CL Financial bailout – Sunlight Disinfectant

If you think this title is for the latest brand of household cleaner, you would be wrong.  I drew that title from the famous statement by deceased US Supreme Court Justice Louis Brandeis, in reference to corruption and fraudulent dealings: ‘sunlight is said to be the best of disinfectants.

Of course, this is all about the impending Colman Commission of Enquiry into the failure of CL Financial and other companies (including CMMB) and the Hindu Credit Union.

We are attempting to understand our situation in this financial fiasco – how was the entire collapse caused?  Who is responsible?  What can we do to avoid a repetition?

Our House needs a serious cleaning and we need a new commitment to serious retrospection if we are to succeed in understanding this scandalous situation.

To set the stage, there are four principalities being represented in this Enquiry –

  1. CL Financial Chiefs – The people who had Direction and Control of the entire failed group – that would include the shareholders.
  2. The Regulators – The Supervisor of Insurance, Securities and Exchange Commission (SEC) and the Central Bank.
  3. The Auditors – PriceWaterhouseCoopers and Ernst & Young – the former being auditors for the CL Financial group and the latter acting for the Central Bank.
  4. The aggrieved Policy-Holders and Depositors – Several groups have been formed to seek the return of all the monies owed to these investors.

My first point about this Colman Commission is how welcome it is, as a tangible sign of a change in how our country is being run.  No, I did not vote for either group in the last election, but it seems to me that neither of the last two regimes (Manning or Panday) would have initiated a public enquiry into this financial fiasco.

As much as I approve the decision to have this public enquiry, the purpose of this article is to warn against some of the forces now being assembled to erode the enquiry’s effectiveness.  Even though, in this respect, political times have changed, we need to remain vigilant if the Colman Commission is to be effective.

To be sure, the four principalities I listed comprise very powerful players for whom this enquiry is a literal nightmare, since they will be obliged to explain some of their biggest decisions and actions, which they would never have had to explain to anyone outside of their own circle.

If the Enquiry takes place as intended, we are going to be afforded an unprecedented insight into the workings, dealings, arrangements and situations in our leadership class – all of it at a depth and range never before recorded.  Matters that had been only the subject of picong, ole talk and so-called urban legends will all now become part of the official record.  Yes, our Republic will be coming of age.

Our country is a Republic, which to me means that no class of citizen ought to enjoy rights which are superior.  But there has been a pattern of behaviour in this fiasco which has been very disturbing because it violates those Republican expectations.  Of course, I am referring to the fact that a three-tier system seems to have been in operation during the entire meltdown.

  1. The lowest tier comprises those many persons who are now fretting over their investments with this failed group.  Those people have to decide between continued protest action, legal action or just plain pleading to get some relief.  A significant number of them would have placed undue reliance on the CLF products and would be suffering extra stress because they put too many, or all, of their eggs in one basket.
  2. The middle tier is the lucky and/or well-connected people who were able to get back their money after the group collapsed.  When the Prime Minister announced this Enquiry on 1st October 2010, she promised to release details of who received the monies disbursed in that period – i.e. after 30th January 2009.  That list of names and who received what sums would be an absolutely explosive one.
  3. Of course, the top tier and the absolute insiders would be those who had early warning of the oncoming collapse and took steps to preserve their wealth.  That group would have to include the top CL Financial chiefs who left in the 12 months before the collapse – Monteil, Fifi and Mayers.  Major depositors and investors would also have been part of this privileged group.  The Governor of the Central Bank and the last Minister of Finance also withdrew monies just before the collapse.

Maybe I am entirely wrong and there was complete surprise when the CL Financial group collapsed.  But if that is the case, one is really contemplating a slack system of management systems and an entire swath of our ruling elite who are not ‘fit and proper’.  The question of who knew what and when, will be a main point of dispute, because either way you slice it, the picture is unappealing.

You can be sure that the people in the top layer will do anything in their power to protect themselves from the stern scrutiny of those in the lowest group, not to mention the public, who are paying for all this.

I wrote a previous column in this series, entitled ‘Taking in front‘ and on this occasion, in light of what is at stake, I, too, am taking in front.  Having suffered a defeat in that the Colman Commission has now been established, the members of the Code of Silence can be expected to try halting, delaying or just diluting the Commission.

Harry Harnarine, former HCU president. Photo © newsday.co.tt
Harry Harnarine, former HCU president. Photo © newsday.co.tt

We have already had former Hindu Credit Union (HCU) chief, Harry Harnarine, defeated in the High Court in an attempt to stop the Colman Commission.  I was not surprised to read reports that Harnarine is planning to appeal that decision.  We can expect other strong challenges as this historic process unfolds.

If the members of the Code of Silence are unable to derail the Commission itself, we should not be surprised if they try to cloak the proceedings in some kind of blanket to prevent too much information escaping.

Readers, please note that the process of asking the Court to prevent publication of a particular piece of evidence is a very swift one, with the ruling expected in the very same sitting.  That is because if those proceedings are too drawn-out, it can be actually self-defeating, since the matter which they are seeking to have concealed can be published and discussed while a decision is awaited.

That is the reason we need to beat this drum now.  We cannot wait for the filing of injunctions and then seek to publish.  By then, it would be too late.

The new algebra is simple and inescapable –

Expenditure of Public Money – Transparency = CORRUPTION

Whatever the negatives of the American Imperium, there are still aspects of that society which are worthy of emulation.  The example which comes to mind is the recently-published report of the Financial Crisis Inquiry Commission.

The preface of that Report contains an instructive paragraph, at page xii –

“…This report is not the sole repository of what the panel found. A website — www.fcic.gov — will host a wealth of information beyond what could be presented here. It will contain a stockpile of materials — including documents and emails, video of the Commission’s public hearings, testimony, and supporting research — that can be studied for years to come. Much of what is footnoted in this report can be found on the website. In addition, more materials that cannot be released yet for various reasons will eventually be made public through the National Archives and Records Administration…”

The US legislature is determined that the inner lessons and testimony on this important crisis are available to all interested parties for the years ahead.  That represents a solid commitment to a learning society, which will at least attempt to draw lessons from the bitterest of experiences.  In my opinion, that commitment is worthy of emulation.

Has our society reached the stage of maturation to commit to an entirely transparent process of retrospection?  That is the question which will be tested in the weeks and months to follow.

The entire proceedings of the Colman Commission must be held in public.  The proceedings must be on TV and available on the internet.  The Colman Commission needs a strong internet presence, with its own website.

Sunlight Disinfectant cleans brighter, you see?

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6 thoughts on “CL Financial bailout – Sunlight Disinfectant

  1. Very important, Afra!

    Apart from the great work you are doing in ‘raising awareness’, can you suggest other actions that people might take to help to keep prevent any cloaking of the proceedings?

  2. Hi Afra,
    Is anyone representing the interest of the depositors from the Eastern Caribbean? If not, shouldn’t they be part of the aggrieved policyholders and depositors?

    1. The Eastern Caribbean problem is a connected yet separate kettle of fish. Whilst some court actions, mainly in the US, have been commenced it would appear that those politicians and senior financial persons from the EC are also going about their lives without a care. Just as in T+T. However, why T+T should have to put out significant monies for the EC when they themselves are doing nothing to help themselves, let alone pursue their own higher up’s who benefited from CLF’s / CLICO’s largesse, is beyond me.

  3. Remember the Mustill Inquiry!

    Messrs Fifi and Monteil were too busy to take part and made themselves unavailable. The AG at the time decided that he had nothing to contribute to the proceedings. Will they take part this time?

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