VIDEO: First Up Interview – 17 March 2010Afra Raymond sits with Fazeer Mohammed and Jessie May Ventour to discuss, among other things, the “battle” between the Government & the construction industry in Trinidad and Tobago. Video courtesy CNMG
VIDEO: First Up Interview – 09 March 2010Afra Raymond sits with Fitzgerald Hinds and Jessie May Ventour to discuss an updated in-depth look at UDeCOTT subsequent to the resignation of its Executive Chairman, Calder Hart. Video courtesy CNMG
| From: | Afra Raymond <afra@tstt.net.tt> |
| To: | Nunez-Tesheirak@gov.tt |
| Date | Fri, March 12, 2010 6:26:03 PM |
Madam Minister,
I am writing to thank you for sending me the CL Financial Shareholders’ Agreement of 12th June 2009, as requested in my Freedom of Information application of 16th November 2009.
I have now published this onto my website – www.afraraymond.com – for public information and to develop a better understanding of its implications.
Finally, I am taking the opportunity to point out that my second Freedom of Information application, for Mr. Lawrence Duprey’s 13th January 2009 letter to the Central Bank Governor, was filed on 1st March. It would be a positive move, in the direction of transparency and public accountability, if you were to release that document to me within the statutory timeframe of one month.
I await your reply.
Yours sincerely,
Afra Raymond
FOR YOUR INFORMATION: A copy of the official agreement between C.L. Financial Limited and the Government of Trinidad and Tobago has finally been delivered to me per my request under the Freedom of Information Act. This CL Financial Shareholders’ Agreement (SA) of 12th June 2009 which I requested on 16th November 2009 under the Freedom of Information Act was sent to me by the Ministry of Finance on 11th March 2010 and my emailed response to the Minister of Finance is on the home page of this blog.
My preliminary comments are –
With the exception of the last item, none of these other three serious matters are addressed at all in the SA. Silence on the payment of dividends. Over-pledged assets are described as being ‘valuable consideration‘. Silence on the missing $5.0Bn from CLICO’s Statutory Fund.
Those four events, having been revealed in the gap between the MoU and the SA, should have informed the stances taken by the parties. To my mind, these actions by CL Financial are indicative of insincere behaviour intended to outwit and cheat the taxpayer. The Ministry of Finance press release describes the SA as ‘…giving substance to…‘. Nothing could be further from the truth, since the SA in fact creates new levels of entitlements and protections for the CL Financial shareholders.
As taxpayers, we ought to have been able to rely on the State negotiators to propose terms which would have extinguished the equity of the CL Financial owners and taken other steps to restore the correct position. Instead, the SA has not sought to address their assaults on good faith and ‘fit and proper’ behaviour. We have now been bound into a long-term arrangement to restore the fortunes of one of the Caribbean’s riskiest adventurers.
Readers, please take note. In terms of its size, timing and terms, this CL Financial bailout is a grievous attack on the very integrity of our Treasury.
In a situation like this, where a company is effectively both illiquid and insolvent, the incoming investor/lender has enhanced rights. Effectively, such a company is dead – just like someone whose heart has stopped beating – and any assistance or lending is usually on very onerous terms. The only exception would be in the case of related-parties who are able to agree special terms which no one else could accept.
That seems to have been the case here, since we had the CL Financial group out of cash, with its assets fully pledged, but yet able to get the full financial assistance of the State, without being forced to relinquish the rights of its shareholders.
One is reminded of the telling statement by the Governor at the press conference to announce the bailout on 30th January 2009, as to the fact that one of the main reasons for the collapse of the CL Financial group was ‘…excessive related-party transactions…’. It seems to me that this is exactly what we, the entire nation of Trinidad & Tobago, have now entered into.
The capacity to learn from the past is one of the main signs of maturation, but we are not displaying those qualities here at all, at all.
We do not seem to have learned from the central lesson of that tragic collapse.
Another troubling aspect of this SA is that it does not properly allocate risk and reward between the parties. Again, readers are asked to remember that the mis-matching of risk and reward was also one of the elements which brought down the CL Financial group.
If that happened, the State investment in CL Financial would have been beneficial to the 325 shareholders, but all the State would be entitled to receive, for having risked its own capital, would be a repayment of those sums, with no interest.
In this situation, the SA has allocated to the State all the risk, a massive injection of capital, responsibility for management, yet even in the case of a successful outcome there is no return either by way of interest on the funds advanced or equity in the rejuvenated enterprises.
