VIDEO: First Up Interview – 8 July 2010Afra Raymond sits down with Jessie May Ventour and Fazir Mohammed for a discussion on the new initiative by the new Government to the ongoing CL Financial bailout.
VIDEO: First Up Interview (CLICO) – 18 May 2010Afra Raymond sits down with Jessie May Ventour and Derek Ramsamooj for a discussion of matters pertaining to the CLICO and CL Fianacial bailout prior to the national elections.
On Sunday 6th June the Trinidad Express’ Investigative Desk published yet another series of exclusive reports from Camini Marajh and those are once again, raising more questions than answers.
The reports revolved around some of the recent dealings of Home Construction Limited and their financing via First Citizens’ bank. The Home Construction group of companies is an important part of the CL Financial empire – that CLF empire is being bailed out by the State.
The key issues arising from the reported information would seem to be –
…there was no need since CL Financial was not a statutory State company, and the shareholders’ agreement signed between Lawrence Duprey and the Government required agreement by both sides before any change could be instituted…
If I am reading that right it would seem that the terms of the June 12th 2009 Shareholders’ Agreement were being invoked to secure the positions of the present holders of high office in the CL Financial group. If this position as outlined by Holder is indeed correct, then there seems to be an urgent need for those terms to be re-examined and/or renegotiated.
Apparently Dr. Tewarie is also the Director of the Institute of Critical Thinking at UWI. Listen to his conclusion to the Director’s Statement –
…The present in which we now live has already been created for us or we ourselves might have knowingly or unknowingly conspired to create it. But we live and we learn. The important thing is that we learn. When we learn we grow and evolve and are better able to deal with the inevitable new challenges. And so we press on…
see http://sta.uwi.edu/ct/foundir.asp
We need a proper account from Dr. Tewarie on the last days of the CL Financial group. The people who are responsible for this scale of collapse must render an account. To fail to do so would only compound their failure and we would have to banish them to obscurity.
We are now in an interesting space, between the noise of the election campaign and the appointment of some of the most powerful government officials. The new Cabinet was sworn in on Friday 28th May and the appointment of officials to the SPEs and Statutory Corporations is about to take place.
As noted previously, these SPEs are arguably now more powerful than the traditional civil service, in both the scale of their operations and the loose oversight regimes within which they exist.
As I noted in the first part of this article, published on 16th April, our history is that newly-elected governments will select their own candidates to fill these vacancies. Apart from the issues of ritual dismissals which were identified then, there are further points to be made at this stage.
The People’s Partnership has won a resounding electoral victory and it seems that a significant number of voters were voting for a change from the large-scale corruption and bobol which had become commonplace.
There were some precedents set by the last PNM, which were so shocking, even by our elastic standards, that they must be highlighted, so we can ensure they are never repeated.
Even though the People’s Partnership is still in the ‘honeymoon period’, it is timely to set out these precedents for consideration –
Of course, these are all made more painful, by the fact that they are true and also, by the strange position of Jack Warner MP, our new Minister for Works and Transport. As far as I am aware, once one is appointed to serve in Cabinet, which is effectively the highest office, one is obliged to demit all other offices at once. The notions at work here being the general principle that it is impossible to serve two masters and also this instance being one in which the responsibilities are so serious that ones service must be total and dedicated.
Jack Warner has confirmed that he will be keeping his roles as a Vice-President of FIFA, President of CONCACAF and Special Adviser to the Trinidad & Tobago Football Federation. Simply amazing. Of course, I am subject to correction, but it seems to me that this is an absolutely unacceptable situation. It is impossible for Warner to serve two masters and this is not a precedent which should be tolerated at all, at all.
I want change, not exchange – Question is “Can the People’s Partnership deliver that?”
In view of the season and the issues raised so far in this series, I am setting out some ideas about the scale of challenge we must overcome to achieve change, not exchange.
The State-owned Special Purpose Entities (SPEs) are an important part of the picture in the provision of goods and services to our country.
Who is to run these important entities? In what manner? These questions of “w” are central to the sharp public concerns over the level of corruption at and performance of, these agencies. My contention is that there are two contending tendencies in the minds of those who make that sort of decision.
The two ideals exist in fundamental tension, moreso since other aspects of the question are also in flux.
There is no clear agreement as to the boundary between the critical SPEs and the rest. Some of the players believe that every SPE should be subject to their political whims, while others have clear ideas as to which ones must be managed professionally.
Also, it is quite likely that the two ideas co-exist in the minds of some of the main players. That is, they are themselves severely conflicted on the entire subject.
The idea that important SPE/State jobs and contracts are available for those in political favour is one of the things we have to change.
