Compliance of CL Financial Directors with the Integrity in Public Life Act

These are my emails to formally raise the issue of the applicability of our Integrity in Public Life Act—which requires Public Officials to file declarations of their interests and assets as an Integrity safeguard—to the Directors of CL Financial.

This is an issue I first wrote on in May 2009 and the questions remained unanswered, so the questions have now been put directly to the relevant officials.

From: Afra Raymond <afraraymond@gmail.com>
Date: Mon, Sep 10, 2012 at 10:12 PM
Subject: Compliance of CL Financial Directors with the Integrity in Public Life Act
To: registrar@integritycommission.org.tt

To – Mr. Martin Farrell, Registrar of the Integrity Commission

Dear Sir,

The Integrity in Public Life Act requires that “Members of the Boards of all Statutory Bodies and State Enterprises including those bodies in which the State has a controlling interest” are required to file returns and declare interests with the Integrity Commission.

Clause 3.1. of the CL Financial Shareholders’ Agreement of 12th June 2009 – see https://afraraymond.files.wordpress.com/2010/03/mou21.pdf – specifies that the Board of Directors of CLF shall consist of seven Directors, four of which shall be nominated by the Government.  The GORTT has a controlling interest and it is public knowledge that the GORTT has exercised those rights, amounting to strong influence evidencing control.

It seems clear that the directors of CL Financial Ltd are therefore persons who should file declarations, and therefore also the directors of subsidiaries under their influence and control, but having visited your offices earlier today to examine the Register of Interests it seems that these Directors have not been filing returns with you.

For your information, your staff confirmed to me today that none of these people have filed declarations or been required to file such for 2009, 2010 or 2011 –

Gerald Yet Ming (CLF’s current Chairman)
Hayden Charles (CLICO Director)
Ronald Harford (Republic Bank’s Chairman)
Dr Euric Bobb (former CLF Chairman)
Rampersad Motilal (Managing Director of Methanol Holdings Limited)

I am therefore requesting, in the public interest, your confirmation that Directors of CL Financial and the companies within its control are required to file declarations or your confirmation that those Directors are not required to file or such other informative response that will satisfy this complaint of apparent non-compliance.

I await your early reply.

Yours faithfully,

Afra Raymond
B.Sc. FRICSwww.afraraymond.com

From: Afra Raymond <afraraymond@gmail.com>
Date: Mon, Sep 10, 2012 at 10:13 PM
Subject: Compliance of CL Financial Directors with the Integrity in Public Life Act
To: [email hidden by author]
To – Senator Larry Howai, Minister of Finance & the Economy
Honourable Minister,
The Integrity in Public Life Act requires that “Members of the Boards of all Statutory Bodies and State Enterprises including those bodies in which the State has a controlling interest” are required to file returns and declare interests with the Integrity Commission.
Clause 3.1. of the CL Financial Shareholders’ Agreement of 12th June 2009 – see https://afraraymond.files.wordpress.com/2010/03/mou21.pdf – specifies that the Board of Directors of CLF shall consist of seven Directors, four of which shall be nominated by the Government.  The GORTT has a controlling interest and it is public knowledge that the GORTT has exercised those rights, amounting to strong influence evidencing control.

In addition, the CL Financial bailout has consumed large amounts of public money, in which connection I would invite your attention to the 3rd April 2012 affidavit of then Minister of Finance, Winston Dookeran, in which the public money committed to this bailout is detailed as –

Para 21    (a)     $5.0Bn already provided to CLICO
           (b)     $7.0Bn paid to holders of the EFPA and

Para 22           $12.0Bn estimated as further funding to be advanced.

For ease of reference, that affidavit can be viewed here – https://afraraymond.files.wordpress.com/2012/09/2012-04-03-affidavit-of-winston-dookeran.pdf.

That amounts to an estimated $24Bn of public money to be expended in bailout exercise and it is my contention that our country’s Integrity safeguards must be firmly in place to reduce any potential for improper behaviour or the suspicion of such.

It seems clear that the directors of CL Financial Ltd are therefore persons who should file declarations, and therefore also the directors of subsidiaries under their influence and control, but having visited the Integrity Commission offices earlier today to examine the Register of Interests it seems that these Directors have not been filing returns.

