Tag: Trinidad

The Uff Commission – A Final Fix?

It might seem impossible, but we have been pushed into greater confusion by the events of the fortnight since the last Property Matters appeared.

Despite a fresh round of confusing denials, UDeCOTT are reported to have maintained their legal action to challenge the Uff Commission.   That challenge includes claims as to the alleged bias of the Commissioners.  UDeCOTT continues to deny that the purpose of these legal challenges is to de-rail the Uff Commission.  If those actions were to be sustained and to eventually succeed, the Uff Commission would be de-railed.  Some attorneys have pointed out to me that there have been no studied statements as to whether an Enquiry with a reduced number of Commissioners is still effective under the law.  Even so, justice must not only be done, it must appear to be done.  Point being, even if the Enquiry with a reduced number of Commissioners is lawful, it will hardly be able to command any moral authority.  It is my view that a successful legal challenge from UDeCOTT would have the effect of killing the Uff Commission entirely.

I am reliably informed that the hearings for this UDeCOTT challenge could take at least one year.

Some of the major highlights in the swarm of contradictory comments were –

  • Conrad Enill’s opaque statement on the State paying UDeCOTT’s legal fees.  The PNM Chairman referred the question to the Minister of Planning, Housing and the Environment, Dr. Emily Gaynor-Dick-Forde.
  • Attorney General John Jeremie made strong, stirring statements on his no-nonsense approach to white-collar crime.  Mr. Jeremie was adamant that all the necessary steps would be taken to ensure the proper completion of the Enquiry.
  • Minister Gaynor-Dick-Forde is reported to have given a telephone interview to affirm that ‘UDECOTT is right’ in making its legal challenge.  http://guardian.co.tt/news/politics/2009/09/26/udecott-right That incredible assertion can only dilute the limited authority of this Minister, who took prompt action to dismiss the entire HDC board of Directors earlier this year.  The Minister’s explanation was that there was a ‘governance crisis’ at the HDC.  If this behaviour by UDeCOTT does not count as a ‘governance crisis’ of the first order, we have to wonder about the quality of this Minister’s judgment.  Dr. Gaynor-Dick-Forde went so far as to say that the AG and UDeCOTT were saying ‘one and the same thing’.  This Minister is a highly-lettered scholarship winner and has affirmed herself to be a Christian with a ‘big C’.
  • Independent Senator and UDeCOTT Board member Michael Annisette, gave a strong defence to UDeCOTT in his contribution to the budget debate.  More on this later.

UDeCOTT also made a public statement to compare their legal challenge to Dr. Keith Rowley’s action vs. The Integrity Commission, when he was a member of the Cabinet.  That comparison is baseless and misleading, as are so many other statements in this sorry affair.  Just to list three important differences –

  1. Firstly, Rowley paid his own legal fees while UDeCOTT is using taxpayers’ money to defy the government.
  2. Secondly, Rowley sued in his private capacity – i.e. to preserve his reputation – while it is clear that UDeCOTT is suing as a body corporate.
  3. Thirdly, the Rowley lawsuit was against an independent Constitutional Commission, appointed by the President.  In contrast, UDeCOTT is challenging the acts of an Enquiry whose members have been selected and terms specified by the Cabinet.  The President issued the documents for the appointment of the Commission, but the entire Enquiry is a creature of the government’s creation.  For a State Agency to challenge such an Enquiry is utterly unprecedented and scandalous behaviour.

The original Cleaver Heights allegations have been discredited and the attempt to introduce fresh material on that project was compromised with the surprise appearance of Mr. Carl Khan as a witness on the CH allegations.  The last hearings of the Enquiry had the potential to reveal the extent of the waste and corruption which all citizens know to be a reality.

It is clear for all to see that this important Enquiry is being willfully undermined.  The damage to the credibility of the members of the Cabinet is immense.  Even docile and obedient party members are now asking ‘Who really in charge here?’.

Further legal and reasoned justifications will only deepen the loss of faith.  UDeCOTT Board members are acting in defiance of stated government policy.  Or are they in fact following a policy of concealment?  A Board which was acting in defiance of the PM would have been dismissed already.

Only swift, direct and unambiguous action by the PM can retrieve this fiasco.  The confusing antics by the others are fooling less and less people.

SIDEBAR: Is UDECOTT insolvent?

Amidst all the scandal and name-calling, I am reminding readers that UDeCOTT has filed no accounts for 2007 or 2008.  We are entitled to wonder why.

To continue from last week, I have been involved in a series of email enquiries on this question with Minister in the Ministry of Finance, Mariano Browne.  His replies have advised that all the remaining issues on this audit have been resolved, but that there are non-technical reasons why PWC cannot issue the accounts.  He has not advised what those ‘non-technical issues’ were.

This Property Matters series on UDeCOTT has been running for over 2 years and it is useful to step back from the details and return to first principles.

UDeCOTT is a State Enterprise which lists Value for Money, Professionalism and Accountability among its Core Values.

UDeCOTT has been carrying out a large-scale construction programme and has borrowed most of the funds for that.  While the projects were under construction UDeCOTT’s accountants calculated their value by adding the estimated value of the sites (as if they were vacant) to the cost of the completed works (that is called ‘value’ in the Quantity Surveying/Engineering parts of the construction profession).  That method is an acceptable one.

The problem is that upon completion, those projects have to be put onto the Balance Sheet at Market Value.  That means that the properties have to be valued at the estimated price they would fetch in the open market.  Those are the requirements of International Accounting Standards.  We have repeatedly said that not one of these projects represents value for money.  Not one.  The largely vacant International Waterfront Complex was financed via a 15-year bond which, by my calculations, would now be requiring a monthly payment of the order of $14.0M.  That project is UDeCOTT’s flagship and as such it formed a key part of the Executive Chairman’s report in 2006.  The phrase was – “…project financing on competitive terms without the requirement of a Government Guarantee or Government Letter of Comfort…”  In the absence of either of those, how is UDeCOTT paying the financiers for this project?  More to the point, how is the carrying-cost of the largely vacant complex being shown in the accounts.

The terms of finance secured by UDeCOTT were very competitive – the rental value of the complex, if it were occupied, would barely cover the debt service.  How is the high cost of maintenance to be factored into the property valuation and consequently, the accounts?

One of the recurring themes in this series on UDeCOTT has been the fact that the true ‘break-even’ rent of these projects are in fact unachievable in a market flooded by the very same space.  The plain meaning of that is they are all now liabilities in terms of market value, since their rent is insufficient to cover the real cost of land plus the building.