At this moment we are poised before a snap election, with a highly-charged atmosphere on the issue of SPE corruption. Even devotees of the ruling party seem to be shocked by the scale of the problem. Whatever the outcome of this election, there is likely to be considerable action on this aspect of public affairs.
If the present ruling party wins convincingly, we are likely to see a triumphant return to the stated policy of Expediency in Public Affairs. Those winners could declare that the policy approaches which brought us to this sorry place are the right ones, which were endorsed by the electorate, so we return to mismanagement and dishonesty.
The possibility of a victory of the Peoples’ Partnership also holds challenges in this area, since they could return to old habits. By that I intend to remind readers that when UNC took office in 1995, there was a widespread series of dismissals of top-level staff at SPEs. It was so large-scale that the late Grand Master wrote a 1997 calypso on it – ‘De No-Work Band’. It was never a very popular one of Kitch’s numbers, but those people who suffered sudden and unjustified dismissal will remember the tune, as well as the words. Plenty names and bitter-sweet too bad. PNM did much the same thing when they returned to office in 2001. No kaiso for PNM, though.
That pattern of brusque dismissals and crude exchange is highly questionable, given that both parties have fundamentally similar economic and social policies. It seems to me that the dismissals are motivated more by by vengeance and a desire to control the vacated jobs, than by any actual difference in ideology or approach..
This is what I mean, in saying that we need change not exchange.
It might seem unlikely, but we could very soon be confronting these issues of who runs our SPEs and how, in what is likely to be a harsher, sharper fashion than ever before.
The ingredients are all there –
Yes, come 25th May, we could be seeing a situation which eclipses all the wildness which has gone on so far in this country of ours.
It is clear that there are certain SPEs which must be forensically investigated, with people charged under the law with a view to recovering the stolen funds and restoring a healthy atmosphere to public life in this country of ours. I have already given a lot of detail on those SPEs. My point holds ‘irregardless’ of who wins the election. The situation of gross mismanagement and unpunished corruption is too dangerous to our good health as a nation to be allowed to continue just so.
It is equally clear to me that there are serious, capable and committed people in our SPEs. Those people have been exemplary in the execution of their duties and added real value to the public service in this country. They are all now at risk of suffering the fate of other ‘political appointees’ when the other side wins.
It is not good enough for us to shrug and murmur that that is how these things go. We are a small country, with limited human resources and we cannot spare the intellectual capital which is evaporated every time we go through these purges.
The reflections continue this week, by drawing heavily on the text of the Uff Report and the transcripts of the Uff Commission, to set some of the scandalous facts into context. This is for those who are still wondering ‘What was it all really for?’
Last week I wrote that the State must behave in an exemplary fashion. It is also important to know that the State has a responsibility beyond the moral plane. On an entirely practical level, it is clear that the State controls the majority of economic activity in our nation. As such, it is responsible for the majority of construction projects in the country. If we exclude the exceptional projects built for the energy sector, over 75% of the construction in the country is carried out by the State.
Apart from statutory undertakers – like TTEC, WASA, TSTT etc. – the State carries out most of its capital investment via various SPEs. Those would include:
The conduct of the State is therefore fundamental to the conduct of a huge slice of the business activity in our country. If the behaviour in the majority of our commercial relationships is improper, that is good reason for the cynical attitudes and poor standards which flourish.
Yes, there is considerable ambiguity in the term ‘improper’ and I am therefore going to illustrate.
One of the perennial questions is ‘How come State projects are almost always overbudget and late?’ That is a truly universal question and the problem, if only the main element is isolated for discussion, is that the parties are too close.
The typical contractual and managerial controls of budgets, accounting systems, independent professional advice and penalty clauses were all violated wantonly. Our Treasury has been plundered. See the sidebar for an extract from the Uff Report.
UDeCOTT and the HDC are the State’s two main agencies in the move to physical development, they are both under the Ministry of Planning, Housing and the Environment.
We are now clear that both have been failures when measured against the goals set for them. The sheer scale of the failure will be set out next week in this space, again with extracts from the published record.
We need to ask what has to happen differently? Can we make the change?
Governance is one of the vexed aspects of this discussion on the purpose and performance of Special Purpose Entities (SPEs). Whether we are looking at the HDC or UDeCOTT, the concerns are similar.
At the national level, we can have a broad description of good governance which includes elements such as – equity, participation, accountability, transparency and conforming to the rule of law. Of course, when we focus on the SPEs, there is a narrower definition of good corporate governance being the rules which are followed by a Board of Directors to achieve fairness, accountability and transparency in the relations with the company’s stakeholders.
