Freedom of Information in the CL Financial bailout

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.

CL Financial’s Annual Return as at 17th February 2009

CL Financial Annual Returns 17 February 2009

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.
#302 – Trustees of CL Financial Limited – holds 119,145 shares.

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 to be made a party to the Colman Commission

16th March 2011

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

Colman Commission’s opening statement on Friday 11th March 2011

This is the opening statement given by Sir Anthony Colman QC at the first sitting of the Colman Commission on Friday 11th March 2011.

https://afraraymond.net/wp-content/uploads/2011/03/commission-of-enquiry-clico-sir-a-colman.pdf

CL Financial bailout – Sunlight Disinfectant

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.

Harry Harnarine, former HCU president. Photo © newsday.co.tt

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

Whatever the negatives of the American Imperium, there are still aspects of that society which are worthy of emulation. The example which comes to mind is the recently-published report of the Financial Crisis Inquiry Commission.

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.

Sunlight Disinfectant cleans brighter, you see?

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

14^th February 2011

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

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.

My areas for focus in this submission are –

Fiduciary Duty of Directors and Officers

The burning question is – When did the Directors and Officers of CL Financial (CLF) know that the group was heading to collapse? When did the Directors and Officers of the failed subsidiaries know? What did they know and when did they know it? How much warning did their management controls give them?

The question is pertinent and the time-line is instructive –

31^st March 2008 – Andre Monteil retires as CLF’s Group Finance Director.
6^th August 2008 – Anthony Fifi retires as Managing Director of the Home Construction Limited group, which is wholly-owned by CLF.
Mid-October 2008 – CLF purchases Jamaica Money Market Brokers’ 45% shareholding in CMMB. Please note that CLF owns 40% of JMMB.
7^th November 2008 – Michael Carballo, CLF’s Group Finance Director gives an interview to the Business Guardian that the group had assets of $100Bn and could weather any storm.
18^th November 2008 – CLF 2007 Annual Report is published – its Consolidated Balance Sheet disclosed a Total Asset Value of $100.666Bn.
8^th December 2008 – Robert Mayers proceeds on pre-retirement leave from CMMB, pending his scheduled retirement, on 28^th February 2009, as Managing Director.
13^th January 2009 – Lawrence Duprey, CLF’s Executive Chairman writes, detailing an asset value of $23.9Bn, to the Governor of the Central Bank to seek urgent financial assistance. See ‘Finding the Assets‘ published on 23^rd August 2009 for the text of that letter.
16^th January 2009 – CLF pays a dividend of $3.00 per share.
23^rd January 2009 – CLF has its Annual General Meeting at Trinidad Hilton.
30^th January 2009 – The bailout is announced at a Press Conference at the Central Bank.

So, there is this contradictory financial manoeuvre in the dying stages of the group. I am speaking about the CMMB share purchase, in which CLF purchases Jamaica Money Market Brokers’ 45% shareholding in CMMB at a reported $41.37M USD. That price equates to 16.5 times earnings, given that CMMB’s profit as at March 2008 was $35M. It is impossible to reconcile that earnings multiple with CMMB’s exceedingly low profit rate and the rapidly-approaching collapse.

Was a professional, independent valuation of those shares obtained prior to the purchase? How can it have been a proper discharge of their fiduciary duty to shareholders for the CLF Directors to have agreed such a massive, questionable purchase without proper advice?

That transaction drew $262M out of CLF’s rapidly-depleting coffers on terms which are suspect. It demands close examination.

Another inescapable episode is the last CLF Annual General Meeting, the timing could hardly be better for an insight into the sensibilities of these chiefs. At the date of that AGM, Friday 23^rd January 2009, the bailout letter was 10 days’ old, the dividend cheques were one week old and the bailout itself was a week ahead.

What was the atmosphere at that meeting? Were the shareholders told frankly of the major challenges and that the group had been forced to seek a State bailout? Did the Directors offer an explanation for the failure of the group?

It would be important to examine that AGM very carefully.

The Second issue is the treatment of departing Directors and Officers. Note that three of the most important and senior CLF chiefs departed in the 12 months prior to the collapse. It is most unlikely that those departures were mere good fortune or coincidence.

It is difficult to probe and verify such agreements when they are oral, much less when they are between parties who are actively collaborating. Memory can be notoriously unreliable.

