Tag: Trinidad

Do What Is Right

Once again, the information flow on this fiasco is so erratic that one has to wonder if that is intentional.  We not so easy to destabilize.  Madam Minister, it is our taxpayers’ money that you are spending, so the time to account is now.

In the history of our region’s development, it is my view that this episode is arguably the most shattering failure – economically, financially and regionally – in living memory.  It is important to distinguish this from externally-propelled events since it is Caribbean people, principally from our country, who were the architects and engineers of the CL Financial empire.  We are the driving force in this fiasco, both those who designed and built the seductive savings and retirement plans, as well as those who invested with CLICO/CL Financial.  Those who designed the fancy car and those who got on for the ride.  Those who did not take the fancy ride are being asked – no, told! – to help those people injured in the crash of the largest and fanciest ride on the road.  We are very kind people and it is never any problem to help those who are in need, but please don’t tell us that the ‘driver lost control of the vehicle’.  Time to change gears and shift our thinking.  Who is our leader?

Some of the important aspects of this situation are –

  1. CL Financial letter – The CL Financial letter of 13th January which requested urgent financial assistance from the State has never been published.  Yes, that is the appeal signed by Mr. Duprey 3 days before dividends were paid on 16th January.  We have never even been told why the letter has not been published.  It is no excuse that these items of correspondence are never normally published.  The sheer size, financial consequence, political linkages and regional impact of the CL Financial failure are all sound reasons to declare this an exceptional case to the extent that a new standard of transparency is required.  That 13th January letter is obviously part of the public record yet it is not available.  Why is that Minister?  Could it be that that letter contains information which reveals too much about the true background to this tangled affair?  Madam Minister, what is your interest in further secrecy on this aspect?  The atmosphere is heavy with claims, counter-claims and, most oppressive of all, the scripted silence of the chiefs.  It is my view that your continued concealment of this vital document is only going to feed an unhealthy degree of skepticism, which is already present in this sorry affair, for reasons we are all too familiar with.
  2. The new MoU – We are told that a new agreement was signed with CL Financial on Tuesday 2nd June.  I have been unable to get sight of that agreement but there are reports that the State has now taken control of the troubled group.  What are the terms of that agreement?  Does CL Financial have assets sufficient to cover their liabilities?  Is there an option to call on the assets of the CL Financial Directors and Officers to settle any shortfall?  When can we expect the new MoU to be published?
  3. The Dividend – We have heard the Minister attempt a rebuttal of the parliamentary allegations she faced on early withdrawals of her various CIB deposits and the potential conflict of interest issues.  Minister, we have that part of your message, even if only a few of us have accepted your version.  That is all part of public life, but what we are not hearing from you is any statement on the CL Financial dividend.  You are a noted attorney and former lecturer at the Law School in UWI, so what is your learned opinion on the payment of dividends by an organization which was unable to pay their financial obligations in proper priority?  Am I asking an improper question?  Are we, as a country with ambitions of becoming an International Financial Centre, going to let these shareholders keep their dividends in this failed group?  That would be a real shame and completely incompatible with our stated ambitions.  Minister, your continued silence on these aspects of the fiasco of the century will only increase the clouds of suspicion and disrespect now swirling through the public mind.
  4. CLICO’s new business model – The newly-appointed Chairman of CLICO, Dr. Euric Bobb, has made recent statements on the development of a new business model for CLICO.  The recovery of this company will face challenges from the departure of key sales agents; the withdrawal of their high-return products, which were CLICO’s unique selling point; and of course, the missing $5.0Bn from the CLICO Statutory Fund.  It did not help that the new board released a high-profile series of advertisements in February which went to pains to assure the public that it was ‘business at usual’ at CLICO.  That is absolutely the last message they could, or should, have been wanting to send.  The CLICO model is what put us into this mess and the new board should have been making efforts to point out that they would not be repeating the errors of the previous CLICO chiefs.
  5. The Court case – We are still no wiser as to why on earth is the CL Financial legal battle being fought in closed court.  Someone must have applied to have the hearings closed: I wonder who?  And why?  You see, the fact that the hearings are closed means that we are forced to rely on ‘leaks’ to see only part of the story.  Of course, that is only the part the person leaking would like us to see.  So we need to have those hearings opened to ensure a good quality of information.  Even beyond that burning concern is the recent reports that the High Court has made an order to prevent the State from using information in this case for criminal cases.  No doubt that order was obtained at CL Financial’s request, but what is the thinking underlying the ruling of the Court on this aspect.  I would like to hear some better explanation of that.
  6. The last days – I believe that a full, public investigation of this entire sorry fiasco is vital, if we are to learn all its lessons.  I am not entirely sure if a Commission of Enquiry is the way to go, or if another form of investigation can also be effective here.  For example, I would have liked to see the Arthur Lok Jack School of Business undertaking some extended studies on this.  It would be very interesting to see a list of those who broke their investments/fixed deposits in the Group in the last 90 days.  That would be very instructive.

Judgment Time – Moral Hazard, Part III

The drama continues and we learn of it in weird, spasmodic bursts.  The Information Age is here.  To err is human.

