There were several important developments in the Colman Commission last week, with the widely reported appeals of Sir Anthony Colman QC for the Central Bank to change its position with respect to the presentation of accounts to the Enquiry.
From my own attendance at the opening session of the Colman Commission on Friday 11th March and the various reports, it seems that there are various moves afoot to restrict or stop the enquiry. I expected this sort of scenario in declaring the main players to be part of a ‘Code of Silence’ – it is no surprise to me.
There are three strands which are becoming evident as we move into the new phase, with the Colman Commission and several legal actions swinging into action.
- Firstly, we had former HCU boss Harry Harnarine challenging the Colman Commission in Court, claiming it to be illegal etc. Obviously, Harnarine did not relish the thought of having to answer questions on TV. The Appeal Court rejected those claims on Monday 4th April and the reports were contradictory, to say the least –
“Speaking with reporters following the ruling, Harnarine said he was not satisfied with the panel’s ruling.
Harnarine said he welcomed the enquiry and would make objections “at the right time”.
Harnarine wanted the court to declare the commission null and void, that it was an abuse of the court’s process and that it was unlawful and illegal, among other requests.” - Secondly, the Central Bank’s action to wind-up Clico Investment Bank (CIB) was challenged by the National Gas Corporation (NGC) and the National Insurance Board (NIB). On 27th January the judge in that case ruled that the petitioner must be questioned. The Central Bank’s attorneys had fought very hard to resist that. The petitioner was the Inspector of Financial Institutions, Carl Hiralal. I have already questioned the apparent anomalies in his affidavits – in ‘The House on the Corner’ parts 1 & 2 – so Hiralal’s cross-examination was one to be anticipated. On 28th March, NGC withdrew from that lawsuit, which was to recover some $1.1Bn from CIB. There has been no statement as to why that was done. Given that the missing $1.1Bn is our taxpayers’ money, an urgent statement to clarify this decision is needed.
WHERE IS THE NGC’s MISSING $1.1Bn?
The NIB’s lawsuit is still ongoing and I await that cross-examination of Hiralal with great interest. - Thirdly, we now have reports of various objections being raised by the attorneys in respect of the accounts for CL Financial.
Readers need to be clear that there are three types of accounts in this matter. Given the room for error it is important to get this straight:
- Annual Audited Accounts – These are routine and ought to have been filed by now. The last accounts for the CL Financial Group and its subsidiaries were by PriceWaterhouseCoopers (PWC) as at year-end 2007. We therefore have a situation in this country with two insurance companies – CLICO and British-American – open for business with no accounts filed for 2008, 2009 or 2010. That is unacceptable and further delaying will only bring discredit to the responsible parties. The sidebar contains more on this.
- The Reviews of Accounts – Post-bailout, the Central Bank has hired Ernst & Young (E&Y) to review the accounts of the Clico Investment Bank and CLICO. In addition, the Commissioner of Co-operatives had hired E&Y to do the same for Hindu Credit Union (HCU). From what I have read, E&Y seem to be objecting to both the production of those reports to the Colman Commission and the subpoena to its Executive Chairman, Colin Soo Ping Chow – see Trinidad Express of 6th April – see here. I am not at all clear what is the objection to releasing those reports, after all, the E&Y report into CIB formed part of the Central Bank submissions to the High Court in the winding-up petition.
- Forensic Audits – These were reportedly done by Bob Lindquist and KPMG Canada for the Central Bank on CLICO, with the latter firm now claiming that their client is objecting to disclosure. The grounds appear to be that if those reports were disclosed, it would undermine the intended prosecutions. That seems to me to be a reasonable rationale to pause the publication of those reports until that impasse is resolved.
So, what is at stake here?
Sad to say, but this is reminding me of the actions of Calder Hart/UDeCOTT in trying to derail and frustrate the Uff Enquiry. On that infamous occasion we had the spectacle of a State-owned company challenging the Uff Commission – which had been established by the State – in the High Court. I hope that my view is incorrect.