I am submitting that those departures can be examined from the documents if one were to approach from the compensation aspect. What I mean is that these chiefs would have been paid upon departure and that would likely have been documented.

If that approach were taken, the suggested questions would be

How much did Messrs. Monteil/Fifi/Mayers receive upon retirement?
Was that sum reduced to reflect the impending crash?
Were the amounts arrived at by a ‘set’ formula?
Were the amounts arrived at by an interpretation of an employment contract which divorced pay from performance?

This would make it possible to have some insight into the way these chiefs treated with themselves, their shareholders and the other stakeholders of the group.

Executive Flexible Premium Annuity (EFPA)

I have written extensively on the EFPA, its growth and the effect of that size upon the entire CL Financial group.

I have no further points to make on those aspects. My submission here is on the point of set-off and the burden to the taxpayer.

My submission is that in relation to the intended payments from the State to EFPA claimants is that the State must conduct itself in an exemplary fashion. The State must not be placed at any further disadvantage, having already shouldered this enormous, exceptional payout.

There are now anti money-laundering (AML) laws which require depositors to make declarations as to the Source of Funds, all in an effort to prevent the proceeds of crime from entering the legitimate economy. In my view it is necessary for the government to be satisfied that the various sums being claimed were properly declared under the AML laws. We have had shocking reports about the elementary management controls which were either absent or awry in the CL Financial group, so it would not surprise me if their AML-compliance was lax. That needs to be thoroughly checked. It would not be at all acceptable for our taxpayers’ monies to be used to rinse ‘dirty money’.

Also, the claimants who owe on their taxes – VAT, PAYE, Corporation Tax, Income Tax and so on – should not be refunded.

Finally, there is the issue of the many borrowers from Clico, British-American, Clico Investment Bank (CIB). In the case of CIB alone, we are told that about $1.0Bn of those loans are ‘non-performing’ – which means that the borrowers are not repaying their loans. It would be perverse for some of those non-performing borrowers to receive refunds from the State. This is a live part of this situation, since in the case of CIB itself, the very Inspector of Financial Institutions swore in his affidavit filed in the winding-up action for that failed bank –

…With respect to the Creditors of the Petitioner, the Petitioner has met the statutory obligations for the Board of Inland Revenue (except for Corporation Tax Returns for 2007, 2008 and 2009 which are being prepared and remain outstanding)…

That is a glaring example of the kind of wanton wrongdoing at the heart of this mess. CIB fails to file its Corporation Tax returns for three years, yet keep their banking licence and arrange for the taxpayer to bail them out when it all goes sour.

Some claimants may try to invoke the ‘corporate veil’ to shield themselves from various breaches committed by their companies, but this is an exceptional situation in which the State is making an offer. In my view, the corporate veil ought properly to be ignored, so that the long-standing commercial principle of ‘set-off’ can be applied to the claimants.

I am submitting to the Commission that everyone over seeking bailout funds exceeding $75,000 be subject to a BIR audit for themselves and any business interests that they may have earned revenues from and they should be denied a taxpayer-funded bailout if they were found to have not paid their taxes.

Political Party Financing

It is my submission that the means by our political parties are financed is at the very heart of this affair.

Governance models, regulatory frameworks and accounting conventions are all important parts of the interlocked issues, but those pale into insignificance beside the influence of this major party financier.

There can be no doubt that CLF was one of the leading contributors to political parties in this country.

In the case of the United National Congress (UNC), which is the leading element of the existing coalition government, their last leader was convicted and imprisoned for failing to declare substantial donations received from Lawrence Duprey – see here and here.

In the case of the People’s National Movement (PNM), there have been published reports as to the payment of sums of the order of $20M to that party by CLF in the 2007 general election – see here and here.

In the case of the former political party, the entire CLICO issue was raised by the respected economist Trevor Sudama MP in the 2002 budget debate. Sudama was a UNC Cabinet member and posed the question as to whether CLICO, having been found to be insolvent by the Supervisor of Insurance, should be allowed to continue in business. Sudama was strongly opposed in the debate and eventually removed from the Cabinet. This can be corroborated from Hansard (p. 757 and 800) and the reports of the Supervisor of Insurance.