For your information, Integrity Commission staff confirmed to me today that none of these people have filed declarations or been required to file such for 2009, 2010 or 2011 –
Gerald Yet Ming (CLF’s current Chairman)
Hayden Charles (CLICO Director)
Ronald Harford (Republic Bank’s Chairman)
Dr Euric Bobb (former CLF Chairman)
Rampersad Motilal (Managing Director of Methanol Holdings Limited)

I am therefore requesting, in the public interest, your confirmation that Directors of CL Financial and the companies within its control are required to file declarations or your confirmation that those Directors are not being required to file or such other informative response that will satisfy this complaint of apparent non-compliance.

I await your early reply.

Yours faithfully,

Afra Raymond
B.Sc. FRICS

www.afraraymond.com

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EMANCIPATION Too – a relevant republication for the Republic, yea our Nation….

This is the text of the ‘Emancipation’ column published in the Business Guardian of 30th July 2009 as my attempt to grapple with some of the the unspoken causes and consequences of this huge fiasco.

I am republishing for two reasons…

  1. Firstly, there have been recent attempts by several people to claim that the Hindu Credit Union part of the Colman Commission is not related to ‘race’…that was surprising since some of those were people who ought to know better – Sir Anthony Colman, the Guardian Editorial-writer and of course, Andre Bagoo. In my opinion a significant part of these two interlinked stories – the CL Financial and HCU collapses – is rooted in our own issues with race. It would be a grave error to dismiss race in trying to understand these crises.
  2. Secondly, the original column was published before this blog was launched, so this is a way of putting the point to those who missed it on the first subscribers.

I have not had the time to delve into the role of race in the HCU matter, so this is my offering in relation to CL Financial and our own African Emancipation Day celebrations…maybe readers can share with me if they see the relation between this situation and the HCU one…


Emancipation

This week the meaning of Emancipation is considered alongside the CL Financial fiasco. It is a painful, but necessary, task. Those of us concerned to commemorate the Emancipation of African people from slavery must have the courage and clarity to reflect on our past, both the distant and the recent. In reflection we can find direction and perhaps, the beginning of a solution.

How, if at all, is the CL Financial fiasco connected with the story of Emancipation? I deliberately use the word ‘story’ since it is clear that there are many versions of this period in our history. I say ‘our history’ because, whatever the race of today’s readers, the Emancipation journey is of vital concern to the progress of humanity.

There were notable and honourable African leaders who put up strong resistance to the efforts by Europeans to enslave their people. But the sad and inescapable fact is that there were others who thought of the process differently. It is a painful matter to discuss, but the fact is that some African rulers collaborated with the European slave-traders to capture and sell their people. Not all, but enough to make the difference. Without getting into the entire history, which is way beyond the scope of this column, the actions of that group of rulers were enough to ensure the success of the entire monstrous project. The Atlantic slave-trade shaped large elements of today’s world and we have been trying to build a new one ever since. Yes, an immoral and greedy group of rulers put a greater value on their personal enrichment than the well-being of those they were entrusted to lead.

The entire society paid the price for the selfish ambitions of these rulers.

One of the most striking things about the CL Financial fiasco is that Lawrence Duprey is one of us, an indigenous Caribbean man. Yes, a black man, with African blood flowing through his veins and that is something that has not formed part of our public discussion so far. One of the strangest features of these times is how, despite the over-supply of media, critical issues are not discussed. When one considers that the vast majority of the population of the region comes from an African background, it is striking that Lawrence Duprey is the only such tycoon in the region with his level of profile. But wait, I almost forgot that there is another one. Yes, I am speaking about Michael Lee Chin.

Whichever way you slice it, this is extremely telling and as a result Duprey carried a peculiar set of expectations. Because of his unique profile as a black man, the fact is that Lawrence Duprey was the recipient of widespread admiration, envy and wonder. That is our society and that is one of the ways we deal with its ugly realities.

To go further, the leading people in the CL Financial team were also black. Yes, most of the CL Financial team have African blood flowing in their veins. Yes, by now I can hear some readers saying things like – ‘But X or Y doesn’t think that they are Black’ or ‘So what?’ or ‘Exactly what is your point?’. That kind of skepticism is expected when one discusses this kind of issue. In fact it is my view that the underlying attitude is the very problem.

