Express newspaper creating needless confusion with its inaccurate reporting. I never said that it was the intention of the Government to remove Government to Government Agreements from the Public Procurement Law. Instead, I said the law is ambiguous and needs to be clarified.
My previous article traced the accountability arc of attempts by PNM governments to dilute our country’s accountability framework. That arc is rooted in the record, serving to dismantle the fanciful tales about ‘morality in public affairs’ and so on. According to Dr. Rowley – “Facts are stubborn things.”
Colm Imbert has served as Finance Minister since PNM’s general election win in September 2015. The provisions of S.7 of The Act, which apply to Government to Government Agreements (G2G) and Public Private Partnerships (PPP) have remained the same over that entire period.
The OPR Board was appointed in January 2018 by then President Anthony Carmona, as his final official act, so it was impossible to implement the new system before that.
This continues my series — Part 1 and Part 2 — on the unexplained and unacceptable delays in implementing the new Public Procurement system. Those delays arise from the failure or refusal of the Finance Minister to settle the Regulations which are essential for the Office of Procurement Regulation (OPR) to be fully operationalised.
User groups and other interest groups should be properly consulted on decisions regarding public building projects, to ensure that relevant views can be expressed at the appropriate time and taken into account before decisions are made…
(The emphasis is mine)
Is there a link between the Uff Report and Tobago Sandals? Is Tobago Sandals such a unique opportunity that we ought to adopt unique standards to assess its costs and benefits? What are the various benefits being proclaimed by the supporters of that project? This article will examine some of those claims against the factual background.
I returned to the large-scale and controversial proposals for Tobago Sandals by using that important Uff Report recommendation as my opener. The Uff Enquiry into the Construction Industry arose due to strong protests and complaints from the JCC, T&T Transparency Institute, myself and other individuals. One of the most decisive voices calling for those operations to be probed was Dr Keith Rowley, who was at that stage at loggerheads with his colleagues in government. I think Dr Rowley gained considerable kudos for taking a stand against the improper practices of his colleagues in that area. Continue reading “Property Matters – Tobago Sandals”→
In my previous article, Camille Robinson-Regis was incorrectly named as a member of Cabinet in January 2009, when she was in fact serving at that time as our High Commissioner to Canada.
The voices of our leading Artists urge us to search for meaning, if we are serious about building a civilisation out of the lies and ruin we inhabit. That kind of serious building requires a solid foundation which must contain sober reflection and acceptance of responsibility by both the people and the leaders. This is the Season of Reflection, so this week I am looking backward to go forward. A Sankofa pause to delve into these sobering CL Financial events to try to derive some meaning. We have now passed Emancipation, so the series is moving onward to Independence.
In this article I will examine the positions taken by various leaders as the CLF crisis gathered force, culminating in the declaration of the bailout on 30 January 2009. There is either a sobering naivete or a lack of rectitude in the highest chambers in our Republic.
The main persons dealing with the crisis were the Cabinet, the CLF Chiefs and the Central Bank. The former Cabinet members from whom we need to hear are – Colm Imbert, who is the current Minister of Finance; Mariano Browne, then Minister in the Ministry of Finance; Conrad Enill, former Minister of Finance and Chairman of the PNM; Karen Nunez-Tesheira, then Minister of Finance. Continue reading “CL Financial bailout – Charting the Ruins”→
The CL Financial bailout fiasco is headed towards an epic legal mangle as Lawrence Duprey and his cohort aim to regain control of the Caribbean’s largest-ever commercial/financial group. In swift response, the Minister of Finance is making legal moves to put CLF into liquidation.
At the root of this dispute is the actual sum of Public Money spent on this immense bailout and when, or if ever, it is to be repaid. I have been involved in extended litigation to get the details of the bailout from the Ministry of Finance and the High Court ruled in my favour in July 2015, with that result now being contested in the Appeal Court.
