Category: Colman Commission

The Colman Commission – The Importance of Money

Sir Anthony Colman, QC. Photo courtesy Guardian Media Ltd.The Colman Commission was established about a year ago as a Public Enquiry into the failure of the CL Financial group, some of its subsidiaries, and the Hindu Credit Union.  The Commission is also mandated to report on the causes of these costly failures, so that it can make recommendations for possible prosecutions and the regulatory or systemic changes needed to avoid further collapses.

There has been a lot of fresh information revealed at the Commission and that is good, since the public now has a much better view of the various episodes behind the scenes.  The sole Commissioner, Sir Anthony Colman, has now made a statement which outlines his progress in this huge and complex matter.  Colman expects to take at least one more year and will be continuing his examination of the HCU matter when the CL Financial stage is completed.

Despite all the evidence about staggering sums of money and the heated public discussion that has sparked, I am perturbed by the way the essential information is being handled.

Since it is a Public Enquiry into a huge financial collapse, the financial information has to be front and centre if we are to get at the facts.

It is common knowledge that the link between performance and pay is essential in obtaining quality results in any competitive situation.  That basic fact, with which most people would agree, is now seriously challenged by some of the key events in the global financial meltdown.  It is beyond the scope of this article to delve into the new learning emerging from this global crisis, suffice to say that the old learning has literally been ‘tested to destruction’.

An unhealthy relationship between pay and performance would be a problem for any company, but in a financial company the issue is worse.  That is because the investors expect those companies to endure and prosper, so that they can collect the expected returns.

The Colman Commission will be unable to fulfill its mandate if it does not uncover the relationship between pay and performance in the failed companies.  Colman will also need to consider the motives and behaviour of the investors, who must also form a significant part of the story.  Without their participation and investments, the failed companies would have had no money to lose.

There is a strong interest in keeping the real figures and circumstances out of the news and some of the main items are –

  • The Accounts
  • The true levels of salaries, fees, dividends and bonuses
  • The identities and sums of money returned to those who have benefited from the bailout
  • The delinquent borrowers who owe the failed companies huge sums of money
  • The extent to which the failed companies and their chiefs complied with our tax laws

In ‘The Colman Commission – Cloudy Concessions’, published here on 1 September, 2011, I pointed out the danger of allowing the HCU claimants to testify without stating the amounts invested for the public record.  It was my view that those concessions represented the ‘thin edge of the wedge’ in terms of the entire exercise being a Public Enquiry into a series of financial collapses.

In this recent, third session of evidence Hearings, we have had three examples of the ‘widening wedge’ in respect of financial information.

  1. The first example is the recent imbroglio on the testimony of the CEO of Methanol Holdings (MHTL), in which significant financial information was excluded, apparently by agreement between the various parties and the Commission.  This is exactly the kind of danger I had been warning about, since MHTL is a significant, supposedly healthy, part of the failed CL Financial group and there is bound to be considerable public interest in its financial performance.  Yet, the Colman Commission agreed to exclude that financial information, so the public is none the wiser as to the overall health of the CLF group, despite paying for a public Enquiry.  This issue was highlighted in the Guardian editorial of Tuesday 15 November, 2011, which ended by emphasizing the public’s right to know.
  2. The second example was the decision on Directors’ monies – as reported in the Business page of this newspaper on 16 November, 2011 “…Commission Colman has ruled that the means of remuneration for CL Financial officials should be disclosed  to the Commission but not the actual quantification of them…”.  That bizarre concession removed any possibility of reporting on the real state of affairs at these failed companies.  If the Commission continued with that arrangement, it would have been impossible for any real understanding of the crisis and its causes to be derived from their work.
  3. The third, most notable, example was even more noteworthy, being the reversal of that decision and the grounds for that reversal, as reported in the Express of 16 November, 2011

    …The board appearance fee was revealed yesterday on the same day that Sir Anthony Colman, the lone commissioner in the Commission of Enquiry, ruled that the remuneration packages of those involved with the conglomerates collapse could be made public….

    Colman yesterday reversed a decision he made on Tuesday…

    “My attention has been drawn to the fact that in fact some evidence has already been circulated in regard to Mr (Michael) Carballo’s remuneration package and also Mr (Lawrence) Duprey’s remuneration,” Colman said.

    “I have come to the conclusion that it would be grossly unfair if there were a general bar on further evidence as to remuneration of participants so I reverse the ruling which I made yesterday and the result would be that the remuneration of participants can be put into evidence,” he said.

