Throughout this series of articles on the CL Financial bailout I have touched on the existence and effect of a Code of Silence amongst our ruling elite.
This is sometimes called the Information Age, with the latest news and ideas being ‘pinged’ or ‘tweeted’ across the Social Networks. The new reality demands a complete shift in our attitudes to information. Our leadership class has blatantly refused to share their information and insights at moments of crisis, which shows the challenge facing us if we are to progress. Just to give two examples, think of the many secret reports from all the Commissions of Enquiry before the Uff Commission and the steadfast refusal of our political leaders, for many years, to even consider a Commission of Enquiry into the Coup. It is widespread and literally sickening to all right-thinking people.
We have had a new start and some reason to hope for change, by the PP government’s appointment of Commissions of Enquiry into the 1990 Coup and the financial collapse (CL Financial and Hindu Credit Union).
Even now, alongside those hopes, the new government has still not published the Bernard Report into the Piarco Airport Project.
Despite the progress, we cannot be complacent, the slope is slippery and the stakes are high.
The Code of Silence is deep and powerful in the case of the CL Financial bailout.
On 3rd October, I set out a few of the failures on the part of the regulators. Those failings are real and serious, but sometimes a shift in focus can be beneficial.
If we look beyond the legally-empowered regulators, there are other informal ‘regulators’ upon whom society relies to make decisions. Those would include Civic Society Organisations, Trade Unions, Institutions of Higher Learning and Professional Bodies. Society has been able to rely on these because they are seen to represent collective knowledge and insight, rising above individual interests to attain broader perspectives.
Those bodies, with one notable exception, have been silent throughout this CL Financial fiasco and have failed the broader society in this colossal matter. I am being forced by these events to re-examine my fundamental assumptions on the degree of our reliance on these bodies. This is the real nadir of corruption, when we seem to have lost our way in the long grass and we not even talking about the politicians and so on. This one is not about them. It is about us and our feet of clay.
Let me explain –
- Law Association – This is one of the leading Professional Bodies and their silence has been deafening. The President of the Law Association is former Independent Senator, Sunday Express columnist and eminent Senior Counsel, Martin Daly. Daly is widely regarded as a fearless and irreproachable voice on many matters.
The tangled web in this CL Financial bailout has included early withdrawals, overlapping Directorships between depositors and bankers, payment of dividends after asking for state financial assistance, misleading negotiating positions taken by the CL Financial chiefs, a huge zero-interest payout to the CL Financial chiefs which left their shareholdings intact, attempts to sell assets in breach of the MoU. Most of all, the serious and inescapable conflict of interest of the then Minister of Finance, who is an attorney – every single attorney I have spoken with agrees that this was a clear case of conflict of interest.
Yet, not a word from the Law Association. Am I alone in expecting any better?
- Institute of Chartered Accountants of Trinidad & Tobago (ICATT) – The entire collapse is shot through with a failure of accountants at several levels and yet this professional body has been silent on all this. After ignoring my open letter and other attempts to start some dialogue on this, Anthony Pierre, ICATT’s President, agreed to appear on a TV interview with me on CNMG. That interview was broadcast on Sunday 26th September 2010 – it can be viewed at http://wp.me/pBrZN-qW – in the ‘Sunday Morning Politics’ slot. When I put the question to him as to the errors and/or omissions of the professional accountants in this huge collapse, Pierre took the position that there was no cause for concern. I do not accept that position, but of course the Commission of Enquiry and hopefully the publication of those long-overdue accounts will shed some more light.
- University of the West Indies (UWI) – There has been very limited engagement from UWI on this matter, which is a pity when one considers that the areas of study there include economics, finance, law, business management and accounting.
Of course, the former Campus Principal and now Director of UWI’s Institute of Critical Thinking is Dr Bhoendratt Tewarie, who was also a member of CL Financial’s pre-collapse Board. That is the same Board which approved payment of a dividend 3 days after CL Financial’s Executive Chairman wrote to the Central Bank for urgent financial assistance. Dr Tewarie is also reported to have been at the final Annual General Meeting of CL Financial, held at Trinidad Hilton on 23rd January 2009. The timing couldn’t be better for a report to shareholders – after all, the Central Bank had been written to 10 days before, the dividends approved a week before and the bailout itself was just 7 days away. So what happened at that AGM? Were shareholders given an honest report from the custodians of their capital?