All these issues are present across the entire portfolio of projects many of which are now completing, post-2006.  If I am right, the accounting effect of all this will be a sudden decline in asset values and a simultaneous leap in debt-servicing/maintenance requirements.

Independent Senator and UDeCOTT board member Michael Annisette made recent comments on the indebtedness and accounts of State Enterprises – http://guardian.co.tt/business/business/2009/09/25/williams-regulate-state-debt

Michael Annisette, president of the Seamen and Waterfront Workers Trade Union, said if regulation is not followed through on a timely basis government must clamp down on those entities.

“I agree that monitoring must be exercised in a timely fashion. There must be oversight and superintending of the accounts in a sustainable and fundamental way, that’s the only way you can have checks and balances on these institutions.

“There are cases where action starts after the fact and not before. The action must be preventative and not reactive,” Annisette said. He said people who are given responsibility are not always accountable. Accountability demands a responsibility if you don’t account you pay the price. There must be a deterrent mechanism in place.” Annisette added. “…The state enterprises are simply ignoring these regulations and no one is following up to ensure compliance…”

Afra Raymond is Managing Director of Raymond & Pierre Limited.  Comments can be sent to afra@raymondandpierre.com

Email to Minister of Finance

From: Afra Raymond <afra@tstt.net.tt>
Date: Sat, Sep 19, 2009 at 2:38 PM
Subject: CL Financial second Mou dated 12th June 2009

To: Nunez-Tesheirak@gov.tt

Honourable Minister,

After your address to the CMMB Budget Breakfast on Thursday 10th September, I asked you when the Ministry of Finance intended to publish the second CL Financial MoU.

You replied that there was no intention to publish that document and you went on to say that the Ministry was seeking legal advice on this. I am relying on my memory here and that is, of course, subject to correction.

For the avoidance of doubt, I am here making a written request for your reply as to when the Ministry of Finance intends to publish this second MoU with CL Financial, signed on 12th June 2009. I would add, for your information, that the original press release on that MoU was emailed to me by the Ministry of Finance upon my request.

Thank you.

Afra Raymond

The Uff Commission – A Quality Finish?

To produce good, lasting results, it is vital that project managers pay particular attention at the closing stages, since the finish is often the most lasting impression which a project can make on its users.  Thus with the Uff Commission.

It requires fortitude to resist the distractions posed by the ongoing discussions on the proposed property tax revisions.  Those proposals were set out in the 2009/2010 budget, which was laid in Parliament on Monday 7th September.  Coincidentally, that was the same day that Professor John Uff, Chairman of the Enquiry, held his press conference.

Property Matters will keep its focus on the Uff Commission.

The first question arising is – ‘Whose job was it to ensure that the Enquiry was properly established in law/Gazetted etc.?’  Just about everyone I have spoken with either knows and is not saying or does not know and expects no answer.  That is a perturbing part of the reality out here, when one considers that this is supposed to be an educational process towards betterment of a significant national activity.

We have read reports of the obscure stance taken by the last Attorney General when faced with questions as to her possible responsibility.  Her quote is sobering – “My whole attitude to this is that I have reverted to private life and I have no comment (on what cause the non-gazetting)…”  That was reported in the Express of 10th September at http://www.trinidadexpress.com/index.pl/article?id=161529620.

We have also seen reports that the Attorney General has taken the necessary steps to ensure that the oversight is addressed and that is encouraging, for all the reasons stated in last week’s Property Matters.  The opposition UNC is also reported to have pledged their support for any measures brought to Parliament in this matter.  Both these are positive signs.

Restoring the Enquiry’s legality is an important part of a good finish to this important public work, but there is a vital ingredient, which has been missing so far.  I am referring to the constant resistance being mounted by UDeCOTT’s attorneys.  Given the PM’s strong statements to the effect that this government has nothing to hide, it is almost unbelievable that these attorneys acting for Calder Hart and UDeCOTT have taken certain positions.  Unbelievable, but true.  It is like a subsidiary company resisting or obstructing lawful instructions coming from its parent company.  The missing ingredient here would have to be that the Board of UDeCOTT be instructed to desist from such actions, since those are contrary to the atmosphere of transparency and probity which the PM is advocating.

As a reminder to readers, please note that UDeCOTT is one of the State Agencies within the Ministry of Planning, Housing and the Environment (PHE).  The Housing Development Corporation is another State Agency within that Ministry.  The point I am driving at here is to remind readers of the actions of that very Minister when the HDC were trying to complete its second submission to the Enquiry.  The entire HDC Board of Directors, save its Chairman, Andrew McIntosh, were dismissed.  The Minister cited a ‘governance crisis’ and no further explanation has been offered.  A new Board was appointed with the former Chairman staying in place and Abigail Cox re-appointed as a Director.  One can only wonder what kind of governance crisis could lead to the sudden dismissal of an entire Board of Directors and the retention of its Chairman.  How could any ‘governance crisis’ emerge, if the HDC Chairman had been an effective one?  If he was ineffective, what is the thinking of a Minister who would re-appoint such a Chairman?

The simple point is that the government can dismiss an entire Board of Directors for some infraction or other cause.  In that very Ministry they already have, in the course of the Uff Enquiry.  The retention of the UDeCOTT Board of Directors, in these circumstances, is a clear and present peril to the PM’s stated notions of integrity in public affairs.  That those UDeCOTT Directors remain in place is a clear vote of confidence from the PM.  Any further attempts by Mr. Hart’s or UDeCOTT’s attorneys to de-rail the Enquiry would be a recipe for a complete loss of the limited confidence the PM now enjoys.

Insofar as the Enquiry’s examination of the HDC’s performance, I make 2 points.  Firstly, I submitted questions on the project delivery shortfall to the Enquiry to direct to the Minister of PHE.  One would expect that the Enquiry would require that the Minister make a written reply to those legitimate queries.  Secondly, the Bob Lindquist report is also in question.  The renowned Canadian forensic accountant, Bob Lindquist, was hired by the HDC, amidst much fanfare, in January this year, to investigate the alleged missing funds from the Cleaver Heights housing project.  We have never been given an update on his findings, but have recently seen reports of this Minister refusing to answer questions as to whether the report has been completed or will be published.  I smiled while reading the Minister’s firm statement – “…We aren’t interested in all the bacchanal and back and forth people seemed to be focused on…” That story is at http://www.newsday.co.tt/news/0,106338.html.  We would also suggest that the Enquiry use its legal powers have the Bob Lindquist report submitted without delay.

