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

CL Financial Annual Returns 17 February 2009

This is the official copy of CL Financial’s Annual Return from the Companies Registry, as at 17th February 2009 – it bears the official stamps and is signed by CLF’s then Corporate Secretary, Gita Sakal.

The company had a paid-up capital of $7.5M, with that number of $1.00 shares in issue.

The 325 shareholders are listed alphabetically, as at 7th September 2008, with details of their occupations and addresses also supplied. Of course, that list shows, at #289, the then Minister of Finance – Karen Nunez-Tesheira – as Karen Tesheira, Attorney-at-Law – holding some 10,410 shares.

Another thing that is striking is that Lawrence Duprey would appear to have only three blocks of shares in his ownership –

#47 – CL Duprey Investment Trust – holding 1,634,335 shares, but we are unable to find the details on that company.
#78 – DALCO Capital Management Company Limited of #37 Frederick Street, POS – holding 1,947,833 shares. I am assuming that DALCO is a play on his initials – Lawrence Andre Duprey LAD, reversed.
#302 – Trustees of CL Financial Limited – holds 119,145 shares.

I am taking that to mean that Lawrence Duprey had under his direct control a maximum of 3,701,313 shares – i.e. 49.35% of the group’s entire shareholding…slightly less than half.

I am leaving it to the better-informed readers to help fill in the gaps in this story.

As to Andre Monteil, the recently-retired Group Finance Director, his 337,269 shares were transferred from Stone Street Capital Limited to First Street Capital Limited on 31st March 2008, the date he retired from the CLF group. Both companies’ registered address is the same – 33b Perseverance Road, Haleland Park, Maraval.

Afra Raymond’s submission to be made a party to the Colman Commission

16th March 2011

Afra Raymond’s submission seeking to be made a party to the Commission of Enquiry into the failure of

CL Financial Limited
Colonial Life Insurance Company (Trinidad) Limited
Clico Investment Bank Limited
Caribbean Money Market Brokers Limited and
The Hindu Credit Union Credit Union Co-operative Society Limited

My name is Afra Martin Raymond and I am a Chartered Surveyor, being a Fellow of the Royal Institution of Chartered Surveyors. I am Managing Director of Raymond & Pierre Limited – Chartered Valuation Surveyors, Real Estate Agents and Property Consultants. I am also the President of the Joint Consultative Council for the Construction Industry (JCC), an umbrella organisation which represents the interests of Engineers, Surveyors, Architects, Town Planners and Contractors in this Republic.

This submission is being made in my personal capacity and does not represent the position of either Raymond & Pierre Limited or the JCC.

My work on this vital issue has all been based on the public record and can be seen at www.afraraymond.com.

I am willing to give oral evidence before the Commission.

I have been conducting a campaign in the public interest on this important matter. My work is unfunded and I have no assistance. Indeed, I have no legal adviser at this Enquiry.

Having followed the issue so closely and attended the opening session on Friday 11th March, I am of the view that the parties thus far identified in this Enquiry are all seeking to advance their own interest.

I am here seeking to be made a party to this Enquiry, in seeking the interest of the silent majority, the taxpaying public, who have had to pay for this huge financial fiasco.

I am making this submission under rule 2. of the Commission’s Rules of Procedure, as a person whose “…participation in the Enquiry may be helpful to the Commission in fulfilling its mandate…”

I await your reply.

——————————-
Afra M. Raymond B.Sc. FRICS
Port-of-Spain

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

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

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

CL Financial bailout – Sunlight Disinfectant

If you think this title is for the latest brand of household cleaner, you would be wrong. I drew that title from the famous statement by deceased US Supreme Court Justice Louis Brandeis, in reference to corruption and fraudulent dealings: ‘sunlight is said to be the best of disinfectants.‘

Of course, this is all about the impending Colman Commission of Enquiry into the failure of CL Financial and other companies (including CMMB) and the Hindu Credit Union.

We are attempting to understand our situation in this financial fiasco – how was the entire collapse caused? Who is responsible? What can we do to avoid a repetition?

Our House needs a serious cleaning and we need a new commitment to serious retrospection if we are to succeed in understanding this scandalous situation.

To set the stage, there are four principalities being represented in this Enquiry –

CL Financial Chiefs – The people who had Direction and Control of the entire failed group – that would include the shareholders.
The Regulators – The Supervisor of Insurance, Securities and Exchange Commission (SEC) and the Central Bank.
The Auditors – PriceWaterhouseCoopers and Ernst & Young – the former being auditors for the CL Financial group and the latter acting for the Central Bank.
The aggrieved Policy-Holders and Depositors – Several groups have been formed to seek the return of all the monies owed to these investors.

My first point about this Colman Commission is how welcome it is, as a tangible sign of a change in how our country is being run. No, I did not vote for either group in the last election, but it seems to me that neither of the last two regimes (Manning or Panday) would have initiated a public enquiry into this financial fiasco.