So many threads to pull from, but here goes –

  1. The Minster of Finance – Thus far, I have not touched the issues of the Minister’s shareholding, or joined the calls for her to resign.  I heard for myself on radio 102.1FM, one morning recently, the aggressive statements made by the Minister of Finance and those prompted me. There are 2 aspects of this in my view –
    • The first is that it is safe to assume that the Minister knew that CLF paid dividends after they had written to the Central Bank for urgent financial assistance.  Did she take exception to this action by the CLF chiefs?  What is her view on that?  In any case, did she instruct her negotiating team to attempt to recover those dividends?  Was that ever an agenda item in those MoU negotiations? Does the Minister have a view as to that decision by CLF’s Board of Directors?  Is that a decision which, in her learned view, would be taken by ‘fit and proper’ people?
    • The second one flows from the Minister’s defensive statements made in Parliament to explain the broken fixed deposits and so on.  Without going into the details of those statements, the line of defense went like this – I, like many other citizens, knew of the problems being experienced by the CLF group; I was also advised of those by my sister, who is engaged at a senior level in the financial sector; as a result of those factors, I decided, as a matter of prudence, to withdraw the various monies held in the group; CLF did not write the Central Bank ‘til 13th January and that is when my official knowledge began.  I accept the Minister’s statement as factual, but that is the very problem.  To my mind, the oath of office which is taken by our parliamentarians and cabinet ministers obliges them to put country first.  The first action of any responsible Minister of Finance, upon becoming aware of an impending crisis at CLF, was to seek an immediate meeting with the PM and other colleagues to discuss an urgent solution.  A key cabinet Minister states openly that she was seeking her own interest first and then effectively waiting for the other shoe to drop.  Utter irresponsibility and the lack of consequence writ large.
  2. The Governor – The Governor of the Central Bank has described the challenges of trying to regulate the CLF group in its several subsidiaries.  We have no reason to doubt his account of the perils posed by the CLF business model and the Central Bank’s various attempts to grapple with those.  The Governor also issued a private statement to clarify the position around the opposition allegations that he had taken advantage of his special knowledge to withdraw fixed deposits held at CIB.  I also accept as true his clarification on that matter.    If you accept both accounts, as I do, there is a real issue as to quality of judgment.  We are contemplating that the very man who knew, more than any other ‘outsider’, of the deep challenges and high-risk business-model of CLF was also making investments with CIB.  I am unable to reconcile that picture, which seems to be correct, with responsible judgment.  What is the manner of man to make those investments?
  3. The Sakal saga – I read in the Sunday Express of 24th May an expose of the Gita Sakal story.  It seems from that story that CLF has made allegations against Ms. Sakal that she attempted to obtain certain monies from the sums which were obtained by their sale of a shareholding in CLICO Energy to a German company.  That sale was been agreed on February 3rd and was one of the subjects of the ongoing court action between the Central Bank and CLF.  Up to that point, according to the Sunday Express story, there appears to be little dispute on the facts.  That court action started when the Central Bank obtained an ex parte injunction on Carnival Sunday and the action continues, in closed hearings.  The Sunday Express expose quoted Michael Carballo several times in setting out the case against Ms. Sakal.  I am proceeding cautiously here since the author of the Sunday Express piece is an esteemed colleague and the entire matter is very delicate, centering on ‘Who is to guard the guards?’  Some points to consider –
    • The MoU – was signed on 30th January and clause 20 of it prohibits CLF from disposing of any of its assets without the prior approval of the State.  Yet, on Tuesday 3rd February CLF entered an agreement to sell its 51% shareholding in CLICO Energy to its German partners.  That story was made public in this paper on 24th March at http://guardian.co.tt/news/general/2009/03/24/duprey-energy-fire-sale-raise-severance-money.  What kind of person agrees on Friday to clear terms and by next Tuesday is acting in breach of the prior agreement?  That is the one burning question in all this…What is the manner of man we are dealing with?  Amidst all the talk of visionaries and plots and schemes for his downfall…
    • One Caribbean Media – are the owners of the Express newspaper.  According to their 2007 Annual Report, CLF hold a 33.1% shareholding in One Caribbean Media.
    • Director – Michael Carballo, the Group Financial Director of CLF, is also a Director of One Caribbean Media – http://www.onecaribbeanmedia.net/index.pl/hdir.
    • The burning question – given that my colleague had access to Michael Carballo and some key documents, is why not enquire as to the genesis of the share sale?  That seminal issue appears to have been sidelined and we in the media who seek after clarity and integrity, must take special care at this time to preserve our own.

    4. Please note that I am not, in any way, defending Ms. Sakal.

  4. The MoU – We are also hearing reports that both parties have agreed that the MoU is to be renegotiated.  Can this be true?  Will the Governor please update us on these matters?  I ask again, ‘Who are we negotiating with?’
  5. Executive Remuneration – The new Chairman of CLICO, Dr. Euric Bobb, was reported to have recently stated that the new management would not be continuing the level of excessive remuneration which had been a pattern in the past (at CLICO).  It would be good to know the previous levels of salary and benefits which led to this complete fiasco.
  6. CLICO – Dr. Bobb also gave recent clear statements as to the strength of CLICO under the new management and that was important.  We are getting increasing reports that some of CLICO’s most productive sales agents are joining other insurance companies and, if those are true, CLICO’s future could be very challenging.

SIDEBAR: Integrity and the CL Financial bailout – the nexus

There is an interesting nexus between the Integrity in Public Life Act (2000) and the CLF bailout.

The Act obliges that public officials make a declaration of their income, assets, liabilities and interests to the Integrity Commission on or before 31st May of each year.  There are penalties for non-compliance.  We have seen high-profile investigations and prosecutions with the proposed amendments to the Act now being debated in the Senate.

The Integrity Commission website lists ten classes of persons in public life who must file declarations with them.  That list can be found at http://www.integritycommission.org.tt/whofile.html.  The ninth class of person is “Members of the Boards of all Statutory Bodies and State Enterprises including those bodies in which the State has a controlling interest.”

CL Financial has already signed over its shareholdings in Republic Bank Ltd. (55%) and Methanol Holdings Trinidad Ltd (56%) to the State under the MoU, and the State has taken complete control of CLICO.  Will CLICO, MHTL and Republic Bank Directors be filing returns on or before 31 May?

Payback Time – Moral Hazard, Part II

There is a powerful and circular irony in the entire CL Financial fiasco.  That irony is in the manner in which risk and its twin brother, reward, were dealt with.  CLICO and British-American built an impressive reputation as safe companies with which one could invest for an uncertain future.  That reputation was such that many people in our region held the greater part of their investments with those companies.  The irony, which is now clear for us to see, is that those companies did not do an effective job of managing their risks.  Hence the disaster we are facing.

According to CL Financial’s 2007 annual report, the group held cash or cash equivalents in excess of $8.7Bn at the end of 2007.  That huge sum of money was depleted to the extent that the CLF Group had to write on 13th January 2009 seeking a massive bailout.

The same annual report also gives cause to question the manner in which the global meltdown has been blamed for the fiasco.  With the audited accounts only being completed in late November 2008, the annual report must have been finalised after that date.  The preface to the CLF 2007 annual report, at page 1 and entitled ‘The Next Wave of Growth’, refers to the meltdown like this –

  • “These are foreboding financial times – for Trinidad and Tobago, for the world. At C L Financial we are cautious but unafraid. Leaders in government and business sectors throughout the globe are taking joint action to mitigate this economic crisis, and so are we.”
  • “No organisation will be immune from the turbulence but our widespread assets and market penetration are the best shield against these uncertain conditions.”
  • “We have confidence in our ability to not only navigate this financial storm but to find fresh and profitable opportunities within it.”

Contrast those statements, finalized in the last six weeks of 2008, with the written appeal to the State for urgent help in the first fortnight of 2009.  Maybe truth really is stranger than fiction after all.

