Tag: confidentiality agreement

CL Financial bailout – Call for Order

The CL Financial bailout continues to be a major failure on any scale, both in the causes of the fiasco and especially the manner in which it has been handled.

This is my update on what has been the progress in this campaign.

The equation for our reality check is –

Expenditure of Public Money
Minus            Transparency
Minus            Accountability
Equals           CORRUPTION

In May 2009, I wrote that the Directors and Officers of the CL Financial group should be required to file declarations under the provisions of the Integrity in Public Life Act (IPLA).

According to the IPLA, the Schedule detailing those persons is at page 31 – one of the classes of person required to file declarations to the Integrity Commission is –

“Members of the Boards of all Statutory Bodies and State Enterprises including those bodies in which the State has a controlling interest.”

I have put the last part of the sentence in italics to emphasize the deliberate choice of language by the legislators.  The drafting of legislation is a painstaking exercise of strategy, debate and sometimes compromise…my point being that the inclusion of that last phrase must mean that the legislators intended to go beyond merely saying ‘Statutory Bodies and State Enterprises’, which would be the obvious, to specify that the IPLA must also apply in situations where the State has a controlling interest.

The CL Financial Shareholders Agreement (the Agreement), of 12 June 2009, which I obtained by using the Freedom of Information Act, specifies at clause 3.1 that the Board of Directors of CLF shall consist of seven Directors, four of which shall be nominated by the Government.  The government has been exercising its rights under this clause, so it is clear that the State’s controlling interest in the CL Financial group is effective.

Quite apart from the four companies named in the bailout Memorandum of Understanding of 30 January 2009 and the Agreement – i.e. CL Financial, CLICO, British American Insurance and Caribbean Money Market Brokers – it is also clear that CL Financial controls the other companies in the group.  This effective State control therefore extends to include enterprises which are majority-owned by CL Financial, such as Home Construction Limited, Angostura Holdings Limited, Republic Bank Limited and Methanol Holdings Trinidad Limited.

This very issue of the meaning of the IPLA in relation to state-controlled companies was ruled upon by the High Court in HCA1735 of 2005, in which one of the two issues being determined was –

“…(2) What is the meaning of the expression “Members of the Boards of all Statutory Bodies and State Enterprises including those bodies in which the State has a controlling interest” in paragraph 9 of the Schedule to the Integrity in Public Life Act as amended?…”

The written judgment of Justice Judith Jones  states in its conclusion –

“…Conclusion

248. In my opinion therefore the words “Members of the Boards of all Statutory Bodies and State Enterprises including those bodies in which the State has a controlling interest” as found in the Act must be taken to mean:
‘the members of the management or decision making body of:

  1. all organisations or bodies established by Statute;
  2. all businesses or companies controlled by or on behalf of the State’.

249. Further for the purpose of determining control by or on behalf of the State a business or company shall be taken to be controlled by the State if the State exercises or is entitled to exercise control directly or indirectly over its affairs; if the State is entitled to appoint a majority of the directors of the Board of Directors or holds at least fifty percent of the capital of that body.

250. This interpretation to my mind is in accord with the purpose and intention of the legislation as expressed by the Constitution and the Act, that is, to preserve and promote the integrity of persons exercising executive or legislative functions on behalf of the State…”

I am advised that TSTT appealed that High Court decision and that judgment is awaited since mid-2010.

I confirmed that key CL Financial Directors have not been filing declarations under the IPLA.  On Monday 10 September, I consulted in person with Integrity Commission staff who confirmed to me 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)

According to the 3 April 2012 affidavit of then Minister of Finance, Winston Dookeran, the public money committed to this colossal bailout is –

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.

That is a total of $24Bn in public money being paid to satisfy the creditors of the CLF group.

I wrote on Monday 10 September to both the Integrity Commission and the Minister of Finance & the Economy to report my serious concerns on this unacceptable state of affairs.  It simply cannot be right that the Directors of this huge state-controlled group are allowed to escape the provisions of the IPLA.  There must be proper transparency in matters of this kind, if good order is to be preserved in our society.

