This – clfFoI-1 – is a copy of the letter sent today from my attorney to the Ministry of Finance, requesting that they provide –
‘The Duprey letter’ – The fateful 13th January 2009 CL Financial letter, signed by Lawrence Duprey, seeking urgent and massive financial assistance from the Central Bank.
CL Financial’s 2008 audited accounts – These should have been prepared by PriceWaterhouseCoopers, as at 31st December 2008 and of course those are of great interest, since the 2007 audited accounts (published on 18th November 2008) disclosed assets of $100.6Bn, while ‘the Duprey letter’ showed assets of $23.9Bn.
The letter invites the Ministry of Finance to send the documents in 10 days or we go to the High Court.
Given the current state of play at the Colman Commission, there are no prizes for guessing which of those is going to happen.
This is the official copy of CL Financial’s Annual Return from the Companies Registry, as at 17th February 2009 – it bears the official stamps and is signed by CLF’s then Corporate Secretary, Gita Sakal.
The company had a paid-up capital of $7.5M, with that number of $1.00 shares in issue.
The 325 shareholders are listed alphabetically, as at 7th September 2008, with details of their occupations and addresses also supplied. Of course, that list shows, at #289, the then Minister of Finance – Karen Nunez-Tesheira – as Karen Tesheira, Attorney-at-Law – holding some 10,410 shares.
Another thing that is striking is that Lawrence Duprey would appear to have only three blocks of shares in his ownership –
#47 – CL Duprey Investment Trust – holding 1,634,335 shares, but we are unable to find the details on that company.
#78 – DALCO Capital Management Company Limited of #37 Frederick Street, POS – holding 1,947,833 shares. I am assuming that DALCO is a play on his initials – Lawrence Andre Duprey LAD, reversed.
I am taking that to mean that Lawrence Duprey had under his direct control a maximum of 3,701,313 shares – i.e. 49.35% of the group’s entire shareholding…slightly less than half.
I am leaving it to the better-informed readers to help fill in the gaps in this story.
As to Andre Monteil, the recently-retired Group Finance Director, his 337,269 shares were transferred from Stone Street Capital Limited to First Street Capital Limited on 31st March 2008, the date he retired from the CLF group. Both companies’ registered address is the same – 33b Perseverance Road, Haleland Park, Maraval.
Afra Raymond’s submission seeking to be made a party 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 has all been based on the public record and can be seen at www.afraraymond.com.
I am willing to give oral evidence before the Commission.
I have been conducting a campaign in the public interest on this important matter. My work is unfunded and I have no assistance. Indeed, I have no legal adviser at this Enquiry.
Having followed the issue so closely and attended the opening session on Friday 11th March, I am of the view that the parties thus far identified in this Enquiry are all seeking to advance their own interest.
I am here seeking to be made a party to this Enquiry, in seeking the interest of the silent majority, the taxpaying public, who have had to pay for this huge financial fiasco.
I am making this submission under rule 2. of the Commission’s Rules of Procedure, as a person whose “…participation in the Enquiry may be helpful to the Commission in fulfilling its mandate…”
I await your reply.
——————————-
Afra M. Raymond B.Sc. FRICS
Port-of-Spain
If you think this title is for the latest brand of household cleaner, you would be wrong. I drew that title from the famous statement by deceased US Supreme Court Justice Louis Brandeis, in reference to corruption and fraudulent dealings: ‘sunlight is said to be the best of disinfectants.‘
Of course, this is all about the impending Colman Commission of Enquiry into the failure of CL Financial and other companies (including CMMB) and the Hindu Credit Union.
We are attempting to understand our situation in this financial fiasco – how was the entire collapse caused? Who is responsible? What can we do to avoid a repetition?
Our House needs a serious cleaning and we need a new commitment to serious retrospection if we are to succeed in understanding this scandalous situation.
To set the stage, there are four principalities being represented in this Enquiry –
CL Financial Chiefs – The people who had Direction and Control of the entire failed group – that would include the shareholders.
The Regulators – The Supervisor of Insurance, Securities and Exchange Commission (SEC) and the Central Bank.
The Auditors – PriceWaterhouseCoopers and Ernst & Young – the former being auditors for the CL Financial group and the latter acting for the Central Bank.
The aggrieved Policy-Holders and Depositors – Several groups have been formed to seek the return of all the monies owed to these investors.
My first point about this Colman Commission is how welcome it is, as a tangible sign of a change in how our country is being run. No, I did not vote for either group in the last election, but it seems to me that neither of the last two regimes (Manning or Panday) would have initiated a public enquiry into this financial fiasco.
As much as I approve the decision to have this public enquiry, the purpose of this article is to warn against some of the forces now being assembled to erode the enquiry’s effectiveness. Even though, in this respect, political times have changed, we need to remain vigilant if the Colman Commission is to be effective.
To be sure, the four principalities I listed comprise very powerful players for whom this enquiry is a literal nightmare, since they will be obliged to explain some of their biggest decisions and actions, which they would never have had to explain to anyone outside of their own circle.
If the Enquiry takes place as intended, we are going to be afforded an unprecedented insight into the workings, dealings, arrangements and situations in our leadership class – all of it at a depth and range never before recorded. Matters that had been only the subject of picong, ole talk and so-called urban legends will all now become part of the official record. Yes, our Republic will be coming of age.