When one considers that the SPEs were introduced to overcome the delays of the old civil service rules, their corporate governance rules are key in achieving those elusive levels of performance.
“Holding to account
62. We have observed, in the context of contractual issues as well as regulatory matters that there exists a culture of non-enforcement which appears to operate on a mutual basis. Contractors seem reluctant to issue proceedings for payments overdue or to enforce claims and employers in turn refrain from enforcing time obligations which are routinely not complied with. In regard to delay issues, the point was demonstrated by the fact that no witness or representative appearing at the enquiry was able to quote any case in which a contractor had actually been required to pay or had been debited with liquidated damages. In the wider field there was a tacit acceptance that regulatory approvals, particularly as to planning, were rarely given in a final form before the work was performed, this coupled with an expectation that such approval would be forthcoming retrospectively.
63. At the same time we had the impression that one contractor who made a habit of enforcing contractual rights, if necessary by formal proceedings, was regarded as being “confrontational”. Such an attitude does not sit well with the careful drawing up of commercial agreements; nor with competitive tending, which is carried out on the basis that contracts will be enforced. It is also inconsistent with the clear duty of directors of companies and public bodies to enforce the contracts they negotiate and enter into. If there is a desire to promote the timely and proper performance of public sector contracts, this will only be achieved by holding parties to account for any breaches of contracts freely entered into; as well as enforcement of legal duties in regard to regulatory matters. Enforcement must also be assured through efficient and timely processes of courts and other tribunals.”
The emphases are mine.
One of the abiding questions on the CL Financial issue is – ‘What main event/s caused the group to fail?‘
One of the main rumours making the rounds at the time of the bailout was that the State-owned National Gas Company had made heavy withdrawals from CLICO Investment Bank. Those withdrawals and the requests for the return of further deposits were said to have triggered the ‘crash’ within the CL Financial group.
Another major issue which was raised in the Parliament by the current leader of the opposition was the allegation that the Minister of Finance and Governor of the Central Bank had used ‘insider information’ to withdraw their own deposits from CIB. Despite the explanations by these officials, which form part of this article, those perceptions persist among the population.
Ultimately, the questions have to be ‘What did they know?‘ and ‘When did they know it?‘ This article will delve into some of those issues, using the published record, as is my practice.
The main points are –
The NGC press release – This was published in the daily newspapers on 4 February 2009, as a corrective to the widespread and potentially-damaging rumours. It was issued under the hand of the NGC President, Frank Look Kin – it is the penultimate item on its publications page, under the title ‘Press Release- NGC’s Management of Its Financial Investments‘. Due to its huge revenues (stated to be $14.0Bn in 2008), over 90% of which are in US dollars, the NGC has established a policy for the management of its large-scale, short-term investments. According to the press release, those funds are placed in either approved financial institutions or investment-grade rated foreign banks. The placement of those deposits is guided by limits for the percentage of funds allocated to a financial institution or group of financial institutions. The selection of deposit-taking institutions and the establishment of placement limits are both good financial practice in terms of risk management.
Approved Financial Institutions
Those are taken to mean the 25 companies licenced under the Financial Institutions Act 2008. Those companies are all required to be members of the Deposit Insurance fund and their names can be viewed at http://www.dictt.org/deposit_insurance/index.php?pid=2006. There are 6 main banks on the list – Citibank, First Caribbean, First Citizens’, RBTT, Republic Bank and Scotiabank. Two smaller banks on the list are Intercommercial Bank and Bank of Baroda.
Interlocking Directorships
A continuing concern, in light of the growing challenges to the old order of the commercial and financial world, is the role of inter-locking Directorships. That is the situation in which a very small group of people control most of the major companies and activities in a society.
Critics of that situation would say that such situations are a recipe for corruption and self-serving behaviour. The small group of people can enrich themselves, leaving the leftovers for everyone else. Those who support that situation would say that the emergence of such a small group of leaders is natural, particularly in a small society such as ours, and the real challenge is to develop rules and norms which limit the possible negatives.
This is an issue which I am exploring in the ongoing series to examine the governance implications of the UDeCOTT fiasco. It is not surprising that it is also a feature of the CL Financial collapse and there is an example of that in the case of NGC and CIB.
The CIB Directors
At the time of the collapse, the Board of Directors of CLICO Investment Bank comprised –
Mervyn Assam (Chairman)
Amjad Ali
Anthony Rahael
Maria Thorne
Michael Callendar
Faris Al Rawi
The NGC Executive
At that time, the National Gas Corporation’s executive management included –
Ms. Olave Maria Thorne, Vice President, Legal and Corporate Management and Company Secretary – see http://www.ngc.co.tt/About/executive.htm. Yes, same person.
