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.
Continue reading “CL Financial bailout – the Integrity Query”

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CL Financial bailout – the EFPA details part two

CL Financial bailout – the EFPA details part two

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. Continue reading “CL Financial bailout – the EFPA details part two”

CL Financial bailout – the EFPA Details, part one

CL Financial bailout – the EFPA Details, part one

Declaration

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.
$10,823,375,210

Continue reading “CL Financial bailout – the EFPA Details, part one”

Afra gets CLICO data…End corbeaux capitalism, he says

cobocapitalism

This interview appears in the Business Express Newspaper on Wednesday, March 28, 2018.

LAST week, nearly six years after he first requested the data under the Freedom of Information Act (FOIA), the Ministry of Finance sent Afra Raymond a compact disc with information on all individuals and institutions who received payments from the State for their investments in CLICO, the insurance company that collapsed in January 2009. The matter went to the Court of Appeal before the parties agreed on an out-of-court settlement with the ministry agreeing to most of Raymond’s demands.

For Raymond, an Express Business columnist, property expert and transparency campaigner, it has been a long but ultimately rewarding road, which began with the May 8, 2012 filing with the ministry. As to cost, he will receive 70 per cent of the cost of the litigation in the High Court.

He answers questions on the issue below:

Q: What in broad terms is the importance to governance and government in T&T of last week’s release of information on the State’s payment to CLICO

A: The need for eternal vigilance is greater than before, with our reduced national resources and I should never have had to make that kind of effort to get these details. Three administrations, between 2009 and now, felt it was proper to hide this huge public spending. Good sense seems to have arrived – for the while anyway! How much Public Money was spent on lawyers’ fees in this sorry affair? Is that a secret too?

This bailout was done via the Central Bank and the CL Financial parent company which formally came under State control by virtue of the June 21, 2009 Shareholders’ Agreement. The State then created new laws to further inoculate the Central Bank from the oversight of the Courts via judicial review and so on. 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.

Contrast T&T with the Bajan approach to the related 2009 collapse of CLICO in Barbados – The High Court there appointed Deloitte as Judicial Manager in April 2011 and a far more transparent process is taking place – see clicolife.com for an example of how we could have done it better.

If one analyses the data, do you agree that the majority of holders of the investments were individuals who were looking to maximise the return on their investments?

Yes, there were several wealthy investors, but a great many of the accounts and most of the larger ones, were held by companies, including state enterprises! We all know that the EFPA was approved as an individual pension product, yet it was sold to companies, which were later able to obtain repayment.

What do you think accounts for the large number of institutional investors who were able to invest in investment vehicles that were first marketed as being for individuals?

The sheer size of the returns being offered by the EFPA eclipsed good sense and it was the ‘best deal in the country’, quite literally ‘Too Good to be True’, grew and grew until it was ‘Too Big to Fail’ and as we now know, everyone is so closely related that it is now a case of ‘Too Big to go to Jail!’

What, in your view, are the long-term lessons of your fight for information on this state expenditure?

What is sorely needed is for the media and the academy to take their proper role as wellsprings of enquiry, research and debate. The mainstream media (MSM) have not embarked on a sustained campaign to get this information released. The UWI has taken no formal position on this serious issue as far as I am aware. This is a huge expenditure of scarce public money to repay wealthy risk-takers at a time when basic needs are unfulfilled. Chronic shortages in our public health institutions, so how can we find money for this?!

The process by which this outrageous bailout request made its way to the Head Table, was approved by Cabinet, with the sitting Minister of Finance being a shareholder of the beneficiary company, with the public being the last to know.  [CORRECTION: The ‘sitting Minister of Finance‘ referred to here is not the incumbent, Colm Imbert.  That was an awkward and inaccurate choice of words on my part and I apologise for that error.  The ‘sitting  Minister of Finance‘ to whom I was referring was the holder of that office from November 2007 to May 2010, Mrs Karen Nunez-Tesheira, who was recorded as the owner of 10,410 shares in CL Financial Ltd, being the 289th of 325 shareholders listed in its filing with the Registrar General’s Department of 17th February 2009.] Well I tell you. Never again. It is like a recipe for a failed marriage in which the husband is the last to know…

What are the long-term lessons of the CLICO collapse and the length of time resolution has taken?

Publication of the Colman Report into CLF…The need for financial education…We need a Regional Financial Regulator as the late Norman Girvan proposed in the wake of this fiasco…most importantly, the key players must be arrested and face the courts on serious charges…The State locks up ‘suspects’ in various lockdowns to then go look for the evidence and pay damages, after! All that is to send a message, we are watching you, we know who you are. The question is why won’t the State take the same firm action against the financial criminals? Until we see the State being very serious with white collar criminals, as is now happening in so many other countries, we are going to have more of this ‘Corbeaux Capitalism.’

CL Financial bailout – the Eleventh Commandment

thoushaltnotbefoundout

‘…When we were growing-up, the Ten Commandments were drummed into us, in an effort to impart certain values…the way things are in T&T these days, it looks like we all have to live with the Eleventh Commandment…Thou shalt not be found out!…’

Today is eight weeks after the Appeal Court made its Consent Order on 24th January 2018 in this protracted litigation between the Ministry of Finance & The Economy and I. Since then, we have been chasing the information which the Ministry agreed to provide. We have had not one item or detail delivered and it is my view that had we not been chasing this continuously, the matter would have simply died.

That is what we are dealing with here. I am constrained to recite the misunderstood phrase, born out of frustration, but it looks like we are dealing with yet another ‘recalcitrant minority‘. Some readers may find that choice of phrase to be going too far in what might be simple inefficiency, rather than any deliberate obfuscation. Of course everyone is entitled to their view, so I am going to set out a few of the key event so that readers can decide.