I also made a Freedom of Information application on 8 May 2012  to the Ministry of Finance to get four items which are listed here, along with the Ministry’s replies of 14 August –

  1. CL Financial accounts and if those are not available, the figures on which the Minister of Finance has been relying – The reply is to ask me to provide further information as to what I mean. The Minister of Finance is making analyses and justifying his positions in public, including proposing legislation to Parliament – he must therefore be relying on some figures or estimates to proceed in this way. When I ask for those details, the Finance Ministry is mystified and needs me to explain what I really mean. Just imagine that!
  2. The presentation made to Members of Parliament in September 2011 to brief them prior to the debate on the Central Bank (Amendment) Bill and the Purchase of Certain Rights and Validation Bill 2011– The reply is to claim that the presentation is an exempt document which the Ministry is therefore unable to provide.  The official presentation made to our Members of Parliament in this matter is deemed secret, which seems incompatible with the notion of a free, democratic society, so it will not rest there.
    The recent revelations about the Plot to Pervert Parliament in relation to the S.34 debacle and the way in which the country, its significant institutions and its legislature have been misled for the benefit of political financiers have given me pause.  I am now reflecting that the bailout and shareholders agreement were never debated, they were both declared as fait accompli.  What is more, the new 2011 laws I am writing about here have a similar flavour of Abuse of Office in that we are being told that the contents of that presentation to Members of Parliament are secret.  The S.34 fiasco involved an alleged stealing of $1Bn in Public Money and we are all now seeing the extent to which these white-collar criminals and their servants will go to cover their tracks.  It is truly revolting.  So, the question is ‘‘Given what we now know and the fact that the CLF bailout involves many billions of dollars in Public Money, is it reasonable to assume that our Parliamentarians and Public Officials will be responsible and honest in their dealings?’ I will be returning to this, it is turning in my mind.
  3. Details on the composition of the creditors of the CL Financial group, in particular EFPA holders.  I was asking who was owed money and who got paid.  That is at the centre of this issue – The reply states that the information requested is likely to be exempt from the Freedom of Information Act.  That is another aspect of this to be challenged.
  4. Declarations filed by Directors and Officers of the CL Financial group under the IPLA – The reply points out that those declarations are secret, which is correct, but also goes on to state that this is not to be construed as an admission or denial that the IPLA applies to those Directors and Officers.  Well I tell you.

The region’s largest privately-held group of companies is now under State control, in a situation of huge insolvency, with no proper accounts and no declarations being filed by the Directors.

It is as if the sheer size and power of this CL Financial event is warping all the usual rules – like a black hole or anti-matter – to the extent that it seems like the Freedom of Information Act is now being used for the Incarceration of Information!

This development is a serious peril to our Treasury.  It must be a matter of the gravest possible concern to all right-thinking people that our fundamental Integrity safeguards appear to have been circumvented or ignored in a matter of this size and consequence.

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.net/wp-content/uploads/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.net/wp-content/uploads/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.net/wp-content/uploads/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

VIDEO: Afra Raymond testimony in the Colman Commission, Day 1

This shows the attempts by various parties to object to my showing the PowerPoint presentation…some of those parties and their attorneys include –

  • Central Bank – represented by London-based Bankim Thanki QC
  • Lawrence Duprey – represented by London-based Andrew Mitchell QC
  • PriceWaterhouseCoopers – represented by Russell Martineau SC, former Attorney General and former President of the Law Association
  • Andre Monteil – represented by Martin Daly SC, Sunday Express columnist and former President of the Law Association

It is really instructive to consider the various arguments put forward by these parties in an attempt to limit my testimony and ultimately to deny it the benefit of clear illustration via PowerPoint.

There is going to be a real struggle to show the information on this series of financial and economic crimes.  That information needs to be shown in as digestible a form as possible, which was the point of my presentation.

Between the strong opposition of the parties who were at the centre of the crisis and the refusal of the government to fund multi-media facilities, we have a fight on our hands to get at the facts.

VIDEO: 4th Biennial Business Banking and Finance Conference (BBF4)

This is the video of my address to the 4th Biennial Business Banking and Finance Conference (BBF4) held at the Trinidad Hilton from 22 to 24 June, 2011. The session I participated in was devoted to ‘Lessons from the Financial Crisis: The Resolution of Failed Entities.’ [See the acknowledgement letter from the conference convenor here.]Video courtesy UWI

  • Programme Air Date: 24 June 2011
  • Programme Length: 0:15:21

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.