Finally, we come to the big and truly disgusting one.  Yes, I am referring to UDeCOTT’s missing accounts.  According to the Ministry of Finance guidelines published in January 2008, State Enterprises are “…required to publish…audited financial statements…within 4 months to (sic) the end of their financial year…”.  UDeCOTT’s last audited accounts are up to the end of 2006.

On Monday 8th June, the Minister in the Ministry of Finance, Mariano Browne, addressed a corporate governance meeting for leaders of State Enterprises.  In doing so, Senator Browne set out some very clear points – “..you are now required to ensure the timely submission of board minutes, strategic plans, financial statements, cash statements of operations and loan overdraft portfolios…”.

Calder Hart told the Enquiry, under oath on 28th January, that all the outstanding issues for UDeCOTT’s 2007 accounts had been resolved and that those accounts should be available in about 2 weeks’ time.  Yet it seems that we are drifting into the closing chapter of this Enquiry without any accounts for either 2007 or 2008.  That is a breach of the published Guidelines and I am again suggesting that the Enquiry use its powers to seek some public account of these colossal sums of our money.

Afra Raymond is Managing Director of Raymond & Pierre Limited.  Comments can be sent to afra@raymondandpierre.com

The Uff Commission – Foundation Failure?

Last week’s Property Matters ended on the note of predicting that ‘amazing scenes would be witnessed’ and here they are, in spades.

The shocking news that the Uff Commission has been functioning in breach of the Commissions of Enquiry Act could only increase the cloud hanging over these proceedings.  From the outset, there have been questions as to the underlying purpose of the Enquiry; the behaviour of UDeCOTT’s and Calder Hart’s attorneys; the continuing probe into the Cleaver Heights housing project and the official silence on the Bob Lindquist findings, to name just a few.  This latest news that the Enquiry was ‘stillborn’ is likely to increase these concerns and deepen the atmosphere of public scepticism.

A key part of my concern is with the official version, which has recently taken root, that the Enquiry must be completed and its report considered by Cabinet, before any possible criminal charges can be laid.  That is a most alarming informal statement that the police are under the direction of Cabinet.  If that is really the case, we are seeing two detrimental things at once.

Firstly, the reason why the vast majority of the Commission’s time has been spent on matters better explored by the Police Service and the Courts.  That focus on investigating alleged illegal acts has denied the Enquiry the time necessary to probe the broader strategic issues which underlie the performance issues in the public-sector construction industry.  To have made a difference, the greater part of the Enquiry’s time should have been spent on probing the decisive issues of project selection, ranking, costs, quality and delivery.  Even if all the wrong-doers are found guilty and punished by the Courts, we have not, in my view, made a proper enquiry into the failures of process that got us into this mess.  If we did not ask the right questions, there is no way we can do better.

Secondly, we are being told, in not so many words, that unless and until the Cabinet approves such, no one is to face criminal charges.  To my mind, that is plainly wrong and could only undermine our progress to ‘developed nation status’.  Despite the stated goal of modernity, we seem to remain in thrall to Sacred Cows.  How to escape the culture?

I was present on Monday morning (7th September) at the press conference held by Professor John Uff, the Chairman of the Enquiry.  The text of his prepared statement can be accessed at http://www.constructionenquiry.gov.tt/News/Professor-Uff-s-Press-Statement-09-07-09.aspx.

Despite several questions, Professor Uff, declined comment on what could be the cause of this failure to properly establish the Enquiry on a legal footing.  It seems that the fact that the Uff Commission was not published in the T&T Gazette only emerged on Friday 4th September and Professor Uff told us that he was only told on Saturday afternoon.

The Uff Commission was a remarkable spectacle, even by our unique standards.  I have never seen so many lawyers in one room and it did make me nervous from the start, for whatever reason.  Two of the original Commissioners and the head of the team of legal advisers to the Enquiry are silk and there was an impressive roll-call of other silk representing their clients –

  • Frank Solomon, appearing for Calder Hart;
  • Russell Martineau (former Attorney General), appearing for NIPDEC;
  • Deborah Peake, appearing for the Housing Development Corporation;
  • Gilbert Peterson, appearing for Dr. Keith Rowley MP;
  • Douglas Mendes, appearing for the Attorney General;
  • Alvin Fitzpatrick, appearing for the JCC;
  • Andrew Goddard, appearing for UDeCOTT.

I am finding it very difficult to believe that so many learned colleagues missed this legal oversight and one has to wonder when it was really discovered.  I leave that there.

What is the solution?  By now, we have heard the conflicting opinions as to whether a retrospective ‘gazetting’ of the Enquiry can imbue it with legality and whether a ‘Validating Act’ of Parliament can have better effect.  However you look at it, there is no doubt that the decisions on what, if anything, to do and how to do it, are for the government to make.  That is where the whole situation gets fascinating, since this new twist to the Enquiry is both an opportunity and a threat to the government.

Throughout this process our PM has been unswerving in his support of UDeCOTT as a flagship State Enterprise, doing outstanding work on the road to ‘developed nation status’.  In his historic address to the Senate on 13th May 2008, the PM was absolutely clear that his government has nothing to hide and further, that he was confident that any Enquiry would vindicate their faith in UDeCOTT.  Considerable political capital has been invested in supporting UDeCOTT and the stakes are clearly very high.

At this point, cynics might say that the Enquiry has uncovered troubling issues in the operation of UDeCOTT, which must have been of growing concern to the PM, given his earlier declaration of faith.  One could even go further to say that the recent discovery of this legal oversight would give a nervous government a handy way to thwart what could have been a damaging report.

I have another view.  It seems to me that the PM’s declaration of support was an unmistakable statement of integrity and purpose.  It would be impossible to resile from that position without inflicting deep damage to ones own notions of integrity in public life.  I cannot easily imagine our PM leaving this situation to fester without ensuring that the necessary legal steps are taken to ensure the Enquiry’s legality and proper completion.  It would be an ‘own-goal’ of shocking proportions and it seems to me very doubtful that the PM would allow that outcome.

Which leads to the dreaded possibility of the ball being ‘kicked into the long grass’.  Yes, I am referring to the probability of this entire Enquiry descending into a legal mangle of epic proportions.  Professor Uff did say that he was trying to have the issues resolved by agreement.  Given the atmosphere at the Enquiry, I am doubtful that an agreement between the parties is possible, or indeed, even desirable.

I have taken the unusual, and possibly unwise, step of making a political prediction in this column and yes, only time will tell.