A Kaiso title for the Election season. And yes, we are told that CL Financial will rise again. The picture is even more clouded than a year ago and the rumours abound.
The latest developments are –
Hence this week’s title. We await the audited figures.
There were reports in the Sunday Express of 11th April that the Central Bank had initiated legal action against Andre Monteil and Richard Trotman, both formerly of CLICO Investment Bank, for the recovery of huge sums allegedly obtained improperly in the HMB takeover – see http://www.trinidadexpress.com/index.pl/nart?id=161626823 and http://www.trinidadexpress.com/index.pl/nart?id=161626819
Those moves by the Inspector of Financial Institutions represent, as far as I am aware, the first time that legal action is being taken on this scale to tackle those accused of ‘white collar’ crime. It is a decisive step to tackle the widespread impression that jail is not for the rich or lettered class in this society. The course of this trial will be closely observed as it is the first step in a very long and necessary journey.
Our notions of development are rooted in the aspiration toward equality and opportunity. Those worthwhile concepts must be extended to include true equality under the law.
One of the really fascinating aspects of this unfolding financial debacle, which includes the UdeCOTT collapse, is the idea that those accused of this sort of wrongdoing have extensive rights. That kind of consideration is seldom offered to those accused of run-of-the-mill crimes. If nothing, else, the CIB trial will be a kind of long-overdue ‘Open University’ course in the boardroom dealings which are masked from most of our people.
The leaking of the Uff Report, the delayed dismissal of the remaining, ‘squeaky-clean’ UdeCOTT Board members and the dissolution of Parliament are all part of a major distraction operation. The fallout from suppressing the Uff Report would have been huge and unpredictable, so the name of the game was spin. That spin is what we have been getting from government ever since we entered the end-game. The ultimate attempt to distract us was of course the dissolution of the Parliament by FAX on Thursday 8th April.
The strategy seems to be an attempt to provide the media and the population with even more interesting talking points, so that the Uff Report slips into obscurity. I expect that if the incumbent party is returned to office, there will be attempts to claim that the ‘mandate’ granted by that vote is a justification for the matters revealed in the Uff Report. Already a large slice of attention has been shifted to the impending elections, as expected.
I have no intention of allowing those distractions to take hold. I will continue to write on the lessons of the UdeCOTT fiasco.
This entire series of revelations is historic in that finally we have a Report by a Commission of Enquiry published. The second note for us is that it raises once again sobering governance issues, including matters of professional integrity and Directors’ responsibility. Those are aspects into which Property Matters will delve in the coming series.
Some main points for us to consider –
Next, I will be examining the implications of the SPE model and its effects on the nation.
The Attorney General announced at the Post Cabinet press briefing on Thursday 1st April that the full Uff Commission Report will be laid in the Senate on Tuesday 6th April – see http://guardian.co.tt/news/politics/2010/04/02/uff-report-senate-tuesday. I was pleased to hear that, but there remained a widespread attitude of skepticism as to the outcome of the AG’s promise. One can hardly blame people for having those feelings since, as TTTI’s President, Victor Hart, has recently reminded us, PM Manning broke his promise to publish the report of the Bernard Commission into the Piarco Airport project. That was over 6 years ago and still no Bernard Report yet.
I received a copy of the Uff Report in my email on Saturday and several other concerned citizens as well, so it seems that some publicly-minded person wanted to ensure that it was not either suppressed or edited. Thank you, whoever you are.
The Uff Report is 512 pages long and contains 91 recommendations, so its sheer volume and the limited time available mean that I am unable to give a detailed review. This week’s column will therefore comprise an overview of the main concerns raised in the Enquiry and the way in which the Report has handled those.
CORRUPTION
Q – Does corruption exist in the manner alleged by the government’s critics?
A – At para 59. the Uff Report states that “…It is accepted that corruption is a problem of serious proportions in Trinidad & Tobago…to which the construction industry is particularly prone…”
Was there actually something corrupt or wrong at UDeCOTT?
Q – Is there good reason for concern at UDeCOTT’s operations, or is it a case of politically-motivated attacks?
A – Para 14.36, from the Commission’s discussion of the Ministry of Legal Affairs Tower/CH contract, is a classic of understatement – “…UDeCOTT’s application of its own rules discloses a worrying lack of transparency as well as inconsistency…”
Para 14.37 states – “…the appearance of Mr. Calder Hart’s fax number on the notepaper, which was no doubt hurriedly printed by CH Development, remains unexplained…”
Para 14.41 –“…there should be an investigation by an appropriate criminal Law Authority into the award of the MLA contract to CH Development, to include the role of Mr. Calder Hart and the conduct of the Board in not ensuring that an enforceable guarantee was given by the parent company of CH Development…”
LOCAL VS FOREIGN
Q – Are local contractors being unfairly replaced by foreign contractors or do the foreigners really deliver better performance?