CL Financial bailout – The Truth about the Truth

Continuing from last week’s critique of the revised bailout and its implications, I have further concerns as to the process by which the legislation was passed.

I am aware that the Members of Parliament were given a briefing, so that they would be better informed on this complex matter.  That briefing was conducted personally by the Minister of Finance and the Governor of the Central Bank, together with their advisers and certain CLICO officials.

The briefing provided background information on these areas –

  • The status of the various outstanding audited accounts;
  • A ‘profile’ of the monies owed in terms of amounts owed to certain classes of policyholders.  I am told that quite a small number of these claimants held a large proportion of the monies being claimed;
  • The various lawsuits/judgments against the Central Bank;
  • The rationale given for extinguishing the right to sue the Central Bank in this matter was that public rights and stability were being given preference over the exercise of private rights.

I am also told that the Members of Parliament were not given copies of the presentations, which seems to have effectively limited them to gaining certain impressions or the limited notes they would have been able to take during the briefing.

That account of events, given to me by more than one Parliamentarian, seems to suggest that the very rationale of the exercise, said to be the elevation of public rights over private ones, could have been subverted.

The reality is that, despite the extensive debate on the matter, this is the position –

  • Accounts – There has still been no proper, clear statement on the status of these CL Financial and CLICO accounts, which is unsatisfactory.  An emerging view is that this is a calculated silence, since the companies are insolvent, which would make the Directors liable for the criminal offence of ‘trading while insolvent’.  That is a considerable issue, which could only be overcome by the State issuing a guarantee to the group’s creditors, which would have exposed the Treasury to the full extent of the huge claims.  The silence is a shabby ‘third way’, which gives a further insight into why the bailout remains untenable to so many of us.
  • There is no publicly-available profile of the monies owed in terms of amounts owed to certain classes of policyholders.  That is a major omission and one can only wonder why the information is being effectively suppressed.  In addition, there were statements that the claims of Credit Unions and Trade Unions will be fully-paid, which seems to be a favourable treatment in comparison to the individual claimants.
  • In respect of the lawsuits and judgments, I do not see how the block on lawsuits against the Central Bank can stop claims in foreign Courts.
  • The rationale of public rights being preferred over private rights is a solid one in a matter of this type, but upon reflection one is left with a different impression.  How can public rights be said to prevail in a situation where the public is denied the essential parts of the picture?

The Parliament benefits from briefings on complex and important matters, but it is unacceptable that those briefings should be somehow shrouded in secrecy. The Minister of Finance and Governor of the Central Bank need to publish their full Parliamentary briefing, without delay, to remove any lingering doubts.  Good governance, transparency and accountability demand no less.

Duprey, Monteil, Sakal

Another aspect of the emerging situation is the recent reports that the Board of Inland Revenue is investigating the three top CL Financial executives for alleged non-payment of taxes. The report in the Sunday Express of 13 November stated that the tax filings of Lawrence Duprey, Andre Monteil and Gita Sakal were under official scrutiny, incredibly enough, it was also stated that Duprey’s chauffeur was in receipt of up to $3.9M in a particular year.

I had always wondered at whether people who enjoyed favour at the highest level really paid all their taxes.  I have pointed out that in the case of Clico Investment Bank (CIB) there are serious and unanswered questions on that point arising from the affidavits of the Inspector of Financial Institutions in the CIB winding-up action.  It seems that fresh and serious doubts are now arising on the tax compliance of some of the top CL Financial officials, so we will see.  In view of the relaxed stance taken in relation to Anti-Money Laundering and Tax Evasion in the revised bailout process, we should not be surprised if these BIR cases slip into obscurity.

We need to be alert to the costs and other consequences of this crisis.  Huge sums of taxpayers’ money are being spent to rescue companies who do not appear to have complied with our tax laws and there are no accounts being discussed.