We are now getting reports that some CLF directors have resigned in the last month or so.  In addition, there was a story in another newspaper which detailed the high salary and bonuses (exceeding $2.5M US annually) paid to the CLF General Counsel/Corporate Secretary.  That story also stated that she retired on 21st April and was making claims for terminal payments of some $5.0M US.  According to the annual report, that person was the third highest officer in CLF.  I have not seen any published correction to or denial of that story.  She is also the officer who signed the Director’s (sic) Report in the CLF 2007 annual report, which declared a dividend of $3.00 per share.  Do these post-fiasco resignations and retirements exonerate directors and officers from their liabilities in this matter?

The MoU of 30th January specifies, at clause 20, that there are to be no increases in salary, payment of bonuses or share options without the government’s prior approval.  That is good, but it would be interesting to know what salaries and bonuses were paid to the CLF chiefs since the beginning of 2008.  That is a most important question, since it is the period in which the group went from a position of reported strength to one of virtual insolvency.  These directors and officers were in charge of the group’s strategy and operations in that period.  How were they rewarded?  How much of those people’s wealth is actually invested in the CLF group?

The issue is one of transparency, but that is a plastic concept here.  It is interesting to note that Royal Bank of Canada, which purchased RBTT last year, has a totally transparent policy on compensation.  I am right now looking at RBC’s website (http://www.rbc.com/investorrelations/pdf/2009englishproxy.pdf) on which they have displayed the detailed salaries of its directors and principal officers, with the rationale.  If we are going to bailout this fiasco, we need to know what were the rewards earned by the CLF chiefs.

We have seen bold moves being made in the USA to recover bonuses from executives of failed financial giants which are now seeking federal bailout.  Does our government intend to take firm and fair actions to recover those monies?

We also need to consider the role of professional standards in all this, since those exist to provide assurance to stakeholders that they are looked after in a complex world.  Not every question is for the court, since all the responsible professionals – accountants, attorneys and actuaries – belong to organizations with disciplinary codes.  Those codes can be severe in dealing with those who bring their profession into disrepute.  It is absolutely no defense for a professional to say that they were just following client’s instructions, if those instructions are in contravention of one’s professional codes of practice.  None.  Is the State intent on making the necessary reports?

This episode has important lessons for our country at a most delicate time of economic downturn and growing social unrest.  What lesson is this sending to our less-well-off citizens and our young people?  Is it going to be a straight case of business as usual or do we have the belly to make a fresh start?

SIDEBAR

The Governor of the Central Bank gave a press update on the CL Financial bailout on 13th February at which he told us that the financial position of CLICO was much worse than had been originally envisaged.  At that time, the Governor promised that that update was the first of a series.  There have been several incidental releases of information on the issue, most recently at the Monetary Policy Review press conference.  Since then it is fair to say that the entire position seems much worse than we had thought and another specific CL Financial update is now overdue, Governor.

Some of the matters I would like to propose for explanation at the next press briefing are –

  1. CLF’s letter – The CLF letter of 13th January has not been published.  Why not?
  2. CLF Dividends – Did the State negotiators know that CLF paid a dividend after writing to seek financial assistance?  If no, why not?  If yes, why not seek recovery of those dividends as a condition of the MoU?
  3. At what point did the State learn that the CLF assets pledged in the MoU had already been pledged elsewhere?
  4. When is the disposal of CLF assets, agreed in the MoU, to start?
  5. In light of the Governor’s own comments, when can we expect him to make a finding as to the CLF directors’ and officers’ being ‘fit and proper’ under Central Bank guidelines?
  6. What progress is being made in finding the $5.0Bn missing from CLICO’s statutory fund, as stated by their newly-appointed CEO?  Are the CLF chiefs, with whom you are in negotiation, being co-operative in this regard?
  7. The Court proceedings in relation to the Carnival Sunday injunction obtained by the Central Bank against CL Financial are being held in closed session.  Why is there the need for secrecy/privacy on these issues?  Who applied to the Court for the hearings to be closed to the public?

Moral Hazard, Part I

The key issue being exposed in the entire CL Financial bailout is that of Moral Hazard.  What is moral hazard and how does it have a bearing on this bailout?

A society in which people operate without standing the consequences of their actions is on a downward spiral to social breakdown or worse.  We have all discussed the social breakdown of our country with our friends and families.  Ours is a nation which has not suffered natural disaster, epidemics or invasion from our enemies, so the source of the breakdown is the absence of consequence.  The concept and reality of consequence is the essence of responsible, mature behaviour.

Moral hazard describes a situation in which, as a matter of policy, people escape the adverse consequences of their actions.  The idea that responsible people can, as a matter of custom and practice, escape the consequences of their actions is of course immoral to most right-minded people.  If there are no consequences, there is no motivation to do the right thing, other than an individual’s own private morals.  We all know how weak a safeguard those can be.  The hazard comes from the fact that the absence of consequence can encourage irresponsible and anti-social behaviour.  Hence the term moral hazard.

A society’s morality is the foundation upon which its legal system is built.  Morals come first and legalities are secondary.  An important point to note, for those who seem fixed upon which laws may, or may not, have been broken in this episode.  The point here is that it is possible to cause a great deal of harm by irresponsible behaviour, without necessarily breaking the law.

The Central Bank’s Governor has spoken directly on these points –

  • 30th January, in describing the causes of the CLF problems – “excessive related-party transactions which carry significant contagion risks. I should note that the high level of concentration is not specifically prohibited by the present legislation. An aggressive high interest rate resource mobilization strategy to finance equally high risk investments, much of which are in illiquid assets (including real estate both in Trinidad and Tobago and abroad).”
  • 13th February – “Clico/CIB were isolated cases of an overly-aggressive and risky business model.”
  • 11th March, speaking on that occasion on the limits of our financial regulations – “Even with all these pieces in place, any licensee who is committed to exploiting loopholes, to taking excessive risks with policyholders’ and depositors’ funds, and to bending the system could go undetected for a while and in so doing could do a lot of damage.”

The State is funding the bailout of the CL Financial Group and CLF’s operating methods were extremely risky ones.

There is no doubt in my mind that the bailout was necessary to prevent a huge financial disaster.  It was a necessary evil that we use taxpayers’ funds to preserve investor confidence.  The question is whether we are capable of learning from these experiences.  The litmus test is to ask – ‘What is to be the fate of those directors, officers, auditors, actuaries and attorneys who presided over the entire house of cards?’