A – Para 6.18 states that – “…no convincing comparison has yet been presented from which reliable conclusions can be drawn as to the relative performance of local and foreign contractors or consultants…”
PROCUREMENT
Q – Is it better for the government to try using Design and Build or should they stick with the traditional Design and Tender method of procurement?
A – Para 7.20 states that – “…there is no single system of procurement which should be preferred in all circumstances…”
The Hart legacy –
According to Para 12.55 – “…We have noted the apparent absence of any note of criticism or dissent within the UdeCOTT staff and the dominant influence of the Executive Chairman, Mr. Calder Hart. To the extent the failure of senior staff and directors to raise any voice in opposition to the level of financial irregularity found on the Brian Lara Project amounts to loyalty, such loyalty is clearly misplaced…”
The Property Matters critique of UDeCOTT started in 2008 on the theme ‘A considerable concentration of power’, which attempted to draw lessons from the Cadbury Commission as to the perils of the Executive Chairman.
The role of UDeCOTT’s Board and its Executive Chairman came in for heavy criticism, with the Report calling for full investigations into the Ministry of Legal Affairs Tower and the Brian Lara Cricket Academy. Furthermore, there is a recommendation that the roles of Chairman and CEO should be separated.
The Rowley saga –
Q – Was there really any money missing at Cleaver Heights?
A – Para 27.11 – “…the entirely erroneous addition of $10,000,000…”
On Tuesday 16th March, I spoke at a JCC press conference and took the opportunity to issue two calls to Ms. Jearlean John – the MD of the Housing Development Corporation and newly-appointed Chairwoman of UDeCOTT. See http://www.caribdaily.com/article/267861/publish-udecott-accounts/.
On the question of the HDC’s fundamental role and its performance, I again raised the issue of their output. In the course of the Enquiry and in this column, I have pointed out the serious output shortfall of the HDC, the primary function of which is contained in its name. Housing Development. At the press conference I was openly skeptical about the often-repeated figure of 26,000 new homes built by the HDC in the execution of the present national housing policy (implemented in 2003) which set a target of 100,000 new homes in a decade. I doubted that even half that amount had actually been built and requested that Ms. John should publish a list of where and how many new homes were completed. On Sunday 28th March, this newspaper carried a two-page ‘Special Report’ on UNC claims of voter-padding and that included the requested information. The article was probing another aspect of the housing riddle, but the two figures which struck me were ‘15,394 housing units constructed by the government in 2003-2009’ and the table detailing the locations and unit numbers with a closing total of 13,677 units. Either way, the total is far less than that claimed thus far and using the upper figure equates to an average of just about 2,200 new homes per year. That is a far cry from the original annual target of 10,000 new homes and even the revised target of 8,000. One can only wonder where the wrong, inflated figure came from and, those having been fed into the budget process, how accurate is our planning? It is all reminiscent of the outstanding query from the Uff Commission as to the Cleaver Heights housing project and the false claims as to missing money – Who told the PM that false information for him to have made those baseless and misleading statements to the Parliament? No one ever admitted to that in the course of the Uff Commission.
Thank you for releasing that info, Ms. John, even if it was in response to another call. Given our persistent culture of secrecy, especially in public matters, it is a welcome change.
My second call to Ms. John at that press conference was to publish the UDeCOTT accounts without further delay. As I put it – ‘Ms. John, if you want to be noted for integrity and transparency, you must publish the UDeCOTT accounts without delay. UDeCOTT has published no audited accounts since the end of 2006 and I was pleased to see the Ms. John’s positive response to those calls. See – http://www.caribdaily.com/article/268401/john-udecott-will-publish-accounts/.
Ms. John was reported to have been appointed and met with UDeCOTT’s Board on 25th March – See http://guardian.co.tt/news/general/2010/03/26/udecott-pushes-complete-priority-jobs. That report in this newspaper concluded with a telling quote from the Deputy Chairman – “Bahadoorsingh said John was an excellent chairman, “Highly competent, very knowledgeable, no nonsense and to the point and very friendly, a pleasure to work with. “It’s a new era with this new chairman. I’m very impressed,”
We are waiting for either the prompt publication of UDeCOTT’s Annual Report, accompanied by audited accounts, or some cogent public explanation for the unacceptable delay in so doing. For all this time to pass, with neither of those events to taking place, can only deepen the atmosphere of distrust. We, the taxpaying public, expect better from you, Ms. John.
AfraRaymond.net 