Last week Wednesday and Thursday I appeared before the Colman Commission to give my testimony in this matter.  On Wednesday afternoon there was a very negative reaction to my attempts to introduce a Power-Point presentation as a way to better illustrate some of the points I have been making.  It was a frustrating and comical experience for me to hear supposedly learned men asking ‘What is this?’ and one of them even saying that he had no idea what it was…Here, in Port-of-Spain in 2011, we have learned men saying that they don’t know what a Power Point presentation is for.  Of course, I am all for transparency, so their patently transparent ‘blocking tactics’ were most welcome, because they showed the viewers on TV just ‘Who is Who and What is What’.  Thank you, colleagues, for doing a better job than I ever could have.  The public is not stupid and your behaviour has had a clear impact on those who were viewing.  That said, the Commissioner ruled that my evidence would be taken the next morning and so it was.

For those who are interested and want to know what all the fuss was about, stay tuned to www.afraraymond.com for a full article on this situation, including the so-called ‘offensive’ slides.

With respect to the method of presenting the evidence in the Colman Commission, I have some serious concerns as to the effect of relying only on written or oral testimony. The volume and complexity of the material and the fact that a wide audience, beyond the attorneys, is watching this Public Enquiry, means that there needs to be an upgrade in the way in which the information is presented. I have written to the Commission on this already and was shocked to learn that a request for further funding for multi-media was apparently rejected at the highest level.

There have been two Power Point presentations to the Colman Commission – my own and Ms. Maria Daniel of Ernst & Young, who was just before me – and in both cases the witnesses had to rent their own equipment.

The purpose of this Public Enquiry is to bring some light and justice to this very shadowy and crooked episode.  I am here asking the Prime Minister, Minister of Finance and the Attorney General to take proper leadership on this issue.  The people need to see the evidence if they are to understand.

I can well remember the Prime Minister’s campaigning words, echoing in my mind “Serve the People! Serve the People! Serve the People!”.

Finally, I am writing to the Integrity Commission this week to request, again, that they obtain declarations from the Directors of CL Financial, as required under the Integrity in Public Life Act.

If you are not outraged, you haven’t been paying attention…

CL Financial bailout – The Final Solution?

The new bailout formula was approved, as two new Acts, by our Parliament on 14 September –

The first one prevents any lawsuits against the Central Bank by claimants, while the second gives the Minister of Finance the right to borrow up to $10.7Bn and places the Republic Bank Ltd. (RBL) shares formerly held by CLICO into a new investment vehicle, NEL 2.

These seem to represent what I am calling the Final Solution, in that the clamour and protest which had marked the last year seems to have been fading away.  There have been queries from the various ‘Policyholders’ groups’, but those have been limited.

Whatever one thinks of the actual bailout, which I maintain is a perversion of our Treasury, there are valuable lessons to be learned from all this.  The main lesson for me is the Power of the Few.  In that although only about 16,000 investors were affected, they were able to mount a successful campaign to improve their position.  We need to note that lobbying and campaigning can be effective in gaining benefits for limited groups.  To all the weak-hearts who say nothing ever changes, please take note.

We also saw the position set out by the PM in her important speech on 1 October 2010 being reversed, in that the claimants’ rights to sue the Central Bank have been extinguished.  There are rumblings about a challenge to the constitutionality of that restriction, but we will have to wait on that one to play out.  The fact that the right to challenge the Central Bank’s actions in respect of the bailout has been removed opens fresh dangers in terms of the payout process.

We have all had bad experiences of what usually happens when serious unrestricted power is held by someone who does not have to answer for their actions.  My concern is that there does not seem to be any avenue for oversight of or appeal/redress against the Central Bank, in the event that claimants feel they are receiving unfair treatment.  That concern will have to be addressed at some stage.

Even as an account of the payout, we have deficient reporting with no true profile of the wealth being returned having been presented for public consideration.  The Central Bank and Ministry of Finance is in possession of this critical information as to the amounts of money to be returned to claimants, but that is being suppressed, for whatever reason. This episode has been a real stain on our stated ambitions towards accountability, transparency and the ever-distant ‘Good Governance’.

A related point is that the PM gave a clear commitment to revealing who benefited from the first wave of bailout funds, said at the time to be of the order of $7.3Bn. The PM’s speech is at pages 19 to 34 of Hansard – at pg 24 –

…The previous administration injected $5 billion into Clico and they spent $2.3 billion to bail out the other distressed entities such as CIB in particular, so coming to a total of $7.3 billion has gone into that hole and yet today the Government and, therefore, the taxpayers of this country have been called upon to come up with another $16 billion to $19 billion. So what happened to that $7.3 billion? Where did it go? Who are the people that were paid? How was it utilized? What happened to that $7.3 billion?…

The concern here is that we are not at all sure that this new arrangement will in fact yield the required information as to who are the real beneficiaries of this bailout.  In view of the fact that the entire deal is a burden on our Treasury, this opaque arrangement is unacceptable.