    “I do not accept that if the remuneration emanated from any of the companies involved there could be any question of confidentiality,” Colman said”

    It is remarkable to me that an appeal restricted to the principle of fair-play seemed to have caused this reversal, in a situation where the initial concession was toxic to the fundamental enquiry which is being conducted at public expense, supposedly for our benefit.

This is an Enquiry into a colossal financial collapse, so therefore the money must be front and centre at all times.  We must have scrutiny as to its origin, rationale/contract for payment and its disposition for tax purposes.

Sir Anthony Colman needs to be watchful of the wily attorneys, who may seek again to tempt him to agree to conceal some more financial information which might be awkward for their clients.  The fact is that all those companies are now being funded by the Treasury and we have a right to know what caused this huge mess.

It is not a concession, we now own the mess, so we must be allowed to see all of its parts.  No sacred cows.

Sidebar: Colman’s Challenge

Colman’s statement as to the difficulty of running the Enquiry was most instructive, with a total of 49 lawyers appearing for various parties and a further 5 for the Commission.

Colman has had to maneuvre between 18 parties to the Enquiry, three non-parties and over 800,000 documents.

Which only makes it all the more important that the Colman Commission be given the necessary administrative/legal support and multi-media resources so that it can better serve the purposes for which it was established.

We have the resources in this country to give each SEA student a new laptop, so it should be no challenge to provide those resources to the Colman Commission.

AUDIO: High Noon Interview – 22 September 2011

Power 102 FM

Afra Raymond is interviewed on the “Centre Stage” show on Power 102 FM in Trinidad and Tobago, hosted by Chris Seon, Cliff Learmond and Sherma Wilson, on the Colman Commission and the revelations and possible consequences.

  • Programme Date: Thurday, 22 September 2011
  • Programme Length: 0:23:21

The Colman Commission – Preserving Natural Justice

Following my last article on the Colman Commission –Balancing the Scale – in which the recent private meeting of Attorneys was discussed, I wrote the following to its Secretary.

From: Afra Raymond <afraraymond@gmail.com>
To: judith gonzalez <comsecclfhcu@gmail.com>
Sent: Wednesday, September 21, 2011 9:02 AM
Subject: To the Colman Commission

To – Judith Gonzalez, Secretary to the Colman Commission

Dear Ms. Gonzalez,

I was perturbed to learn, only recently, that the Commission had convened a meeting on Friday 8th July at which one of the items discussed was whether my various submissions should be admitted as evidence and if so, what should be the ‘status’ accorded it.

Here we had the situation of a Public Enquiry into a matter of Public concern, convening a private meeting which discussed as one item of business my inclusion as a witness.  As a participant in the Enquiry, not a party, I was excluded from the  discussion as to whether my evidence should be omitted…I was not invited to that meeting and only found about this afterwards, almost in passing.  I also understand that the various parties are to be given the opportunity to make submissions on those issues on my testimony, on which the Commissioner can make a ruling.

My work on this matter of grave public concern has been a solo exercise, except for the occasional assistance of friends. I am without legal representation at this important forum.

Given the substantial parties involved – all of whom are represented by attorneys – and the limits placed on my input by the Commission’s decision to deny me the status of a party, one can scarcely imagine a more lop-sided scenario than this one. Natural Justice is not negotiable.

All that said, the meeting in question has already taken place, so I am requesting that you give proper consideration to inviting my participation when this matter is next to be discussed.

Thank you for your consideration.

Afra Raymond

www.afraraymond.com

Sixth submission to the Commission of Enquiry into the failure of CL Financial Limited, et al

13th September 2011

Afra Raymond’s sixth submission to the

Commission of Enquiry into the failure of
CL Financial Limited
Colonial Life Insurance Company (Trinidad) Limited
Clico Investment Bank Limited
Caribbean Money Market Brokers Limited and
The Hindu Credit Union Credit Union Co-operative Society Limited

My name is Afra Martin Raymond and I am a Chartered Surveyor, being a Fellow of the Royal Institution of Chartered Surveyors.  I am Managing Director of Raymond & Pierre Limited – Chartered Valuation Surveyors, Real Estate Agents and Property Consultants.  I am also the President of the Joint Consultative Council for the Construction Industry (JCC), an umbrella organisation which represents the interests of Engineers, Surveyors, Architects, Town Planners and Contractors in this Republic.