This matter has gone well beyond a Freedom of Information request, as I am now holding an order from the High Court and another from the Appeal Court. Given those facts, the delays of the various public officials involved are serious, seeming to show a lack of haste which verges on contempt of court. Of course, the key officials with which my attorneys are engaging are also attorneys. I tell you. Continue reading “CL Financial bailout – the Eleventh Commandment”

CL Financial bailout – the consent order, part two

CL Financial bailout – the consent order, part two

The previous article gave the essential details of the fight for and contents of the Consent Order between the Ministry of Finance & The Economy and I. It has now been nine days since that Consent Order, yet despite the best efforts of my team we are no closer to understanding this delay. We do not know what reply the Ministry gave its attorneys, who is working on compiling these details, or indeed, if anyone is working on it.

Therefore one has to wonder, in relation to the requested details ‘What did they know?‘ and ‘When did they know it?

This article will examine these delays. Continue reading “CL Financial bailout – the consent order, part two”

CL Financial bailout – the consent order

CL Financial bailout – the consent order

On Wednesday 24th January 2018 we settled the Consent Order in the Appeal Court, in this long-running legal battle between the Ministry of Finance & The Economy and I. That Consent Order will allow the public much better insight into the CL Financial bailout. The Ministry of Finance & The Economy has now agreed to provide two of the three items I requested in 2012 under the Freedom of Information Act –

  1. Any unaudited financial statements of CL Financial Limited for the years 2008-2011 in the possession of the Ministry of Finance which were relied upon to prepare the affidavits of Minister Winston Dookeran filed on 3 April, 2012 in High Court proceedings CV 2011-01234, Percy Farrell and Others v Clico and others.
  2. Any list of the creditors of CL Financial existing at the date of the request in the possession of the Ministry of Finance, the names of the EFPA holders of Clico, the dates of the repayment of EFPA holders of Clico and the identities of those whose investments have been repaid.

We agreed to delete Paragraph 2 of the Order of Justice Boodoosingh, which referred to the presentation made to Independent Senators in September 2011.

The Ministry is to pay Seventy Percent (70%) of my High Court costs to be assessed in default of agreement and it was also agreed that there would be no order as to costs in respect of the appeal.

The Appeal Court panel comprised Justices of Appeal Mendonca, Jamadar and Rajkumar.

I am thanking my attorneys, Gilbert Peterson SC and Kingsley Walesby, for their diligence and skill in seeking the Public Interest in this important matter. I am also thanking my friends and media colleagues who supported this campaign for proper standards of accountability, transparency and good governance in our country.

We could not have come this far without the assistance of other campaigners such as the T&T Transparency Institute, Disclosure Today, the Constitution Reform Forum and of course, TedX POS and The Big Black Box…Special appreciation goes to those organisations…

Finally, of course, I thank the Minister of Finance & The Economy and his Cabinet colleagues who decided to support this long-standing call for those details to be published. It is a case of better late than never, so my thanks are sincere ones. We now need to maintain our vigilance as we advance the standards of accountability, transparency and good governance in our country.
Thank You.
Afra Raymond

That was the Press Release I made at the end of these protracted legal proceedings.

Timeline of this legal action

  • 8 May 2012 — Request made under the Freedom of Information Act (FoIA) to the Ministry of Finance & The Economy;
  • 29 March 2013 — Lawsuit filed to challenge the refusal of the Ministry to provide the requested information. The Ministry’s reason for refusing was that CL Financial is a private company and not a ‘public authority‘, to which the FoIA is limited;
  • 22 July 2015 — High Court ruled in favour of my original Request for Information and ordered publication of the requested details;
  • 10 August 2015 — The Ministry appealed the High Court ruling, citing new reasons not advanced in the earlier case;
  • 24 January 2018 — At our first hearing, the Ministry resiled from its previous positions and only objected to one of the three items I requested. We agreed the terms of a Consent Order and the legal matter ended.

The bailout started in January 2009 — that is the official date at least — so it is almost nine years in progress. It is impossible to say just what caused the Ministry of Finance & The Economy to reverse its position, but at last there will be a long-overdue publication of the details of just who got paid.

Certainly, with the effluxion of those 8+ years, certain legal limitations would have accrued, such that it may well be impossible to proceed against certain persons.

On 8th August 2017, the Appeal Court ruled in favour of the State’s application to appoint Provisional Liquidators to CL Financial. As required by that ruling, the first 3-monthly Report of the Liquidator is due to be filed in the High Court at the end of January 2018. That Liquidator’s Report would comprise detailed accounts of the sort which would have negated the Ministry’s earlier objections to publishing the accounts for the CL Financial group.

It will be fascinating to examine the details when they are submitted, which I expect within the next fortnight. We will be able to see who were the real beneficiaries of this immense payout of Public Money.

Of course, the terms of the Consent Order do allow a certain latitude, so it is important to remain vigilant in this endgame. Apart from the two parties to this concluded legal battle, the fact is that most of the beneficiaries I interacted with never wanted their identities disclosed. I would be surprised if those wealthy and influential persons did not attempt to thwart the impending publication.

The final point is that the item for which I withdrew my request was the presentation made to Independent Senators in September 2011 by the then Minister of Finance & The Economy, Winston Dookeran. The fight for that item would have raised certain fascinating issues between the Freedom of Information Act and the Constitution, which at S.55 protects Parliamentarians and their proceedings from intrusion by the Courts. Those issues are sure to arise again, but both sides left them aside in reaching this agreement.
Continue reading “CL Financial bailout – the consent order”