CL Financial bailout – the Integrity Query

ic-logoYet another worrying aspect of the CL Financial (CLF) bailout fiasco is the role of the Integrity Commission (IC) in these turbid dealings. I am referring to the apparent failure or refusal of The Commission to carry out its duties in relation to CLF as required by the Integrity in Public Life Act (IPLA).

I first raised the prospect that CLF might well be under the IC’s oversight on 28th May 2009, in an article entitled – Judgment Time – Moral Hazard part 3. I have been pursuing that concern steadily since September 2012 and yet the position of the IC is no clearer. On 9th September 2015, I again put the question – Is the integrity Commission being willfully blind towards CL Financial? Indeed, in my March 28th 2018 interview with the Trinidad Express, I stated, in relation to the governance aspects unearthed by my campaign –

“…What is more, our Integrity Commission also seems to have lost its way in failing to recognise that CL Financial is a company under State control. As a result, the Commission has sought no Directors’ declarations from the largest of the State controlled companies. I tell you…”

Given that these are very serious allegations to level against one of our nation’s Public Institutions, I will give the supporting details.

The Integrity Commission is one of our country’s Important Independent Institutions, intended to tackle corrupt behaviour amongst public officials. Given the well-known and seemingly-unstoppable rise in grand corruption, the IC has attracted heavy criticism from various quarters.

The IPLA applies to ‘persons in Public Life’ as defined in the IPLA as –

“…(9) Members of the Boards of all Statutory Bodies and State Enterprises including those Bodies in which the State has a controlling interest…”

The CL Financial Shareholders’ Agreement of 12th June 2009 gave the State the power to appoint four of the seven Directors of the CLF Board of Directors, which has been fully engaged. That Agreement therefore gave the State control over CL Financial Ltd.

On 6th October 2013, the IC published its Statement as a paid advertisement in the Sunday Express, which specified, at its fourth item, that –

“…State Enterprises are those companies which according to the legal sources that determine control (such as…any relevant and legal shareholders agreements) are controlled by the State…”

That statement was issued in response to public concerns over the position after the Appeal Court ruling in the TSTT matter, in relation to the applicability of the IPLA to that company, but its meaning is plain.

The issue is as pregnant as it is painful.

If the IC accepts that CLF was indeed under State control since the Shareholders’ Agreement of 12th June 2009, it is obliged to requisition declarations from Directors of that parent company and all its subsidiaries. That would include the distressed companies and the other ones in the ownership or control of CLF. Companies such as Republic Bank and Angostura. I have established, by direct research, that the IC has not been requiring those declarations of income, assets and liabilities from the CLF Directors.

If the IC rejects the Shareholders’ Agreement as being invalid, one is left to wonder –

On what basis were those massive sums of Public Money paid out in the CL Financial bailout?

ic-board2018
Commissioners of the Integrity Commission of Trinidad and Tobago: Mr. Justice Melville Baird (Ret.), Chairman (seated), Mr. Pete London. Mrs. Angela Young Lai and Rajiv Persad, Deputy Chairman. Missing is Earle Martin James.

Indeed, with a new Chairman in the person of eminent retired Justice, Mr Melville Baird, together with a new Registrar, Ms Jasmine Pascal, one has to wonder if the new leadership at the Commission can do better than their predecessors in resolving this failure of our Integrity Framework.

The largest State-controlled company has not been under proper oversight of the IC, for nine years now, just imagine that.

TIMELINE

  • 28 May 2009 – I pointed out in ‘Judgment Time – Moral Hazard, Part III‘ that there was a link between the control the State was now exerting on the CLF group and the requirements of the IPLA.
  • June 2009CL Financial Shareholders Agreement is signed – clause 3.1 of which gave the Government the right to nominate four of the seven CL Financial Directors.
  • September 2012 – I formally wrote to the Integrity Commission with my concerns that the requirements of the IPLA are apparently being disregarded since CLF Directors were not filing declarations. The main document supporting that submission was the CL Financial Shareholders Agreement of June 2009.
  • 20 March 2014 – I wrote to the Commission to request its update.
  • 21 March 2014 – The Commission states that a reply was either sent or would be sent.
  • 22 May 2014 – I wrote at length to the Commission to record my concern at their delay and ambiguity in dealing with my original complaint. The Commission’s Annual Reports contain details of how complaints are disposed, but the 2012 and 2013 editions had no mention of my complaint.
  • 22 May 2014 – The Commission replied to explain that my concerns had been classified as a query, not a complaint. In addition, the Commission stated that “…With respect to your query we have sought and obtained legal advice…” but that they were unable to proceed further due to the fact that they did not have the full number of members. To my astonishment, the Commission also requested a copy of the CL Financial Shareholders Agreement which had been attached to my original complaint. If the Commission did not have that fundamental document, which is available online at my blog, this request raised the question of ‘Just what were the instructions to the lawyer from whom advice was obtained?’ I submitted the requested document the same day. The second issue arising from the Commission’s statement that it had sought legal advice, is the extent to which it appears to have lost sight of its proper ‘watchdog’ role. My point being that the CL Financial Shareholders Agreement was announced by the Ministry of Finance in June 2009, yet it was not until my complaint of September 2012 that legal advice was sought as to its implications for CLF Directors.
  • 23 May 2014 – The Commission wrote to acknowledge receipt.
  • 25 September 2014 – Pete London was appointed as the ‘Chartered Accountant’ member of the Commission, which means that the full number of members is now in place.
  • Continuing – correspondence and delays as to the inescapable question – Does the Integrity Commission accept that CL Financial Ltd is a State-controlled company, subject to the provisions of the IPLA?
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