This led to Colman’s appeal to the public as reported in the Trinidad and Tobago Guardian on 7th April and Trinidad Express of Friday 8th April. The first of those reports contained an intriguing fragment in which former AG and Law Association President, Russell Martineau SC raised objections on behalf of his clients, PWC, on grounds of confidentiality. That mystified me, since PWC’s audits seem to be confined to the first, most innocuous group, as outlined above.
According to Colman, if the Commission has to get fresh reports into these matters it will mean more delays and more expense. He said that would be a matter for the public to decide if that is in their interest, hence these efforts.
The Central Bank made a press release on 14th April which confirmed that they intend to take legal actions. Please note that the press release was silent as to the Annual Audited Accounts. For whatever reason, the Central Bank is continuing its silence as to the status of the most innocuous class of accounts.
It is unacceptable for these issues to be mixed in this misleading fashion. Simple and inescapable questions need to be answered now –
- Are the CL Financial annual audited accounts for 2008, 2009 and 2010 ready?
- If yes, why have they not been published?
- If not, why not?
- What is the objection to publishing the Reviews of Accounts?
It seems that we are being given a tough choice, between –
- a solid investigation, which preserves the secrecy of the forensic reports, with probable prosecutions, or
- a wide-open investigation, with a high level of information emerging about the entire fiasco, but little chance of successful prosecutions.
The Trinidad and Tobago Guardian editorial of Tuesday 12th opted for the former, while the Trinidad Express editorial of the same day took the opposite view, favouring the latter.
The decisive question, for me, is whether the Central Bank has a track record upon which we can rely. The basis of their objections is the notion that prosecutions are to be mounted against the offending parties. Can we really accept that?
The Central Bank’s track-record on these matters has been doubtful and people are right to be concerned. From the CIB’s reported failure to file Corporation Tax returns for 2007, 2008 and 2009 to the continued inaction on the ‘Fit and Proper’ regulations, to the failure to recover the dividends CLF paid after the bailout was requested. A poor record of proper enforcement.
We are now being asked to believe that an organisation which is unable or unwilling to pick those ‘low-hanging fruit’, will be able and willing to prosecute ‘high-flying smartmen’.
I am being reminded of those childish spelling-games we all played –
A for Apple
B for Bat
C for yuhself!
Trinidad & Tobago Transparency Institute made a press release on the issue, which called on the Central Bank to act in an exemplary fashion. That is a welcome statement.
My vote, for what it is worth, is that we should preserve the secrecy of the forensic reports so as to remove any escape hatch for these fraudsters and their accomplices. Leave them no avenue to claim that if this or that had not happened they would have been able to prosecute. There is probably enough material in the other two classes of accounts to progress the Colman Commission.
SIDEBAR
Freedom of Information – Having had three applications under the FoI Act ignored, I have now given the Ministry of Finance ten (10) days to provide a copy of CL Financial’s letter of 13th January 2009 requesting the bailout and the 2008 Audited Accounts for the CLF group – see here . If those documents are not supplied, it is off to Court we go.
Legal Opinions – At this point in the mix, we sorely need to hear from the legal columnists as to what is the position in this heated contest – Martin Daly, Dana Seetahal, Ken Lalla and Martin George, we await.
AfraRaymond.net 
A very clear and comprehensive treatment of pertinent issues. Thanks Afra
Come on Afra, be fair. Good questions, but what about the Central Bank’s track record of having sued Monteil and Trotman for over $100 million dollars last year and all the other actions it took to get the forensic reports done? Doesn’t that count too? The Central Bank cannot prosecute anybody Afra and you know that. That is for the DPP. The Central Bank can only sue or have Clico and CIB sue them. And they have that track record and say they are planning more litigation so why not mention that too. Glad to see you agree that they should hold back the forensic reports because I agree with that too and that is exactly what the Central Bank are doing. So on two counts the Central Bank is winning and doing the right thing but you don’t give them any credit. Try to find out who exactly is protecting Duprey and CLF and you will solve the puzzle. Don’t give the fraudsters room to wriggle out.