This submission is being made in my personal capacity and does not represent the position of either Raymond & Pierre Limited or the JCC.

My work on this vital issue can be seen at www.afraraymond.com.

I am willing to give oral evidence before the Commission.

This submission is supplementary and comprises a single article, published on 15th September 2011, titled ‘The Colman Commission – Balancing the Scale‘.

I do believe all the items in this submission to be true and correct.

……………………………………………..

Afra M. Raymond B.Sc. FRICS
www.afraraymond.com
Apt. #14, Highsquare Condominiums,
1a Dere Street,
Port-of-Spain
625 8168 (h)
678 9802/350 6215 (c)
625 6230 (d)
afraraymond@gmail.com

The Colman Commission – Balancing the Scale

The Colman Commission into the failure of CLF Financial and the Hindu Credit Union is just about to move into its second round of Hearings and the public can expect to have further testimony on the losses suffered by people who deposited monies with CL Financial.

I have made several submissions to the Commission and have been invited to give evidence.  I am reliably informed that there have been strong and unanimous objections to my participation in the Colman Commission.  It would seem that only the Commission itself is interested in having my testimony go onto the record.

It is not surprising to me that objections of that sort would be arising now, but readers need to have a context.

The Colman Commission was established to find out how this fiasco occurred, recommend methods to stop a recurrence and also to identify responsible people who are apt for lawsuits or criminal charges.  The main parties can be expected to give self-serving evidence, designed to exonerate themselves from any blame.  We can also expect to hear more attempts to put the blame onto Wall Street, despite the claims in the CL Financial 2007 Annual Report– this is from the preamble –

…“The Next Wave of Growth” is the theme of this annual report, highlighting, to quote our Chairman, “that out of any crisis opportunities will emerge and our progress during the year under review prepares us to seize those opportunities and unlock value.” We have confidence in our ability to not only navigate this financial storm but to find fresh and profitable opportunities within it…

That Annual Report was published on 23 January 2009 – yes, that is 10 days after Duprey wrote to the Central Bank Governor for urgent financial assistance and one week before the bailout was signed on 30 January.

The Colman Commission is a Public Inquiry into a matter of major importance; it was approved by the Cabinet and installed by the President of the Republic.  A Commission of Enquiry can only make findings on the evidence submitted to it, so it would be very important for some people to have certain evidence omitted.

One of the most outrageous aspects of the entire Uff Enquiry was the use of public money by UDECOTT to attempt to block certain documents coming into evidence.  Those various attempts to limit the scope of the Uff Enquiry were disgusting to all right-thinking people and seemed to be a straight case of the ‘tail wagging the dog‘.

It is unacceptable that the Ministry of Finance could be taking a position which is seeking to exclude my evidence from the Commission.  If that were so, it would mean that Ministry is acting in a manner which effectively dilutes the Commission and what is more, appears to be incompatible with the intention of the Cabinet to have a full public enquiry into this matter of national concern.  In addition, the Central Bank is also reported to have objected.

The Colman Commission needs to be robust in getting at the truth of this financial disaster.

The new Bailout Plan

At the time of writing I have no details of the new bailout plan, proposed to be laid in Parliament for debate on Wednesday 14 September.  According to a report in the Trinidad and Tobago Guardian, the proposed plan is in two limbs, the first includes the issuance of new bonds to raise monies for the payment of policyholders, while the second is the creation of a prohibition against lawsuits against the Central Bank.

The three concerns I have at this stage are –

  1. Accounts– The last published audited accounts for the CL Financial group were for 2007, but despite the tremendous resources which have been deployed by the State in this matter there is no clue as to when accounts are to be brought up to date.  Given that both the 2009 agreements – the MoU of 30 January 2009 and the CL Financial Shareholders Agreement of 12 June 2009– exist in a framework of State funds being paid to the group’s creditors and recovered by asset sales, this situation is totally unacceptable.  What is more, there has never been any attempt to explain the delay in completing those accounts.

    As a result we have two insurance companies operating in our country without any accounts, which is in breach of the very regulatory framework of the Central Bank.

    The Finance Minister must address these relevant concerns if this proposal is to gain any support.  It brings to mind the recent point made by Independent Senator Subhas Ramkhelewan, in debating the recent proposals to increase the State borrowing limits, that the Parliament needs proper details of the ways in which those monies are proposed to be spent, because no person could borrow money from a diligent lender without giving details.  We need, as a country, to insist on these higher standards.