If that happened, the State investment in CL Financial would have been a loss for the taxpayer, since it would be impossible to recover our funds.
In this situation, the SA has allocated to the State all the risk, a massive injection of capital and responsibility for management. The only thing the State has to look forward to here is the blame and the losses.
Heads we lose, tails they win…
The resignation of Calder Hart as Executive Chairman of UDeCOTT and all four other major Boards he chaired is no surprise to me. None whatsoever. I had already noted in this space the consistent false claims and bogus rationales emerging from that individual.
One of the main ones is the ‘Anancy-story’ that all these new buildings would reduce the rents paid by government for offices. Those false claims of savings to the public purse were often repeated by the PM and his then Minister of Planning and Development, Camille Robinson-Regis, but they were withdrawn when challenged to let us have some figures. By my calculations, the UdeCOTT offices will cost this country about 3 times MORE per square foot than the space now occupied. Hart has consistently declined/refused or ignored my several requests for information on the touted savings.
We need to locate this moment firmly in context, so that we are not fooled, again, into seeing these issues too narrowly. Some main issues are –
Finally, we need to deal with the widespread belief that after all is said and done, the country is better off as we have gotten many new buildings for our money, even if a few things went wrong, or too far. I do not support those views, for three reasons –
AUDIO: High Noon Interview – 26 February 2010
Afra Raymond is interviewed on the “High Noon” show on Power 102 Fm in Trinidad and Tobago, hosted by Larry Lumsden, on the CL Financial bailout and its possible ramifications for the the society.
As we move forward into the deep waters of the CL Financial bailout, the picture becomes murkier and less encouraging. It seems to me that we have never had a government which spends more on PR and advertisements, yet on this most important issue, the picture is nothing but baffling.
This week I will focus on three of the main areas which need urgent explanation –
When British American Insurance Company, a key part of the CL Financial group, was declared insolvent at the end of October 2009, that was after the international firm of accountants, KPMG, had examined their books. The governments of the Eastern Caribbean Currency Union issued a press release – http://www.normangirvan.info/wp-content/uploads/2009/11/eccu-clico-statement.pdf – which included this sobering statement – “In the event of a liquidation of BAICO, policyholders will not be paid in full. Indeed, it is probable that if BAICO was liquidated, policyholders will only get 10 cents on their dollar. This means if you have an annuity of $1000, you would only receive $100.”
I just wonder what are the real figures for the entire CL Financial group, given the sheer refusal, by all the responsible officials, to discuss the 2008 audited accounts for the group.
It seems to me, based on the available information, that the interests of the taxpayer have been subordinated to those of policyholders, depositors and most odious of all, the 325 private shareholders of CL Financial.
The first MoU was signed on 30th January and is published by the Ministry of Finance at http://www.finance.gov.tt/documents/news/mr03183E.pdf. The second MoU was signed on 12th June 2009 and, although certain details were set out in the Ministry’s press release, it has never been published. That is odd, to say the least, if one considers the second sentence of the press release – “This new agreement is designed to give substance to the Memorandum of Understanding (MOU) of January 30th 2009.”
Michael Carballo was emphatic that the shareholding had not been affected by the new MoU – “Carballo said the government was in control of the management and running of the Caribbean conglomerate, but what has not changed is the ownership.
“The shareholding hasn’t changed. There is no intention to change the shareholding. It’s an agreement for about three years whereby the assets are managed and restructured and then the company will be returned to the shareholders,” he said.” That was in the Jamaican Gleaner of 17th June 2009
see – http://www.jamaica-gleaner.com/gleaner/20090617/business/business1.html.
As we enter the wrong side of the boom, it is a little like traveling to the dark side of the moon. Familiar navigation points fade from view and we are forced to use bearings that are new.
At these moments of turmoil and impending crisis, it is always interesting to observe closely what key people are not saying. Yes, the pauses and silences can be very instructive in these situations.
I do believe that our national appetite for melodrama, bacchanal and commess is being played upon to distract us from the seriousness of the situations facing us.
The main example is the CL Financial bailout, which was announced a little over a year ago when the first Memorandum of Understanding (MoU) was signed on 30th January 2009. Given the subsequent revelations as to the withdrawals of funds by important people and the shareholdings of the Minister of Finance in CLF, it is impossible to say exactly when the actual bailout began. All we can say for sure is that we, the public, were told of a bailout on 30th January 2009.