We the taxpayers are now committed to finding the money to fix this colossal fiasco, and that is despite the fact that we did not cause it.  That is moral hazard for you.  This fiasco is due to CLF’s adventurous directors and officers.  What is to be their contribution to cleaning up this disaster?  Are these directors and officers going to be allowed to continue as if nothing happened?   I am asking whether CLF’s directors and officers are going to be let off the hook completely.

We continue to hold aspirations for Caribbean leadership and our response at this time of crisis is instructive as to challenges facing our region.

SIDEBAR: The CL Financial dividend

I have not spent any time on the many calls for the Minister of Finance to resign, be prosecuted, be fired and so on.  To me, the issue is simply too obvious for words and that is all.  I agree with Minister Enill that our time is better spent on the ‘bigger picture’.

The timeline set out in last week’s column allows an insight into the conduct of CL Financial over the last few crucial months.

CL Financial was unable to pay the interest or capital due to its depositors.  CL Financial was also unable to pay the benefits to which its policyholders were entitled.  We are told that that was the background to their letter of 13th January requesting urgent financial assistance.  We have no reason to doubt that account of events.

We have also read that dividends were paid to CL Financial shareholders on 16th January.  As a shareholder, the Minister of Finance knew that those dividends were paid after CLF requested State assistance.  The MoU, which is the ‘rescue plan’ for this fiasco, was signed on 30th January.  Why was that document silent on the refund of those dividends?

This cannot be allowed to stand.  It goes to the heart of the major issue of the negative long-term impact of a lack of consequence.  This is really the bigger picture.

Did the Central Bank know that a dividend had been paid to CL Financial shareholders after the written request for assistance and before the signing of the MoU?  If the Central Bank knew, why were CLF shareholders allowed to keep hold of those dividends?  If the Central Bank did not know, why not?  Was the Central Bank operating with an incomplete and misleading set of instructions?  Or are we contemplating something far, far, worse?

Methanol Holdings Trinidad Limited

Last weeks’ column sought to say that 2 statements on this aspect of the bailout – one from the Governor of the Central Bank and the other from MHTL – were contradictory.  It has been pointed out to me that those statements are not necessarily contradictory and I now accept that as being correct.

Equity in the Bailout process

Apart from the directors and officers of CL Financial and members of the government, there are other aspects of moral hazard at the level of the private citizen.

It is already a matter of concern that profits and benefits have been privatized, while the costs and losses have been nationalised.  That is a shame.  But there is more, since CLICO and CIB always offered the best interest rates and everyone knows what that means.

More reward is only available to those who have an appetite for more risk.  Those people who invested in CLICO knew that a greater rate of return was being offered.  Why then are we bailing out adventurous investors on these terms?

There is an apparent discrepancy in the terms of the bailout and that variance is interesting, to say the least.  CLICO Investment Bank has been absorbed by FCB and depositors there have been offered a choice of reduced interest at FCB rates, or the $75,000 entitlement under the Deposit Insurance scheme.  In contrast, CLICO’s depositors and policyholders have had their position fully guaranteed.  CIB, being a bank, was better capitalised, better regulated and its depositors were insured.  In terms of those benchmarks, CLICO was an inferior investment vehicle, yet the State has offered full protection to CLICO investors and only partial satisfaction to those who invested in CIB, the stronger company.  In my view the playing field should be leveled so that both sets of investors are offered the more modest package of benefits.

To continue with this lop-sided bailout only adds to the moral hazard of this messy situation.

Who is Who and What is What?

The more one considers the CL Financial bailout, the less comfortable one feels.  It was no surprise to see the main points of last week’s column publicly confirmed by the key participants.

What can one possibly say to the confirmation that the assets pledged in the MoU were pledged elsewhere? That was confirmed by both the Governor of the Central Bank and Michael Carballo, CL Financial’s Group Financial Director.

These are some of the puzzling aspects of this complex situation-

  • Methanol Holdings Trinidad Limited (MHTL) – There appear to be stark contradictions between the 6th April statements of the Governor of the Central Bank and the recent MHTL press release (available at http://www.ttmethanol.com/web/assure.html).  The signatory on the MHTL press release is their CEO, Rampersad Motilal, who is also listed as a CLF Director in their 2007 Annual Report.  There have been recent press reports that Mr. Motilal recently resigned as a Director of CL Financial.  The Governor stated that methanol prices are so low that to try to sell those shares now would be to limit the returns on the sales.  MHTL states that  its operations continued to be strong with all their plants having excellent first quarter performance, with its low cost profile allowing it to maintain overall profitable operations for 2009 even if the softened methanol prices continue.  The press release went on to state that the company’s financial position, especially its liquidity position is very strong.  Which one of these accounts should we trust?  What are the MHTL shares worth?
  • Republic Bank Limited (RBL) – These shares were pledged as part of CLF’s collateral in the 30th January MoU, but we have only silence on the agreed disposal.  Indeed, the RBL share price is stable at $86 per share since November 2008 and one has to wonder why the delay in the agreed disposal.
  • CLICO – As stated in last week’s column, the newly-appointed CEO of CLICO, Claude Musaib-Ali, revealed on Ash Wednesday that over $5.0Bn is missing from CLICO’s Statutory Fund and that those monies cannot be located.  A week ago, the Governor stated that the size of the CLICO bailout is now estimated to be $5.0Bn.  I am assuming that these taxpayers’ funds are being used to fill the gap left by the missing Statutory Fund monies.
  • CL Financial’s stance – At the beginning of this process we were led to believe that CL Financial was being pro-active and cooperative in their dealings with the State.  Indeed the Governor even made this point directly in his prepared remarks at the 30th January press conference “…I would like to acknowledge the high level of cooperation that we have received from Mr. Duprey…”  Since then CLF has now been exposed as paying dividends after requesting the State bailout, challenging the injunction obtained by the State over their assets with a powerful legal team and, to top it all, pledging the same assets twice.  The Governor spoke on 23rd April – “If you ask me whether CL Financial did everything that was honourable and beyond reproach, the answer is no! The answer is no!”  [See – http://guardian.co.tt/business/business/2009/04/24/cl-financial-bailout-cost-5-billion-over-two-years ]My word.  But there is yet another account coming from Michael Carballo, expressing surprise at the Governor’s statements – “We have a good relationship…and we have always sought to operate in good faith.  All information presented has been authentic and above board…”  In that case we may not need a Bob Lindquist to find out ’Where is the missing $5.0Bn the Treasury is now replacing?’  One can only wonder – What next?
  • A matter of interest – It seems clear that some consensus has now been formed to defer the sale of CLF assets so as to transfer the burden to the Treasury.  The MoU, which we were led to believe is the main document, now appears to have become secondary, despite the existence of no new facts.  What could possibly be the rationale for such an iniquitous decision?  If we proceed from where we are, it is clear that CL Financial has negotiated for itself an unsecured, massive line of credit from our Treasury.  Any one who has had to borrow money without security knows how difficult it is to get such a loan.  Even if you are lucky and someone big in the bank favours you, the interest rate is going to be extremely high.  Given the background to this fiasco, the lack of security and the reported conduct of the chiefs at CLF, what is the rate of interest being paid by this high-risk borrower?  We need to know that interest rate and now, please.