SIDEBAR

I am happy to admit my error in last week’s reference to V.S. Naipaul’s classic phrase – ‘…amazing scenes were witnessed…”, it is, of course, from the ‘House for Mr. Biswas’, not ‘Miguel Street’.  I must have been thinking of busy men eternally building a series of mysterious things until the police arrested them.  The small boy would ask the busy men – “What all-you making?” and he always got the same enigmatic reply “We making the ‘thing-without-a-name…”

Afra Raymond is Managing Director of Raymond & Pierre Limited.  Comments can be sent to afra@raymondandpierre.com

The Uff Commission – The Final Chapter

After a necessary and prolonged pause to review other matters of public interest, Property Matters returns to the high-profile Uff Commission as its final hearings are set to begin on Monday 7th September.

This series of hearings was not a part of the original agenda for the Commission of Enquiry.  It was only announced at the close of its last sitting in May that the Commission would sit again to hear further evidence on the Cleaver Heights project and the testimony of Mr. Carl Khan.

I already wrote here on 18th January 2009 of the vigorous stand taken by UdeCOTT’s and Calder Hart’s attorney in the early stages of the Enquiry.  At the time, I was very critical of their stance – “…It is difficult to imagine a less-cooperative or more disdainful stance from a party under investigation…”

In their latest sally on 24th July, these attorneys issued a 12-page letter to the Uff Commission, challenging the impartiality of the Commissioners.  That letter made allegations against Israel Khan, Keith Sirju and the Chairman, Professor John Uff.  It ended by calling for all 4 of the Commissioners to recuse themselves.  Ours is a country which can guarantee a daily surprise, but this one took the prize.  UdeCOTT was continuing to resist the lawful investigation being undertaken on behalf of its owners, the people of this country, as represented by their government.

There were reports on 6th August that the Board of UDeCOTT was instructed to withdraw those legal threats.  http://www.trinidadexpress.com/index.pl/article?id=161513988 UDeCOTT withdrew those threats, albeit conditionally.  UDeCOTT placed full-page advertisements in the press to deny the statement by Dr. Keith Rowley that they were attempting to ‘de-rail’ the Uff Commission.  The threat of legal action by UDeCOTT and its rapid withdrawal is indicative of a deep divide between the Cabinet and this flagship State enterprise.  It is the only way to make sense of the UDeCOTT Board’s incredible decision to attempt to thwart the government-appointed Commission.  The published denials made no sense at all.  You really have to wonder how many people believed UDeCOTT’s assertions that they were not trying to ‘de-rail’ the Uff Commission.  Then on 11th August, Israel Khan SC, resigned.

There have now been further attempts by UDeCOTT’s lawyers to dislodge Commissioner Kenneth Sirju, with allegations of conflict of interest.  The Commission is trying to overcome those objections by seeking consensus on the Cleaver Heights part of the session and that is expected to be decided on Tuesday 2nd September.

The main issues arising at this stage are –

  • The local limits of integrity standards – The accusations of conflict of interest made against Commissioner Sirju seem to suggest some real limits as to the extent to which we can effectively import first-world norms as to integrity and conflicts of interest.  We need to develop our own effective norms on integrity in public affairs, but, in this case, the deciding factor would be the declarations made by Commissioner Sirju.
  • Cleaver Heights – Apart from the turbid result of the Enquiry into the ‘missing money’, there are two serious side-effects of the Cleaver Heights saga.  Firstly, the inimical effect of the State seeming to target a perceived critic/rival of the PM.  In my view, that widespread impression of the State targeting Dr. Rowley is toxic to our nation developing healthy habits of public debate and dissent.  Secondly, the fact that we seem to have become distracted by Cleaver Heights and lost the opportunity to delve into substantive questions on the poor output of the national housing program.  As stated in Property Matters of 25th January, the HDC is producing less than 50% of the reduced annual target of 8,000 new homes.  The Uff Commission was appointed to enquire into the public sector construction industry and it is now drawing to a close with no time spent on this strategic shortfall.  That is a real shame.
  • The personal aspect – I have never encouraged any discussion or interest in the personal lives of the key players in this Enquiry, notably Calder Hart and his family.  To my mind, that was just sheer bacchanal which distracted from the main issues of poor process.  That said, and having heard much of the evidence, it would be interesting to see if there is indeed any ‘fire’ here, amidst all the ‘smoke and mirrors’.
  • UDeCOTT’s accounts – It is impossible to enquire into the operations of a commercial company without considering its financial situation.  On 28th January, the CoE heard sworn testimony from the Executive Chairman of UDeCOTT, Mr. Calder Hart, while he was being cross-examined by Alvin Fitzpatrick SC, to the effect that the 2007 accounts would be ready within a week a or two.  Yet we seem to have drifted into a situation in which the Commission will have to deliver its report without having considered any accounts from UDeCOTT after 31st December 2006.  If that were the case, it could have the effect of significantly discrediting the Commission’s findings as to UdeCOTT’s operations.

Our locally-grown, Nobel Prize-winning author, V.S. Naipaul created, in the seminal ‘Miguel Street’, a pregnant phrase which has come to typify this place…“…amazing scenes were witnessed…”  I expect the final series of hearings of the Uff Commission to contain many ‘amazing scenes’ as parties battle to defend their honour and, in some cases, preserve their liberty.

SIDEBAR: – The upcoming agenda

The expected agenda for the final sitting of the Uff Commission includes –

  • The testimony of Carl Khan – This is the surprise witness who gave his evidence on 19th May on his previous marriage to the present wife of UDeCOTT’s Executive Chairman, Calder Hart.  Khan also referred to the Mrs. Hart’s relatives.  This would be the first evidence to the Commission on the matters raised by Ramesh Maharaj in Parliament on 23rd May 2008.
  • The Cleaver Heights Saga – At the end of May, the government announced the new hearings for the Uff Commission to include further evidence on the Cleaver Heights project.  The initial report on Cleaver Heights was prepared by Mr. Jerry McAffrey of UK-based construction consultants, ACUTAS.  That report did not support the original allegations, made by the PM during the budget debate in October 2008, as to a ‘missing’ sum of money, said to be $10M.
  • Mrs Sherrine Hart – There have been recent reports that Mrs. Hart will be testifying in this session of hearings.

Afra Raymond is Managing Director of Raymond & Pierre Limited.  Comments can be sent to afra@raymondandpierre.com

Condonation

The word Condonation has been turning through my mind since the start of this fiasco.  It refers to a pattern of conduct in which someone who could, or should, have done something to stop wrongdoing does nothing.  The silence of the person practicing condonation effectively allows the continuance of the wrongdoing, even if that person’s actions do not quite amount to conspiring with the wrongdoer.