There has been a cascade of bewildering and disturbing events – those are set out at my blog, www.afraraymond.com – and we are now at a position of deep confusion. The resignations of three top-level executives of the group and the subsequent bald press releases are most disturbing. They speak of disputes and jostling taking place in terms of this huge group we are now committed to rescue. For the record, those resignations were –
The growing sound we are hearing is that the Bob Lindquist forensic report into the dealings of CLICO etc. is to be completed at the end of February. Many people for whom I would normally hold some respect are anxiously awaiting that report to see what possible wrong-doing might be revealed.
In my view it is an error at this time for us to be awaiting the publication or selected leaking of such a document.
We need to press for the Audited Accounts of the CL Financial group as at 31st December 2008. Those accounts should be signed-off by the same professional firm which did the 2007 audit, the internationally-renowned PriceWaterhouseCoopers.
That is the most important single document, since it will fix an asset value at the end of 2008. That is –
Despite its obvious importance in the mystery of the missing money, there is complete silence as to the progress of the 2008 audit. It is almost a full year overdue and the only accounts we hear of are the forensic and confidential ones. The CL Financial group’s audited accounts were always published anyway, so why can we not have a clear, official statement as to when the 2008 audited accounts will be published? What is the mystery?
This country is now bailing-out a group which has failed and/or refused to provide its annual audited accounts and that is unacceptable in terms of the proper expenditure of our taxpayers’ funds.
Let us mark this moment well, because if the 2008 audited accounts are allowed to fade into obscurity, please do not think that we, the citizens, will be treated any better with the 2009 accounts. Please take note that this is a recipe for even greater levels of corruption than what besets us now.
There are also other facts, now in the record, which cry out for early attention, without need for special reports or melodrama.
Was the payment of a dividend to CL Financial shareholders, after writing to seek urgent financial assistance, an illegal act by its Board of Directors? Yes or no? If yes, then what actions are to be taken to both a) recover those sums of money and b) punish the Directors of CL Financial for their illegal act? If no, we need to hear how that could possibly be the case. If that dividend payment were legal, our tiny Republic would once again be setting a new precedent for the world to observe. Is it possible, as incredible as it might seem, that the Board of CL Financial did not know that Duprey’s letter had been sent to the Central Bank?
The State is in control of the CL Financial group and ought to be able to present a picture as to who broke their deposits in the last 90 days. That is guaranteed to be an interesting read and no need for any forensic report there, either. Maybe more importantly, who borrowed from the floundering group in its last days and on what terms. Another piece of the puzzle which is easily within grasp, but the mysterious silence is persistent.
The Governor of the Central Bank has, on several occasions, publicly and clearly stated his deep concern at the actions of the CL Financial chiefs – look at these 2 examples –
The Central Bank issued updated regulations as to the qualities of person considered to be fit and proper to serve as Directors or Senior Officials of Financial companies – that is at http://www.central-bank.org.tt/news/releases/2005/mr050510.pdf. At 3.1, it states –
“In accordance with governing legislation a person is considered to be fit and proper if the person essentially is of good character, competent, honest, financially sound, reputable, reliable and discharges and is likely to discharge his/her responsibilities fairly.”
The Governor of the Central bank has spoken, in unmistakable terms, about the conduct of these CL Financial officials – so what is the delay in exercising his powers under the fit and proper regulations? If we are to believe his statements, and I have no reason to doubt the Governor’s word, there is no lack of evidence that the CL Financial chiefs were not operating in accordance with the official rules as to fit and proper conduct.
We do not need to wait for any forensic report to be leaked or any opinion from expensive foreign lawyers. Sweet as the melodrama can be, it is a most dangerous distraction in this case.
As per the CL Financial fiasco, we are all waiting on the completion of the report of the Uff Commission of Enquiry into the Public Sector Construction Industry, with particular attention to UDeCOTT and Cleaver Heights. That report is due to be presented to the President at the end of this month and, as important as it no doubt is, the primary issue is in danger of becoming conveniently obscured. I have raised the question before, is UDeCOTT insolvent? Why the inordinate and unexplained delay in publishing their audited accounts? The last time UDeCOTT published audited accounts was in 2006 – so no account for 2007, 2008 or 2009. State guidelines require that State Enterprises publish their audited accounts by the end of April of the next year.
There is no good reason for the non-publication of any of these accounts. They are bound to help us solve the mystery of the missing money.
PODCAST: RICS Americas Interview – 14 January 2010
This is a podcast Afra Raymond did while in New York on Thursday 14th January at the offices of RICS Americas, the regional HQ of the international professional body, the Royal Institution of Chartered Surveyors.
