It has been virtually six months since my last commentary on the CL Financial fiasco, my silence was due to other pressing duties, but Terrence Farrell’s No Sacred Cows published in the Trinidad Express on 16 July demands a proper reply. For those of you who have not read it, this is a good time to take the chance to do so, by clicking on the link above.
The fact that there are potent questions of whether the best process was followed in making the critical appointment of the new Central Bank Governor, Jwala Rambarran, has been raised by several commentators, most notably in last week’s BG View Is Jwala’s appointment good or bad for T&T? Those questions revolve around the scope of discretion which our governments are allowed in these matters and the extent to which the public interest can be sacrificed in favour of what can appear to be political favouritism. Matters of public importance must always be open to robust scrutiny in the press.
My own view is that there is a critical series of Central Bank issues which are in danger of being obscured by the line Farrell has taken in this debate.
Email exchange with Dr. Terrence Farrell
On Tue, Jul 24, 2012, at 8:53 AM, Terrence Farrell wrote:
Dear Mr Raymond,
I took note of your article in today’s Express. I do not respond in public to comments on articles I write and I will continue that policy in respect of your comments. I merely attach for your perusal the Adlith Brown Memorial Lecture I delivered at the Central Bank in November 2010, and in particular the sections dealing with CLICO and CL Financial. That lecture was delivered before a full auditorium including Governor WIlliams and his top staff. Suffice it to say, it did not endear me to the Bank!! My name did not appear on the Bank’s invitation list for about a year afterward.
You do not know me, but I am not one who ‘puts water in my mouth’. I call a spade a spade and a shovel a shovel. Those who suggest that I leave my critiques only for this government have not read or have forgotten my article in the T&T Review on ‘Our Irresponsible Elite’, my articles in the Express on the Integrity in Public Life Act and sundry others. Re the Central Bank and CLICO, I did not have all the information then since the inquiry had not yet started and in fact up to now, the Governor and the Bank have not yet testified to the Commission. They should do so in September. But I felt I knew enough to suggest that the Bank had failed in respect of CLICO and CL Financial.
The assessment of Williams’ tenure will come (and I may well do it myself) and in that assessment the CLICO/CL FInancial debacle will not have done the Bank proud. That though is no reason to now appoint a new governor of questionable credentials and no argument to defend the ongoing assault on our institutions.
On Tue, Jul 24, 2012 at 9:27 AM, Afra Raymond wrote:
Dear Dr. Farrell,
Thank you for your swift, pointed response to my article in today’s Express.
I am familiar with the Adlith Brown Memorial lecture you delivered in November 2010 and it is my view that, given what was known at that time, your critique of the Central Bank was muted – space limits did not allow me to delve into all those areas, but the evidence I cited in today’s article was all available by mid-2010. You did say that you may make a full critique of the CBTT’s role in this fiasco and that would be interesting to consider. I am not surprised that you were off the CBTT ‘guest list’ for a spell, which that tells a sad story of hubris and such.
With respect to the new Governor and for what it is worth, I am all in favor of us upgrading these systems by which key appointments are made, as per the second para of my article. I will be sure to hold him to the same high standard to which our leaders should set.
Thanks for taking the time to respond.
Sent from my iPad
From: Afra Raymond
Date: Wed, 25 Jul 2012 12:18:41 -0400
To: Terrence Farrell
Subject: Re: Your Article in Today’s Express
Hello Dr. Farrell,
I am soon going to publish onto my blog an expanded version of the Express article and would like to include our email exchange, along with your 2010 Adlith Brown Memorial lecture – I am seeking your agreement to that.
More than just this immediate request, the fact is that the decision of our educated classes to opt-out of the public debate has led us to a time which is much poorer, in all the senses of that phrase…The voices we hear are largely party-political roars which are barely-sensible, the reluctance of our thinking-class to engage in a critical discourse is really the source of the brandy being served in ever-stingier portions, with some people choosing to express it as a declining (I should have written ‘increasing‘) proportion of water…As always, these issues have more than one cause and I am inviting you to reconsider your stance of not responding to comments on articles you write…let me just say that in other places it would be a matter of professional pride and minimum editorial standards that such a response be forthcoming…Of course, we might agree that not everything foreign is to be imitated, but surely such habits which cultivate progressive discourse are to be emulated….
I await your reply…
On Wed, Jul 25, 2012 at 2:49 PM, Terrence Farrell wrote:
Apologies for the tardy response. I am out of the country and did not have Internet access for a while.
I have no problem with you publishing the exchange on your blog. The Lecture should be on the CCMS website.