The weakening of moral authority

Finally, we come to an inevitability we all have to face, even if there is seldom any appetite to discuss it.  Yes, I am talking about the future and our aspirations.  There is a real danger that we – and I am deliberately using the collective ‘we’ – could allow our ‘Fit and Proper’ guidelines to remain yet another law which is ‘on the books’ but ‘nobody ever get charge’.  Here we have Directors and Officers of a finance company who –

  • have paid dividends after appealing for a massive State bailout;
  • pledged assets twice, which is something no ordinary person would ever be allowed to get away with;
  • claim to be cooperating with the State yet there is still $5.0Bn missing and silence on the refund of those odious dividends.

This country has intentions or stated ambitions to become an International Financial Centre.  This sorry episode is a litmus test as to our seriousness.

SIDEBAR: 22 Days of Decision

  • Tuesday 13th January 2009 – CLF writes to Central Bank requesting urgent financial assistance.
  • Friday 16th January 2009 – CLF issues dividend cheques to its shareholders.
  • Friday 23rd January 2009 – CLF holds its AGM at Trinidad Hilton.
  • Friday 30th January 2009 – MoU announced at Central Bank.  This is available at http://www.finance.gov.tt/documents/news/mr03183E.pdf
  • Sunday 1st February 2009 – Press reports that an agreement has been made to allow CLF to re-purchase MHTL shares at an agreed price in 2 years’ time.
  • Thursday 5th February 2009 – Press reports that an agreement has been made to allow Lawrence Duprey to remain as CLF Executive Chairman.  Further press reports that CLF has been advised by its British legal advisers that they must abide by the terms of the MoU.

If it was not so serious, this would be real jokey.

Rapid De-Rail

The Governor of the Central Bank is reported to have advised, at his address to the South Trinidad Chamber of Industry & Commerce on 7th April, that the assets of CL Financial (CLF) were fully pledged. <http://guardian.co.tt/business/business/2009/04/08/govt-left-empty-handed-cl-financial-bailout>. This is an outrageous development.

We are told that CLICO, CMMB, CIB and British-American Insurance Company Limited are the 4 CLF companies which were in financial trouble.  Those troubles prompted the request for urgent financial assistance made on 13th January.

That letter remains hidden from our view.  What sound reasons could possibly exist for its concealment?  Lawrence Duprey was interviewed on 12th March by this newspaper and it was reported that “…Speaking about the bailout, Duprey said he could not discuss the proposals that the CL Financial group made to the Government in January…”  Why the secrecy?  http://guardian.co.tt/news/general/2009/03/12/conflict-interest-no-way-says-duprey

This is not, repeat not, private business.  This is an enormous claim, estimated to exceed $10Bn, on our Treasury at a time of ‘belt-tightening’.  The continued secrecy on this matter is inimical to the very investment trust which the bailout is meant to preserve.  The CLF letter of 13th January must be published without further delay.

We are witnessing one of the greatest outrages in the history of our young Republic.  You see, the CLF officials who negotiated with the State must have known that the assets being pledged under the terms of the Memorandum of Understanding (MoU) were already pledged elsewhere.  You cannot sell something twice.  Everybody knows that.  Unless, that is, you trade in lies and fraud.

One of the basic principles of the insurance contract is Uberrima Fides – meaning that the person seeking the cover of an insurance policy must act with utmost good faith.  Failure to disclose important facts to your insurer could have the effect of making your policy in-valid.  It seems that CLF has acted with utmost bad faith in this matter.

CLF does not have, or cannot borrow, enough money to meet its financial obligations.  The plain meaning of the Governor’s statement is that CLF’s liabilities exceed its assets, which means that CLF is insolvent.

On Ash Wednesday, 25th February, the newly-appointed CEO/Managing Director of CLICO, Claude Musaib-Ali, reportedly told employees that the sum of $5.0Bn was missing from the company’s Statutory Fund.  “The people who were here before took the money and put it somewhere. We don’t know where. “We are perplexed…” he told workers, “we don’t know where it has gone.”<http://guardian.co.tt/news/general/2009/03/01/where-money-gone>

I could scarcely believe what I was reading.  If ever there were a case for the expensive expertise of the renowned forensic accountant, Bob Lindquist, this is it.  Mr. Lindquist is now investigating an alleged discrepancy of $20M at the Housing Development Corporation.

The Liquidation process

We also need to consider the liquidation process – what gets sold; to whom; when and at which price.  According to the 30th January MoU, CLF agreed to sell its shareholdings in Republic Bank, Methanol Holdings and CMMB to meet the cost of the bailout.  If the money raised from the sale of those shares was insufficient, CLF also agreed to the sale of “…all or any of their other assets as may be required to achieve the said correction…”.  Yet the Governor was reported to have also said on 7th April – “…because of a slump in real estate and methanol prices the Government would not be able to sell the conglomerate’s vast real estate holdings at present to recover the funds provided to CL Financial to relieve a liquidity problem.”

It seems that the decision has been taken to defer the sale of these assets because of the poor returns which would be made at this time.  Why the shift in strategy since 30th January?  The plain meaning of the Governor’s words is that to sell the CLF assets as agreed in the MoU would not yield the required monies.  That, in turn, would lead to a call on ‘all or any’ of the other CLF assets until the State injection of funds were matched.  The likely effect would be to close down CLF.  We are now being given a stupefying rationale for the fact that the implementation of the MoU is being delayed.  I say stupefying because the slump in real estate and methanol prices were already realities on 30th January.  The deferral of the liquidation of these CLF assets has two important consequences –

Firstly, taxpayers would be funding the bailout while waiting for asset prices to recover.