The late Professor Dennis Pantin did write several times on the CL Financial collapse and bailout in his Sunday Guardian column. Dennis made the early call for a Commission of Enquiry into this entire mess and that has now been acted upon.
Another UWI figure in the whole mess is Dr. Patrick Watson, who is Professor of Economics and Director of the Sir Arthur Lewis Institute for Social and Economic Studies (SALISES). Professor Watson is a government Senator in the current Parliament, who after maintaining his silence on this economic catastrophe since January 2009, has now become most vocal since the budget speech.
Is a straight case of nearer to Church further from God.
- Trade Unions – The two groups which one can normally expect to have a public position on these long-term, large-scale issues are the Oilfields Workers’ Trade Union (OWTU) and of course, the Federation of Independent Trade Unions and NGOs (FITUN). Neither of those bodies rose to the challenge and we are the poorer for it.
- Trinidad & Tobago Transparency Institute (TTTI) – Yes, the TTTI did make a strong statement calling for improved accountability in the bailout process. That is a Civic Society body doing its job.
What really happened?
But apart from us in the Civil Society, there is another level of the Code of Silence being practiced in that some of the very people who were in charge of this huge crash have rejoined public life, saying nothing about the crash.
They have been recycled. Yes, I know that recycling is good, but this one is toxic.
Caribbean Money Market Brokers (CMMB) – Robert Mayers was the former Managing Director of CMMB, who retired on 8th December 2008 – see http://legacy.guardian.co.tt/archives/2008-12-09/business2.html – which is less than two months before that company collapsed. Mayers is a most articulate and willing public speaker, who was recently discussing the national budget on the electronic media.
We have heard nothing from Mayers on how the collapse presented itself and there is no concerted attempt to pass on any lessons learned to a younger generation of citizen.
Clico Investment Bank (CIB) – CIB was chaired by Mervyn Assam, recently appointed as a Special Ambassador with responsibility for Trade and Industry. Faris Al-Rawi, attorney-at-law, was a Director on that Board and he is now a PNM Senator.
Neither man has made any attempt to publicly explain CIB’s shocking insolvency, which was estimated by the Central bank to be of the order of $4.7Bn.
All those people appear to have been anointed, in what must have been a private ceremony, then re-presented as ready to serve. We deserve no less than a proper explanation from these Directors and Officers and I was pleased to see PNM Senator Penelope Beckles recently joining me in calling for them to be questioned publicly.
The case of AIC Finance
Ian Narine, writing in the Business Guardian on Thursday 14th October – http://guardian.co.tt/business/business-guardian/2010/10/14/there-enough-everyone – attempted to point out the way he had tried to warn the investing public on the perils of CL Financial. That column made interesting reading, but what would be the position of the press if any such situation were unfolding right now?
Just as an example, AIC Finance is owned and run by the Jamaican billionaire, Michael Lee-Chin, who came in for mention in Anthony Wilson’s 15th October 2009 BG View ‘Will Lee-Chin avoid Duprey’s fate?’ – see http://guardian.co.tt/business/business-guardian/2009/10/15/will-lee-chin-avoid-duprey-s-fate. I commented on that in the Trinidad & Tobago Review of 2nd November 2009 in ‘Duprey’s fate’ – see http://wp.me/pBrZN-43 or http://www.tntreview.com/?p=887 and the points are once again pertinent.
AIC Barbados, the regional holding company for the group, defaulted on a USD bond in 2009 – in other words, they were unable to pay their debts – see http://guardian.co.tt/business/business/2009/06/06/lee-chin-late-us47m-bond-payment or http://www.jamaica-gleaner.com/gleaner/20100818/business/business1.html.
In the last part of September, AIC Finance has been advertising surprisingly high rates of interest in daily newspaper adverts which also offer ‘Preferential rates to Trinidad & Tobago Association of Responsible Persons (TTARP) members’.
COMPARISON TABLE for 12-month fixed deposit rates for amounts up to $500,000 as at 30th September 2010
|Financial Institution||Range of interest rates|
|First Citizens’ Bank||1.25% to 2.1%|
|RBTT||0.2% to 1.45%|
|Scotiabank||Up to 0.75%|
|Republic Bank||0.30% to 0.75%|
|Unit Trust Corporation (Money Market Fund)||2.15%|
|First Citizens’ Bank Abercrombie Fund||1.90%|
|Fidelity Finance (part of the Maritime group)||1.8%|
If CL Financial could not sustain this strategy, how can AIC continue to offer these rates in today’s market?