    We need to move away from the black box and the magician’s hat, towards a more transparent situation in which large-scale public spending decisions are based on a solid series of rationales.

  2. Colman Commission – The concern here is that the second limb of this proposal will prevent lawsuits against the Central Bank; at this point I am not sure if that only applies to CL Financial-related matters.  The Terms of Reference of the Colman Commission state –

    …2. To make such findings, observations ad (sic) recommendations arising out of its deliberations, as may be deemed appropriate, in relation to:

    (i) whether there are any grounds for criminal and civil proceedings against any person or entity; whether criminal proceedings should therefore be recommended to the Director of Public Prosecutions for his consideration; and whether civil proceedings should be recommended to the Attorney General for his consideration;

    It seems to me that the result of these proposals could be to thwart that part of the functions of the Colman Commission as they relate to the Central Bank.

  3. Insurance Act – Finally, I am concerned that as we are on the eve of a possible ‘solution’ to the problems of the policyholders, there may be other fragile insurance companies with solvency issues.  The fact that these matters are now so high on the public agenda means that we should not waste the opportunity to bring forward the new Insurance Bill, which has been drafted for some time, for discussion.

It is at moments like this that a responsible and long-term approach to these huge issues is in the interest of the entire nation.

CORRECTION

In this article, which was published on September 13th 2011, I stated that there were unanimous objections to my appearance as a witness at the Colman Commission. I wrote that on the basis of certain reports given to me by persons who were present at those meetings, but after receiving a challenge from the attorneys for the Trinidad & Tobago Securities & Exchange Commission (TTSEC), it was impossible to corroborate that aspect of the article – i.e. that the TTSEC had objected to my appearance.

This notice is to correct the record in that respect, I do regret any inconvenience or damage caused to the TTSEC by my publication of those allegations. – a Correction with similar effect was published in the Business Guardian of 18th November and I do regret the delay in publishing this one here for blog-readers.

Afra Raymond

Fifth submission to the Commission of Enquiry into the failure of CL Financial Limited, et al

9th September 2011

Afra Raymond’s fifth submission to the

Commission of Enquiry into the failure of
CL Financial Limited
Colonial Life Insurance Company (Trinidad) Limited
Clico Investment Bank Limited
Caribbean Money Market Brokers Limited and
The Hindu Credit Union Credit Union Co-operative Society Limited

My name is Afra Martin Raymond and I am a Chartered Surveyor, being a Fellow of the Royal Institution of Chartered Surveyors.  I am Managing Director of Raymond & Pierre Limited – Chartered Valuation Surveyors, Real Estate Agents and Property Consultants.  I am also the President of the Joint Consultative Council for the Construction Industry (JCC), an umbrella organisation which represents the interests of Engineers, Surveyors, Architects, Town Planners and Contractors in this Republic.

This submission is being made in my personal capacity and does not represent the position of either Raymond & Pierre Limited or the JCC.

My work on this vital issue can be seen at www.afraraymond.com.

I am willing to give oral evidence before the Commission.

This submission is supplementary, providing an update on the work which I have published since the fourth 4th July 2011.

The three articles in this submission are –

Date of Publication Title Abstract
6th July 2011 Colman Commission considerations Questioning the reluctance of persons who lost monies in the CL Financial fiasco to appear as witnesses.
27th July 2011 Lessons from the Financial Crisis Probing the causes and consequences of the crisis.
30th August 2011 The Colman Commission – Cloudy Concessions The concession to allow witnesses’ statements as to the quantum of their investments to go unpublished is critiqued.

I do believe all the items in this submission to be true and correct.

……………………………………………..
Afra M. Raymond B.Sc. FRICS
http://www.afraraymond.com

Apt. #14, Highsquare Condominiums,
1a Dere Street,
Port-of-Spain
625 8168 (h)
678 9802/350 6215 (c)
625 6230 (d)
afraraymond@gmail.com

The Colman Commission – Cloudy Concessions

The Colman Commission held its first session of Hearings in the last week of June, so we were able to have moving reports from witnesses who had lost-out from various investments with the Hindu Credit Union (HCU).

I read those transcripts and it was painful to see the shape of this problem.  The most striking aspect for me was that the various attorneys seemed to have struck a compromise as to the parts of that evidence which would form part of the public record.

