CL Financial bailout: The Peoples’ Partnership position

Kamla Persad-Bissessar, M.P. Photo courtesy Guardian Media
Kamla Persad-Bissessar, M.P., leader of the Peoples’ Partnership and newly elected Prime Minister

The CL Financial bailout has been a major public concern since it was announced on 30th January 2009 and I have been critical of the steps taken by the current administration to deal with the collapse of what was the Caribbean’s largest conglomerate.  The leader of the Peoples’ Partnership (PP), Kamla Persad-Bissessar, has been noted for her strong criticism of the actions of the then Minister of Finance in making early withdrawals from the CL Financial group before the collapse.  Her arguments in the Parliament are an important part of the story of this fiasco.

National elections are tomorrow, with the distinct probability of a victory by the united PP, so it is timely to consider the way in which that group might handle the bailout.

In addition to her major contribution to this debate, the opposition leader has recently promised to revisit the terms of the bailout and that is an intriguing development.

It is impossible at this stage to know what the PP will do on this important public matter, but I have been considering the role of certain major players.

The Insiders

For example, these are prominent people, formerly from the highest level of the CL Financial group –

The Insiders
The Insiders: (l - r) Robert Mayers, Mervyn Assam, Dr. Bhoendradatt Tewarie, Carlos John
  • Robert Mayers – Deputy Leader of CoP and former Managing Director of CMMB – Mayers retired in November 2008 and was reportedly the financial adviser to Lawrence Duprey.  Mr. Mayers is not listed in the CL Financial Annual Return of 17th February 2009 as a shareholder.
  • Mervyn Assam – Former Trade Minister with UNC in the 1995-2000 period and UNC Senator up until the dissolution of Parliament in April.  Assam was a founder of CLICO Investment Bank (CIB) and its last Chairman before the collapse.  Despite the heat and temper of the election campaign, we have heard nothing on the role of Assam in the collapse of CIB.  Yet again, the ‘Code of Silence’ is suspected, by negative inference, as it were.  There seems to be some tacit agreement between the contending parties on this controversial matter. Mr. Assam is listed in the CL Financial Annual Return of 17th February 2009 as #22 of the 325 shareholders, holding 7,500 shares.
  • Dr. Bhoendradatt Tewarie – Former Principal of UWI (St. Augustine), Director of CL Financial and Republic Bank Limited at the time of the collapse.  The Foundation for Politics and Leadership, which was founded by some of the leading figures in the Congress of the People (CoP), headlined Dr. Tewarie to speak at their January 16th conference ‘Thinking Ahead – Governance in the 21st Century’.  Tewarie is reported to have been one of the Directors who was present at the last Annual General Meeting of CL Financial on 23rd January 2009 at Trinidad Hilton.  Yes, that is 7 days after they paid the final dividend; 10 days after they wrote the Central Bank and 7 days before announcing the bailout.  Again, Tewarie is also silent on those events in the CL Financial Boardroom. Dr. Tewarie is listed in the CL Financial Annual Return of 17th February 2009 as #290 of the 325 shareholders, holding 1,171 shares.
  • Carlos John – Former close aide of Lawrence Duprey and Director of CL Financial.  Now visible at political meetings and has reportedly been recently canvassing in support of the PP’s St. Joseph candidate, recently-retired High Court Judge, Herbert Volney.  Mr. John is not listed in the CL Financial Annual Return of 17th February 2009 as a shareholder.

It is easy to imagine these men playing an important part in any future PP government.

The Outsiders

The Outsiders
The Outsiders: (l - r) former MPs Trevor Sudama and Ramesh Lawrence Maharaj

In contrast, the two UNC MPs who, publicly and in advance, voiced serious concerns over the CL Financial group were economist, Trevor Sudama and  former Attorney General, Ramesh Lawrence Maharaj.  Both of those courageous individuals suffered the wrath of Mr. Panday and eventually found themselves sidelined.  Ramesh was an MP in the last Parliament and ended up backing the very Basdeo Panday in the UNC’s recent leadership contest.  A twisted road indeed, but ultimately, with Kamla’s victory, Ramesh has now been excluded from the ranks of PP candidates in tomorrow’s  election.  Only those two individuals in our public life had the foresight and fortitude to sound the alarm on CL Financial.  For whatever reason, we have now come to an arrangement of forces which has no room for those two men.

