During my earlier writings on the CL Financial bailout I was very critical of the apparent silence of the Institute of Chartered Accountants of Trinidad & Tobago (ICATT) in the midst of that huge financial crash. I took a very dim view of ICATT’s failure to make any clear statements at that time, during the period in which my friend, Anthony Pierre, was its President. To his credit, Pierre later appeared on my ‘Sunday Talk’ TV show on CNMG on 24th October 2010 to discuss the bailout together with former CLICO Sales Director, Emmanuel ‘Manny’ Lawrence, and gave a great deal of insight.
This week’s column examines the struggles which have arisen from ICATT’s commendable attempts to exert its disciplinary procedures against one of its members, Chanka Seeterram, who testified at the Colman Enquiry on his role as auditor of the failed Hindu Credit Union. Chanka Seeterram is a Chartered Accountant of long standing, who was in his early career attached to Ernst & Young, now practicing as Chanka Seeterram & Co. in St Augustine.
This is the first time I am writing on the HCU, as I was advised to refrain from doing so by my attorneys due to the defamation litigation by both myself and our firm, Raymond & Pierre Ltd, against Harry Harnarine and the HCU group. That litigation arose from Harnarine’s scandalous statements against me and our firm on HCU’s Radio Shakti, spanned 2005-2013 and culminated in the High Court making a bankruptcy ruling against Harnarine.
This matter, related to ICATT’s disciplinary procedures, arose from Seeterram’s testimony on his HCU audits prior to the collapse of that credit union. The actual complaint was made by former Minister in the Ministry of Finance and PNM Treasurer, Mariano Browne, in the form of a brief email to ICATT on 24th October 2012 –
“Please refer this matter to the Investigation Committee.”
Browne was referring to the Trinidad and Tobago Guardian article of that date on Seeterram’s testimony, “Depositors in dark about $31M loss”. ICATT started an investigation of the matters arising and Seeterram sought a judicial review of that decision to investigate. On 31st May 2017, the High Court ruled in favour of ICATT and Seeterram has now appealed that decision.
These are decisive extracts from the Colman Report into HCU, published on 16th July 2014 –
…F179: The audited 2005 stand-alone financial statements for the year to September 2005 record a net surplus of $6,019,878, in the Statement of Income and Expenses an “Appreciation in value of investment and Investment Properties” of $25,583,749, that figure being derived from an appreciation of about $53 million and a capital depreciation in value of about $27 million and, in the Statement of Changes in Members “Equity and Reserves”, an amount of about $31 million described as a “a Prior Year – Deficit on Revaluation of Fixed Assets”. This last figure and its description were first explained by Mr Chanka Seeterram in a written response to questions put by the Commission by saying that there had been a professional valuation in 2004 of properties sold in 2005 but that prices obtained were less than the valuation. HCU management therefore reflected the drop in value in the statement of changes in Members Equity and Reserves as a prior year adjustment. The consequence of transferring to a prior year adjustment the realised loss in the 2005 year was to create a profit of $6,019,878 in the 2005 year, whereas, if there had been no such transfer, there would have been a deficit for 2005 of about $25 million.
F180: In the course of his oral evidence Mr Chanka Seeterram conceded that he knew of no accounting principle or standard that permitted such a course, that this treatment involved a “very delicate” matter for him to decide upon and represented a “compromise” which would “would probably buy some time for [HCU] to get their act together to be able to do what they thought was necessary to turn around the company. Because I felt if this was shown – they felt if this was shown in the profit and loss account, to show this massive loss inside there, they couldn’t face the outcome”. He conceded that this treatment was wrong but was needed to buy time for HCU in order to check their options and it was agreed, possibly on his advice or as a result of discussions with him, that they ought to approach the Government for financial advice or assistance “Because I felt it was the only source of help they can get; and they needed the help”.
F181: When Mr Chanka Seeterram gave oral evidence, at his own request, on a second occasion, he provided a completely different explanation for the “Prior Year Deficit” statement….
F182: This Commission rejects Mr Seeterram’s subsequent attempt to explain this distortion in the financial statements for the year to 30 September 2005. His initial explanation was expressed as clearly recollected detailed and explicit. His subsequent explanation was entirely unconvincing. Whether this proceeded from reconstruction due to faulty recollection or from deliberate invention need not be decided. By the time these audited statements were passed by him in September 2006 it must have been apparent to him that HCU had no future unless it could be bailed out by GORTT or some other source. Were there to appear in the stand-alone accounts a deficit of $25 million, the Credit Union would be unlikely to survive “they couldn’t face the outcome”. The manner of treatment of the losses on these properties was in the view of this Commission more probably than not a cosmetic device designed to shield HCU from the appearance of insolvency…
(The emphases are mine)
The grounds used by Seeterram to challenge ICATT included the assertion that ‘the Browne complaint‘, as it became known, was invalid, due to its brevity; as well as whether ICATT had exceeded its powers in investigating him.
There are many more points arising from this Colman Report, but three will suffice in closing –
- Firstly, when can we expect the publication of the Colman Report into the failure of CL Financial?
- Secondly, When can we expect the recommended investigations and prosecutions of the parties named in the HCU Report?
- Finally, It is surely a notable landmark that ICATT has taken this steps to preserve the integrity of their profession, but the niggling question lingers. Given the widely-reported testimony on these issues, would ICATT have started an investigation without a formal request?
© 2017, Afra Raymond. All Rights Reserved.