I was a Director of the Trinidad Building & Loan Association (1999-2013) when that organisation purchased EFPA investments and also when those sums were recovered during the bailout via the issue of 20-year bonds.
On Thursday, 22nd March 2018, the Ministry of Finance & The Economy, sent details of EFPA payments (in partial satisfaction of the Appeal Court’s Consent Order of 24th January 2018) under cover of a transmittal letter from the Office of the Chief State Solicitor.
The details provided are for payments of $10.8 Billion in Public Money to EFPA account holders between March 2011 and March 2015. That was an average payout of over $220M TTD per month in that four-year period and would correspond with the September 2011 Parliamentary approval for an additional $10.7 Billion to be spent on the CL Financial bailout. This all raises interesting issues as to the timing of these payments, as shown in this table –
|PERIOD||Minister of Finance statements on bailout costs||EFPA payment details from Ministry of Finance||COMMENTS|
|BEFORE 3rd April 2012 affidavit of Winston Dookeran||Para 21 “…(a) $5.0Bn already provided to CLICO;
(b) $7.0Bn paid to holders of the EFPA…”
|$6,229,920,482||There is an apparent discrepancy between these figures in the amount of $770,079,518|
|BETWEEN 3rd April 2012 and 1st October 2012||“…The cost to the national community has been substantial—an amount of $19.7 billion or 13.0 per cent of our current GDP||$3,144,270,326||Larry Howai’s 2013 budget statement was that $7.7 Billion had been spent on the CLF bailout after Winston Dookeran’s affidavit. The details from the Ministry of Finance show that only $3.144 Billion of that could be attributable to EFPA payments.|
|AFTER 1st October 2012||Estimates have ranged from $20 Billion to the $27.7 Billion estimate on 10th May 2017 by the current Minister, Colm Imbert.||$1,449,184,402||The Public Money spent after that date exceeds an estimated $6.0 Billion, only a part of which went to EFPA account holders.|
After numerous official statements that the bailout cost about $25 Billion TTD and given that the details provided cover only $10.8 Billion TTD, there are real questions as to who got the other payments. The preceding table shows some of the periods in which those payments are likely to have occurred, so more examination is necessary to establish the details of those payments. The known unknowns, as it were.
The fundamental case for the bailout as presented to the public on 30th January 2009 and in the turbid period after was that this was an expense we had to bear to preserve the stability of the nation’s financial system. One of the major points was that the majority of our pensions were held with CLICO, so the interest of pensioners was paramount in that move to stabilise the system. Now that we have these details, it is very difficult for me to reconcile that rationale with the huge sums paid to companies and ultra-wealthy risk-takers.
According to the Peoples Partnership at their first budget presentation in September 2010, about $7.3 Billion had been spent on the CLF bailout at that stage. Who got that money? Here is then PM, Kamla Persad-Bissessar, making the point on 1st October 2010 –
“…The $5 Billion has been spent—we are advised—to repay matured EFPA policies in an ad hoc and unstructured manner where payment arrangements were entered into based on levels of funds invested. What criteria did you use to repay investors? Whom did you choose to pay? How were they chosen? These questions need to be answered. Because if it is today after the $7.3 Billion, all these EFPA people, the policy group and so on, they are out there, where is their money? Where is their money? Did you have a priority listing of who should be paid? Why did you go—and you are now crying crocodile tears about trade unions, credit unions, the poor man and the small man—why did you not pay them first? Why did you not pay them first? Where did that $7 Billion go?…”
We are still no closer to knowing just where that money went. We need to get those details as well.
From the details provided, State Enterprises were also able to invest in the EFPA, which was approved and intended for the individual investor. Both sides – the agents and the companies – must have known that what they were doing was outside the approval and yet it happened so many times, with the use of Public Money to bailout those State Enterprises. As we know from the recent imbroglio regarding TSTT’s purchase of Massy Technologies, State Enterprises must get Corporation Sole approval for non-government investments. Was that rule followed in these cases? Have any of the responsible Directors or Permanent Secretaries been penalised in any way?
Here are some of the significant figures disclosed thus far –
|State Enterprise||Amount (millions of TT dollars)|
|First Citizens Investment Services Ltd||$460.4|
|Export Import Bank of T&T Ltd||$32.6|
|First Citizens Asset Management Ltd||$22.2|
|Agricultural Development Bank Ltd||$21.5|
These are huge sums of Public Money which were invested in this individual investment product and certain questions arise as to how these were accounted for. The actual EFPAs bore individual names, which was required in light of the approval. So, how then was it possible to show those investments as assets in the company’s balance sheet? Is that kind of accounting approved by professional standards? To my mind it is untenable that an asset can be in the named ownership of one party and also be shown as an asset of a different party. Can the Institute of Chartered Accountants of T&T explain any of this to us?
Next week I will delve into the comparison between the individual and the institutional investor as well as the credit union aspect.
ADDENDUM: Payment Summary
The payments made to EFPA holders in the CL Financial bailout which were detailed in the enclosed spreadsheets can be summarised as follows –
|Type of Account||No. of accounts||Amount paid|
|EFPA holders with account balances of $75,000 or less [Tab 75KU]||9,265||$291,474,236|
|EFPA holder with account balances of more than $75,000 [Tab O75K]||13,291||$1,035,381,038|
|Bonds issues to EFPA holders with balances over $75,000 [Tab BONDS]||13,354||$8,815,635,000|
|Credit Unions & Trade Unions [Tab CUTU]||294||$663,318,653|
|Cash payments to persons entitled to bonds issued after maturity date [Tab BNCH]||345||$17,491,000|
Notes to Table
- The total of $10.823 Billion TTD is less than half the amount of Public Money reportedly spent on this CL Financial bailout, so there is substantial further information to obtain.
- The number of accounts does not correspond to the number of payees, since people had multiple investments.
- The number of accounts was adjusted to reflect the fact that those EFPA holders with over $75,000 also received bonds. The adjustment was to deduct 13,291 EFPA accounts from the gross total, since those were also counted in the next category – i.e. in receipt of $75,000 initial payment, with the balance in 20-year zero-interest bonds.
9 thoughts on “CL Financial bailout – the EFPA Details, part one”
What is the aggreement by the Central Bank and the EFPA policy holder at maturity 2022. Is it still at 100%refund of Investment.?
I don’t know, you would have to ask the Central Bank…
You have given me faith that Trinidad and Tobago have some honest people who will put their life on the line to expose this type of actions by the managers of the country. I salute you sir!
I know people were running to CL Financial to invest because the interest rate was over 12% pa while the going rate was around 6-8%. They should have paid the ultimate penalty for greed. This was an opportunity for the Inland Revenue department to do an audit of the large deposit holders. What were the source of funds.
Stay strong my brother.
Brilliant work in the victory of disclosure and in the continuing forensics Afra…
I am sitting here and thinking- Where is the outrage from the citizens and civil organizations on the revelation of this information! What is the stand/reaction by the Trinidad and Tobago Transperancy Institute, Financial Intelligence Unit, The department overseeing state corporations in the Ministry Finance and other organizations concerned with the accountability of state funds?
I firmly believe that there is a claim to cash in on the full maturity amount i.e. Principal + Interest. Who will benefit? Quite obvious.
Mr Raymond, Have you tried to bring this information to the people of TT. Trade Unions, NGOs, Civil groups etc. I am surprised that there is no outrage in the country about this treachery on the citizens of TT.
Well this information is published via the articles in the Wednesday ‘Express Business’, apart from this space…