At the same time, let us note that the regulators are themselves black people. Yes, the picture I am painting is that the main players are virtually all black people – the Cabinet, the Central Bank and the CL Financial/CLICO chiefs.

We African people have come from far, both metaphorically and physically. We now find ourselves in a sorry place with this CL Financial fiasco. We have a particular responsibility to do better this time around. There is no escaping that fact.

CLICO was built around the ideal, by its founder Cyril Duprey (Lawrence’s cousin) that ‘Give a man service, give a man value and he will give you more business’. Simple, but strong, those were the foundation stones of CLICO. Truth prevailed and with hard work the company prospered. CLICO developed unprecedented levels of investor confidence, as a black company (indigenous) in which one could have faith. Given our history as African people, that level of investor confidence is no small or incidental thing. It could only have been the result of solid vision and diligent long-term application, to name just two of the qualities of the founder.

CL Financial was established as a holding company and rapid diversification followed, with investments in a number of areas unrelated to conventional insurance business. As a result of its success, CLICO was able to provide most of the cash to pay for the group’s unorthodox expansion.

At that stage, the activities of the group shifted to reflect the new ambitions of its new chiefs, most notably its Executive Chairman, Lawrence Duprey. Those activities ultimately undermined the stability and health of the whole.

The Emancipation story has many lessons, but the central one, from my point of view, is that many of our rulers lost sight of the balance between private wealth/privilege and the public good. Are we doing better now? For us, in this Emancipation week, it is useful to consider the extent to which we have learnt from our past.

The actual behaviour of the CL Financial chiefs and the group’s shareholders in this moment is instructive. At every turn, the public good has been shafted in favour of private wealth. From the payment of dividends while CLICO’s Statutory Fund was in deficit to the payment of dividends to CL Financial shareholders after they wrote for urgent financial assistance from the State. The pledging of assets which had already been pledged and the attempted sale of assets contrary to the original MoU. The shocking statement of CLICO’s new boss that $5.0Bn was missing from its Statutory Fund and the utter silence subsequently as to its whereabouts.

All this shocking behaviour and no sign of any reprimand, charge or censure from our rulers. Instead, we are told that our entire Treasury has been pledged to assist savers and restore shareholder value. Trinidad & Tobago is a land of many firsts, but this is a tragic one.

How did we get to the point of pledging our common wealth to restoring value to a few privileged people who are showing no proper regard for the public good?

Do we have the moral fibre to recognize what has gone wrong in our past and behave differently?

Property Matters – State Enterprise Accounts

State Enterprise Performance Monitoring Manual
In the next few weeks, this column will cover some of the issues which are likely to have a bearing on the 2012 Budget.

In my view the State and its Agencies must perform in an exemplary fashion if we are to progress.  A good example is worth a thousand words.

At page 22 of the 2010-2011 budget statement, the Minister of Finance said –

…Mr. Speaker, no coherent, co-ordinated planning or strategy for state enterprises exists.  As a result we have begun to rationalise the state enterprises, including the special purpose companies, which will incorporate a new accountability system that goes beyond the presently operating company ordinances. It is these loopholes in public accountability that resulted in the UdeCOTT scandal. This must never again happen in Trinidad and Tobago…

The Ministry of Finance has now published a new State Enterprises Performance Monitoring Manual 2011, it is over three times longer than the previous edition, so it will be something to consider in weeks to come.

Certainly, there are stricter requirements in relation to the filing of accounts – at pg 30 of the 2011 guidelines –

3.2.5 AUDITED FINANCIAL STATEMENTS

State Enterprises are required to submit the following:

  1. Audited Financial Statements (2 originals and 120 copies) to the Minister of Finance within four (4) months of their financial year end. These reports are to be laid in Parliament and subsequently submitted to the Public Accounts and Enterprises Committee for consideration;
  2. Copies of their Management letters issued by Statutory Auditors…

At pg 16 of the 2008 edition –

1.3.10 Publishing of Financial Statements by State Enterprises

Government has agreed that State Enterprises be required to publish in at least one (1) major daily newspaper a summary of the audited financial statements within four (4) months to the end of their financial year and a summary of the unaudited half-yearly statements within two (2) months of the mid-year date.