Our country is a Republic, which to me means that no class of citizen ought to enjoy rights which are superior. But there has been a pattern of behaviour in this fiasco which has been very disturbing because it violates those Republican expectations. Of course, I am referring to the fact that a three-tier system seems to have been in operation during the entire meltdown.
The lowest tier comprises those many persons who are now fretting over their investments with this failed group. Those people have to decide between continued protest action, legal action or just plain pleading to get some relief. A significant number of them would have placed undue reliance on the CLF products and would be suffering extra stress because they put too many, or all, of their eggs in one basket.
The middle tier is the lucky and/or well-connected people who were able to get back their money after the group collapsed. When the Prime Minister announced this Enquiry on 1st October 2010, she promised to release details of who received the monies disbursed in that period – i.e. after 30th January 2009. That list of names and who received what sums would be an absolutely explosive one.
Of course, the top tier and the absolute insiders would be those who had early warning of the oncoming collapse and took steps to preserve their wealth. That group would have to include the top CL Financial chiefs who left in the 12 months before the collapse – Monteil, Fifi and Mayers. Major depositors and investors would also have been part of this privileged group. The Governor of the Central Bank and the last Minister of Finance also withdrew monies just before the collapse.
Maybe I am entirely wrong and there was complete surprise when the CL Financial group collapsed. But if that is the case, one is really contemplating a slack system of management systems and an entire swath of our ruling elite who are not ‘fit and proper’. The question of who knew what and when, will be a main point of dispute, because either way you slice it, the picture is unappealing.
You can be sure that the people in the top layer will do anything in their power to protect themselves from the stern scrutiny of those in the lowest group, not to mention the public, who are paying for all this.
I wrote a previous column in this series, entitled ‘Taking in front‘ and on this occasion, in light of what is at stake, I, too, am taking in front. Having suffered a defeat in that the Colman Commission has now been established, the members of the Code of Silence can be expected to try halting, delaying or just diluting the Commission.
We have already had former Hindu Credit Union (HCU) chief, Harry Harnarine, defeated in the High Court in an attempt to stop the Colman Commission. I was not surprised to read reports that Harnarine is planning to appeal that decision. We can expect other strong challenges as this historic process unfolds.
If the members of the Code of Silence are unable to derail the Commission itself, we should not be surprised if they try to cloak the proceedings in some kind of blanket to prevent too much information escaping.
Readers, please note that the process of asking the Court to prevent publication of a particular piece of evidence is a very swift one, with the ruling expected in the very same sitting. That is because if those proceedings are too drawn-out, it can be actually self-defeating, since the matter which they are seeking to have concealed can be published and discussed while a decision is awaited.
That is the reason we need to beat this drum now. We cannot wait for the filing of injunctions and then seek to publish. By then, it would be too late.
The new algebra is simple and inescapable –
Expenditure of Public Money – Transparency = CORRUPTION
The preface of that Report contains an instructive paragraph, at page xii –
“…This report is not the sole repository of what the panel found. A website — www.fcic.gov — will host a wealth of information beyond what could be presented here. It will contain a stockpile of materials — including documents and emails, video of the Commission’s public hearings, testimony, and supporting research — that can be studied for years to come. Much of what is footnoted in this report can be found on the website. In addition, more materials that cannot be released yet for various reasons will eventually be made public through the National Archives and Records Administration…”
The US legislature is determined that the inner lessons and testimony on this important crisis are available to all interested parties for the years ahead. That represents a solid commitment to a learning society, which will at least attempt to draw lessons from the bitterest of experiences. In my opinion, that commitment is worthy of emulation.
Has our society reached the stage of maturation to commit to an entirely transparent process of retrospection? That is the question which will be tested in the weeks and months to follow.
The entire proceedings of the Colman Commission must be held in public. The proceedings must be on TV and available on the internet. The Colman Commission needs a strong internet presence, with its own website.
I have been preparing my submissions for the Colman Commission and took some time-out to start reading the Report into the USA’s financial crisis. Of course I am referring to the Financial Crisis Inquiry Report, which was published at the end of last month, about a year after its first hearings.
Even though I have barely scratched the surface of this 662-page work, it has already been a deeply fascinating read, filled with cautionary insights. The first conclusion of that Report is worth citing –
“We conclude this financial crisis was avoidable.
The crisis was the result of human action and inaction, not of Mother Nature or computer models gone haywire. The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand, and manage evolving risks within a system essential to the well-being of the American public. Theirs was a big miss, not a stumble. While the business cycle cannot be repealed, a crisis of this magnitude need not have occurred. To paraphrase Shakespeare, the fault lies not in the stars, but in us.
Despite the expressed view of many on Wall Street and in Washington that the crisis could not have been foreseen or avoided, there were warning signs. The tragedy was that they were ignored or discounted…”
It is an epic failure in that the world’s strongest and most diversified financial system was brought, literally, to its knees by a tidal wave of greed. Some of the main features were –
Slack regulators, who had looser and looser control of market activity, yet did little or nothing to propose the need for better controls.
Corrupt politicians, who accepted huge political donations from the financial institutions – yes, both parties – so that there was an absence of real debate on major policy shifts and consequences
A sheer overdose of hubris in an atmosphere in which it seemed, against all good sense, that tangible risk had been abolished. The catchphrase among market players was ‘IBGYBG – I be gone, you be gone’ – denoting a total abandonment of the notion of customer service. In many cases the salespersons knew what they were selling was of such poor quality that their own firms were betting against it.