Yes, Julian, the Central Bank has sued those two for the CIB monies, it is true, and yes, they are the ones who ordered the forensic reports. It is also true that they are unable to directly prosecute anyone.
Good points, but consider the other facts, such as the failure to take any action on the obvious ‘fit and proper’ breaches by the Directors and Officers of these failed companies or the silence on CL Financial’s illegal dividend payout. What about the fact that Clico Investment Bank (CIB) was able to keep its licence as a bank even though it failed to file Corporation Tax returns for 2007, 2008 and 2009 – see ‘The House on the Corner‘, published on 2nd September 2010 at http://wp.me/pBrZN-mT.
There is patent regulatory capture here, up to and including the fact that four former Executive Directors of the failed CMMB have now been given approvals to operate a new Investment House, even while a Commission of Enquiry is just starting into the failure – see ‘Did CMMB collapse or not?‘, published on 16th December 2010 at http://wp.me/pBrZN-wx.
All to say that these actions are typical of regulatory failure and resemble the situation in other parts of our troubled country – well-proclaimed, complex and expensive actions being mounted at the same time as abject failure to apply the basic rules.
In my view these examples illustrate my contention that we are being asked to believe that an organisation which has not fulfilled its basic functions is going to realise these complex designs.
In the circumstances, my skepticism is justifiable and I have allowed for the fact that those intended prosecutions are an important part of the necessary change within the Central Bank, hence the need to preserve their integrity.
By the way, I do mention the Central Bank press release and provide a link to it.
So, who is protecting Duprey and CLF?
Thanks for joining-in.
Afra
Thank you Afra for your continued efforts to keep us informed on this important matter.
Afra,
Kudos to you for enlightening us on the happenings within CL Financial through your blog. I’ve been a customer of CIB since 2003, primarily because my CLICO insurance agent convinced me that it was safe to put my deposits there. Over time I got the opportunity to meet with some of the Bank’s management and directors. I also had the opportunity to read the Financial Institutions Act, particularly the section dealing with penalties to be levied on directors and management for not carrying out their fiduciary mandate.
What penalties and/or fines do you think will be levied against the other directors, executives and senior managers? To date, only Lawrence Duprey, Andre Monteil and Richard Trotman have made the news.
Based on my research, the other directors, executives and senior managers at the time of the collapse were:
Amjad Ali
Faris Al-Rawi
Anthony Rahael
Mervyn Assam – replaced Andre Monteil as Chairman; currently Ambassador Extraordinary and Plenipotentiary with responsibility for Trade and Industry
Lynette Quamina – former VP, HR
Violet Knox – former VP, Retail Banking
Jacqui Syms – former VP, Strategy and Governance; currently board member at iGovTT
Devi Mooleedhar – former Senior Vice President; currently senior executive at Intercommercial Bank
Caroline Lewis – former VP, Operations
Carlon Kirton – former VP, Marketing
David Green – former VP, IT
Ian Bailey – former AVP, Risk
Leigh-Ann Benjamin-Campbell – former AVP, Compliance
Corrie Gomez – former Chief Accountant; currently working at CLICO in a similar role
Kerry-Ann Erskine – former Chief Accountant
Jason Edwards – former Management Accountant
Andre Powder – former Branch Manager, Port of Spain
Ian Philip – former Branch Manager, Chaguanas
Charles Balkaran – former Branch Manager, San Fernando; currently board member at UDECOTT
Also, what role if any did Lennox Archer and Mala Gandhi have with the collapse since they were in charge of the Bank prior to Richard Trotman’s appointment as President, and what penalties and/or fines would be levied against them?
Anthony
Anthony,
Many thanks for joining-in…and what a debut it is!