What is at stake?

Apart from the crucial Special Purpose Entities (SPEs), the CL Financial bailout has placed the entire group under State control.  There are  therefore substantial Directorships and contracts, within the very CL Financial group, to be dispensed.

SIDEBAR: FIXING the bailout

Some of the main issues which must be dealt with if the bailout terms are to be normalised would be –

  • Audited Accounts – There is an immense variance between the asset value of the group as per their 2007 audited accounts ($100.7Bn as published on 18th November 2008) and as stated in their letter of 13th January 2009 requesting urgent financial assistance (a mere 56 days later, the asset value was stated to be $23.9BN). We need to have the audited accounts for 2008 and 2009 published without further delay. In any case, that publication is mandated by clause 4.4.5 of the Shareholders’ Agreement.
  • Payment of CL Financial dividend – CL Financial paid a dividend of $3.00 per share to its shareholders on 16th January 2009, 3 days after writing to seek the urgent financial assistance of the State.  Steps need to be taken to recover those dividends from the shareholders.
  • Role of the Regulator – The Governor of the Central Bank has repeatedly told of the long-term concern over the risks inherent in CL Financial’s operations.  We need to know if those regulators were at fault and to what extent could all of this have been avoided.
  • Fit and Proper conduct of the Directors – The ‘Fit and Proper’ criteria which are essential qualifications for Directors and Officers of Financial Institutions, were clearly not followed, if we are to believe the public statements of the Governor.  What is to be done with the offenders? Will a PP administration be willing or able to dis-qualify those Directors?
  • Taxpayers’ protection for CL Financial shareholders – The Shareholders’ Agreement of 12th June 2009 extended the bailout protection to the shareholders of the collapsed group.  For the interests of shareholders to be protected in this situation is contrary to good sense and violates elementary principles of good public policy.  It is unprecedented anywhere else in the world, including Nigeria, as shown in ‘Finding the Assets‘, published in the Business Guardian on 19th November 2009. Literally, it is a case of ‘Only in Trinidad & Tobago’.  Question is, will a PP administration be reversing that corrupt decision?
  • The strategy behind the bailout – Most importantly – ‘What is the strategy behind the bailout?‘  On 31st March, there was a major press conference of the CL Financial leadership to announce the resignation of Dr. Euric Bobb and the appointment of Marlon Holder as the group’s new CEO.  The promise to provide accounts and a strategy was a key feature of that event and it is awaited.

SIDEBAR: The role of SPEs

There are about 65 SPEs and the terms of the CL Financial bailout bring another 65 companies in that group within the umbrella of State control.  That is a total of 130 companies and this could be an opportunity to re-shape the corporate culture of the place.

The opposition leader has been noted for her sharp questioning of the real role of the SPEs, even going so far as to suggest that they are deliberately used to avoid the norms of proper accountability in the spending of public monies.

The PM, Mr. Manning, also told us in his interview last Sunday that in some cases, the SPEs may have ‘cut corners’.

Both those statements seem to signal an acceptance of the need to change, but we will have to wait to see what actually happens.


3 thoughts on “CL Financial bailout: The Peoples’ Partnership position

  1. The usual suspects are now on the frontline. No accidental tourist here.
    Can they repair the damage they have done? or Will they act in enlightened self interest?

    1. Hello Herma,

      I guess the only prize for guessing right is the lack of surprise, eh?

      With the new Cabinet to be announced later this week and appointments to SPE Boards to follow, this is the time for us to make our views known. Did we vote for Change, or was it simply Exchange? In my view the public must NOT be saddled with any of those irresponsible people from the so-called ‘responsible classes’. Those people and our collective failure to deny them positions of responsibility, are the direct cause of the sad state of affairs in our country.

      Specifically, the people who sat at the controls while CL Financial drifted onto the rocks must not be allowed to return to public office and esteem without providing a full account of the events leading up to this Caribbean catastrophe.

      The ‘Code of Silence’ must be dismantled, brick by brick, if necessary, if we are to progress.

      At the very least, we should be banishing them to obscurity.

      Please join us here again.


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