HCU Investors were allowed by the Colman Commission not to state investment amounts. They seemed to set the agenda.

The main concession was that those witnesses did not have to state the amount of their investments for the record.  The reasoning seems to have been a stated fear of crime, but it is my view that this concession will compromise the effectiveness of the Colman Commission.  Given that the Commission is scheduled to resume its Hearings on 19 September, it seems timely to put these matters forward now.

To begin with, the two Golden Rules of investment are –

  1. The Risk and Reward paradigm – Risk and Reward have an inescapable relationship – i.e. the greater the Risk, the greater the Reward and vice versa.
  2. Investments need to be spread out so as to avoid undue concentration of risk – in colloquial terms, you should not put all your eggs into one basket, or bet all your money on one horse.

From these time-honoured ‘Golden Rules’, we derived the ‘Prudential Criteria’ which guide how financial institutions balance risk and reward.

Yet, despite the ‘Golden Rules’ the CLF and HCU chiefs were able to devise products which tempted tens of thousands of people to abandon those basic safeguards and invest in their products.  People who were normally sensible were tempted to abandon good sense and break both ‘Golden Rules’.  That is the measure of this tragedy.

Another point is that it was not only individuals who made that type of error, there were other people, with responsibility for managing monies, who also gave into the various temptations.  The sidebar has details on that.

Let us be clear that the scope of this fiasco is as broad as it is deep, with boundaries stretching from the delayed and misleading accounts to the mismatched funding/investment practices of the core companies, from the absence of proper corporate governance described by Dr. Euric Bobb to the negative impact of the extensive political donations made by the CLF group.  The Executive Flexible Premium Annuity (EFPA) is at the heart of the tragedy – the most successful investment product ever designed and built in the Caribbean, while being, at one and the same time, arguably the most toxic.

The duty of the Colman Commission is to probe how this fiasco occurred, recommend methods to stop a recurrence and also to identify responsible people who are apt for lawsuits or criminal charges.

We are now contemplating an inquiry into a large-scale financial collapse, which appears to have conceded the right of witnesses to withhold details about their investments.  We are able to read the name and age of the witness, but effectively barred from information as to the size of their investment or the proportion of their total portfolio that figure represents.  A Public Enquiry into a financial failure has conceded the right of the public to the basic financial information.  I say basic, because the fact is that without those thousands of EFPA and INC investments, there would not have been the cashflow to allow CL Financial to embark on that fateful journey.

This appears to me to be a cloudy concession, to say the least, since it might represent the thin edge of the wedge in setting a precedent to allow subsequent witnesses to try obscuring or omitting financial details.  More importantly, the effect of that kind of concession is that it will almost certainly mask the extent to which the basic financial rules were violated.  That is not a philosophical question, because the CLF disaster only attained this scale and consequence as a result of these basic rules being broken.  Ergo, it is not at all possible to credibly examine the causes of the crisis, if one has conceded that those are areas which will not be publicly examined.

There was public campaign to persuade people to make these risky investments.  That campaign was calculated to have them set aside the norms of good sense – the ‘Golden Rules’ were abandoned.  The Agents, many of whom masqueraded as ‘Investment Advisors’, appealed to people to close-off their other accounts and sell other investments so as to put as many eggs into that one basket as possible.  After all, the more money you put with them, is the more interest CL Financial was offering.  We all know that is how the thing went.

At the same time, these agents were busy telling people that their product offered these tremendous rates of return and complete security of funds, etc. etc.  I bet everyone reading this heard those lyrics, at least once.

This concession is short-sighted and I am urging the Colman Commission to reconsider its position urgently.  There must be no easy concession to allow less light.

Sunlight is the best disinfectant.

The depth of this tragedy can only be plumbed if we are able to see the true extent to which the ‘Golden Rules’ were broken.

The Colman Commission has to keep its focus.  That concession needs to be renegotiated, if it is not already too late.

SIDEBAR: The levels of responsible investors

Apart from the individual investors who suffered from their misplaced faith in the CL Financial and HCU Products, there are others who also need to be examined by the Colman Commission if we are to have a proper picture of those events.

Firstly, there are the Credit Unions, who were acting for many small and relatively unsophisticated investors.  Several Credit Unions placed heavy investments into these EFPA products, which of course was a product approved for individual investors.  The nature and extent of those Credit Union investments need to be a living part of this enquiry.