I am sure that there is going to be great interest in the role of the Directors and Officers of these failed Financial Institutions as well as the proper legal penalties which are to be levied upon them.
Do you happen to have the names/positions of the Directors and Officers of the other failed companies – CL Financial, CLICO, British American Insurance and Caribbean Money Market Brokers (CMMB)?
Thanks again.
Afra
From CLICO’s 2001 annual report titled “The Wealth Managers”
BOARD OF DIRECTORS
Lawrence Duprey
John Martin
Peter Salvary
Kerston Coombs
Anthony Fifi
Roger Duprey
Andre Monteil
Neil Jones
Gita Sakal – General Counsel / Corporate Secretary
Afra,
Why are you keeping your investigations at one level? Has it ever occurred to you that some of the very officers named were actually victims of the whole debacle? And Anthony, the information about the directors and officers is dated, it may have come from any old document, because the information is inaccurate, There were two other directors that you did not name, Michael Callender and Maria Thorne. Afra, do some real investigation by talking to some of the same officers named. Talk to employees and get the true picture.
And what about the Central Bank, are they blameless in all of this? Find out why they did nothing about the problems with the loan portfolio for years. Who were friends with whom.
Victim
Hello and thanks for your comments, Joanne,
Two important points are that I am doing this work alone, with occasional comments or assistance, so there are real limits to which aspects of this vast fiasco can receive my attention. Also, my work is really an analysis of the published record and does not qualify to be called ‘investigative’, at least not in my view.
It is absolutely clear that the Central Bank have a huge part to play in this crisis being allowed to grow to this size, so I will continue to be critical of their regulatory lapses.
In relation to CIB, you can see some of those lapses identified in ‘The House on the Corner‘ parts 1 & 2 in the CL Financial bailout index on this blog.
Your point about the CIB loan portfolio is spot-on and that is why we need to have the details of the various bad loans made by the CL Financial group published alongside the details of those who were fortunate enough to have received their monies before the bailout terms were changed by Dookeran on 8th September 2010. The PM promised to do that when she spoke in Parliament on 1st October 2010 and we need to ensure that information comes out.
Thanks again for joining-in.
Afra
Afra,
Joanne makes some valuable points. I know three of the persons named by Anthony and can assure you that they, along with junior staff, were victims in this debacle. It is rather disappointing to note that employees of the Bank and their families have not been able to access their hard-earned funds which they chose to deposit there, even though “third party” matured deposits have been paid out or transferred to First Citizens Bank.
While I agree that there were problems, my information indicates that managers and senior executives were not allowed, prior to the arrival of Trotman and Assam, to make changes in the processes and procedures which would have corrected many of the issues found at the end of January 2009.
Additionally, it would be rather hypocritical of the Central Bank, as regulator, to levy fines and penalties on most, if not all, of the directors, senior executives and managers, considering that they (the CBTT) regularly conducted audits of the Bank’s affairs and at no time, intervened or stopped the Bank’s activities. It should be instructive to note that three of the executives named, Syms, Bailey (now deceased) and Benjamin-Campbell, were former employees of the CBTT and were privy to information about the Bank from previous audits.
Also, we should take into consideration that PricewaterhouseCoopers conducted an annual audit of the Bank during the years of its operations and should have noted any activities that contravened GAAP, IAS and other industry best practices. I say all of this to make the point that if penalties are to be levied, everyone… the regulator, the auditors, the owners, the directors, et al would have to be implicated. The bigger question to ask is does the current administration want to bring the “house” down to score political mileage? From my understanding, CIB’s loan portfolio contains a who’s who listing of past and current political names, captains of industry, and movers and shakers of society… some of whom are in default at this time.
Frankly, this debacle was handled badly. I would have expected the CBTT to give the Bank the opportunity to address the attendant issues. The CBTT could have appointed their own people to the management team or change the team altogether. We will never know why there was a mad rush to shut the place down. Please bear in mind that 100 staff members including their families were disenfranchised by this action, and many of them did not do anything wrong to deserve this. Frankly, they were not the ones making decisions at board meetings.