“…Whilst in the last five-year administration, the management of Clico, CLF and the associated companies were shrouded in secrecy by the UNC administration, this PNM Government has no intention of operating in that manner. This Government will operate in an open, transparent and accountable manner as it has been doing…“ (The emphases are mine)
On the issue of interest due on Public Money advanced for the CL Financial bailout
I have been stating that the Public Money advanced for this CL Financial bailout was interest-free and that was a clear indication of the ‘most-favoured’ status of the borrowers. With apologies to my readers, CLICO’s 2015 audited accounts, (which were issued on 17th October 2016) disclose at its 32nd note that 4.75% was charged on the first tranche of $5Bn which was lent in 2009, so my prior claims on that item are now withdrawn. That first advance was converted to 4.75% preference shares, so interest was charged on the bailout monies but at such a paltry rate as to leave my fundamental point undisturbed, as explained below.
The Weighted Average Cost of Capital (WACC) is a metric used to show what is the average cost of the capital raised by a company. It is a vital tool in strategic management and allows the company’s leaders to make effective borrowing decisions.
If we apply this approach to the CL Financial bailout the answer is instructive. So, one can assume that the total advanced is $25Bn with only 4.75% interest on the first $5Bn and no interest on any more of the Public Money advanced to CLF. Accordingly, given that only 20% of the CLF bailout pays interest at 4.75% and the other 80% is at zero-percent, the WACC is .95%. Yes, less than 1% is the interest due from CLF for this epic loan. I tell you.
Once again, there are multiple versions of reality operating in relation to the CL Financial bailout, like some award-winning ScyFy movie. In one dimension, we have the PM accusing the previous regime of untoward secrecy while pledging to be open, transparent and accountable. In another dimension, we have a Minister of Finance promising to give us all the details of the monies spent on this bailout, while battling in the Appeal Court to overturn the High Court judgment I won to have those same details published. At the same time, Lawrence Duprey lobbies for the return of the CL Financial companies to him, while sidestepping any proper explanation of what went wrong. Both the PM and the Central Bank Governor label the CL Financial chiefs in scathing terms, while refusing to insist on proper commercial terms for the enormous financial assistance of the State. In yet another dimension, the State is said to be weathering a series of tough financial challenges, while showing stunning generosity to the wealthiest man in the Caribbean.
To paraphrase Pulitzer Prize-winning author, Junot Diaz – ‘ScyFy? What ScyFy?! The Antilles was Scyfy before there was ScyFy!‘
In July 2015, the High Court ruled in my favour that details of the CLF bailout were to be published by the Ministry of Finance, but that ruling has now been appealed.
The Ministry’s appeal, which was submitted on Friday 30th December 2016, has these main points –
CLF Accounts – The order to provide the accounts used by a previous Finance Minister to prepare a High Court affidavit is being contested as being a breach of legal professional privilege;
Parliamentary briefing – The order to provide the briefing to Independent Senators prior to debate on two laws on the CLF bailout is being contested as a breach of parliamentary privilege;
Who got paid? – The order to provide the names of those who were paid in the CLF bailout and the date of those payments is being contested as inimical to the confidentiality which a private person should enjoy.
Those arguments are only now being introduced, for the first time, during this appeal. That fact alone I consider to be unacceptable, but the points are being contested strongly and of course the Court of Appeal will be ruling on them.