As you will hear, Afra Raymond was speaking from his positions as a Chartered Surveyor, Managing Director of Raymond & Pierre Limited and of course, President of the Institute of Surveyors of Trinidad & Tobago. He focused on 2 matters
He concluded by reminding listeners that the RICS’ principal cause was that of “serving the public interest” and that that was one of the main engines for him as a campaigning surveyor.
This is to be published on the last day of 2009 and it is intended to do two things – firstly, to provide an overview of the CL Financial bailout and secondly, to start a critical conversation on our work as writers and analysts.
The timeline of the events over the last year or so on the CL financial bailout is set out for ease of reference. The detailed material can be found in the earlier part of this series at www.afraraymond.com. In doing some other reading, I came across a valuable part of the story and that is the first item in the timeline.
It is common to criticise governments on the basis that they are out of touch and seem to operate in silos. Meaning that various departments of our governments often operate without taking account of each others’ plans and actions. That is indeed so, but we also have to be willing to change if we are to have a chance of changing our world.
In saying so, we in the media have been existing in a similar place where cross-linking and critical discourse is almost extinct. If we are not able or willing to start a critical, public conversation amongst ourselves, there would also be severe limits on our own growth and effectiveness. The times are very challenging and they pose a caution for us all in the media. Our country needs a quality media of integrity.
Of course, I am speaking of the work of Camini Marajh, the respected investigative reporter from the Express. This year we have been treated to 3 high-profile exposes on CL Financial by Ms. Marajh – on Gita Sakal, Patrick Patel and most recently, the Home Mortgage Bank/Angostura deal (those 3 articles are at http://www.trinidadexpress.com/index.pl/article?id=161566763, http://www.trinidadexpress.com/index.pl/article?id=161566759, http://www.trinidadexpress.com/index.pl/article?id=161569418), with heavy focus on the role of the CL Financial group’s former Finance Director, Andre Monteil.
It is clear from that series of articles that Ms. Marajh has access to private documents and Michael Carballo. Is it that readers will have to remain in suspense as to the key mysteries of the CL Financial fiasco? In my view, those would have to be –
See http://guardian.co.tt/business/business-guardian/2009/11/19/finding-assets.
See http://www.trinidadexpress.com/index.pl/article_opinion?id=161452507.
Of course, one could maintain that the focus on the other aspects of the story are of greater importance and public interest. I am just wondering, in public, whether those questions have ever been put to Carballo and if so, what did he reply. It would be a real piece of investigative tonic if Ms. Marajh were to use her access to ask these burning questions.
It also needs to be said that Ms. Marajh’s last set on the Angostura purchase of the Lascelles Mercado group in Jamaica opened two aspects for further investigation.
I do not have the kind of space the Express affords my colleague, so this will be brief.
The first of these was the fact that Home Mortgage Bank seems to have guaranteed a transaction in which Angostura took over Jamaican rum manufacturer, Lascelles Mercado at a cost exceeding $600M USD. It seems that the HMB guarantee was set out in a December 2007 document. That sum was also said to be in excess of the financing headroom available to HMB, but that is not something I am going to pursue here. My concern is that the Home Mortgage Bank was established by an Act of Parliament to provide liquidity to the secondary mortgage market. How come a mortgage company, established to provide finance for the benefit of homeowners, could issue a guarantee to a conglomerate to buy a liquor company? How come? To my mind, that seems to be well outside the intended scope of the HMB as per its own company information – http://www.homemortgagett.com/loadpage.cgi?company_info. There is also the interesting point that this huge deal, with all its possible implications for the stability of the HMB, was not disclosed in the audited accounts (where it ought to have appeared as a Contingent Liability) or Chairman’s Review of their 2007 Annual Report – see http://www.homemortgagett.com/AnnualReport2007/HMBAnnualReport2007.pdf.
The second point is that the expose mentioned that the Angostura purchase was made at twice the listed price of the Lascelles Mercado shares. It is one thing for a company to take strategic decisions, using its own shareholders’ funds and paying ‘over the odds’ for assets, if that acquisition satisfies its objectives. That is one thing, but what we seem to have here is a mortgage bank guaranteeing a massive purchase of shares at twice the value. Was a due-diligence of the transaction done? If there was none, this would be a case in which shareholders’ and depositors’ monies were put needlessly at risk.
As far as I can tell, this is the kind of behaviour which led to the collapse of the entire CL Financial group. We in the media have a responsibility to do better.
AfraRaymond.net 