2017 in Review

There has been a veritable cascade of events as we went through 2017, each seemingly more gripping than the last, so it is difficult to summarise such a year. Accordingly, these are the more important issues which I covered this year and which are likely to arise again in 2018.

Public Procurement

The new Public Procurement & Disposal of Public Property law has been amended and is in place awaiting full implementation. It is a strong law which will go a long way to properly control transactions in Public Money. We have suffered decades of waste and theft of Public Money, so an effective new approach is now overdue. The funding for the Office of Procurement Regulation (OPR) was approved for the fiscal year 2017 and the essential training of the public officials who will operate within the new system is virtually complete.

What we need to achieve now is the appointment of fit and proper persons to serve on the OPR Board. The President has the responsibility of appointing the OPR Board, after consultation with the PM and Leader of the Opposition. Given the high stakes in these appointments and the atmosphere of public scepticism, it seems best that the process be conducted in as transparent and open a manner as possible. I don’t want any Christmas surprises where these appointments are concerned, it would far better if the process and shortlist were disclosed as requested in our joint, open letter to the President.

CL Financial bailout

The Liquidation process intended to recover the huge sums advanced by the State in this bailout is now in train with the appointment of Hugh Dickson and Marcus A Wide of international accounting firm Grant Thornton, and the withdrawal of the appeals threatened by Duprey.

So how will we ever know how those vast sums of Public Money were spent if the State persists in its appeal against my Requests For Information? Apart from the fluctuating amounts stated by various high-ranking public officials, there are the actual questions of what did we pay for and who got all that money. In my view the Public Money due to be recovered would include:

1. Money repaid to depositors, investors and policyholders — not all of which would have been repaid interest;
2. Debts forgiven under the veil of confidentiality;
3. Professional Fees and Commissions paid to various expert advisers and brokers.

Tobago Sandals

The highly-anticipated and much-debated Tobago Sandals project appears to have been deferred, if not shelved. The reasons for that remain unclear, but the impression I have gathered from our research into the three existing State-owned hotels in our country is that performance information is likely not compiled, remains unaudited and is certainly not shared. Of course I am subject to correction, but if that is indeed the case, on what basis are we proceeding with a fourth, largest-ever investment?

If this project is to proceed, the norms of good governance would require that all the anticipated costs and benefits be disclosed.

Property Tax

The re-introduction of the Property Tax has become embroiled in a stew of litigation which ought to be fast-tracked as a matter of high public importance, given the poor state of our public finances.

The importance of a modern and effective Property Tax system cannot be overstated. People who earn untaxed income very often invest in property: land for later subdivision/development; lots for ‘flipping’; rental property; older properties for refurbishment, then rental or resale and so on.

The Income Tax and Corporation Tax regimes do not appear to be effective in this respect, so the new Property Tax system is necessary to capture details of that wealth earned from untaxed income.

HCU failure

When is the DPP to prosecute the persons recommended to be charged and prosecuted in the 2014 Colman Report?

Having closely re-read the Colman Report quite recently, I have started to ask myself if there are there further perils lurking in our Credit Union movement?

This extract on the Commissioner for Co-operative Development’s (CCD’s) concerns on the need for inquiries at large credit unions is striking:

“F171: Mr Diaram Maharaj explained in evidence, which is accepted, that since his appointment earlier that year he had been too heavily and urgently occupied with the affairs of other large credit unions to deal with HCU. However, he took the view that no inquiry into HCU should be proceeded with and he set out his reasons in a very explicit memorandum to the Permanent Secretary dated 12 May 2006. In summary, HCU was one of three of the largest credit unions, all of which qualified for inquiries. “Any such move to hold Inquiries at this juncture will only cause a loss of confidence in these organisations and may result in a run on their operation.” (from pg 67) [The emphasis is mine]…

Of course the CCD is the Regulator for the Credit Union and Cooperative Movement, so that statement under oath is a most serious one. All the more so, when one notes that Colman accepted its veracity. I have to say that it seems to chime with the statement by former HCU auditor, Chanka Seeterram, as per The Ethics Gap part 3 –

“…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…”

The Credit Union Regulator was stating that the HCU was not the only one in trouble. I have little doubt that these issues will emerge further in 2018 – Can we avoid the errors of the future, if we refuse to learn from our past? That is the question before us.

What is the Real Exchange Rate?

Finally, just what is the real exchange rate? Do we rely on the $6.80 published daily and at which we can scarcely access USD, or do we accept the significantly higher rates disclosed in high-level official statements?

For example:

1. PETROTRIN – the 9.75% interest payable on Petrotrin’s $850M bond is an annual cost $82.875M USD. On 7th January 2017, Petrotrin issued ‘Financial Realities at Petrotrin‘ which specified “…the interest payments on its US$850M bond at approximately TT$687M per year…”. One can infer an exchange rate of $8.30;
2. FINANCE MINISTER – On 8th December 2017, Finance Minister Imbert, stated in Parliament, in discussing certain financial obligations of the State –
   

   “…the Government has had to pay out the sum of $27.3 million. We have lost US $27.3 million, almost TT $200 million…” pg 159 of Hansard.

   That equates to an exchange rate of $7.33.

This issue, the growing calls for devaluation and the question of who benefits from that real gap in the official rate will be sure to grow in importance as we move into 2018.