In the case of the PNM, the link was even deeper, with the same individual being that party’s Treasurer, CLF’s Group Finance Director and Chairman of two banks – Home Mortgage Bank and CLICO Investment Bank as well as two major State enterprises in the construction sector – Housing Development Corporation and the Education Facilities Company Limited. That individual is Louis Andre Monteil.

It is clear from the many statements of the Governor of the Central Bank that they were very limited in what they could do as regulators and it is difficult to escape the impression that an undue influence was brought to bear in the case of CLF.

The last Minister of Finance, Karen Nunez-Tesheira – a former law lecturer – was found to have withdrawn her own and her family’s monies from the CLF group just before the crash, was a shareholder of CLF and accepted dividends after the bailout was requested by the beleaguered group.

Only when Nunez-Tesheira was confronted by an informed and relentless media did she admit any of those transactions. We have never had an account of those dividends.

There is a long-standing and widely-accepted doctrine of Cabinet secrecy. It is my submission that this is one of those exceptional cases in which the very purpose of the Enquiry will be frustrated unless the Terms of Reference are robustly interpreted. In this case the situation demands an examination of the conduct of these matters at the political level.

For a proper understanding of this issue, it is essential that Karen Nunez-Tesheira, Trevor Sudama and Louis Andre Monteil be cross-examined on this political aspect. It is my view that former Prime Ministers Basdeo Panday and Patrick Manning must be questioned if we are to properly apprehend the extent of the financiers’ influence.

I am basing that submission on part (i) of this Enquiry’s Terms of Reference -To enquire into “…the circumstances, factors, causes and reasons leading to the January 2009 intervention…”. There is no way to satisfy the first part of your mandate, to understand the root causes of the crisis, without getting into this fundamental issue. Political Party financing is at the centre of the fiasco. The learning from the Wall Street crisis on this question is unequivocal as to the pernicious influence of these political financiers and lobbyists.

For this Enquiry to achieve the required level of interrogation, information and insight, it must pierce the conventional veil of Cabinet secrecy. To do that, you need to take a robust view of your Terms of Reference.

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

……………………………………………..

Afra M. Raymond B.Sc. FRICS

www.afraraymond.com

CL Financial bailout – Testing the Code of Silence

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 1^st October address to Parliament.

On 17^th 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 13^th January 2009 to Ewart Williams? A mere 56 days separate the publication of those 2007 accounts – on 18^th 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 4^th 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 7^th 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.

SIDEBAR: Who is Anthony Colman?

Take a read at his comprehensive website including his CV. http://www.siranthonycolman.com/

CL Financial bailout: These Turbid Times

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)
Competing agendas? There was an EFPA group and a CLICO Policyholders group formed just after the budget on 8^th 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?

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 31^st 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.

Barbados Free Press spreads the word for AfraRaymond.com

Code of Silence was an article in two parts – the first dealing with the agents and effects of that Code and the second dealing with the unfolding case of AIC.

As usual, I sent the article to my main blogging-collaborator Barbados Free Press (BFP) who split it apart into those halves. Maybe they felt that the bond default by AIC Barbados in the second half deserved a separate focus for their readers – who knows?

So, BFP published Code of Silence surrounds CL Financial bailout on Saturday 16th and Michael Lee-Chin’s AIC Finance – Another CL Financial CLICO situation in progress? on Monday 18th.

Later that day, the AIC story was picked-up by Forbes.com and that story is here, Forbes picks up Barbados Free Press news feed!

CL Financial bailout: The Code of Silence

Throughout this series of articles on the CL Financial bailout I have touched on the existence and effect of a Code of Silence amongst our ruling elite.

This is sometimes called the Information Age, with the latest news and ideas being ‘pinged’ or ‘tweeted’ across the Social Networks. The new reality demands a complete shift in our attitudes to information. Our leadership class has blatantly refused to share their information and insights at moments of crisis, which shows the challenge facing us if we are to progress. Just to give two examples, think of the many secret reports from all the Commissions of Enquiry before the Uff Commission and the steadfast refusal of our political leaders, for many years, to even consider a Commission of Enquiry into the Coup. It is widespread and literally sickening to all right-thinking people.

We have had a new start and some reason to hope for change, by the PP government’s appointment of Commissions of Enquiry into the 1990 Coup and the financial collapse (CL Financial and Hindu Credit Union).