After all –

Expenditure of Public money – Accountability – Transparency = CORRUPTION

Quite apart from those concerns, the fact is that provisions should have been made for Anti-Money Laundering and Tax Evasion screening.  The Treasury must not be used for Money-Laundering and the proper safeguards need to be put in place to prevent this.

The lack of accounts for the CL Financial group, after 31 months under State management, is also unacceptable.  The essential terms of the bailout are being sidelined, since the original agreement was for the State injections of cash to be repaid via asset sales.  Both 2009 agreements – the January MoU and the June CL Financial Shareholders’ Agreement – also spoke to the preparation of accounts and provision of information.

The perturbing aspect is that there continues to be a uniform silence as to the preparation of these overdue accounts, so the taxpayer must wonder just how, or if ever, these vast sums of bailout money are to be recovered.  This is the burning question which is at the root of my outrage.

The new arrangement is also silent as to the position with respect to other creditors of the CL Financial group, so there is no certainty as to how those claims would be treated.  On 31 October, Trinidad and Tobago Newday reported on ‘CLICO Bahamas seeks $365M from CL Financial’.  There are substantial regional and local claims outstanding, so the entire cost appears is an unknown quantity at this time, given the lack of accounts.

As I pointed out previously, the Directors and Officers of the CL Financial group and its subsidiaries ought to be subject to the provisions of the Integrity in Public Life Act, by reason of its being a State-controlled company.  The Integrity Commission needs to demand the required declarations from those persons, if we are to secure the required level of transparency.

The continuing failure of the Central Bank to make rulings as to the extent to which CL Financial’s Directors and Officers at the time of the collapse are ‘fit and proper persons’ is the final piece of the sorry picture.

The State’s period controlling the CL Financial group, ends on 11 June 2012 – a mere 7 months away – at which time the group will return to its owners.  Given the fact that the Central Bank has not made an adverse ‘Fit & Proper’ finding against Lawrence Duprey, in the absence of accounts and with a significant part of the RBL shares divested in this fashion, what will be the out-come?  Is the stage now set for Lawrence Duprey to return?

I spent last Wednesday afternoon in New York’s Zucotti Park, with so many points to share on that experience.  For now, I leave this striking slogan of the Occupy Wall Street movement –

If you are not outraged, you haven’t been paying attention…

Property Matters – Proper Procurement Practice

My last column addressed the imperative of controlling State expenditure as an element in the national budgeting process. I made the point that a new Public Procurement system needs to come into effect to give us the tools to control these huge expenditures.

The Ministry of Planning & the Economy (MPE) published a Request for Proposals (RFP) at the end of August for the development of Invader’s Bay, a 70-acre parcel of State-owned reclaimed land – shown in this plan  below: invadersbay-sml

The Invader’s Bay lands are absolutely prime property – flat, waterfront land with easy access to highways and all the urban infrastructure of water, electricity and sewers. These are valuable public lands, with an estimated value of at least $1.0Bn.

That RFP invited proposals with a closing-date of 4 October, which is an entirely inadequate 6 weeks. The Joint Consultative Council for the Construction Industry (JCC) has taken a strong position against that RFP process, including writing the MPE and meeting with the Minister, Sen. Dr. Bhoendradatt  Tewarie and Minister of Trade and Industry Stephen Cadiz, MP.

The JCC wants work for its members, but that must be after a proper process, it is not our intention to stop any particular project

The JCC wants a proper participatory process.

The first “official” response to our publicity was an article in the Newsday of Monday 3 October – ‘Cadiz: JCC jumped the gun‘, the leading point being that the government was trying to open-up the procurement process so as to invite suitable proposals.