Such summary statements must be in accordance with the requirements of the Securities Industry Act, 1995.

The new guidelines appear to be stricter, but the requirement to publish to the press seems to have been removed.

There are swirling issues on this –

  • No accounts for years – As I have pointed out before, some of the largest State Enterprises have published no accounts for years.  UDECOTT and NHA/HDC are just two examples of this flagrant breach of the shareholders’ instructions as set out above. In the case of HDC, there is a greater concern in my view, since sections 18, 19 and 20 of the HDC Act require the audited accounts to be produced and published.  Anyhow you try to spin it, those are terrible signs.  For a private company to have no accounts, for even a few months, is indicative of poor performance at the very least.  No accounts for years is unacceptable.  One can only wonder how clearly could anyone plan if basic information is being obscured in this fashion.  We expect better from the chiefs of these State Enterprises and certainly we expect better from the Peoples’ Partnership.  In his preamble to the 2010-2011 budget, Minister Dookeran said –

…We must at all times remember who we work for. We must make Government work for the people.  As our Prime Minister always says: serve the people, serve the people, serve the people…

  • Serious debts outstanding – There are continuing reports, despite some efforts, that contractors, consultants and suppliers are owed substantial monies by State Enterprises for extended periods.  That has a disastrous effect on our local economy both on an immediate tangible level and in terms of the more subjective element of confidence.
  • Ambitious new projects continue to be announced, even as the basic accounts are incomplete and substantial bills remain unpaid.

Apart from the evident confusion, at the very highest levels of the State and Government, the unacceptable part is that there is not even an attempt to explain what is the hold-up or what areas of the accounts remain unresolved.  The few times anyone in authority has attempted to explain the delays in those accounts, it has been a model of vagueness and ambiguity.  That uncommunicative behaviour does not augur well.  These State Enterprises are not building a wartime bunker or a new spy satellite, only new homes and offices.

But there is more, according to S. 99 (1) of the Companies Act 1995

  1. every Director of a company shall in exercising his powers and discharging his duties act honestly and in good faith with a view to the best interests of the company; and
  2. exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

Those provisions make mismanagement of a company an offence.  It is literally impossible to manage or direct the affairs of a multi-billion dollar company in the absence of audited accounts.  So there must be serious concerns as to how the Directors of those State Enterprises without accounts could have properly discharged their obligations under S. 99 (1).

SEC logoApart from these points, there is now the fact that the SEC has made Orders in respect of Contraventions of the Securities Industry Act 1995 and the Securities Industry Bye-Laws 1997.  Those Orders are in relation to the failure of these huge State-owned Enterprises to publish their accounts –

  1. 19th March 2010 against HDC, with fines totalling $121,000 – see http://www.ttsec.org.tt/content/pub100326.pdf.
  2. 15th June 2011 against UDECOTT, with fines totalling $120,000 – see http://www.ttsec.org.tt/content/Order-for-settlement-re-UDECOTT.pdf.
  3. 25th July 2011 against HDC, with fines totalling $400,000 – see http://www.ttsec.org.tt/content/Order-for-settlement-re-Trinidad-and-Tobago-Housing-Development-Corporation.pdf.

I was pleased to see the SEC taking this firm action against these offending State Enterprises, it is an important and necessary intervention.  I am not at all sure what, if any, ongoing penalties are being applied.  If there are no ongoing punishments or fines, this important regulator needs to take a tougher stand.  It is simply not good enough in my view for the regulator to levy these fines and allow the companies to carry on with ‘business as usual‘.  That would be like a dutiful policeman ticketing a motorist for smooth tires, no seatbelt and no headlights – issuing the ticket and then letting that motorist drive off.  The SEC needs to consider heavy daily fines and banning orders against Directors of these companies in breach of the law, if such do not already exist.

The era of irresponsibility in high office needs to be brought to a close.  The role of the Treasury in supporting this grossly irresponsible behaviour is questionable.  The silence on the missing accounts is intolerable.  The chapter of getting away with it needs to be ended.

Expenditure of Public money – Accountability – Transparency = CORRUPTION