To put it plainly, in those families where children are abused by one parent, it is almost always the case that the other parent knew.  The continued silence of one parent allows the abusive one to continue.  Even if the other parent did not commit any act of abuse, theirs is a series of inactions which allow wrongdoing to continue.  It could be argued that the silence can imply forgiveness.  Yes, that is condonation.

In relation to the CL Financial bailout, there is plenty of apparent condonation.  So much so that fresh perils could now be coming toward us.

My starting-point for these concerns was the startling story that a group of investors in the Stanford International Bank Limited have filed a lawsuit against the Antiguan government, claiming some $8.0Bn USD.  The lawsuit also alleges that the Antiguan authorities “became a full partner in a fraud and reaped enormous financial benefits from the scheme“.  My main reading for that case came from the Trinidad Express column by David Jessop on 18th July 2009 ‘A case that hits home’ – that column can be accessed at http://www.trinidadexpress.com/index.pl/article_opinion?id=161505942.

One of the telling points in that Antigua situation is that that case is filed in the USA and so one has to wonder whether the small-island arrangements can withstand a US-style court case.

Some people might even be asking what has this Antigua case got to do with us here in T & T.  After all, our government has pledged to bailout all policyholders and depositors, right?  Not so fast, because it is a condition of the CL Financial bailout that we are not assisting overseas policyholders and depositors.  Whatever the level of comfort being enjoyed by locally-domiciled policyholders and depositors in CLF Financial, those who invested from overseas will have to get compensated in some other way.  Will they choose a Stanford-type lawsuit?

The implications of this possibility are sobering, when we consider the Antigua case further.  When we consider the tangled web of connections here in our country, can we seriously expect to survive US-style litigation?

We have a Minister of Finance who is also a shareholder of the failed group, together with a Governor of the Central Bank who warns of investments which are ‘too good to be true’, yet holds deposits with CIB.  The Minister of Finance, in her defensive statement to those accusing her of conflict of interest, makes it clear that when she realized that the group was in trouble, she put her family interests before those of the nation.

In addition we have a ruling party which accepted substantial donations from the CL Financial Group and yes, the party’s Treasurer was also the Finance Director for the group.  The CL Financial group distributed dividends to its shareholders after writing to the Central Bank for urgent financial assistance and as yet, none of its Directors have been censured.  The shareholders of CL Financial have also been allowed to keep their dividends as the group drifted toward the rocks.

Some of the assets pledged to match the cost of the bailout are already pledged elsewhere, something the CL Financial negotiators must have known.  The Governor of the Central Bank is reported to have said that all the assets are pledged elsewhere – see http://guardian.co.tt/business/business/2009/04/08/govt-left-empty-handed-cl-financial-bailout .  Despite the prohibition against selling any assets, CL Financial is found to have been trying to sell its shareholding in CLICO Energy just 5 days after signing the MoU.  This was reported at http://guardian.co.tt/news/general/2009/03/24/duprey-energy-fire-sale-raise-severance-money .The ‘fit and proper’ guidelines published by the Central Bank are not implemented in the CL Financial case.

In addition, the new CEO of the principal company, CLICO, tells us that some $5.0Bn is missing from that company’s statutory fund and cannot be found.  This was reported at http://guardian.co.tt/news/general/2009/03/01/where-money-gone .  There has been no further official word on the missing funds, despite the involvement of Bob Lindquist, KPMG Forensic and the continuing assistance of the CL Financial chiefs.

None of this has been denied or contested.

It is all so incredible that no fiction writer, not even one of the more outlandish ones, could ever concoct such a story.  A perceptive editor might even reject it, but the fact is that we have to deal with these elements.

In an earlier column in this series, I commented on the democratic deficit which allowed our elected rulers to proceed with virtual carte blanche, the law being the only impediment.  Some would say that that arrangement is a workable one which allows the ruling party appropriate scope within which to run the country.  That is not a debate for this space, suffice to say that the CL Financial situation is posing a fresh series of questions.  Those questions arise in the aspect of scale – to get proverbial for an instant

Q – ‘Where does an Elephant sit?’

A – ‘Anywhere it wants, silly!’

Point being that an elephant is so huge that if it decided to sit, we would all have to make way for it, whatever the inconvenience.  In both cases, the Stanford Investment Bank and the government of Antigua, as well as the CL Financial group and our own government, the company was so huge that it exerted a serious influence on national affairs.

Economists use the terms ‘externalities’ or ‘external costs’ to refer to quantifiable costs which are not directly considered as an aspect of the matter under examination.  In this case, the externality is that none of the 3 major political parties are speaking on this monumental event.  The silence is choking and even the government, with all its huge publicity machinery, is only speaking when it has to.  Apart from some early ‘sound-bites’, the UNC is absolutely silent.  Even a party with such a stable of noted ‘firebrands’ is silenced by the deep relationship between Lawrence Duprey and its leadership.  In the case of the ‘third party’ CoP, it is even more galling since they have a ‘front bench’ of unmatched depth in the fields of finance and economics.  One can only wonder at the reason for their silence.

That silence is a huge externality imposed on us all by the very size of the CL Financial group.  The irony is that the very issue which needs to be debated is the one on which we are silent.  That is a colonial pattern of public discourse and it is inimical to our nation’s development.  Such are the consequences of condonation.

Emancipation

This week the meaning of Emancipation is considered alongside the CL Financial fiasco.  It is a painful, but necessary, task.  Those of us concerned to commemorate the Emancipation of African people from slavery must have the courage and clarity to reflect on our past, both the distant and the recent.  In reflection we can find direction and perhaps, the beginning of a solution.

How, if at all, is the CL Financial fiasco connected with the story of Emancipation?  I deliberately use the word ‘story’ since it is clear that there are many versions of this period in our history.  I say ‘our history’ because, whatever the race of today’s readers, the Emancipation journey is of vital concern to the progress of humanity.

There were notable and honourable African leaders who put up strong resistance to the efforts by Europeans to enslave their people.  But the sad and inescapable fact is that there were others who thought of the process differently.  It is a painful matter to discuss, but the fact is that some African rulers collaborated with the European slave-traders to capture and sell their people.  Not all, but enough to make the difference.  Without getting into the entire history, which is way beyond the scope of this column, the actions of that group of rulers were enough to ensure the success of the entire monstrous project.  The Atlantic slave-trade shaped large elements of today’s world and we have been trying to build a new one ever since.  Yes, an immoral and greedy group of rulers put a greater value on their personal enrichment than the well-being of those they were entrusted to lead.