Cadiz is reported to have said

…What the Government has done is asked interested parties for proposals for concepts,” he said. “I don’t see that there is any issue at all. There were proposals made and the Government felt that this is public land and we should open it up and we gave people six weeks, we feel that is enough time…

Public Procurement can be described as the process which results in the spending or earning of ‘Public Money’.  Public Money is money which is due to or payable by the State, or any debts for which the State is ultimately liable.  Therefore Public Money must include the contracts entered into by the State as well as the disposal, by sale or otherwise, of State assets.  The Invader’s Bay RFP is the start of a large-scale Public Procurement process, since its stated intention is to lease land to developers who make ‘suitable proposals’.

The publication of the RFP and those statements all give the impression that a proper procurement process is underway at Invader’s Bay.

Nothing could be further from the truth.  Let me explain.

The first step in the Procurement cycle is the ‘Needs Identification’.  The two main questions in the case of Invader’s Bay would be –

  1. What do we want to do with this property?  That must also include ones assumptions as to what uses are not desirable there.
  2. Why do we want to do these things?

For example, the answer to the ‘What’ question could be that the property would be used for recreation or parkland.  The answer to the ‘Why’ question could be either for private profit or to create new recreational facilities as a ‘public good’, those being free facilities which increase the amenity of a district or city.  The Brian Lara Promenade and the San Fernando Hill facility are two examples of that.

Without a Needs Assessment it is impossible to objectively assess what is a ‘suitable project’.  To carry out a Needs Assessment, it would have been necessary for the MPE to have consulted widely with the public and stakeholders.  The Invader’s Bay lands are in our capital and are about one-third the size of the Queen’s Park Savannah.  My point being that any proper Needs Assessment must involve substantial public and stakeholder consultation.

There has been no consultation whatsoever.  None.

What is even more unacceptable is that the RFP, which was published by the Ministry of Planning & the Economy, is silent as to the 3 existing strategic plans for the Port-of-Spain area.  The 3 plans are:

  1. Final Draft Development Plan: A Strategic Planning Framework for Metropolitan Port of Spain (Volume 2 Implementation Plan – The Port of Spain City Corporation) [Main Link] [Alternate Link]
  2. A Strategy for the Economic, Social and Physical Transformation of East Port of Spain: East Port of Spain Strategic Development Plan – September 2007
  3. Port of Spain Waterfront Project Strategic Development Plan for lands from Sea Lots to the Mucurapo Foreshore, still unpublished.

All of those plans paid for with Public Money.  A straight case of – ‘nearer to Church, further from God’.

So, how are the proposals to be assessed?  How will the decisions be made?

At para 3.5 of the RFP, at ‘Project Assessment’, we read –

“Proposals will be scored using the “Invader’s Bay Development Matrix and Criteria Description”.

We asked for that document when we met with the Ministers, but were told that it would be completed after the closing-date.

In the absence of these rules, how can developers know the ingredients of a winning proposal?  Given that the evaluation rules are due to be completed after the closing-date, how can we be sure that this is a transparent process?

This could be an opportunity to demonstrate best-practice for public procurement, as promised by the People’s Partnership.

What is happening here is a recipe for accusations, blunders and confusion, just like in the previous decades of ‘old politics’.  All the ingredients for corruption are present and that is why the JCC has made this call for the immediate withdrawal of this deeply-flawed RFP and its revision, after wide consultation.

We need to move away from the pattern of the biggest projects being set-up in secret , so that by the time the public gets to hear about it, all the vital details are fixed.

Expediency taking precedence over proper process has long been a costly constant in the governance of our society.

We must do better and it is not too late to do the right thing.

Expenditure of Public money – Accountability – Transparency = CORRUPTION

SIDEBAR: Criticisms by Cadiz

stephencadiz
Minister of Trade and Industry, Stephen Cadiz, MP

It is instructive to consider the criticisms of the JCC which were reportedly made by Cadiz.The headline accused the JCC of ‘jumping the gun’, implying undue haste and thoughtless speed.  Cadiz is quoted as saying, “…I think the JCC jumped the gun,” he said. “If you cannot do it by six week then how long? Six months?”.

At another point in the same article, Cadiz is quoted as saying, “We need to get these things going,” he said. “The JCC only made representation of their disappointment four weeks into the RFP…”  The implication being that the JCC were tardy and should have acted more swiftly.

If this Invader’s Bay situation were not so serious, it would be comical. The question in my mind is ‘Which of those explanations does Minister Cadiz believe?’

What seems clear is the hostility with which the Minister views the intervention of the JCC.