For those readers who might consider the ScyFy comparison to be an overdone one, just consider how the Minister of Finance has approached the appeal with these further excerpts from Dr Rowley’s important address to the Parliament –
“…once the Minister of Finance has completed his on-going audit, he will come to Parliament and tell the citizens of Trinidad and Tobago the exact amount of money expended by the Government with respect to the said bailout. This will include the cost incurred by lawyers, accountants, professionals and all others. Furthermore, any and all disposal of assets from the group will be announced to the public in an open and transparent manner as well…”
At a time of economic sacrifice, the free-ticket given to CLF in January 2009, by the Patrick Manning-led Cabinet is being endorsed and renewed for further travel by the Keith Rowley-led Cabinet…this is where we are…
CORRECTION: On the issue of interest due on Public Money advanced for the CL Financial bailout
I have been stating that the Public Money advanced for this CL Financial bailout has been interest-free and that was a clear indication of the most-favoured status of the borrowers. With apologies to my readers, I now accept that 4.75% was charged on the first tranche of $5Bn which was lent in 2009, so my prior claim needs to be withdrawn – see comments below. Yes, interest was charged on the bailout monies but at such a paltry rate as to leave my fundamental point undisturbed, as explained below.
The Weighted Average Cost of Capital (WACC) is a metric used to show what is the average cost of the capital raised by a company. It is a vital tool in strategic management and allows the company’s leaders to make effective borrowing decisions. For example, a company which had borrowed half of its capital at 10% and the other half at 14%, would have a WACC of 12%.
If we apply this approach to the CL Financial bailout the answer is instructive. So, we can assume that the total advanced is $25Bn – there are many estimates floating out there, but $25Bn is recurs quite frequently – with only 4.75% being charged on the first $5Bn and no interest on any more of the Public Money advanced to CLF. According to my calculations, given that only 20% of the CLF bailout pays interest at 4.75% and the other 80% is at zero-percent, the WACC is .95%, less than 1% is the interest due from the CL Financial chiefs for this epic loan. I tell you. It really looks like those insurance and investment gurus had it right, eh…party political investment is really the best insurance policy.
Having said that, the two questions arising are still of high importance –
firstly, why was no interest charged on the rest of the Public Money advanced?
Secondly, why was the low rate of 4.75% charged on that first tranche?
That rate is significantly less than the mortgage rate at that time, so how and why did a distressed borrower qualify for that kind of favour?
The return of Lawrence Duprey was the Sunday Express lead story on 15th January 2017 – ‘Rebirth of Duprey‘. This is one of those times when one is really sorry that an original suspicion was true.
We seem to be striding straight toward a precipice with no clear information at all about why, or how. The largest-ever special interest deal now seems set to return CL Financial to Lawrence Duprey and his cohort, which will be hugely detrimental to the public interest.
These bailout conditions in no way resemble the Wall St examples, despite the comical claims of its defenders that it was the same thing. There are three important differences –
the CL shareholders kept their shares;
the massive loan of over $20 Billion to the Caribbean’s wealthiest individual was made at a zero interest rate, that’s right, zero;
the CL Financial chiefs were never required to give a public explanation of what caused this massive collapse.
Those terms were agreed by the Cabinet in January 2009. It is a real ‘sweetheart deal’ to assist Mr Duprey and his cohorts to a soft recovery so they could get back control of the companies when things improved. We are now reaping what our rulers sowed, hence the title of this article. Continue reading “CL Financial bailout – Bitter Brew”→
Last week we learned that Lawrence Duprey and his fellow CL Financial shareholders are victims of a badly-handled bailout. According to the Duprey version, the State must halt all asset disposals and he must regain control of the CL Financial group of companies. In what seemed to be an immediate response, Minister of Finance & the Economy, Colm Imbert, said he was so alarmed at the gross mismatch in the bailout figures that he decided to order a forensic audit on the entire process. These two contrasting stories are the latest big news on the CL Financial bailout.
I have always objected to the CL Financial bailout and it has become a strong example of how the Public Interest can be perverted under a series of disguises.
The Duprey Gambit is just the latest attack on good values in our country. It is a nasty, shocking outbreak of moral hazard. It needs to be dismantled and discredited, nothing less will do.
The Imbert Initiative looks like a welcome move to examine the details of this scandalous waste of Public Money. The proposed forensic audit seems to signal some official appetite for disclosure. However, if this is to properly protect the Public Interest, there are some ‘litmus tests’ which can show the official commitment to disclosure