I am very disappointed with the regulatory system that is in place in Trinidad and Tobago. As my mother reminds me all the time, the fish rots from the head; and the head here is the Central Bank.
Regards,
Mark
Afra,
A quick question… how, if by strict application of the Fit and Proper rules, a person who was a director, executive or manager of a failed institution cannot hold such a position again or within a specified period of time, was Ms. Mooleedhar able to obtain a senior position at the UTC immediately after leaving CIB? She is currently a senior person at Intercommercial Bank, as indicated by Anthony. Wouldn’t the Fit and Proper rules apply to her?
Also, doesn’t the Integrity in Public Life Act also apply here? If so, how did Syms and Balkaran get on state boards?
Barney
Mark and Barney
Your comments are spot on with my thinking.
Afra, even Mervyn Assam’s funds being withheld appears to me to be unfair. My investigations revealed that Assam’s funds with the Bank pre-dated his second incarnation at the Bank by about four years. He was at the Bank for approximately 6 months when it was closed. He was brought in to clean up the mess left by Lennox Archer and suffered a loss of $1.0m instead. Further, several of the VPs’ appointments were of recent vintage with some of them still being on probation. They were part of the clean up exercise. The appointment of the new new Directors, Callender and Thorne also. Incidentally was a depositor of long standing with the Bank, was appointed in December, and if my information is correct, her deposit was also with-held, a tidy sum too.
The problems with the loan portfolio cited in Mr. Hiralal’s statement were issues raised years before under Archer and Gandhi. It benefited them not to correct them. But that is another story. When I look at the FIA, and based on conversations I have had with very senior officers at the CBTT, they should have gone into the Bank and Managed it with the current officers in place. Had they done that, they could have kept the Bank going and corrected the deficiencies in the loan books. They could also have renewed deposits at a much lower rate.
The Bank had never lapsed on payment of any matured deposits, regardless of size. The issue was that a national company was used by person(s) to cause a run on the bank by calling in all their deposits which ran into several million US$. Which financial institution could pay out all of that with two days notice. Even the mighty RBL would have needed more time.
In addition, Lawrence Duprey, CMT, did not tell the truth to the CBTT when he went cap in hand. Because the CB could not legally help the insurance company (at the time) he told them that the Bank needed the funds with the intention of funnelling the money back to the insurance company. And imagine someone made a hefty sum giving him that advice. What a laugh!
On another note, I believe that the entire Banking sector was happy for the closure of the “House on the Corner”. Have you noticed that since its closure banks are paying interest rates of 1%? That the Treasury bills are advertising yields of less than a dollar. Check the financials prior to January 2009, TBs were upwards of $4.00 and Non-banks and the UTC were paying 5- 6% on deposits. CIB was paying 7-8%. Commercial Banks were paying 2.5 – 3.5% on savings. What about the profitability of the Banks has it changed significantly? Banks has traditionally ripped off the depositors of this country and lent the funds to their friends.
My friends at the Bank were unceremoneously sent home without a cent and some of their deposits and annuities were not paid. One man died of a stroke within six months,(not IB) because his mother’s funds were held jointly on his name. Persons with service ranging from 5 to 19 years left without one cent, and without the ability to ply their trade. Another officer’s father’s gratuity was placed jointly with that officer. That too was not paid. When the staff visited an attorney to get him to represent them, he said he needed a deposit of $100K. Where were they expected to get that type of money? Other attorneys refused to touch the case.
And the CB’s suit again Duprey and Montei, though deserving is only done to take the heat from themselves for bundling the entire thing. But, this is Trinidad
Joanne, Barney & Mark,
The ‘Crucial Choice‘ with the Colman Commission is whether you are going to find the time or appetite to give evidence.
