One of the more interesting issues emerging from these EFPA details is the extent to which companies invested in what was approved as an individual investment instrument.

In the previous article, I detailed the significant investments made by State Enterprises, which prompted questions on the governance arrangements applicable to those companies. We know that companies made the investments in the names of individuals, that much was clear from the JSC’s 5th June 2015 Report on the EMBD.

These extracts are telling as to the depth of malpractice which existed at EMBD –

Gary Parmassar, Ag chief executive officer of EMBD Ltd, and Henckle Lall, chairman, during the Joint Select Committee at the J Hamilton Room, Tower D, Port-of-Spain, yesterday. PHOTO: JEFF MAYERS. Courtesy Trinidad Guardian.

“…Mr. Lall: Head. Not a head lease, headstrong. So he would direct the staff, what to do, how to do it, when not to do, when not to do it. And there was no one to stop him because he was the Executive Chairman. So he was judge, jury, executioner.
Mr. G. Singh: This is Mr. Rao?
Mr. Lall: Mr. Rao. With respect to the funds going into his account, we cannot find records to show anything like that. What we did in our investigation, we found that there was a Clico deposit in which he credited interest to his account but we have no documentation on it. Clico subsequently decided they could not do that so they stopped it, and again we could not find documentation on it…”
“…Mr. G. Singh: Before you go on, I want to ask a supplemental Chairman, because I want clarification. So you are saying that there was an EMBD deposit in Clico.
Mr. Lall: Yeah.
Mr. G. Singh: What was the quantum of that deposit?
Mr. Lall: How many millions it was, Gary?
Mr. Parmassar: That would have been approximately, about $30 million.
Mr. G. Singh: Thirty million dollars in a Clico deposit account, attracting interest of how much?
Mr. Parmassar: I am not clear on the interest at this time.
Mr. G. Singh: So it is a Clico deposit. Sometimes they attract, what, 14, 15 per cent interest?
Mrs. Mc Intosh: Ten.
Mr. G. Singh: At least 10 per cent interest. And for what period did this movement of interest go to the private bank account, or the allegation it went—it certainly did not remain within the EMBD deposit. It went to another account.
Mr. Parmassar: Chairman, through you, the records that we have do not reflect any amount being transferred into a personal account. We do not have any records of that currently. So I am not able to give a figure or to say the amount that would have been transferred into a personal account if an amount was transferred into a personal account…” (pgs 69-70)

According to this testimony, EMBD had a $30M EFPA at a minimum interest rate of 10%, with none of that interest being credited to its bank accounts. That is an annual minimum of $3.0M in interest, earned on a principal sum of Public Money, being paid into a personal bank account. What is more, the recently released EFPA details show EMBD was paid $57.6m during the bailout. Were the original EFPA investments approved by Corporation Sole? What about the $3.0M + in annual interest which was reportedly diverted for private benefit? Is anyone to be punished or the funds recovered, or is it just ‘Business as Usual?

Quite aside from the particular concerns arising from the State Enterprise investments in EFPAs, there are more general issues in trying to define the true extent of the company investments. The details sent by the Ministry of Finance show the names of the payees, with some listed as persons and others as organisations – companies, churches, credit unions and so on.

So the first question arising is

‘How can some of those payees’ names be anything but specific individuals’ names, given that the EFPA was approved as an individual product?’

Company investments were mostly made in favour of a named person, but that still leaves the conundrum of exactly how can one establish the proportions of individual EFPA investments against those made by companies. Searching the given payee names for organisations gives a figure of just over $2.1 Billion, which is slightly less than 20% of the EFPA totals disclosed. This aspect of examination will require a lot more work.

Credit Unions and Trade Unions were also heavily invested in the EFPA, with a total of 294 accounts repaid in that category. Again, the same considerations would have applied, in terms of both sides knowing and understanding that the investment being undertaken was not an approved one. Yet over $663M of scarce Public Money was made available to bailout those entities.

This table shows the larger Credit Union EFPA investments in descending order –

Credit Union Amount (millions TT$)
Telephone Workers CU $122.3
Central Finance Facility $74.8
TECU $66.0
Caroni Ltd. St. Madeline CU $23.5
Rhand CU $22.1
Venture CU $21.0
Tranquility CU $19.7
Teachers’ CU $18.7
TRINTOC Penal CU $18.5
Eastern CU $10.5
Agricola CU $7.9
Neal & Massy CU $7.5
TATECO (San Fernando) CU $3.4

Some individuals had substantial EFPA holdings, in one case exceeding $165M and with many exceeding $10M. I am unable to reconcile the original calls for preserving pensions with early repayment for individuals who deposited those large sums.

My final reflection is on the recurring issue of ‘Race’, whatever that is in our country. One of the narratives making the rounds, as it were, is the one about how clannish East Indians are and how they spend their money with their own kind and do not support other groups (races?) in business etc…of course I have my own views on the validity of that theory, from my own experiences, but it is always useful to have a larger, external, point of reference when considering such emotive issues. That is why I have been particularly intrigued by the CLICO experience in the Caribbean.
CLICO was founded in 1936 by persons of African descent and was being run by the second and third generations of persons of similar stock up until its collapse in 2009. A significant part of the challenge in launching an insurance company during the colonial period was the fact that the financial system was controlled by white people. The CLICO salesmen had real difficulties and the founder, Cyril Duprey, rallied them with the prescient words –

“…While I agree that the creole people do not like creole business, there is one thing you fail to realize. If you give a man value, if you give a man service, irrespective of his background, he is going to support you. And I intend to give both…”

Those service-oriented values proved to be important ingredients in the success of CLICO and later CL Financial, even if they were originally intended to rally the early sales-force to deal with the reluctance of the persons of African descent to do business with a firm owned by their ‘own kind’.

I was therefore intrigued to examine the EFPA details and note that a significant number of the customers had names which we associate with those of East Indian descent, although here in T&T it is always difficult to be entirely sure if the only information is the names. In my unscientific and preliminary view, a great part of the EFPA portfolio was held by East Indian people and that pleased me. Indo-Trinis were evidently easily able to weigh risk & opportunity over any racial loyalty, real or imagined. In Trinidad and Tobago, money trumps Race & Religion, that is the lesson for me.

This is yet another example of the enduring significance of the words of wisdom coming from the CLICO founder, Cyril Duprey, echoing to this day, even as I imagine him twirling in his grave.



One thought on “CL Financial bailout – the EFPA details part two

  1. Why is there no outcry from the members of these institutions and the general TT public? Journalist, NGOs, and other institutions are not saying anything about this scandal.

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