Sent from my BlackBerry® device from…
From: Afra Raymond
Date: Wed, Jul 25, 2012 at 2:00 PM
Subject: Re: Your Article in Today’s Express
To: Terrence Farrell
Much appreciated, I do hope you can find time to ‘tune-in’ to our discourse…
For those who do not know, Dr. Terrence Farrell is a former national scholar and a highly-educated member of the regional financial sector. Among his several top positions, he has been a Deputy Governor of the Central Bank of T&T. In addition, he has also held top-level private sector appointments in the financial industry.
In writing on the CL Financial fiasco, I have adopted the phrase ‘Code of Silence’ to describe the unspoken agreement that the entire mess is to be mentioned as little as possible. That silence is especially pronounced amongst those best equipped to analyse the issues, so the intention of the Code would appear to be to preserve the existing order of things.
Silence is the Enemy of Progress, so this crisis has exposed an abysmal showing from our most educated brethren, miserable really. Nothing from the Accountants, Lawyers, Bankers, Insurance or other professional and industry associations. UWI is only now becoming involved in the necessary discourse.
So, why am I taking precious time to respond to Terrance Farrell? A few examples to show my concerns –
Firstly, in the 30th January 2009 Central Bank Press Release – by then Governor Ewart Williams – on the first page we are told:
…In our regular monitoring of CIB, and of Clico since 2004 (when insurance supervision was transferred from the Ministry of Finance), the Central Bank has consistently focused on these deficiencies but have been stymied by the inevitable challenge of change and by inadequacies in the legislative framework which do not give the Bank the authority to demand these changes….
So we need to pause here and look closely at the three facts before us –
- Ewart Williams was saying that since 2004 serious problems were identified in the CL Financial group and that he did not have the proper tools to deal with these.
- Within a week of that fateful bailout date, our Parliament had debated the Central Bank (Amendment) Bill and the Insurance (Amendment) Bill, both being assented to on Friday 6 February 2009.
- Farrell’s opinion is that the Governor must be “…sufficiently strong and respected to keep the financial system stable…”. In his appreciation of Ewart Williams, he clearly conferred that level of performance onto the outgoing Governor.
The burning question is ‘Where were these Draft Bills when the CL Financial crisis was gathering force since 2004?‘ Had they been prepared and never been put to the political administration or had they been submitted and rejected by the politicians? Or are we to believe that both Bills were swiftly drafted?
Of course all three facts cannot be correct and I believe that the third fact is the false one. Farrell’s inference that Williams had the necessary stature to be an effective Governor is obviously disproven by the CL Financial fiasco.
Please remember that this is the same Governor who had two investments with that ‘deficient’ group. How can one possibly reconcile a top official of acumen and strength with that investment?
But there is more. According to para 23 of the 16 April 2010 affidavit by the Inspector of Financial Institutions:
…With respect to the Creditors of the Petitioner, the Petitioner has met the statutory obligations for the Board of Inland Revenue (except for Corporation Tax Returns for 2007, 2008 and 2009 which are being prepared and remain outstanding)…
I am reliably advised that means that CIB did not pay Corporation Tax for those years. Yet CIB was able to retain its banking licence thoroughout that period, and, upon collapsing, obtain an immediate bailout on most generous terms.
Farrell also tells us that the Central Bank needs to be “…a decisive actor when action is required…”. Obviously, that standard did not obtain over the last decade.
The entire scenario reeks of corruption in the highest offices in the Republic and on the largest possible scale. We are witness to an epic swindle being carried out on our Treasury and in broad daylight.
There is plenty more evidence to discuss on this issue, including the seminal 15 July 1996 Republic Bank Letter to Shareholders which warned of the perils of the then ongoing aggressive takeover by CLICO.
At the critical turns in this crisis, we have been without Farrell’s views in terms of the rigorous scrutiny from which we ought to have been benefitting.
Farrell also adds, in relation to Williams’ impact at the Central Bank, that it was “…repaired and strengthened by Ewart Williams over the last ten years…”. That seems to be a straight case of Nearer to church, further from God’. Given Farrell’s reading of events, it seems that Ewart Williams is being treated like a ‘Sacred Cow’.
That is the root of my concern here, given Farrell’s headline ‘No Sacred Cows’, which is usually used to convey that someone is a fearless critic.
I continue to be outraged that the outgoing Governor appears to have retired with full benefits after having presided over a disaster on this scale.
The quest for better governance is not just a matter of criticising the administration, the educated commentators also have to hold to some consistent standard of rigour. Given his background, I consider Farrell’s contribution on this fiasco to be lacking that standard.
It is not too late, because I am sure that the Colman Commission would benefit from Farrell’s input in relation to the strategic view of the roots of the crisis and the sort of interventions which could have avoided this sorry situation.
For my own part, I will be looking to see how Rambarran performs on the burning issue of properly applying the ‘Fit & Proper regulations’ to the Financial Sector. Given the poor record of the outgoing Governor on this count, I am going to be calling for the new broom to make a clean sweep.