The entire society paid the price for the selfish ambitions of these rulers.

One of the most striking things about the CL Financial fiasco is that Lawrence Duprey is one of us, an indigenous Caribbean man. Yes, a black man, with African blood flowing through his veins and that is something that has not formed part of our public discussion so far.  One of the strangest features of these times is how, despite the over-supply of media, critical issues are not discussed.  When one considers that the vast majority of the population of the region comes from an African background, it is striking that Lawrence Duprey is the only such tycoon in the region with his level of profile.  But wait, I almost forgot that there is another one.  Yes, I am speaking about Michael Lee Chin.

Whichever way you slice it, this is extremely telling and as a result Duprey carried a peculiar set of expectations.  Because of his unique profile as a black man, the fact is that Lawrence Duprey was the recipient of widespread admiration, envy and wonder.  That is our society and that is one of the ways we deal with its ugly realities.

To go further, the leading people in the CL Financial team were also black.  Yes, most of the CL Financial team have African blood flowing in their veins.  Yes, by now I can hear some readers saying things like – ‘But X or Y doesn’t think that they are Black’ or ‘So what?’ or ‘Exactly what is your point?’.  That kind of skepticism is expected when one discusses this kind of issue.  In fact it is my view that the underlying attitude is the very problem.

At the same time, let us note that the regulators are themselves black people.  Yes, the picture I am painting is that the main players are virtually all black people – the Cabinet, the Central Bank and the CL Financial/CLICO chiefs.

We African people have come from far, both metaphorically and physically.  We now find ourselves in a sorry place with this CL Financial fiasco.  We have a particular responsibility to do better this time around.  There is no escaping that fact.

CLICO was built around the ideal, by its founder Cyril Duprey (Lawrence’s cousin) that ‘Give a man service, give a man value and he will give you more business’.  Simple, but strong, those were the foundation stones of CLICO.  Truth prevailed and with hard work the company prospered.  CLICO developed unprecedented levels of investor confidence, as a black company (indigenous) in which one could have faith.  Given our history as African people, that level of investor confidence is no small or incidental thing.  It could only have been the result of solid vision and diligent long-term application, to name just two of the qualities of the founder.

CL Financial was established as a holding company and rapid diversification followed, with investments in a number of areas unrelated to conventional insurance business.    As a result of its success, CLICO was able to provide most of the cash to pay for the group’s unorthodox expansion.

At that stage, the activities of the group shifted to reflect the new ambitions of its new chiefs, most notably its Executive Chairman, Lawrence Duprey.  Those activities ultimately undermined the stability and health of the whole.

The Emancipation story has many lessons, but the central one, from my point of view, is that many of our rulers lost sight of the balance between private wealth/privilege and the public good.  Are we doing better now?  For us, in this Emancipation week, it is useful to consider the extent to which we have learnt from our past.

The actual behaviour of the CL Financial chiefs and the group’s shareholders in this moment is instructive.  At every turn, the public good has been shafted in favour of private wealth.  From the payment of dividends while CLICO’s Statutory Fund was in deficit to the payment of dividends to CL Financial shareholders after they wrote for urgent financial assistance from the State.  The pledging of assets which had already been pledged and the attempted sale of assets contrary to the original MoU.  The shocking statement of CLICO’s new boss that $5.0Bn was missing from its Statutory Fund and the utter silence subsequently as to its whereabouts.

All this shocking behaviour and no sign of any reprimand, charge or censure from our rulers.  Instead, we are told that our entire Treasury has been pledged to assist savers and restore shareholder value.  Trinidad & Tobago is a land of many firsts, but this is a tragic one.

How did we get to the point of pledging our common wealth to restoring value to a few privileged people who are showing no proper regard for the public good?

Do we have the moral fibre to recognize what has gone wrong in our past and behave differently?

Figuring it out

“We are not serious,

Very few conscious,

So I cannot agree wid mih own chorus!”

from ‘Trinidad is Nice, Trinidad is a Paradise’ by Brother Valentino (Emerol Philips)

The 12th June agreement is to be voted on by CL Financial’s shareholders on Wednesday 15th July.  By the time this is published, there ought to have been a decisive vote on the matter.

I maintain my position that the 12th June agreement is taking us in a completely different direction to that outlined in the original MoU of 30th January.  I am also saying that the new direction is a detrimental one for this country with not even an attempt being made to explain the underlying rationale.

The flagship of the CL Financial group was CLICO, according to the Central Bank Governor, on 13th February – “In the CL Financial business model, Clico was a major source of cash much of which was used to finance investments held in the name of other entities in the Group.  In this model, Clico has ended up as guarantor for many of the Group’s assets most of which are heavily pledged.”  CLICO’s most successful product in this model was a high-interest one which promised more than any other investment available in the market.  Even at those high rates of interest promised to their investors, it was cheaper for CL Financial to raise funds in this way than to borrow.

CL Financial is no longer able to rely on CLICO for a source of cheap funds, so we are all thrust into a new, perilous position.

CLICO is now unable to offer the highest rates of return which once distinguished its products and is suffering an unwelcome migration of its better sales agents.  What future for CLICO?

We were often regaled with stories of Lawrence Duprey’s prowess, as a commercial negotiator, in securing the best terms.  It seems to me that CL Financial has arranged a new line of finance from the Treasury to go forward.  We are not told what, if any, interest rate is being charged by our Treasury for this massive line of unsecured borrowing.  Overdue Tax payable to the BIR attracts a punitive interest rate of 20% per annum, being rightly regarded as the taxpayers’ unsecured borrowings from the Treasury.  Are we seeing a plain case of double-standards?

As part of the new agreement, Lawrence Duprey has resigned from his Directorships of the companies in the CL Financial group.  He has retained his significant shareholding and it is clear that Michael Carballo, the group’s finance director, continues as his representative.

Some of you may think this is all OK, since the public funds being advanced to clean up this fiasco are ultimately protected by CL Financial’s agreement to sell assets so as repay.  Time to think again.  The assets which were pledged in the original MoU, were already pledged elsewhere.

Yes, the CL Financial chiefs tried to sell the same thing twice.

But what about the assets which were not pledged?  Oh, those were treated differently.  For example, CL Financial agreed to sell its majority shareholding in CLICO Energy Company less than a week after agreeing to seek the State’s prior written approval to any asset sales.  That action triggered the Central Bank’s legal action to both halt all further assets sales and demand a declaration of all assets.

Yes, CL Financial chiefs tried to sell off one of the remaining assets, contrary to the terms of the MoU.