As much as I approve the decision to have this public enquiry, the purpose of this article is to warn against some of the forces now being assembled to erode the enquiry’s effectiveness. Even though, in this respect, political times have changed, we need to remain vigilant if the Colman Commission is to be effective.

To be sure, the four principalities I listed comprise very powerful players for whom this enquiry is a literal nightmare, since they will be obliged to explain some of their biggest decisions and actions, which they would never have had to explain to anyone outside of their own circle.

If the Enquiry takes place as intended, we are going to be afforded an unprecedented insight into the workings, dealings, arrangements and situations in our leadership class – all of it at a depth and range never before recorded. Matters that had been only the subject of picong, ole talk and so-called urban legends will all now become part of the official record. Yes, our Republic will be coming of age.

Our country is a Republic, which to me means that no class of citizen ought to enjoy rights which are superior. But there has been a pattern of behaviour in this fiasco which has been very disturbing because it violates those Republican expectations. Of course, I am referring to the fact that a three-tier system seems to have been in operation during the entire meltdown.

The lowest tier comprises those many persons who are now fretting over their investments with this failed group. Those people have to decide between continued protest action, legal action or just plain pleading to get some relief. A significant number of them would have placed undue reliance on the CLF products and would be suffering extra stress because they put too many, or all, of their eggs in one basket.
The middle tier is the lucky and/or well-connected people who were able to get back their money after the group collapsed. When the Prime Minister announced this Enquiry on 1st October 2010, she promised to release details of who received the monies disbursed in that period – i.e. after 30th January 2009. That list of names and who received what sums would be an absolutely explosive one.
Of course, the top tier and the absolute insiders would be those who had early warning of the oncoming collapse and took steps to preserve their wealth. That group would have to include the top CL Financial chiefs who left in the 12 months before the collapse – Monteil, Fifi and Mayers. Major depositors and investors would also have been part of this privileged group. The Governor of the Central Bank and the last Minister of Finance also withdrew monies just before the collapse.

Maybe I am entirely wrong and there was complete surprise when the CL Financial group collapsed. But if that is the case, one is really contemplating a slack system of management systems and an entire swath of our ruling elite who are not ‘fit and proper’. The question of who knew what and when, will be a main point of dispute, because either way you slice it, the picture is unappealing.

You can be sure that the people in the top layer will do anything in their power to protect themselves from the stern scrutiny of those in the lowest group, not to mention the public, who are paying for all this.

I wrote a previous column in this series, entitled ‘Taking in front‘ and on this occasion, in light of what is at stake, I, too, am taking in front. Having suffered a defeat in that the Colman Commission has now been established, the members of the Code of Silence can be expected to try halting, delaying or just diluting the Commission.

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

We have already had former Hindu Credit Union (HCU) chief, Harry Harnarine, defeated in the High Court in an attempt to stop the Colman Commission. I was not surprised to read reports that Harnarine is planning to appeal that decision. We can expect other strong challenges as this historic process unfolds.

If the members of the Code of Silence are unable to derail the Commission itself, we should not be surprised if they try to cloak the proceedings in some kind of blanket to prevent too much information escaping.

Readers, please note that the process of asking the Court to prevent publication of a particular piece of evidence is a very swift one, with the ruling expected in the very same sitting. That is because if those proceedings are too drawn-out, it can be actually self-defeating, since the matter which they are seeking to have concealed can be published and discussed while a decision is awaited.

That is the reason we need to beat this drum now. We cannot wait for the filing of injunctions and then seek to publish. By then, it would be too late.

The new algebra is simple and inescapable –

Expenditure of Public Money – Transparency = CORRUPTION

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

The preface of that Report contains an instructive paragraph, at page xii –

“…This report is not the sole repository of what the panel found. A website — www.fcic.gov — will host a wealth of information beyond what could be presented here. It will contain a stockpile of materials — including documents and emails, video of the Commission’s public hearings, testimony, and supporting research — that can be studied for years to come. Much of what is footnoted in this report can be found on the website. In addition, more materials that cannot be released yet for various reasons will eventually be made public through the National Archives and Records Administration…”

The US legislature is determined that the inner lessons and testimony on this important crisis are available to all interested parties for the years ahead. That represents a solid commitment to a learning society, which will at least attempt to draw lessons from the bitterest of experiences. In my opinion, that commitment is worthy of emulation.

Has our society reached the stage of maturation to commit to an entirely transparent process of retrospection? That is the question which will be tested in the weeks and months to follow.

The entire proceedings of the Colman Commission must be held in public. The proceedings must be on TV and available on the internet. The Colman Commission needs a strong internet presence, with its own website.

Sunlight Disinfectant cleans brighter, you see?

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

14^th February 2011

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

This submission is being made in my personal capacity and does not represent the position of either Raymond & Pierre Limited or the JCC.

My work on this vital issue has all been based on the public record and can be seen at www.afraraymond.com.

