial and UDeCOTT Fiascos

Six quick pointers for our readers –

  1. Ambitious Empire-building
  2. Other peoples’ money
  3. Excessive borrowings
  4. No cogent planning or feasibility checks
  5. Real Profits? – Is it possible for CL Financial to pay dividends at the same time as writing to seek the State’s urgent financial assistance?  How could UDeCOTT be declaring improving profits as a property-development company, if every one of their projects is not feasible?
  6. Strategic Agenda – The common agenda is to privatize the benefits and profits while being careful to nationalize the losses.  We reject that agenda.  Moral hazard has to be upheld as a reality if we are to develop a progressive nation.

One thought on “The CL Financial bailout and the Special Purpose Entity fiasco – Joining the dots

  1. I return to the broad theme of OWNERSHIP.

    This of course incorporates the usual matters of Responsibility, Accountability and other such hot button words. What aspect of ownership gives rise to ambitious empire building? Surely as soon as operations exceed a certain scale and a certain reach then the conventions regarding ownership have got to be examined. Who owns CLICO if many key pension funds in both the public and the private sector are administrated by CLICO? Who owns CLF if they need to borrow from the STATE at no interest rate?

    Additionally, in a country so small, when a company scales up its operations, and somehow remains a wholly privately owned company, can regulations anticipate the way in which other peoples’ money will be risked? Our memory serves us very poorly if we cannot see that the failure of SWAIT and International Trust Ltd in 1981 presaged the economic downturn and the public’s loss of faith in the ruling regime at that time. Now the Gas expansion children have the CLF failure.

    We may be moving closer to facing up to this question of ownership after all.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.