So we have Republic Bank and Methanol Holdings shares being effectively unsaleable, since they are reliably reported as having been fully pledged before the original MoU.  Next we have the aborted attempt to sell other assets, not yet pledged.

So what is left?  Wait, what about the Liquor and spirits brands, the Angostura and Jamaican rum companies and such?  Well, according to its most recent Notice to Shareholders, Angostura is itself owed some $633M by CL Financial.  Given that its 2007 accounts disclose sales of $818M, that is a colossal amount of money for Angostura to be owed.  So much for that.

As for those Jamaican Rum assets, Lascelles de Mercado is Jamaica’s leading spirits company, controlling the top rum brands of Wray & Nephew and Appleton.  CL Financial owns about 87% of Lascelles de Mercado, which still has some 1,500 minority shareholders.  The Jamaica Gleaner of 17th June (at http://www.jamaica-gleaner.com/gleaner/20090617/business/business1.html and http://www.jamaica-gleaner.com/gleaner/20090617/business/business4.html) contained two instructive reports on that CL Financial subsidiary.  The first one highlights the payment of dividends to holders of ordinary shares for the first time in 2 years – “Lascelles de Mercado said Monday it would pay dividend amounting to $14 per share, ending a drought for ordinary shareholders who have received no returns for at least two years.” That subsidiary appears to be doing well.  The second report tells us  –

  • “Duprey…has bowed out as chairman of CLF, but remains chairman of Lascelles.”
  • Referring to the 12th June agreement – “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.

  • There is more – “”So the question of selling does not arise,” he (Carballo) added, referring in this instance to Lascelles.”

So there you have it.  If we are to believe Michael Carballo – and I see no reason to doubt him – the good assets which are not pledged are to be retained by CL Financial.

Having lost grip of CLICO and its positive cash-flows, the CL Financial chiefs have now negotiated a new survival strategy.  On the other hand, we have now agreed to finance the recovery of the CL Financial group on terms which are unknown, to restore the value of its assets and return it to its shareholders.

The rueful regulator

The Governor’s statements on 13th February are really perturbing. On 13th February, at his first (and only) CL Financial briefing, the Governor of the Central Bank said – “Meanwhile, with the assistance of the Manager appointed to Clico by the Central Bank, we have made much progress in clarifying the present financial position of CLICO, which unfortunately, appears to be much worse than we had envisaged.”  How could it be much worse?  Are we being told, in not so many words, that CLICO’s filings and accounts were misleading?  Or did the regulator make a poor reading of the information?

Party of Parties

This week’s title is as deliberate as it is appropriate.  The focus last week was on certain aspects of the 12th June agreement with CL Financial to show the fundamental shift from the original MoU of 30th January.

This week, it is time to focus on the parties to the new agreement and the way in which they are dealing with each other.  The differences in treatment are plain and pregnant.

CL Financial are said to have secured the support of about 66% of its shareholders in relation to that agreement.  CL Financial published a Notice to Shareholders of a meeting to be held on 30th June to seek the approval of 75% of the shareholders to the 12th June agreement with the State to appoint a new Board with the mandate described in last week’s column.  The shareholders were to be offered an opportunity to read the agreement and make up their minds as to whether they would vote in support of it.

There was a subsequent Notice to Shareholders which stated that the Board had decided to defer the voting-meeting to respond to certain concerns which had been put to them by shareholders: the shareholders were still invited to attend on the 30th to read and consider the agreement.  It was reported in this paper that a shareholder had written to the CL Financial group finance director, Michael Carballo, to make certain demands in return for his vote in support of the agreement.  There are also other reports of a block of shareholders, led by a Duprey family member, making demands before their support could be assured.

As I write, there is no word as to when CL Financial will be holding the decisive meeting to solicit shareholders votes on the new agreement.

Some serious questions now arise and these would include –

  • The rationale – As outlined last week, the new agreement marks a significant shift from the goals and terms of the original MoU.  What is missing here is the rationale behind the shift in strategy.  It is not to say that there can be no grounds for changing the terms of agreement in the course of large-scale and complex situations, but rather, that there ought to be a cogent rationale for such a drastic shift.  What is the reason to move from a scenario of support with consequent liquidation of assets to match the cost to the Treasury, to one of restoring asset value?  Are we being told, in not so many words, that the assets of CL Financial are in fact insufficient to meet its liabilities?  Is it fair, in all the circumstances, for the public to make that assumption?
  • The new audits – Some time ago, we were informed by the Minister of Finance that audits were being performed on the CL Financial group by Ernst & Young and KPMG.  There have also been several reports that the renowned forensic accountant, Bob Lindquist, was engaged to audit CLICO.  Where are the audit reports of those firms?  Surely, by now the Minister of Finance and the Central Bank would have had those interim audit reports.
  • The New Agreement – Are we to take it that the new agreement is an irrevocable commitment by the State?  Do CL Financial’s shareholders possess the sole right to veto?
  • Lack of Public information – The new agreement remains invisible to the public and there is no word as to when it is to be published.  Given that we taxpayers are to pay for this entire operation, it seems highly unsatisfactory to me that we are not yet in a position to evaluate the agreement.
  • The question of scale – The newly-reappointed AG is reported to have said that he is concerned over how our country will deal with a $97Bn commercial enterprise in the context of a $150Bn national economy.  What is the true nature and extent of the commitment we have now entered?
  • The character of the parties – As explained last week there are legitimate, sobering concerns over the conduct of and relationships between the parties to this huge agreement.  The conduct of CL Financial’s chiefs and the shareholding in that group by the Minister of Finance would give any reasonable person cause to pause.  The huge donations made by CL Financial to the ruling PNM is yet another reason to frown.  The treatment being enjoyed by the CL Financial shareholders at this point, having been paid dividends from a group which would seem to have been essentially insolvent, to now being invited to consider the new agreement, is vexatious.  Hence the title of this week’s column.

Where is the taxpayer in this huge, long-term and expensive set-up?  I am, once again, demanding that we, the public, be given the information necessary to support the new agreement.  This is a glaring case of democratic deficit, in which our elected rulers feel free to enter onerous agreements without affording us the basic information which company law would demand on behalf of shareholders.  There is little doubt that the new agreement will impose heavy burdens on our economy and widespread support will be essential to preserving the investor confidence and legitimacy which is at the heart of this unprecedented mission.  There is no better way to start winning that support than to start sharing information with the public in the same fashion as enjoyed by the CL Financial shareholders.  We do not want a party with General Admission having the worst view and only the VIPs enjoying the best view…especially when we in General Admission are paying the price of the whole party.  Not so.