If any of this sounds familiar, yes, you are right; it is almost the same as our own crisis. The old aphorism ‘When Uncle Sam catch a cold, the Caribbean get pneumonia’ comes to mind.
I have to say that the reading is a sobering experience as one starts to reflect that the deep and broad USA economy has been crippled by these ‘smartmen’ and their political minions. So what hope do we have of resisting those elements? That is the question we need to grapple with in this rounds.
But for all the parallels, there are two important differences –
Firstly, the guilty actors are not going to own-up. This is one pie they won’t want a piece of. They may try to seek exoneration in a version of the truth which locates blame somewhere on Wall Street. Those assertions need to be strongly challenged; they represent a piece of pure mischief.
Secondly, the US crisis is far smaller, proportionally, than our own. The Minister of Finance stated in the 2011 Budget (pg. 8) that the CL Financial bailout was costing our country more than 10% of its Gross Domestic Product (GDP). In comparison, the US bailout was estimated, in December 2010, by their Treasury Secretary to be costing about 1% of that country’s GDP. These facts show the double-mischief of these bold-faced people trying to tell us that this is just like in America.
According to those sources, this crisis is costing us 10 times more than the Wall Street one we keep on about. The relevant Ministry of Finance Press Release of 17th January 2011 states, “…With the Government’s planned bailout of CLFG (CL Financial Group), Standard and Poor’s expect net general government debt will rise to 28% of GDP in fiscal 2011 from 15% in fiscal 2010, though it will remain below the 36% median for ‘A’ rated sovereigns…” That is a difference of 13%. Yes, that is 13 times more than the USA…
This crisis will require us to properly compare and contrast those situations.
It has been two years, but at last the Commission of Enquiry into the T&T financial collapse is about to start its hearings. For the first time and against all their schemes and plans, the main agents of the Code of Silence are going to be forced into the direct sunlight to face questions and of course I mean the several court cases and the Colman Commission as discussed in ‘Testing the Code of Silence‘.
Sir Anthony Colman
The final date for submissions to the Colman Commission is Monday 14th February, which means that all written evidence must be filed by then. I am not sure if electronic evidence, like the 55-minute interview Brian Branker (former Executive Chairman of British American Insurance Co.) gave on Up Next! in September 2010 is allowable, but it seems worth it to try. So this is my call for the producer of that show, Jerry George, to please do submit it. If you are interested, it is at http://vimeo.com/15145888.
I expect that by now the main actors in this Code of Silence are all rehearsing their lines and agreeing who will speak on which piece and in fact which parts to be silent on. In my opinion we can expect nothing but self-serving and defensive statements, if not outright lies, from the main actors in this mess – the CL Financial chiefs, the wayward Regulators and of course, the auditors. The burning question is therefore how is the public interest going to be defended and advanced? By whom? On what terms?
To make the obvious comparison with the Uff Enquiry, we are looking at the same kind of procedure. The decisive difference is that, in this case, the balance of forces is entirely different.
You see, in the Uff Enquiry there were the forces of the State and its agents all lined up to defend their way of operating – that included UDeCOTT, Calder Hart, National Insurance Property Development Company (NIPDEC), Housing Development Corporation (HDC) and of course the State itself was in the Enquiry in the person of the Attorney General. On the other side there were the Joint Consultative Council and Dr. Keith Rowley, MP. All those parties were strongly represented. There were also independent forces at the Enquiry – the Trinidad & Tobago Transparency Institute (TTTI), Carl Khan and myself – the only two witnesses whose testimony stood without hostile cross-examination.
Due to the balance of forces in that forum, the Uff Enquiry was satisfactory in that all versions were strongly contested under cross-examination and also by conflicting testimonies – the Enquiry was forced to decide on the veracity and relevance of evidence…there was no easy middle road or settling for a version because no one had spoken against it.
Here, in the Colman Commission, we face an entirely different order of challenge. Let me explain –
Firstly, the quantities of money involved are several times larger – at least ten times more, in my estimation.
Secondly, the entire establishment seems to have capitulated to the ‘Duprey Dream’. That is a state in which no serious questioning of the actions of the CL Financial chiefs is undertaken. In the USA experience, this phenomenon is described as Regulatory Capture. It is one in which regulators are actually ‘occupied’ by forces who are the people they are supposed to police. That is not unfamiliar to us here in Trinidad & Tobago, but that is why we must fight against it. It is a true nadir of absolute corruption. A roaring silence of the formal and informal regulators.
Finally, based on that record, the Colman Commission will be dominated by these people, the ones who caused the entire mess. If that is the case, there is a real danger that the truth could be compromised or even sacrificed. That peril is what we have to work against.
Some of us have insisted on this Enquiry as a necessary step in preventing a repetition and further looting of the society. The facts and the versions of the facts are about to be tested in the crucible of the Colman Commission.