That is the question.
According to recent press advertisements, the Board of Directors of AIC Finance Limited comprises –
Further details are at http://www.aic.tt/page.asp?page=Board+of+Directors
7 thoughts on “CL Financial bailout: The Code of Silence”
Thanks for sharing your insights.
AIC has been facing all sorts of problems, yet people will continue to place their funds with the company…
Hubris is a killer.
(Toronto, Ontario, April 2, 2003) – The Royal Ontario Museum (ROM) announced today a lead gift of $30 million from donor Michael Lee-Chin for the Renaissance ROM Campaign. The announcement was made in a media conference attended by 150 guests this morning at the ROM, with the participation of prominent members of the culture, business and government communities, including the Hon. Hilary M. Weston (Campaign Chair), the Honourable David Tsubouchi (Ontario’s Minister of Culture) and the Honourable David Collenette (Canada’s Minister of Transportation). In response to this extraordinary contribution, the ROM will name its Crystal building addition the Michael A. Lee-Chin Crystal, and the interior atrium court the Hyacinth Gloria Chen Crystal Court in honour of Mr. Lee-Chin’s mother. The date of May 28, 2003 was also announced for the Launch of the public phase of the $200 million Renaissance ROM Campaign.
Michael Lee-Chin, Chairman and Chief Executive Officer of AIC Limited, stated, “I’m thrilled to make this contribution to support a project that will change the face of Toronto and create an invaluable cultural and educational legacy for Ontario and Canada. I have been struck by how increasingly relevant and important the Museum’s core mission—building bridges of understanding and appreciation of the worlds’ cultural and natural diversity—is to youth and adults of our country. To assist and be involved with this institution at such a pivotal moment in its history is a tremendous privilege.”
Great article. Ira and I think agree that we need to keep pushing to ensure that people are held responsible. Have a look at Ira’s article in the Guardian on Sun. 10th Oct. 2010
And yet this isn’t precisely the problem. What kind of Code of Silence? I don’t doubt that there is, at the margins, some irresponsible segregation of relevant information – maybe even toxic information – which ought to find its way into the public domain. But it’s not merely the provision of information and the calibration of decision-making sequences that we are after when we speak of a Code of Silence. Afra implies that there is willing/active malfeasance in the concealment of information and the reluctance to participate in finding-out and putting to rights. Again, there must be some of this.
In the case of ICATT at least, the silence is both sordid and stupid. Sordid because the whole accounting profession in T&T stands tainted by the advice offered and the blind eye turned (for fees) by certain high-profile firms. Stupid because it would take very little for ICATT to earn the trust of society by themselves questioning their own and letting the chips fall where they would. It isn’t that ICATT isn’t capable or willing or able to call its own to account.
The truth is much uglier.
ICATT never thought of the CL problems in terms of any responsibility they themselves may hold. They’ve never considered it. Frightening for true. Worse, no member of any professional association in T&T considers it the professional responsibility of their organisations to challenge the CL matter from where they are. No one goes to a meeting aggrieved at the madness and requires their profession to devise an inquiry within even their own terms of reference. It’s as if “too big to fail” also means ‘Too Big to Notice‘.
I offer you, therefore, a new title; instead of Code of Silence why not Pledge of Ignorance?
It’s as if someone has called the police with a credible bomb threat and the policeman steups and hangs up the phone. Now assume the caller can see the policeman. He notes the indifference of the officer, is hurt at not being taken seriously and forlornly goes and removes his bomb. Later the policeman says to his pals “See…? No damn bomb”
When we look back on this juncture in say 3 years’ time, either we’ll be filled with self-loathing or we’ll have made an intervention in our newfound scrupulous pursuit of integrity in our financial firms. What do interest rates reveal about the marketplace? Equally, what do they reveal about the dealings of the firms in these markets?
Click to access file-533873.pdf
RBTT is reporting rates of return in excess of 15% in advertising their High Yield Fund. There is more detail if you dig into their website.
As demonstrated in this link, the Code of Silence (cover up) in CLICO is simply a reflection of the Great American Way.
Tax-payers will pay, and the perps will keep their ill-gotten gains.