Even now, alongside those hopes, the new government has still not published the Bernard Report into the Piarco Airport Project.

Despite the progress, we cannot be complacent, the slope is slippery and the stakes are high.

The Code of Silence is deep and powerful in the case of the CL Financial bailout.

On 3rd October, I set out a few of the failures on the part of the regulators. Those failings are real and serious, but sometimes a shift in focus can be beneficial.

If we look beyond the legally-empowered regulators, there are other informal ‘regulators’ upon whom society relies to make decisions. Those would include Civic Society Organisations, Trade Unions, Institutions of Higher Learning and Professional Bodies. Society has been able to rely on these because they are seen to represent collective knowledge and insight, rising above individual interests to attain broader perspectives.

Those bodies, with one notable exception, have been silent throughout this CL Financial fiasco and have failed the broader society in this colossal matter. I am being forced by these events to re-examine my fundamental assumptions on the degree of our reliance on these bodies. This is the real nadir of corruption, when we seem to have lost our way in the long grass and we not even talking about the politicians and so on. This one is not about them. It is about us and our feet of clay.

Let me explain –

Law Association – This is one of the leading Professional Bodies and their silence has been deafening. The President of the Law Association is former Independent Senator, Sunday Express columnist and eminent Senior Counsel, Martin Daly. Daly is widely regarded as a fearless and irreproachable voice on many matters.
The tangled web in this CL Financial bailout has included early withdrawals, overlapping Directorships between depositors and bankers, payment of dividends after asking for state financial assistance, misleading negotiating positions taken by the CL Financial chiefs, a huge zero-interest payout to the CL Financial chiefs which left their shareholdings intact, attempts to sell assets in breach of the MoU. Most of all, the serious and inescapable conflict of interest of the then Minister of Finance, who is an attorney – every single attorney I have spoken with agrees that this was a clear case of conflict of interest.

Yet, not a word from the Law Association. Am I alone in expecting any better?

Institute of Chartered Accountants of Trinidad & Tobago (ICATT) – The entire collapse is shot through with a failure of accountants at several levels and yet this professional body has been silent on all this. After ignoring my open letter and other attempts to start some dialogue on this, Anthony Pierre, ICATT’s President, agreed to appear on a TV interview with me on CNMG. That interview was broadcast on Sunday 26th September 2010 – it can be viewed at http://wp.me/pBrZN-qW – in the ‘Sunday Morning Politics’ slot. When I put the question to him as to the errors and/or omissions of the professional accountants in this huge collapse, Pierre took the position that there was no cause for concern. I do not accept that position, but of course the Commission of Enquiry and hopefully the publication of those long-overdue accounts will shed some more light.

University of the West Indies (UWI) – There has been very limited engagement from UWI on this matter, which is a pity when one considers that the areas of study there include economics, finance, law, business management and accounting.
Of course, the former Campus Principal and now Director of UWI’s Institute of Critical Thinking is Dr Bhoendratt Tewarie, who was also a member of CL Financial’s pre-collapse Board. That is the same Board which approved payment of a dividend 3 days after CL Financial’s Executive Chairman wrote to the Central Bank for urgent financial assistance. Dr Tewarie is also reported to have been at the final Annual General Meeting of CL Financial, held at Trinidad Hilton on 23rd January 2009. The timing couldn’t be better for a report to shareholders – after all, the Central Bank had been written to 10 days before, the dividends approved a week before and the bailout itself was just 7 days away. So what happened at that AGM? Were shareholders given an honest report from the custodians of their capital?

The late Professor Dennis Pantin did write several times on the CL Financial collapse and bailout in his Sunday Guardian column. Dennis made the early call for a Commission of Enquiry into this entire mess and that has now been acted upon.

Sen. Dr. Patrick Watson
Another UWI figure in the whole mess is Dr. Patrick Watson, who is Professor of Economics and Director of the Sir Arthur Lewis Institute for Social and Economic Studies (SALISES). Professor Watson is a government Senator in the current Parliament, who after maintaining his silence on this economic catastrophe since January 2009, has now become most vocal since the budget speech.

Is a straight case of nearer to Church further from God.