Secondly, there were yet another species of large-scale investors who were the chiefs of the State-owned National Gas Company (NGC) and the nation’s largest pension plan, the National Insurance Board.  Those two companies were reported to have invested the sums of $1.1Bn and $700M, respectively, in a Clico Investment Bank (CIB) product called the Investment Note Certificate (INC).  This was another ‘gravity-defying’ product which offered attractive rates of interest along with the guarantee of being backed by good-quality investments.  Like a close relative of the EFPA.  In ‘Taking in Front’ published here on 25th April 2010, I examined the NGC’s involvement in those CIB products.  At one point, up to 40% of NGC’s money was with the CL Financial group, so it is clear that its own Board policy on the placement of large-scale, short-term deposits did not insulate that State Enterprise from the temptations which afflicted others.

Given that the highest levels of commission were paid to the agents for these products which yielded so much cash for the CL Financial group, Colman has to ask whether inducements were ever offered to these people in positions of trust.  Apart from the question of possible inducements, the real question is whether the kind of over-concentration of deposits which exists is at all compatible with the proper execution of one’s fiduciary duty.  Colman will never know unless he withdraws that fatal concession.

Colman Commission considerations

This is a rapid look at some of the news coming out of the Colman Commission – the first live evidence was given on Monday 4th July.

That evidence has so far been into the Hindu Credit Union (HCU) and already some peculiar things are emerging.  I do not follow it on TV and just read the newspaper reports –

  • Breach of Trust – It seems clear to me that the depositors had a seriously misplaced faith in HCU and Harry Harnarine, which itself raises certain questions as to who was really fooling who.  It is basic and inescapable that a higher rate of return will mean a higher level of risk, which is why it is important to be more sceptical about high-return investments.  My point being that as a Credit Union, one has to become a member to participate and therefore one has a stake in the success of the organisation – with access to the accounts and attendance at the AGM, one can only wonder what kind of dance existed between the HCU chiefs and its ordinary members.  Yet, we are hearing from people who seem to have deposited their money at these  incredible rates of return and adopted attitudes of complete trust.  The witnesses need to be more seriously probed on what happened at those AGMs and so on – if they HCU conducted its AGMs anything like the CL Financial’s final AGM, it will be quite a story.   We need to get past the various heartbreaking stories, to the nexus of responsibility which is where this entire game is played.  I am sure there is plenty more to come out, plenty more.
  • farid scoon
    Farid Scoon

    Farid Scoon, Attorney-at-Law – Was expected to explain how he could be representing a group of HCU depositors and the former HCU chief, Harry Harnarine, at the same time.

There also seems to be a strange situation on CL Financial, since I am told that none of the affected people are willing to come forward to testify.  I am not very surprised at that and it is yet another indication of the extent of that toxic ‘Code of Silence‘.

What a shame!  25,000 policyholders said to be affected by the failure of CL Financial, yet only one is willing to testify.  Only One!   I wrote before in this space about the probability that a high proportion of those EFPA monies had never been screened by rigorous Anti Money Laundering (AML) procedures.  I suggested to the Minister of Finance that provisions be made in the payout agreements for the applicants for bailout monies to have the source of their funds vetted for compliance with VAT, PAYE, Income and Corporation taxes.  The Minister did not adopt those proposals.

So, what we now have is the spectacle of the Colman Commission set up by the government to examine the causes of the collapse and finding that few want to speak, very few.  I don’t know if it’s dirty money, or ‘keeping it in the family‘ or what…but I do hope that Colman takes a robust approach by using his powers to sub-poena people to appear and testify.

The Colman Commission needs to deploy more resources in getting info up onto its website in a timely fashion.  Just as a simple example, the opening arguments which were heard last week have been posted onto the website in very erratic, delayed fashion.   The session of Monday 27th June was posted on Tuesday 28th June, but the sessions of Wednesday 29th and Thursday 30th June were posted on Tuesday 5th July, no explanation given.  If more resources are required those need to be deployed.  The Colman Commission must not be allowed to become an orphan in our land of grandiose schemes and projects.

Of course we have seen the expected attempts by Lawrence Duprey to remove himself from being enquired into or even being required to answer questions.  At this time those attempts appear to have been thwarted, but we can surely expect more spoiling tactics and not just from Duprey, either.