Secondly, CLF, having negotiated in bad faith, are being given a second lease on life, since, when asset prices recover they would be able to settle their indebtedness to the State and continue trading.  The obvious CLF insolvency issue is being forgotten.  Is any interest being charged on the huge sums of money being advanced to fund this business rescue?  Is it proper use of taxpayers’ money to rescue a privately-owned conglomerate?

In my view, the main effect of deferring the liquidation of CLF’s assets would be to transfer the growing costs of the bailout from the CLF balance sheet to the Treasury.  Thus allowing CLF’s shareholders to retain value.

The Minister of Finance and her defenders would have us believe that the MoU does not benefit CLF shareholders.  That would be so if it were being faithfully implemented.  But, as is so often the case, the devil is in the details.

Finally, we come to the burning issue which has occupied so much of the debate taking place overseas.  CLF paid a dividend to its shareholders on 16th January, 3 days after writing to the Central Bank for urgent financial assistance.  What moves are being made to recover those dividends?

SIDEBAR: CLF’s Directors and their responsibility

CLF’s Directors, as listed in their 2007 annual report, were –

Lawrence A. Duprey, CMT (Group Executive Chairman / Executive Director)

Sylvia Baldini-Duprey (Deputy Chairman)

Michael E. Carballo (Group Financial Director)

Roger R. Duprey (Executive Director)

M. Anthony Fifi (Director)

Dr. Bhoendradatt Tewarie (Director)

Dr. Rampersad Motilal (Director)

Clinton Ramberansingh (Director)

Leroy Parris (Director)

Bosworth Monck (Director)

Evan McCordick (Alternate Director)

Director’s liability – In May 2005, the Central Bank published its ‘Fit and Proper’ Guideline (sic) and that document can be found at http://www.central-bank.org.tt/news/releases/2005/mr050510.pdf.  It is a critical part of this discourse since it sets out the official position as to the type of person held to be ‘fit and proper’ to be a Director or Officer of a Financial Institution.

It states –

3.1 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.

In light of the startling information disclosed in the Governor’s recent speech, how can we regard the CLF officers who conducted the MoU negotiations as ‘fit and proper’?  What action is being proposed to deal with them?

On 12th March Mr. Duprey was interviewed on the conflict of interest issue – here are some interesting quotes from that interview –

  • “What conflict of interest? Let’s grow up.”
  • “…Government came to protect the policyholders. They are not protecting us because I could walk away from Trinidad tomorrow and make a better living…”
  • “…It does not matter what I am left with. That is irrelevant. What is most important is that the policyholders are protected. I’m not important because I could pick up tomorrow and make a living in Greenland or Alaska or Saudi Arabia…”

The Meaning of Things

Many friends tried to correct me on the title of this article by saying that CLICO was being bailed out, along with British-American Insurance, CLICO Investment Bank (CIB) and Caribbean Money Market Brokers (CMMB).  They went on to assure me that CL Financial (CLF) is fine now that the bailout of those four subsidiaries has taken place.

At the post-Cabinet press briefing on Thursday 12th, PNM Chairman and Minister of Energy, Conrad Enill called for a focus on the ‘Bigger Picture’ and a reduced emphasis on the Minister of Finance.  I could not agree more.  As shocking as the story of the Minister’s shareholding etc. might be, it is easily outweighed by ‘The Bigger Picture’.

CLF wrote to the Central Bank on 13th January to seek urgent financial support from the State and we need to ask why.  In the absence of the CLF letter, the stage is set for speculation.  Given that we are contemplating a bail-out in excess of $10Bn, according to the last statement from the Central Bank Governor, the publication of that letter should not be delayed.

CLF’s 2007 Annual report is available online at http://www.clico.com/pdf/AR07/CL%20Financial%20Annual%20Report%202009.pdf and it tells of a group comprising over 65 companies in 40 countries worldwide.  Even after a decline, profit (after tax) for the year ending 31st December 2007 was stated at $1.74Billion.  Why would a healthy and thriving group like CLF need to seek State intervention to provide urgent financial support for 4 of its subsidiaries?  Was it a case of the looming liabilities being of a scale to eclipse the entire group’s assets?  If there was still equity available within the group’s portfolio, why could they not cover the liabilities by borrowing in the private market?  Was it merely a case of temporary illiquidity – a sort of technical insolvency – needing to be relieved by State intervention?  Even if the answer to this last is positive, we still do not know why they could not borrow on the open market.  It cannot have been easy to decide to go to seek State support and my interpretation is that the group had no other choice.

When we consider the recent revelations that the Minister of Finance holds substantial shares in CLF, which paid its shareholders dividends in January 2009, things become turbid.  Bear with me here, but we are looking at the period between CLF’s auditors publishing their 2007 accounts –18th November 2008 – and CLF’s Executive Chairman writing to the Central Bank on 13th January 2009.  By my count, that is only 55 days.

In that period the CLF Board of Directors did 2 critical and fundamentally opposed things-

  1. Declaring and paying a Dividend – At page 20 of CLF’s Annual Report 2007, we are told, in respect of Dividends, that “…In 2008, a dividend of $3.00 was declared by the Board in respect of the Financial year ended 31 December 2007…”.  The CLF Board could only have declared a dividend when the accounts were completed.  This newspaper published an uncontested report on Tuesday 10th March that those CLF dividend cheques were mailed out on 16th January, in advance of the AGM at Trinidad Hilton on 23rd January.
  2. Writing to the Central Bank to seek urgent financial support – CLF wrote on 13th January and that letter must have been the subject of some serious and prolonged board discussion.  Please consider that the same Directors who declared a dividend in the last forty-three days of 2008 also decided to write to the Central Bank in the first twelve days of 2009.  Imagine that.

Can we ever reconcile those two acts?  How does one write to say that one does not have enough money, then, only three days later, prepare dividend cheques which would have totaled over $20M?  What manner of man behaves in this fashion?  Was the Central Bank ever told that the declared dividend had been paid on January 16th?  We all know that the Minister of Finance knew.  Her statements to the Parliament to ‘clear the air’ were anything but.  Mamaguy for so.  Thursday’s headline in this paper made me smile ‘Duprey backs Karen’.  One can only wonder how long would a trusted executive at CLF last if that level of divided loyalties had been unearthed.  Mr. Duprey, for one, would know how expensive divided loyalties can be.

Is it legal to write cheques for dividends from a group which is unable to meet its liabilities?  Are these CLF Directors fit and proper people to sit as company Directors in our Republic?  Is theirs prudent and responsible behaviour?  Do we as taxpayers want to fund and endorse that kind of double-standard?  I, for one, do not.