Trade Unions – The two groups which one can normally expect to have a public position on these long-term, large-scale issues are the Oilfields Workers’ Trade Union (OWTU) and of course, the Federation of Independent Trade Unions and NGOs (FITUN). Neither of those bodies rose to the challenge and we are the poorer for it.

Trinidad & Tobago Transparency Institute (TTTI) – Yes, the TTTI did make a strong statement calling for improved accountability in the bailout process. That is a Civic Society body doing its job.

What really happened?
But apart from us in the Civil Society, there is another level of the Code of Silence being practiced in that some of the very people who were in charge of this huge crash have rejoined public life, saying nothing about the crash.

They have been recycled. Yes, I know that recycling is good, but this one is toxic.

Caribbean Money Market Brokers (CMMB) – Robert Mayers was the former Managing Director of CMMB, who retired on 8^th December 2008 – see http://legacy.guardian.co.tt/archives/2008-12-09/business2.html – which is less than two months before that company collapsed. Mayers is a most articulate and willing public speaker, who was recently discussing the national budget on the electronic media.

We have heard nothing from Mayers on how the collapse presented itself and there is no concerted attempt to pass on any lessons learned to a younger generation of citizen.

Clico Investment Bank (CIB) – Faris Al-Rawi and Mervyn Assam CIB was chaired by Mervyn Assam, recently appointed as a Special Ambassador with responsibility for Trade and Industry. Faris Al-Rawi, attorney-at-law, was a Director on that Board and he is now a PNM Senator.

Neither man has made any attempt to publicly explain CIB’s shocking insolvency, which was estimated by the Central bank to be of the order of $4.7Bn.

All those people appear to have been anointed, in what must have been a private ceremony, then re-presented as ready to serve. We deserve no less than a proper explanation from these Directors and Officers and I was pleased to see PNM Senator Penelope Beckles recently joining me in calling for them to be questioned publicly.

The case of AIC Finance
Ian Narine, writing in the Business Guardian on Thursday 14th October – http://guardian.co.tt/business/business-guardian/2010/10/14/there-enough-everyone – attempted to point out the way he had tried to warn the investing public on the perils of CL Financial. That column made interesting reading, but what would be the position of the press if any such situation were unfolding right now?

Just as an example, AIC Finance is owned and run by the Jamaican billionaire, Michael Lee-Chin, who came in for mention in Anthony Wilson’s 15th October 2009 BG View ‘Will Lee-Chin avoid Duprey’s fate?’ – see http://guardian.co.tt/business/business-guardian/2009/10/15/will-lee-chin-avoid-duprey-s-fate. I commented on that in the Trinidad & Tobago Review of 2nd November 2009 in ‘Duprey’s fate’ – see http://wp.me/pBrZN-43 or http://www.tntreview.com/?p=887 and the points are once again pertinent.

AIC Barbados, the regional holding company for the group, defaulted on a USD bond in 2009 – in other words, they were unable to pay their debts – see http://guardian.co.tt/business/business/2009/06/06/lee-chin-late-us47m-bond-payment or http://www.jamaica-gleaner.com/gleaner/20100818/business/business1.html.

AIC advert In the last part of September, AIC Finance has been advertising surprisingly high rates of interest in daily newspaper adverts which also offer ‘Preferential rates to Trinidad & Tobago Association of Responsible Persons (TTARP) members’.

COMPARISON TABLE for 12-month fixed deposit rates for amounts up to $500,000 as at 30^th September 2010

Financial Institution	Range of interest rates
First Citizens’ Bank	1.25% to 2.1%
RBTT	0.2% to 1.45%
Scotiabank	Up to 0.75%
Republic Bank	0.30% to 0.75%
Unit Trust Corporation (Money Market Fund)	2.15%
First Citizens’ Bank Abercrombie Fund	1.90%
Fidelity Finance (part of the Maritime group)	1.8%
AIC Finance	4.25%

If CL Financial could not sustain this strategy, how can AIC continue to offer these rates in today’s market?

That is the question.

According to recent press advertisements, the Board of Directors of AIC Finance Limited comprises –
Michael Montrichard
Krishna Narwani
Clarry Benn
Robert Almeida
Hugh Williams
Myrnelle Akan
Hugh Edwards

Further details are at http://www.aic.tt/page.asp?page=Board+of+Directors

A version of this commentary appeared in print on October 17, 2010, on page A31 of the Sunday Guardian.

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