The only way we can avoid the US fate, and possibly worse, is by doing our very best to learn from the bitter experience. Those of us, who have insisted on this crisis being a real turning-point, must make the most of this moment. In my opinion, that can take place on two levels –
The publicity level, with lobbying to ensure that the process receives the maximum possible exposure, generally, and spot-lobbying to ensure that the key players in the mess are spotlighted when it is their turn to testify. The sole Commissioner was reported to have said that the hearings will be televised. How can we check on and ensure that takes place? Also, we should be insisting on a similar arrangement to Uff with the transcripts being on-line.
The evidential level, at which we need to make submissions to contend with the rotten and dishonest discourse from the utterly unresponsible parties who are ultimately responsible. We not only have to contend with and destroy the ‘Anansi-stories‘, we also have to advance our own arguments into the spaces and places they do not want us to go into.
Trevor Sudama, former MP
The key person from whom I would like to see a submission is the respected former MP and economist Trevor Sudama, who was the first person to put onto the public record these serious concerns over the health of the CL Financial group. That was in the 2001 Budget debate and of course we all know that Sudama and his colleagues – Ramesh Lawrence Maharaj and Ralph Maraj – were strongly attacked, ostracized and ultimately forced from the political Head Table. All by their own party colleagues.
Mr. Sudama, we need your input in this vital matter. The background for your intervention in this matter, your debate on it and the political attack must form part of the record in this Enquiry.
Some of the key commentators who should put in written submissions are Camini Marajh of the Express, Andre Bagoo of Newsday and Anthony Wilson, the Ag Editor-in-Chief of this newspaper.
Our professional Institutions have been pointedly silent and I would hope to see submissions from –
Association of Trinidad & Tobago Insurance Companies,
Our institutions of higher education should join in with their perspectives –
Arthur Lok Jack School of Business, part of UWI
School of Business and Computer Studies
School of Accounting and Management
Caribbean Centre for Monetary Studies, also a part of UWI
UWI’s Economics Department
UWI’s Government Faculty
I am going to close by sketching just one parallel.
To go back to the main points of the Wall Street experience as outlined above, we hear of these complex debt swap instruments and their toxic consequences. The fatal flaw of these instruments, according to the reports I have read, seems to be that they seemed to be a good way to invest with high returns and little or no risk. The truth turned out to be just the opposite.
It all seems remote from our own situation, but that is not the only way to look at it. The most controversial single item in this entire situation here has been the EFPA, an annuity duly approved by the Supervisor of Insurance. When we consider the promotional literature for that product, it is nothing less than scandalous that a leading company should have been allowed to advertise an investment product with exceptional rates of return and the repeated phrase ‘guaranteed investment’. There is absolutely no such thing as a guaranteed investment. It is a complete contradiction in terms, but yet it went out to tens of thousands of people, who suspended their disbelief and went along for the ride. That is the Trini parallel with those complex debt swap instruments.
Afra Raymond sits with hosts, Fazeer Mohammed and Felipe Nogueira on the Morning Edition television show to discuss the code of silence surrounding the CLICO bailout. Video courtesy TV6
The Code of Silence has formed the subject of several columns in this series.
I am referring to the unwritten agreement amongst the leadership group in our society to maintain silence in matters of white-collar crime. The guiding principle of the Code being that the members of that group must never be exposed to the same scrutiny and penalties as the common criminal.
That Code of Silence is poisonous to the progressive development of our society. Unless we can bury the notion that white-collar crime pays, our society is doomed to lurch from crisis to crisis. White-collar crime will never be truly challenged until the Code of Silence is tested to destruction. I welcome anything which would dismantle the Code of Silence. Literally anything.
The Commission of Enquiry into the various financial collapses which have beset us – Clico, British-American, Clico Investment Bank, Caribbean Money Market Brokers, the CL Financial group and the Hindu Credit Union – was announced by the Prime Minister in her 1st October address to Parliament.
On 17th November, Sir Anthony Colman QC was sworn in as the new sole Commissioner – he replaced the original choice – Sir Gavin Lightman QC, who had an apparent conflict of interest. The Secretary to the Colman Commission is Judith Gonsalves, who served the Uff Commission in that role. It is reported that Colman intends to hold open hearings and that those should start sometime in this month.
So, we are seeing three powerful channels emerging –
CIB winding-up action – ongoing litigation from National Insurance Board and National Gas Company to stop the Central Bank’s winding-up action. Those court actions have been set for hearing in April and the sum of money at stake is an estimated $1.8Bn.
Policyholders challenges – The various policyholders’ groups have now declared their intention to take legal action to recover the monies they feel are owed to them. The sum of money at stake in that series of actions is estimated to be $12Bn.
The Colman Enquiry – This is an overall, public investigation into the causes of the large-scale financial collapse as listed above. Given the continuing failure to produce the accounts, the total sums of money involved are unknown.
So, what is the likely effect of these lawsuits and the oncoming Colman Commission of Enquiry on the entrenched Code of Silence in our society?
To begin with, I expect a series of legal challenges to the very hearings of the Commission, with the likely grounds being the long-established principle that no person should suffer ‘double jeopardy’, in terms of two sets of charges to be answered. It will be an attempt to completely derail the entire Commission of Enquiry.
I would not be very surprised if certain state agencies also sought to shut the enquiry down. That would be a repeat of the unprecedented recent situation in which UDeCOTT went to court to challenge the Uff Commission.