It is pretty clear by now that you are all very informed as to CIB matters, so you are possibly ex-CIB people. The key challenge here is not what Afra may or may not have focused on in his series, but what are you going to do with your knowledge, and when…
Please remember that ‘Silence is the enemy of Progress‘.
You are all making valuable points, but you need to go on the record and put that material into real evidence, that would be a real step forward in all this.
Thanks again for joining-in.
Afra
Afra,
While I think this is not the medium for me to be griping, I’m at a loss to figure out where to turn considering none of the Bank’s executives have been called to the Commission (I stand to be corrected on this) to give statements and/or evidence. I noted recently, with a loud “steups”, that one of the Attorneys for the Commission had not been called to the local Bar, thus delaying the Enquiry. Can’t we get anything right in this country?
We really make ourselves out to be the clowns of the Caribbean.
Barney
Joanne, Barney & Mark,
The Colman Commission hasadvertised widely to seek submissions and they are still receiving evidence after the announced closing date of 14th February, so the only remaining question is whether you want to give evidence.
Are you a part of the solution? Will you act now to make this a turning-point in our region’s development? Or are you just another paid-up member of the Code of Silence?
Remember that ‘Silence is the enemy of Progress‘.
Thanks again for joining-in.
Afra
Thanks for the challenge Afra. I am not sure that what I have is evidence. I know I have information and I believe in the information that I have, but access to the evidence is nigh impossible. I will still think about it, but for now I will vent on your blog.
And another thing. The Central Bank fired the security company that had a contract for CCTV surveillance. Right after that there were break-ins at two of the buildings and several items were stolen. They then hired 24 hour security guard service, which is much more expensive than the electronic security monitoring. My information is that they have a responsibility to preserve the value of the resources, isn’t what they are doing wasting the resources? They sold the vehicles which were being used by the employees for way below the book values, when they had the opportunity to sell them to the then users at book value. One of the purchases is the Mayor of Arima. He bought the Benz formerly used by Richard Trotman. There was a large basement car park in one of the buildings where they could have stored the vehicles when they were returned by passed managers, but they rented a facility of an ex Central Bank/UTC Manager for (according to Mervyn Assam) “thawsans and thawsans” of dollars.
This Blog should seek to interview Assam and others. We cannot remain satisfied, in this jurisdiction, with saying that simply because something is before the courts we automatically risk prejudicing the judicial process if we seek to develop am informed position on matters of public interest. If the men and them truly want to attain a legacy of anything other than bobol, they hadda get in the habit of disclosure – and not as a deal or as an act of hubris.
Assam, Meyers, Tewarie
These fellas and dem continue to speak – unsullied – about matters of public policy and principles of fairness. This is absurd is it not?
noVack you are right. People need to talk, to vent. Not to Colman. There is need for a kind of truth commission, some kind of catharsis…and Mayers too. Guess how much FCB paid for CMMB? $1.00. Scandalous!!! Who was the CEO of CMMB up to right before the debacle? Mayers. Why did he leave? Did he know something? Where is Ram Ramesh? He was Duprey’s right hand in CLICO at January 2009 and Chairman of CMMB. What did he do hasten the closure of CIB?
Where is everyone? I am not hearing from you.
I think we are all looking at the CoE!
Joanne/Paulie,
I am simply being consumed by some other issues – check yuh Guardian! – and have been unable to follow the daily proceedings on TV, which I never watch anyway…
I am able to get the gist of it from the newspapers and have been reading the transcripts on the Colman Commission blog.
I had the pleasant surprise of being asked to speak at the ‘Business, Banking and Finance‘ conference organised by UWI’s Dept of Management Studies, the Sir Arthur Lewis Institute of Social & Economic Researh and the Caribbean Centre for Money & Finance on Friday 24th June. The designated topic was ‘Restructuring distressed Financial Institutions‘ and it was a good platform, so I will be writing this up for my next column.
Take care.
Afra