SIDEBAR

We have all read the public statements by the newly-reappointed Attorney General, John Jeremie, that he is intent on taking the necessary action to enforce the law if wrong-doing is discovered at CL Financial.

We need to determine if our newly-returned AG is indeed a serious upholder of our laws.

Mr. Jeremie, it is reliably reported that CL Financial paid its shareholders dividends of $3.00 per share on 16th January, some 3 days after writing to the Central Bank for urgent financial assistance from the State.  Now that the State-appointed Directors are on the CL Financial Board, it is possible to obtain evidence of that, with or without the co-operation of the Minister of Finance (herself a CL Financial shareholder).  I am putting it to you that, as a matter of urgency, we need to hear from you on three questions –

  1. Firstly, is such a payment of dividends a legal act?  Can such an act be considered to be fit and proper?
  2. Secondly, did that reported act take place?
  3. Thirdly, what steps, if any, are you now prepared to take against the CL Financial Directors who authorized payment of that dividend?

Fit and Proper

On Friday 12th June, the Acting Minister of Finance, Conrad Enill, signed a new agreement with the CL Financial chiefs.  That agreement has not yet been published, so we have to rely on the Ministry’s press release and news reports. A further new spurt of information has been the story in the Sunday Express of 21st June, which detailed huge campaign donations by CL Financial to the ruling PNM. We have also seen a strong denial from PNM Treasurer and Minister in the Ministry of Finance, Mariano Browne, that CL Financial enjoys any undue influence over government policy as a result of those donations.

Those events form the background to this week’s column –

Change of Course

This new agreement has been presented to us as a supplement to the original one, intended to facilitate its implementation.  The Ministry’s press release informs us that “….This new agreement is designed to give substance to the Memorandum of Understanding (MOU) of January 30th 2009…“  Having considered the available material, I have come to view this new agreement as a complete change of course from that outlined in the original MoU.    The original MoU spoke to the crisis at 4 of CL Financial’s subsidiaries – CLICO, Clico Investment Bank, British-American Insurance and Caribbean Money Market Brokers.  The process outlined was one of immediate State financial support of those companies, with CL Financial to pay back the taxpayers’ funds advanced by agreeing to sell their best assets.  Those assets included majority shareholdings in Republic Bank Limited and Methanol Holdings Trinidad Limited.  The stated goal at that point was to stabilize the entire financial system against the loss of confidence which would surely have followed a collapse of those companies.

The striking features of the new agreement are –

  • New CL Financial Board – The new agreement installs a new Board of Directors for CLF: stated to comprise 4 Directors nominated by the State and 3 nominated by CL Financial.  Michael Carballo is CL Financial’s Group Financial Director and has been retained as a Board Director under the new agreement.  Carballo has been reported as stating that the CL Financial group will be returned to the control of its shareholders after a maximum of 3 years.  The State is now taking over the strategic management of the CL Financial Group.  That was never part of the original MoU.
  • Asset Sales – The Ministry’s press release also states that– “…The MOU imposes requirements on CL Financial to sell its assets in order to repay GORTT for advances and other costs arising from closure of CIB and the restructuring of CLICO and BAT. The achievement of this objective requires continuing goodwill, cooperation and participation by CLF over a period of several years since there is no intention of engaging in a fire sale of CLF assets…”  The emphasis is mine.  For some time now I have been critical of the obscure official rationale for deferring the asset sale agreed to in the original MoU.  I have gone so far as to label that rationale as being a stupefying one.  Here is official confirmation that that is the new policy.  No attempt was made in this rounds to give a rationale for deferring the sale of these assets.  Dry so.  That was never part of the original MoU.
  • Shareholder Value – The new agreement seems to have, as one of its central features, a mission to rescue the CL Financial group on behalf of its shareholders.  Readers should note that CL Financial has only 325 shareholders.  Angostura Ltd. is an important part of the CL Financial group and their Notice to Shareholders published on Saturday 27th June is instructive – “…Shareholders should also note that on June 12th 2009, a formal agreement was signed between CLF and the Government of Trinidad & Tobago (GORTT), whereby a new Board has been constituted at CLF.  The mandate of the new Board, empowered by the GORTT will be to restructure the debts of the CLF group to ensure that they are properly satisfied and also that the Parent company and subsidiaries are placed on a proper and sustainable path to achieve growth and value optimization…”  The restoration of shareholder value was never part of the 30th January MoU.

Entirely new objectives are being presented as ‘giving substance to’ the original MoU.  The examples cited here are enough and one expects to find more food for thought when the document is published.  The 30th January MoU was published on the Finance Ministry’s website on 9th April – about 10 weeks after its execution – which means that this second agreement is not yet, on that basis, overdue.  However, given the increased burdens being imposed on the Treasury and the silence on critical aspects of this unfolding fiasco, I am calling for it to be published without delay.

Let us re-cap how we got here, so that we can understand the moment.

Our Treasury was originally pledged to bail-out savers in 4 troubled finance houses.  The use of public funds to stabilize the financial system by ensuring that depositors and policyholders were safeguarded was itself questionable on grounds of moral hazard, but at least the Treasury was to be repaid by sale of the assets held by the parent company.

We have now learnt several new things –

  1. CLF assets, specifically pledged in the original MoU, were already pledged elsewhere.
  2. CLF, having agreed not to sell or pledge any further assets, agreed to sell assets to German investors, less than one week later.
  3. CLF, having written on 13th January for urgent financial assistance, issued dividend cheques to shareholders 3 days later.
  4. The Minister of Finance is herself a shareholder in CLF.
  5. The CLF group is a major donor to the ruling PNM, even during those years when the CLICO Statutory Fund was in deficit.

We are now being told that the government is to restore shareholder value.  Cool so.  As yet, we have no report from the KPMG team or the Bob Lindquist team examining the books.  No attempt at explanation or providing background information.  Our Treasury has now been pledged to assist the 325 shareholders of the CL Financial group.

Now that the State is in control of the CL Financial board will they now be obliged to submit the affidavit identifying all their assets?  Will the ongoing Court case between CL Financial and the Central Bank be abandoned, now that shareholder and taxpayer interests are so completely aligned?

The Governor of the Central Bank, speaking at the press conference on 30th January made a penetrating point – “…In the Bank’s view however, the current financial difficulties being faced by CIB and Clico have more to do with…excessive related-party transactions which carry significant contagion risks …”

‘Excessive related-party transactions…’ – I could not agree more, Governor.