The beneficiaries of the Code of Silence will make great efforts to avoid any deep examination of its members and the public needs to be alert to this point. There is absolutely no shame in that group and we should also prepare ourselves mentally for the ‘memory loss’ defence of the kind we saw from Hafeez Karamath in the recent Uff Commission.
After generations of operating unexamined, the very bowels of the society’s leaders are about to be opened up to a disgusted and skeptical public. The motivations, links and payoffs between these leaders are to be exposed to view. The exposure is going to be critical. Given the speed with which our legal system operates, the exposure is likely to be lengthy. Given the range of active media in our society, the details are going to be all over the place.
So, what is at stake here? What else can we expect, apart from legal challenges?
To begin with, I believe that the sums of money involved are several times more than in the Uff Commission. In addition, the slowing economy and the pattern of behaviour have set the public into a very critical mood.
In my view, these are some of the people we would see publicly cross-examined in the Commission of Enquiry and various lawsuits –
Lawrence Duprey
Most important of all, the Chief of Chiefs, Lawrence Duprey – Will he or won’t he show up for the many hearings? What can we expect to hear? Can Duprey offer an explanation for the shocking discrepancy between the $100BN+ asset valuation as at the end of 2007 and the $23.9Bn asset value he specified in his letter of 13th January 2009 to Ewart Williams? A mere 56 days separate the publication of those 2007 accounts – on 18th November 2008 – from Duprey’s letter, which has been hidden from view, despite my two Freedom of Information applications. The only reason we have some idea of this discrepancy – no…that is the wrong word, maybe staggering decline is better – is the anxiety of the then Minister of Finance to clear her name from allegations of Insider Dealing. That anxiety led the Minister to read this letter into Hansard on 4th February 2009.
Andre Monteil
Second most important of all, the Chair of Chairs, Andre Monteil – Monteil is now in retirement as a farmer and his testimony is surely one of the most awaited in recent times. As former PNM Treasurer, CL Financial Group Finance Director, Chairman of Education Facilities Company, National Housing Authority, then Housing Development Corporation and Clico Investment Bank, it is difficult to imagine a player who was more central. It is almost like a spy movie called ‘The Man who knew Too Much’.
Patrick Manning
Patrick Manning – When one considers the huge donations reportedly made by CL Financial to the PNM and the tangled web of this entire affair, it is difficult to see how Manning can escape serious, hard questions on many aspects. For instance, his 2002 decision to stop enquiries into HCU by then Minister in the Ministry of Finance, Conrad Enill, will surely be open to question. Manning’s recent bizarre behaviour might well be the beginnings of a defence. We will see.
Karen Nunez- Tesheira
Karen Nunez-Teshiera – The Minister of Finance who had to go to Parliament twice to attempt to clear her name in this matter. Firstly, from allegations that she withdrew her money from CIB early, having had inside information. Secondly, from allegations that as a CL Financial shareholder, she was biased in her dealings with the bailout, having failed to recuse herself from the discussions. Not one person I know, even blindly-loyal PNM-ites, is willing to openly defend the behaviour of Nunez-Teshiera. Not one. Imagine that. I think the phrase is “…A jury of one’s peers…” I wonder whether her Cabinet colleagues knew that the Minister was a shareholder? We won’t have to wait long.
Carl Hiralal
The Regulators – from both the Supervisor of Insurance, and the Inspector of Financial Institutions, Carl Hiralal. Just imagine the Supervisor explaining how Clico kept its licence all those years its statutory fund in serious shortfall. Or the Inspector justifying how CIB can fail to file its tax return and yet keep its licence. Mr. Hiralal must be considering his position most carefully at this point.
Ewart Williams
Central Bank Governor – Imagine Ewart Williams reconciling his several statements on Clico being a problem case since 2004, with his having two fixed deposits at CIB. Williams must also be having a few reflective moments.
The Directors – What is to be the position of the Directors of these failed companies? According to an affidavits filed in the Central Bank’s winding-up action, CIB made an undocumented loan with no interest rate or repayment period agreed. That loan was in the sum of $162M USD – yes, about $1.03Bn of depositors’ funds were lent to Angostura (a related party) with no documentation. It would be interesting to hear the Directors explain the degree to which that sort of advance is compatible with their fiduciary duty. It is important to note that the phrase fiduciary duty in this case refers to the obligation of those CIB Directors to act with the depositors’ interest as their first priority. But remember that CIB was wholly-owned by CL Financial. So, can one properly reconcile the fiduciary duties owed to depositors with those owed to the sole shareholder? It is a veritable conflict to be loaning depositors’ monies to the main shareholder, but that is why the loan agreements and credit committees exist. So as to provide safeguards against incautious loans, which can jeopardise depositors’ funds, so as to ultimately destabilize the bank itself, as in this case. There was no agreement. None at all. For a loan exceeding one billion dollars. All of the safeguards to balance the several duties of the prudent Director seem to have been ignored in this situation. Just imagine the Chairman who presided over the meeting of CIB’s Board which approved that loan, answering a series of critical questions, explaining just what they were doing dispensing with depositors’ funds in that loose fashion. I can scarcely wait.
The Auditors – The various PWC professionals who prepared and signed those audits. Will we see the release of the hidden accounts? How much longer can they remain concealed? There must be some quiet desperation creeping into Balisier House and PWC, just edging forward, along Victoria Avenue.