Fourth submission to the Commission of Enquiry into the failure of CL Financial Limited, et al

4 July 2011

Afra Raymond’s fourth submission to the Commission of Enquiry into the failure of:

CL Financial Limited
Colonial Life Insurance Company (Trinidad) Limited
Clico Investment Bank Limited
Caribbean Money Market Brokers Limited and
The Hindu Credit Union Credit Union Co-operative Society Limited

My name is Afra Martin Raymond and I am a Chartered Surveyor, being a Fellow of the Royal Institution of Chartered Surveyors.  I am Managing Director of Raymond & Pierre Limited – Chartered Valuation Surveyors, Real Estate Agents and Property Consultants.  I am also the President of the Joint Consultative Council for the Construction Industry (JCC), an umbrella organisation which represents the interests of Engineers, Surveyors, Architects, Town Planners and Contractors in this Republic.

This submission is being made in my personal capacity and does not represent the position of either Raymond & Pierre Limited or the JCC.

My work on this vital issue can be seen at www.afraraymond.com.

I am willing to give oral evidence before the Commission.

This submission is supplementary, providing an update on the work which I have published since the first submission on 14 February 2011.

I have attached a ‘live’ table of contents in pdf form, for ease of reference.

I do believe all the items in this submission to be true and correct.

……………………………………………..

Afra M. Raymond B.Sc. FRICS

www.afraraymond.com
Apt. #14, Highsquare Condominiums,
1a Dere Street,
Port-of-Spain
625 8168 (h)
678 9802/350 6215 (c)
625 6230 (d)
afraraymond@gmail.com

Colman Commission – A crucial choice

Image Illustration by NiCam GraphicsThere were several important developments in the Colman Commission last week, with the widely reported appeals of Sir Anthony Colman QC for the Central Bank to change its position with respect to the presentation of accounts to the Enquiry.

From my own attendance at the opening session of the Colman Commission on Friday 11th March and the various reports, it seems that there are various moves afoot to restrict or stop the enquiry.  I expected this sort of scenario in declaring the main players to be part of a ‘Code of Silence’ – it is no surprise to me.

There are three strands which are becoming evident as we move into the new phase, with the Colman Commission and several legal actions swinging into action.

  1. Firstly, we had former HCU boss Harry Harnarine challenging the Colman Commission in Court, claiming it to be illegal etc.  Obviously, Harnarine did not relish the thought of having to answer questions on TV.  The Appeal Court rejected those claims on Monday 4th April and the reports were contradictory, to say the least –

    “Speaking with reporters following the ruling, Harnarine said he was not satisfied with the panel’s ruling.
    Harnarine said he welcomed the enquiry and would make objections “at the right time”.
    Harnarine wanted the court to declare the commission null and void, that it was an abuse of the court’s process and that it was unlawful and illegal, among other requests.”

  2. Secondly, the Central Bank’s action to wind-up Clico Investment Bank (CIB) was challenged by the National Gas Corporation (NGC) and the National Insurance Board (NIB).  On 27th January the judge in that case ruled that the petitioner must be questioned.  The Central Bank’s attorneys had fought very hard to resist that.  The petitioner was the Inspector of Financial Institutions, Carl Hiralal.  I have already questioned the apparent anomalies in his affidavits – in ‘The House on the Corner’ parts 1 & 2 – so Hiralal’s cross-examination was one to be anticipated.  On 28th March, NGC withdrew from that lawsuit, which was to recover some $1.1Bn from CIB.  There has been no statement as to why that was done.  Given that the missing $1.1Bn is our taxpayers’ money, an urgent statement to clarify this decision is needed.
    WHERE IS THE NGC’s MISSING $1.1Bn?
    The NIB’s lawsuit is still ongoing and I await that cross-examination of Hiralal with great interest.
  3. Thirdly, we now have reports of various objections being raised by the attorneys in respect of the accounts for CL Financial.

Readers need to be clear that there are three types of accounts in this matter.  Given the room for error it is important to get this straight:

