The CL Financial bailout continues to be a major failure on any scale, both in the causes of the fiasco and especially the manner in which it has been handled.

This is my update on what has been the progress in this campaign.

The equation for our reality check is –

Expenditure of Public Money
Minus            Transparency
Minus            Accountability
Equals           CORRUPTION

In May 2009, I wrote that the Directors and Officers of the CL Financial group should be required to file declarations under the provisions of the Integrity in Public Life Act (IPLA).

According to the IPLA, the Schedule detailing those persons is at page 31 – one of the classes of person required to file declarations to the Integrity Commission is –

“Members of the Boards of all Statutory Bodies and State Enterprises including those bodies in which the State has a controlling interest.”

I have put the last part of the sentence in italics to emphasize the deliberate choice of language by the legislators.  The drafting of legislation is a painstaking exercise of strategy, debate and sometimes compromise…my point being that the inclusion of that last phrase must mean that the legislators intended to go beyond merely saying ‘Statutory Bodies and State Enterprises’, which would be the obvious, to specify that the IPLA must also apply in situations where the State has a controlling interest.

The CL Financial Shareholders Agreement (the Agreement), of 12 June 2009, which I obtained by using the Freedom of Information Act, specifies at clause 3.1 that the Board of Directors of CLF shall consist of seven Directors, four of which shall be nominated by the Government.  The government has been exercising its rights under this clause, so it is clear that the State’s controlling interest in the CL Financial group is effective.

Quite apart from the four companies named in the bailout Memorandum of Understanding of 30 January 2009 and the Agreement – i.e. CL Financial, CLICO, British American Insurance and Caribbean Money Market Brokers – it is also clear that CL Financial controls the other companies in the group.  This effective State control therefore extends to include enterprises which are majority-owned by CL Financial, such as Home Construction Limited, Angostura Holdings Limited, Republic Bank Limited and Methanol Holdings Trinidad Limited.

This very issue of the meaning of the IPLA in relation to state-controlled companies was ruled upon by the High Court in HCA1735 of 2005, in which one of the two issues being determined was –

“…(2) What is the meaning of the expression “Members of the Boards of all Statutory Bodies and State Enterprises including those bodies in which the State has a controlling interest” in paragraph 9 of the Schedule to the Integrity in Public Life Act as amended?…”

The written judgment of Justice Judith Jones  states in its conclusion –

“…Conclusion

248. In my opinion therefore the words “Members of the Boards of all Statutory Bodies and State Enterprises including those bodies in which the State has a controlling interest” as found in the Act must be taken to mean:
‘the members of the management or decision making body of:

1. all organisations or bodies established by Statute;
2. all businesses or companies controlled by or on behalf of the State’.

249. Further for the purpose of determining control by or on behalf of the State a business or company shall be taken to be controlled by the State if the State exercises or is entitled to exercise control directly or indirectly over its affairs; if the State is entitled to appoint a majority of the directors of the Board of Directors or holds at least fifty percent of the capital of that body.

250. This interpretation to my mind is in accord with the purpose and intention of the legislation as expressed by the Constitution and the Act, that is, to preserve and promote the integrity of persons exercising executive or legislative functions on behalf of the State…”

I am advised that TSTT appealed that High Court decision and that judgment is awaited since mid-2010.

I confirmed that key CL Financial Directors have not been filing declarations under the IPLA.  On Monday 10 September, I consulted in person with Integrity Commission staff who confirmed to me that none of these people have filed declarations or been required to file such for 2009, 2010 or 2011 –

• Gerald Yet Ming (CLF’s current Chairman)
• Hayden Charles (CLICO Director)
• Ronald Harford (Republic Bank’s Chairman)
• Dr Euric Bobb (former CLF Chairman)
• Rampersad Motilal (Managing Director of Methanol Holdings Limited)

According to the 3 April 2012 affidavit of then Minister of Finance, Winston Dookeran, the public money committed to this colossal bailout is –

Para 21         (a)      $5.0Bn already provided to CLICO;
                (b)      $7.0Bn paid to holders of the EFPA and
Para 22                  $12.0Bn estimated as further funding to be advanced.

That is a total of $24Bn in public money being paid to satisfy the creditors of the CLF group.

I wrote on Monday 10 September to both the Integrity Commission and the Minister of Finance & the Economy to report my serious concerns on this unacceptable state of affairs.  It simply cannot be right that the Directors of this huge state-controlled group are allowed to escape the provisions of the IPLA.  There must be proper transparency in matters of this kind, if good order is to be preserved in our society.

I also made a Freedom of Information application on 8 May 2012  to the Ministry of Finance to get four items which are listed here, along with the Ministry’s replies of 14 August –

1. CL Financial accounts and if those are not available, the figures on which the Minister of Finance has been relying – The reply is to ask me to provide further information as to what I mean. The Minister of Finance is making analyses and justifying his positions in public, including proposing legislation to Parliament – he must therefore be relying on some figures or estimates to proceed in this way. When I ask for those details, the Finance Ministry is mystified and needs me to explain what I really mean. Just imagine that!
2. The presentation made to Members of Parliament in September 2011 to brief them prior to the debate on the Central Bank (Amendment) Bill and the Purchase of Certain Rights and Validation Bill 2011– The reply is to claim that the presentation is an exempt document which the Ministry is therefore unable to provide.  The official presentation made to our Members of Parliament in this matter is deemed secret, which seems incompatible with the notion of a free, democratic society, so it will not rest there.
   The recent revelations about the Plot to Pervert Parliament in relation to the S.34 debacle and the way in which the country, its significant institutions and its legislature have been misled for the benefit of political financiers have given me pause.  I am now reflecting that the bailout and shareholders agreement were never debated, they were both declared as fait accompli.  What is more, the new 2011 laws I am writing about here have a similar flavour of Abuse of Office in that we are being told that the contents of that presentation to Members of Parliament are secret.  The S.34 fiasco involved an alleged stealing of $1Bn in Public Money and we are all now seeing the extent to which these white-collar criminals and their servants will go to cover their tracks.  It is truly revolting.  So, the question is ‘‘Given what we now know and the fact that the CLF bailout involves many billions of dollars in Public Money, is it reasonable to assume that our Parliamentarians and Public Officials will be responsible and honest in their dealings?’ I will be returning to this, it is turning in my mind.
3. Details on the composition of the creditors of the CL Financial group, in particular EFPA holders.  I was asking who was owed money and who got paid.  That is at the centre of this issue – The reply states that the information requested is likely to be exempt from the Freedom of Information Act.  That is another aspect of this to be challenged.
4. Declarations filed by Directors and Officers of the CL Financial group under the IPLA – The reply points out that those declarations are secret, which is correct, but also goes on to state that this is not to be construed as an admission or denial that the IPLA applies to those Directors and Officers.  Well I tell you.

The region’s largest privately-held group of companies is now under State control, in a situation of huge insolvency, with no proper accounts and no declarations being filed by the Directors.

It is as if the sheer size and power of this CL Financial event is warping all the usual rules – like a black hole or anti-matter – to the extent that it seems like the Freedom of Information Act is now being used for the Incarceration of Information!

This development is a serious peril to our Treasury.  It must be a matter of the gravest possible concern to all right-thinking people that our fundamental Integrity safeguards appear to have been circumvented or ignored in a matter of this size and consequence.