Robert Mayers
Robert Mayers – When he retired on 7th December 2008, did he or did he not know that Caribbean Money Market Brokers (CMMB) was heading for a financial collapse? Of course, we now know from the official statements that CMMB collapsed a mere 7 weeks after Mayers left office as its Managing Director. So, which is it to be? Is it that the collapse came like a bolt of lightening from a clear blue sky? Were there any warning signs? Do CMMB’s accounts give any clues?
Dr. Bhoendradatt Tewarie
Dr. Bhoendradatt Tewarie – He is former principal of UWI’s St. Augustine campus and now heads UWI’s Institute for Critical Thinking. Dr. Tewarie was a Board Director of the parent company, CL Financial, at the time of the collapse. Was he aware of Duprey’s letter to the Central Bank Governor, a mere 3 days before that Board authorized payment of a dividend to CL Financial’s shareholders?
The same characters and many of the same questions are in the HCU part of the story.
The members of that Code of Silence are probably considering how best to escape the consequences of their actions and inactions. It will be a truly unique Christmas season for some of them. There are probably not enough lawyers in the country to handle this tidal-wave of legal actions.
The stakes are huge and the burning question for me is – Can this be the first time that prominent people go to jail? Serious sentencing? Will any stolen monies be recovered?
Can the Code of Silence survive this challenge?
The Code of Silence must be destroyed if we are to progress.
We are now entering a bizarre endgame in this rounds of musical chairs. The children’s game has returned for us adults, but with a vengeance.
As I wrote on 10th September in this space, the real question is ‘When exactly did the CL Financial group collapse?’.
To understand this huge matter we need to put things in the correct order –
Firstly, the CL Financial chiefs left others holding the risks. Some dates and names, to support the theory –
L.A. Monteil – retired at the end of March 2008
M.A. Fifi – retired in August 2008
Robert Mayers – retired in December 2008.
What did they know and when did they know it?
Secondly, there was a series of large-scale, rapid withdrawals of funds which preceded the start of the bailout. That pattern of activity would have speeded-up the collapse. It would be very interesting to see details of who broke their deposits and failed to ‘roll-over’ in that crucial final stage.
Thirdly, post-January 2009, we have the massive payout of State funds, as detailed in the Guardian editorial of 25th October. Who was the recipient of those funds? Who benefited? On 1st October, the Prime Minister promised to publish that list and we await with interest.
Now, with the PP government taking the decision to review the bailout process, we have entered a truly bizarre stage of this matter. This is the part where all those trusting people who were told to wait and have faith, are realizing that the people in the know have already withdrawn and secured themselves. Some of those people in the know were the same ones who were telling the faithful to keep on waiting. What a thing.
There now appear to be at least four groups representing these investors –
The Clico Policyholders’ Group (CPG) – which is the most visible one with Peter Permell, Manny Lawrence and Norris Gomez etc.
The Clico Policyholders’ Protection Association (CPPA), which is the one with Harold Sookhan and Ramesh Lawrence Maharaj.
South Action Group – with Solomon Hem Lee
Denbow Group – a small number of Clico investors who are being represented by Dr. Claude Denbow SC.
Some of the positions being taken by the various groups are indicative of the degree of desperation of the parties, hence the title of this article. The general view emerging from these groups seems to be that the CL Financial group is basically healthy and profitable, so there should be no issue about returning their investment.
I do not know what those views are based on and it is impractical to continue basing our discussions on the series of rumours and draft reports and suchlike. We need good quality information to make a quality decision and that is not negotiable. We need to insist on that as a minimum.
After the first round of organizing and attorneys’ letters, followed by the Prime Minister’s important address on 1st October, we are now into what appears to be an even stranger place.
Two of the stranger proposals emerging from the CPG’s Port-of-Spain meeting on 24th October were –
Prem Beharry of the CPG was reported in the Trinidad Guardian to have said – “…Ryan ALM are saying they would take US$600 million and would convert it to the best debt instrument in the world which is US Treasury Bills,” Beharry said. “The Ryan ALM group is saying, within three months if they are engaged, they would be able to sell those bonds and get in cash of US$1.8 billion which is equal to the debt of TT$10.5 billion—that money would be used to pay all the policyholders…” That is literally too good to be true. It is the same approach that created this mess in the first place – both at the CL Financial group and Hindu Credit Union. It seemed to me that the CPG was recommending that the government put $600M USD of our taxpayers’ money into this scheme. Yes, I said scheme. Maybe if it was really so good they should have just accepted the discounted rates being offered in the budget and invested those funds with Ryan ALM. After one time is really two times, yes. I recently read that one Prem Beharry was appointed to the National Gas Company Board.
Another proposal, this one reportedly stated by Peter Permell, the CPG’s most prominent spokesperson was for the state to pay 40% immediately with the balance being payable in 5 to 7 years. The persons waiting for delayed payments would earn interest of 4-4.5% on those unpaid balances and also be entitled to a 51% share of any uplift in the value of sold assets. No, there was no proposal for those CPG members to share in any losses if assets had declined in value.
It may all just be a series of negotiating positions, but it seems pretty clear that no one from these various investors’ groups intends to take a discount or ‘haircut’ on the monies owed to them. The unstated assumption is that if someone has to stand the bounce or take a haircut, that someone must be the taxpayer. That could never be the correct position. So, we need the facts.