On Carnival Tuesday, I saw in a notice that the High Court had granted an injunction to prevent CLF from diluting or disposing of its assets and also an order that they should produce a sworn affidavit detailing their assets.  That injunction has since been challenged by CLF’s attorneys and we recently learned that the parties are now discussing the matter privately before returning to Court.  Cool so.  On one side we have CLF and its advisers, who would obviously be trying to minimize the impact these events would have on their group.  On the other side we have the Central Bank, which is an organ of the Ministry of Finance, seeking compliance with the Court Orders they obtained on Carnival Sunday (February 22nd).  It seems that CLF has moved, rapidly, from seeking urgent financial assistance to being coy over the details of its assets.  It is almost beyond belief, but beat that.

It also seems that no lenders were willing to advance funds to CLF, since the State is the lender of last resort.  Given that CLF controls Republic Bank, CLICO Investment Bank and Barbados National Bank, this is a sobering insight into just how serious the cash flow crunch must have been.

To summarise – keeping our focus on the Big Picture – is CLF just suffering from a momentary bout of illiquidity or is the group actually insolvent?  If the former, why not just borrow the required monies from a private source?  If the latter, then just who is the State conducting private negotiations with?  Why?  Who are we, the taxpayers, bailing out?

The more I think about it, the more it seems that this title is just right.  The CL Financial bailout.

Sagacity and Veracity

The sheer rash of recent events, many of them contradictory, make it necessary to draw the connections between the emerging fiascos at both CL Financial and UDeCOTT.

The CL Financial crisis concerns every citizen, whether or not you had any funds invested there.  Indeed, given the scale of the fall-out, it seems that every Caribbean citizen ought to be concerned as well.  CL Financial was a trail-blazer in too many ways for this column to encompass and their problems are, in every way, also ours.  Just to show two ways, think firstly of the thousands of employees and other stakeholders who are affected by the unfolding crisis, then think of the way this episode is affecting the already poor levels of investor confidence.

The challenge at these times is to see what lessons we can usefully draw from the revelations thus far.  Yes, I am going to make a link between CL Financial and UDeCOTT and no, I am not going to make any comment on HCU.

About half of the nation’s insurances reside with the CLICO group.  CLICO’s agents were all trained to speak about the range of impressive assets which were owned by the CL Financial group – the Methanol plant, US and local real estate, Republic Bank Limited, the Home Mortgage Bank, lucrative Liquor brands and so on.  We all knew CLICO agents and have heard the lyrics.  But, as we have now found out, the decisive thing was the extent to which those various impressive assets were used for collateral and the way in which the parts worked together.  It seems that the actual returns on these investments were less than those originally anticipated.  So much so, that the liabilities eventually eclipsed the assets.

Point being that ownership of assets is necessary, but not sufficient, to add value to a portfolio.  The decisive aspect is the way in which those assets and liabilities are matched.  The related question being how much latitude to manoeuvre would the group have if times changed.

It seems to me that there are 3 aspects of the CL Financial fiasco to be highlighted in order to see the picture.

  1. The large-scale ‘Act of God’ events such as the fall in methanol prices, the stock/finance collapse and the declines in the real estate markets which no one corporate group could avoid.
  2. The viability of the business model and the emerging issues on the Statutory Fund.
  3. The struggle to retain selected assets for the CL Financial group by the corporate leadership.

UDeCOTT is the subject of the Uff Commission and we have learned that they have carried out a feasibility study on only one of the many office buildings they are responsible for erecting.  That feasibility study is itself discredited by the fact that the land was omitted.  It is true that our capital city is being greatly altered by the many commercial projects done by UDeCOTT, but the fact is that none of the projects are feasible and all of them are financed by US$ borrowings.  There is no doubt that this represents a great tranche of investment, but what is the rate of return?  Can anyone say?  Is the interest rate greater than the rate of return?

These are object lessons in hubris and the social costs of empire-building.  There are benefits to be sure, but we are witness in both cases to agendas to privatize the benefits and nationalize the losses.  It is particularly important at this point to guard against attempts to confuse us by blaming the respective fiascos on the large-scale events mentioned above.  In both cases we need to separate the ‘Acts of God’ from the imprudent and improper acts for which the public now has to pay.  Those events did indeed take place but it does seem that their impact would have been reduced, had proper prudent procedure been followed.

Commission of Enquiry

There have been calls for a Commission of Enquiry from Mary King, Dennis Pantin and Ramesh Lawrence Maharaj.  I support those calls.

It is not ‘every Monday morning’ that one can have a Commission of Enquiry, but we need to know what happened if we are to prevent a repetition of this fiasco.  This is a ‘bail-out’ in excess of $10Bn, which is a colossal sum at any time.  This is historic and we need to enquire vigorously into the causes of the collapse.  We constantly hear of our aspirations towards regional leadership, particularly in the finance arena.  We cannot learn from this fiasco unless we know what went wrong.

Just two questions could illustrate the issues –

  1. In light of the obvious insolvency, when exactly did CIB and CLICO stop soliciting investments?  This one is almost personal because I spoke, along with two other panelists, at CIB’s inaugural Investment Seminar at the CL Duprey Box at the Oval on Thursday January 22nd.  Yes, that’s right, the official version is that  “…on January 13 2009, Clico’s Chairman formally raised the issue of possible financial assistance from the Central Bank…”
  2. Did CL Financial pay dividends to its shareholders in January 2009?  CIB is wholly-owned by CL Financial (CLF) and CLICO is about 98% owned by CLF.  If CLF had to write on 13th January seeking urgent assistance from the State it is obvious that the parent company was unable to meet the looming obligations.  That is a situation tantamount to insolvency and one can only wonder if it is true that a dividend was paid in these circumstances.  As is my practice, I am sticking to the facts and not indulging in innuendo or ole talk.  I have myself seen the Minister of Finance’s name on the register of shareholders for CL Financial Limited as filed on 17th February 2009.  What a thing.

The CL Financial Fiasco contains lessons at all levels and these would include –

  • the type of regulatory framework
  • the independence, degree of discretion and diligence of the regulators
  • the culpability of Directors and Executives.

There are many solid and troubling accounts of the last days which would emerge during a Commission of Enquiry.