  1. Annual Audited Accounts – These are routine and ought to have been filed by now.  The last accounts for the CL Financial Group and its subsidiaries were by PriceWaterhouseCoopers (PWC) as at year-end 2007.  We therefore have a situation in this country with two insurance companies – CLICO and British-American – open for business with no accounts filed for 2008, 2009 or 2010.  That is unacceptable and further delaying will only bring discredit to the responsible parties.  The sidebar contains more on this.
  2. The Reviews of Accounts – Post-bailout, the Central Bank has hired Ernst & Young (E&Y) to review the accounts of the Clico Investment Bank and CLICO.  In addition, the Commissioner of Co-operatives had hired E&Y to do the same for Hindu Credit Union (HCU).  From what I have read, E&Y seem to be objecting to both the production of those reports to the Colman Commission and the subpoena to its Executive Chairman, Colin Soo Ping Chow – see Trinidad Express   of 6th April – see here.  I am not at all clear what is the objection to releasing those reports, after all, the E&Y report into CIB formed part of the Central Bank submissions to the High Court in the winding-up petition.
  3. Forensic Audits – These were reportedly done by Bob Lindquist and KPMG Canada for the Central Bank on CLICO, with the latter firm now claiming that their client is objecting to disclosure.  The grounds appear to be that if those reports were disclosed, it would undermine the intended prosecutions.  That seems to me to be a reasonable rationale to pause the publication of those reports until that impasse is resolved.

So, what is at stake here?

Sad to say, but this is reminding me of the actions of Calder Hart/UDeCOTT in trying to derail and frustrate the Uff Enquiry.  On that infamous occasion we had the spectacle of a State-owned company challenging the Uff Commission – which had been established by the State – in the High Court.  I hope that my view is incorrect.

This led to Colman’s appeal to the public as reported in the Trinidad and Tobago Guardian on 7th April and Trinidad Express of Friday 8th April.  The first of those reports contained an intriguing fragment in which former AG and Law Association President, Russell Martineau SC raised objections on behalf of his clients, PWC, on grounds of confidentiality. That mystified me, since PWC’s audits seem to be confined to the first, most innocuous group, as outlined above.

According to Colman, if the Commission has to get fresh reports into these matters it will mean more delays and more expense.  He said that would be a matter for the public to decide if that is in their interest, hence these efforts.

The Central Bank made a press release on 14th April which confirmed that they intend to take legal actions. Please note that the press release was silent as to the Annual Audited Accounts. For whatever reason, the Central Bank is continuing its silence as to the status of the most innocuous class of accounts.

It is unacceptable for these issues to be mixed in this misleading fashion. Simple and inescapable questions need to be answered now –

  • Are the CL Financial annual audited accounts for 2008, 2009 and 2010 ready?
  • If yes, why have they not been published?
  • If not, why not?
  • What is the objection to publishing the Reviews of Accounts?

It seems that we are being given a tough choice, between –

  1. a solid investigation, which preserves the secrecy of the forensic reports, with probable prosecutions, or
  2. a wide-open investigation, with a high level of information emerging about the entire fiasco, but little chance of successful prosecutions.

The Trinidad and Tobago Guardian editorial of Tuesday 12th opted for the former, while the Trinidad Express editorial of the same day took the opposite view, favouring the latter.

The decisive question, for me, is whether the Central Bank has a track record upon which we can rely. The basis of their objections is the notion that prosecutions are to be mounted against the offending parties. Can we really accept that?

The Central Bank’s track-record on these matters has been doubtful and people are right to be concerned.  From the CIB’s reported failure to file Corporation Tax returns for 2007, 2008 and 2009 to the continued inaction on the ‘Fit and Proper’ regulations, to the failure to recover the dividends CLF paid after the bailout was requested. A poor record of proper enforcement.

We are now being asked to believe that an organisation which is unable or unwilling to pick those ‘low-hanging fruit’, will be able and willing to prosecute ‘high-flying smartmen’.

I am being reminded of those childish spelling-games we all played –

A for Apple
B for Bat
C for yuhself!

Trinidad & Tobago Transparency Institute made a press release on the issue, which called on the Central Bank to act in an exemplary fashion. That is a welcome statement.

My vote, for what it is worth, is that we should preserve the secrecy of the forensic reports so as to remove any escape hatch for these fraudsters and their accomplices. Leave them no avenue to claim that if this or that had not happened they would have been able to prosecute. There is probably enough material in the other two classes of accounts to progress the Colman Commission.

SIDEBAR

Freedom of Information – Having had three applications under the FoI Act ignored, I have now given the Ministry of Finance ten (10) days to provide a copy of CL Financial’s letter of 13th January 2009 requesting the bailout and the 2008 Audited Accounts for the CLF group – see here .  If those documents are not supplied, it is off to Court we go.

Legal Opinions – At this point in the mix, we sorely need to hear from the legal columnists as to what is the position in this heated contest – Martin Daly, Dana Seetahal, Ken Lalla and Martin George, we await.