The most startling development is the Central Bank’s full page adverts on Thursday 28th October, repudiating the claims that it had offered any guarantees in this situation. The reaction was immediate, with the CPPA publishing large adverts in opposition the next day and a new anti-bailout group emerging for the first time – at last! The CPG’s response was a nadir in their campaign, with the Trinidad Guardian reporting that – “…Permell went on to say that they do not care where the Central Bank gets the money from once they guarantee the policyholders’ contracts…” – I could scarcely believe what was on the page before me. Even the most militant Trade Unionists use more reasonable language.
Which brings us right to the meat of the matter, the order of things. What is the reason that the investors’ groups are now at the front of the line for assistance from this government? I could be wrong, but it is easy to get that impression when one hears of Cabinet discussing the matter twice in one week, certain groups giving threatening timetables and so on. I do not know if our Cabinet – PNM, UNC or PP – has ever given such a total priority to any matter in the past.
There are other claims on the limited monies available to the State. All of those claims existed before these investors groups. All.
Many people have poor water supply. Outstanding payments to contractors and suppliers are in excess of $7.0Bn, according to Central Bank estimates. Insufficient money for OPVs – the estimated cost of $3.0Bn is too much for the country to bear, so national security is falling behind. More guns and drugs entering our homeland. Public Servants claims are about $3Bn and that is also a strain on the Treasury. Not enough police cars. Sad situation in the public hospitals.
The CPG issued a 2 page advert in the Guardian on Thursday 4th November and it deserves careful reading. It was good to see their call for the publication of the correct financial information before making a decision. They set out their proposals for the relief of CPG members – those are the latter of the two above, with the added condition that they be given two seats on the boards of CL Financial and Clico.
The CPG claims that its proposals place no additional burden on the taxpayers, which is a good thing, if that is truly so. The CPG’s proposals are silent as to how the monies already spent are to be recovered.
The real test will be if the accounts and asset valuations reveal the group to be insolvent. Will the various investors’ groups accept that or are we in for a long, bitter fight?
SIDEBAR: The Commission of Enquiry
The Attorney General recently announced that he had withdrawn Sir Gavin Lightman QC as the sole Commissioner, due to an apparent conflict of interest. Lightman had appeared for Clico in a 1991 court case and the PNM did well to have stopped this before it went too far.
Two important further points, though –
Firstly, this is the second such occasion. In the first case, the Commission of Enquiry into 1990 was announced with retired Appeal Court Judge Mustapha Ibrahim as its chair, until he pointed out that he too had a conflict of interest. There needs to be some more care taken on this count.
Secondly, the terms of reference need to be qualified, since the AG was reported to have said that “…The COI, he said, covers CL Financial, Colonial Life Insurance Company (Clico), Clico Investment Bank, British American Insurance Company and the HCU…” Having been frustrated in my efforts for the past fortnight to get confirmation of the Terms of Reference from the AG’s Ministry, I am forced to rely on press reports. Question being, why is CMMB being omitted?
Last week I wrote about the Code of Silence observed by our ruling class. I gave examples to support my idea, but there was not enough space to mention everyone.
The Bankers Association of Trinidad & Tobago (BATT) and the Association of Trinidad & Tobago Insurance Companies (ATTIC) are also part of the situation.
We have a long history of our rulers making huge, stupid, destructive decisions without any commitment to transparency or accountability. That lack of transparency is what allows corrupt to flourish. We can never eliminate corruption, but if we are serious about reducing it, we need to proceed differently.
Maybe, just maybe, this is the kind of colossal event which could force some of us to drastically change our ways, despite the positions we now assume. This is a moment of national peril and the continued observance of the Code of Silence is going to cost our country plenty money.
As it is, we already have been bound to a rotten bailout of the wealthiest individual in the Caribbean by our Treasury at ZERO interest. Anybody looking to set up a small business has to face the bank and pay interest. None of that for Lawrence Duprey and the CL Financial chiefs. They have been able to enrich themselves and when the entire thing went wrong, they were able to negotiate a handsome handshake for themselves and then leave the mess for our government to clean-up.
That is the plain meaning of the bailout. Is not policyholders we bailing-out, is the richest, smartest characters in the country. The bailout script is unfolding so well that almost the entire discussion is now about the fairness/unfairness of the government’s position with respect to retired policyholders etc.
Real Anansi antics.
The CLICO Policyholders Group (CPG) There was an EFPA group and a CLICO Policyholders group formed just after the budget on 8th September, but they soon merged under the latter name. I am now seeing what appears to be a substantial split with 2 competing meetings being organised for 10am today – one in Port-of-Spain and the other in San Fernando.
The CPG group has been very successful at getting their views known and making the media circuit, with the eventual meetings with the advisory group set up by the PM.
The main concern being advanced by the CPG is for the recovery of the funds deposited with CLICO and there has been no reply whatsoever to the point that, despite its labelling, the EFPA was largely sold and understood as a deposit. The accounting rule of thumb as to ‘substance over form‘ in interpretation is an irrefutable part of the debate on this, but CPG have been silent on this point.
Almost all the many people with whom I have discussed this issue, have been very plain in their language – ‘I had my money deposit with CLICO‘ and so on. But the word Policyholder is more likely to attract sympathy, so the games continue.