SIDEBAR: An easy guide to the CL Financial and UDeCOTT Fiascos

Six quick pointers for our readers –

  1. Ambitious Empire-building – Huge and dazzling development is envisaged and implemented.
  2. Other peoples’ money – Use of either taxpayers’ or investors’ monies as ‘seed capital’.
  3. Excessive borrowings – Make sure to borrow for the majority of the costs.  As we are discovering in the CL Financial case, assets have been heavily pledged – i.e. borrowed against.  In the case of UDeCOTT, most of the massive borrowings are in $USD with the situation tantamount to the taxpayer having given a blanket guarantee.
  4. No cogent planning or feasibility checks – Independent professionals of integrity are marginalized or erased from the script.  Witness the long-overdue audits of both CLICO and UDeCOTT, usually a sign of some adverse news.  CLICO’s 2007 audited accounts were only issued in November 2008.  On 28th January 2009, UDeCOTT’s Executive Chairman told the Uff Commission under oath that “…my understanding is that probably before the end of next week we shall have our 2007 accounts…”.  The plain meaning of that statement is that those accounts would have been ready a month ago.  No accounts yet.  The silence and its implications are equally concerning.
  5. Real Profits? – Is it possible for CL Financial to pay dividends at the same time as writing to seek the State’s urgent financial assistance?  How could UDeCOTT be employing commercial strategies and declaring improving profits as a property-development company, if every one of their projects is not feasible?  As usual, the figures will reveal a lot to careful readers.
  6. Strategic Agenda – The common agenda is to privatize the benefits and profits while being careful to nationalize the losses.  We reject that agenda.  Moral hazard has to be upheld as a reality if we are to develop a progressive nation.

An Unhealthy Choice

Sen. Michael Annisette. Photo courtesy TTParliament.org
Sen. Michael Annisette

I was perturbed to read in the press that our President had selected Mr. Michael Annisette to serve as an Independent Senator in our next Parliament.

Apart from his well-known role as head of the SWWTU, Mr. Annisette also sits on the Boards of the Urban Development Corporation of Trinidad and Tobago Limited (UDeCoTT), the Trinidad and Tobago Mortgage Finance Company Limited (TTMF) and the Vehicle Maintenance Corporation of Trinidad & Tobago Limited (VEMCOTT).  These 3 Directorships are in significant State-owned enterprises and it is a widely-held view that such appointments, especially to those who are not experts in the relevant fields, are only offered to those in political favour.  To put it plainly, one would hardly expect to see UNC or COP members, however expert, on State Boards under a PNM administration.

Whatever its latent defects, one would have to agree that an important part of our Parliamentary health is derived from our Independent Senators.  At this time, with national concerns on constitutional reform looming large, it is vital that we have a vigorous, outspoken and articulate cadre of Independent Senators.

It raises serious questions as to process that our President was able to use his power to nominate Mr. Annisette.  Of course one expected that Mr. Annisette would have resigned his Directorships of those State enterprises before his swearing-in as an Independent Senator, but that is the central issue.  We were then being asked to accept that an individual who was loyal to the party in power, to the extent of gaining those sought-after appointments, would have, upon taking the oath of office, become an Independent Senator.  Even a tolerant nation such as ours has its limits.

I recently read a story in the Express of 29th December headlined ‘Independent Senator resigns as EBC commissioner’ and the first paragraph deserves repetition – “After accepting the President’s request to serve on the Independent Bench in the Senate, Independent Senator Corinne Baptiste-McKnight has resigned as a Commissioner on the Elections and Boundaries Commission.”  Imagine that.  The Chairman of the EBC, Dr. Norbert Masson, was quoted as saying “She did the right thing”.

We are witnessing the slow erosion of unwritten standards of public life in so many worrisome ways and here is yet another such.  We are now being asked to believe that it is possible for an individual to serve on the Board of 3 State-owned companies and also serve as an Independent Senator.  The Express story mentioned above states that Mr. Annisette was still a Director of those State-owned companies.  There has been no denial, retraction or correction to my knowledge.  This is an utterly unacceptable state of affairs in my view.

Consider the nature of the Independent Senators in our Parliament.  Andy Johnson wrote a column entitled ‘One of the President’s men’ in the Express of 20th December 2007 and it makes interesting reading since he mentions that a known CoP supporter is now amongst the ranks of our new Independent Senators.  Johnson did not name the person but said that the other 2 parties in the Parliament knew of his affiliation and hinted that this could become controversial.

Given the way in which distractions are used in our country, we need to reflect with the necessary degree of seriousness on all this to properly distinguish these 2 cases.  The lower House of our Parliament is made up of Members elected nationally.  The upper House is comprised of the Senators selected by the PM, the Leader of the Opposition and the President.  They are allowed to nominate sixteen, six and nine Senators, respectively.  The party in power and the opposition are represented in both Houses of the Parliament.  But our constitution implicitly recognizes that these 2 elements alone cannot be enough, hence the third group of Senators we have come to call Independents.

For our President to nominate a Senator who comes from within the ranks of PNM or UNC loyalists seems contrary to the spirit of the constitution.  In contrast, the ranks of our Independent Senators is an appropriate place for supporters of ‘third parties’ together with other matured, expert and committed citizens.  We expect our Parliament to be a place in which major policy issues are debated and settled, but the reality is much different.  The decisive issue here is whether we have the vision and will to stop practices which further dilute the authority of our Parliament.

To challenge or remove the so-far-unnamed CoP supporter in the ranks of Independent Senators in this 9th Parliament will do violence to the spirit of the Constitution.  To allow Mr. Annisette to continue as an Independent Senator while holding 3 Directorships in State-owned companies is to invite ridicule and disrespect.  Even if he were to resign those Directorships now, one is bound to ask, ‘What next?’

It would be wicked to repeat here the scandalous suggestions I received in discussing this question with various people.  Out of some latent regard for the little respectable that is left, I will just say that there are still ways to deal with this unpalatable situation.

The President’s selection of Mr. Annisette was questionable.  For an Independent Senator to continue in his roles as Board Director of 3 State companies is completely unacceptable.  Due to the constitutional immunity extended to that office, it is impossible to legally challenge any of the President’s decisions, so one is forced to take action in the Court of Public Opinion.  Our President should himself take the necessary corrective action now.  He has the power, under Section (43) (2) e of our constitution, to declare Mr. Annisette’s seat vacant.

The silence of the UNC-A and CoP on all this is damning.  It would be interesting to see what views are expressed by other concerned citizens.  The peril we face is Civil Obedience.  Public apathy and cowardice are as corrosive to the health of our Republic as the menace of crime.