We already spent $7.3Bn in cash since the bailout was announced. Please note that nobody is even talking about how the State is going to recover that loan. The only talk is about how are they, the depositors, going to recover their monies.
There is a real principle of financial equity being shredded to pieces in the conduct of this bailout and it was disappointing that Mr. Dookeran, as an Educator in the field, did not take the opportunity to expand on this.
The intent is plainly to deprive the Treasury of its limited funds so that the assets of 15,000 people can be preserved.
So, What about those negotiations?
Sen. Vasant Bharath
When the Prime Minister spoke on 1st October, she created an advisory group (headed by Minister of Food Production, Vasant Bharath) to meet with the policyholders to seek other options.
The Prime Minister was to meet with concerned persons and activists on Wednesday 7th October in Chaguanas, but that meeting was cancelled at short notice, with no alternative dates given.
What we are left with is lengthy, secret meetings to discuss the review of the bailout terms, with no concrete information emerging. That secrecy is totally unsatisfactory. It smacks of secret deal-making and does nothing to inspire the confidence which is supposedly the very purpose of this exercise.
The last regime, with all of their noble intentions and devout Ministers, lost their way in a morass of muddled purposes, secret deals, mixed-up with misleading and false public statements from the highest office in the land. We all know how that ended. The question is whether we have learned anything from that bitter experience. The Peoples’ Partnership were the main beneficiaries of those PNM errors, have they learned from that?
Our money is being spent on this massive exercise and it is not good enough to emerge from these closed meetings with agreed phrases like ‘constructive or meaningful’. This emerging pattern speaks of disrespect for the acumen of our people.
To re-state my equation:
Expenditure of Public Money – Accountability and Transparency = CORRUPTION
Imagine these bold-faced people declaring that when they are done and settled, the terms will be announced to us who paying for the whole thing. The first sign of a bad marriage is when the husband is the last to know – some say, the wife. But the main point is that the public cannot be the last to know.
The simple and painful fact is that public confidence in our leaders is at an all-time low. The time-honoured notion that a leader is someone wiser, more mature, less reckless and of overall higher ideals has been tested to destruction by events. In this particular case, it is easy to understand the charged atmosphere, hence the need for extra ventilation and transparency.
I was recently emailed by a well-meaning group asking that I start setting out some ideas of how CLICO might be rescued and I had to remind them that without basic information, all we can do is argue emptily with each other. All to the amusement of the masterminds of this, the greatest economic crime in our nation’s history.
I was even ‘phoned, while writing this, by an acquaintance who is a leading member of the CPG to join him and an un-named UK guest in a TV studio on Monday morning to discuss all this. Yes, I dismissed the request – too much secret-thing for my taste – and challenged the caller to name the person, supposedly a top UK expert.
What would be ‘constructive and meaningful’ would be to publish these long-outstanding reports so that we in the public can inform ourselves on the vital issues –
The original Duprey letter of 13th January 2009.
The audited accounts of the CL Financial group for the years ending 31st December 2008 and 2009 – Have PwC completed that? When are they to be published?
The Mottley Report – There was a team of three advisers – Wendell Mottley, Colin Soo Ping Chow and Steve Bideshi – appointed to examine the CL Financial group and we need to know what were the findings of this group.
Given that we are being asked to bailout and clean-up Mr. Duprey’s crisis, I feel we need to be told the names and details of those who benefitted from the $7.3Bn paid out so far, as well as those details for the borrowers of the $1.0Bn of ‘non-performing loans’ in CIB’s portfolio.
Finally, we also need to have the position of the CLICO Policyholders’ Group published. What exactly are they claiming?
We have seen reports in the press about the very long Cabinet meeting on Thursday 21st at which the CLICO issue was said to be part of that agenda.
It would be totally unacceptable for a deal to be sealed without properly informing us, the taxpaying public, as to the true background.
The People’s Partnership has already distinguished itself, positively, by announcing Commissions of Enquiry into the attempted coup in 1990 and the Financial collapse (CL Financial and HCU). This is no time to get diverted into back-room deals.
I am working for betterment and from you, our elected rulers, I expect better.
If you think this title is for the latest brand of household cleaner, you would be wrong. I drew that title from the famous statement by deceased US Supreme Court Justice Louis Brandeis, 
I have been preparing my submissions for the Colman Commission and took some time-out to start reading the Report into the USA’s financial crisis. Of course I am referring to the 
The Auditors – The various PWC professionals who prepared and signed those audits. Will we see the release of the hidden accounts? How much longer can they remain concealed? There must be some quiet desperation creeping into Balisier House and PWC, just edging forward, along Victoria Avenue.
The Bankers Association of Trinidad & Tobago (BATT) and the Association of Trinidad & Tobago Insurance Companies (ATTIC) are also part of the situation.
As it is, we already have been bound to a rotten bailout of the wealthiest individual in the Caribbean by our Treasury at 
There was an EFPA group and a CLICO Policyholders group formed just after the budget on 8th September, but they soon merged under the latter name. I am now seeing what appears to be a substantial split with 2 competing meetings being organised for 10am today – one in Port-of-Spain and the other in San Fernando.
The Mottley Report – There was a team of three advisers – Wendell Mottley, Colin Soo Ping Chow and Steve Bideshi – appointed to examine the CL Financial group and we need to know what were the findings of this group.
AfraRaymond.net 