I am willing to give oral evidence before the Commission.

My area for focus in this submission is that of Political Party Financing.
In the case of Hindu Credit Union (HCU) these are good references – http://legacy.guardian.co.tt/archives/2004-12-05/business1.html or http://legacy.guardian.co.tt/archives/2008-07-27/news10.html

Questioned about allegations that he had helped finance the PNM’s campaign leading up to the last general election, Harnarine replied: “We have assisted all major political parties in consideration of the HCU’s membership, which has a large base.”
Harnarine said he went out of his way to help the UNC, COP and even organised a meeting between Manning and the Indian businessmen.

It is my view that these persons must be questioned by the Enquiry if we are to properly comprehend the extent of the financiers’ influence –

former Prime Minister Basdeo Panday
former Prime Minister Patrick Manning
former PNM Chairman and Minister in the Ministry of Finance, Conrad Enill. Enill was also the Campaign Manager during the 2007 and 10 elections, so he will possess a clear knowledge of the campaign finance trail.
former PNM Treasurer and Minister in the Ministry of Finance, Mariano Browne.

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

……………………………………………..

Afra M. Raymond B.Sc. FRICS

Property Matters – Reforming UDECOTT

UDeCOTT Board with Planning Minister Sen. Mary King

Last week’s cover story in the Trinidad and Tobago Guardian paper was of the same title. Readers were treated to a two-page article introducing UDeCOTT’s new Board of Directors and offering several views from the re-appointed Chairwoman, Jearlean John.

As a long-time UDeCOTT-watcher, I was really pleased to see their new Board appointed, but John’s opening quote in that article was provocative in the extreme. Speaking about the scandalous International Waterfront Centre (IWC), UDeCOTT’s flagship project, John is reported to have mused “…Whatever else he did, he did that…” Ms. John was referring to the now-departed Calder Hart.

Truer words were never spoken, but yet it was a provocative opening. How so?

Despite the regime change, it seems that the IWC remains UDeCOTT’s flagship project. On the one hand, its admirers point to the architectural merits of the complex and the repeated claims that it was completed on time and within budget. On the other hand, it is a monument to a chronically-flawed process of project conception and approval, being one of those classic ‘white elephant’ projects, with a ‘break-even’ point at some point in the distant future, if ever.

The IWC represents a serious paradox in the entire UDeCOTT fiasco, but more interestingly, it offers an insight into the extent of the issues facing that State-owned company. Yes, there is an unbroken thread of unreason through this flagship project to the bigger picture.

I will move from the general to the particular.

To begin at the very basic level, UDeCOTT has published no audited accounts since the end of 2006. Yes, that company, one of the hugest in the country, was operated throughout its period of greatest activity without audited accounts. Quite seriously, that indicates a far larger failure in terms of the rules and guidelines for State Enterprises, the oversight of the Parliament and of course the sheer dereliction of the Cabinet. At one point in the Uff Enquiry, UDeCOTT’s attorneys stated that it was a $12Bn company. Of course, the last Prime Minister repeatedly told the public that UDeCOTT was a leading State Enterprise.

At the Uff Enquiry, Calder Hart was questioned under oath by Alvin Fitzpatrick SC, the JCC’s attorney – the relevant extract is at http://wp.me/pBrZN-51 – and said on 28th January 2009 that all the issues with UDeCOTT’s accounts had been resolved. He went on to say that the accounts would be published shortly. Of course that has never happened, so we have to ask why.

In March 2010 I made yet another public call for the publication of those accounts. But even worse, according to a Newsday article on 18th March 2010, Jearlean John, the newly-appointed Chairwoman said

“…Explaining that she adheres to “good corporate governance” in her professional life, John said Udecott will adhere to the law and the standing accounting practices as outlined by the law…”

That published promise was never delivered.

The simple fact is that we cannot continue talking about performance and good governance, far less change, without knowing the condition of our largest State Enterprises.

That is a serious and inescapable point. We were sorely disappointed by the wanton mismanagement of the last regime and its consequences on the State Enterprise sector. The State Enterprises cannot and will not function if the actual strategy is unsound. The State Enterprises are meant to be servants to the Central Government.

I expect better from you both, Minister Mary King and Chairwoman Jearlean John. Much better. No continuation of the past follies and shameless excuses. I am saying plainly to you, Ms. John, that you promised us these accounts nearly a year ago and we have nothing. Sad to say, but a little further and your statements on this important matter could echo Hart’s, as he told his tale.

That article in last week’s BG stated that the new UDeCOTT Board would consider financials for 2008, 2009 and 2010 at its first meeting. No mention of 2007 and I hope that was a mis-print.

Where are the UDeCOTT accounts? What is the mystery? Are the issues resolved or not? Is there yet another ‘Code of Silence’ surrounding this nexus between Calder Hart, the PM’s office and PriceWaterhouse Coopers?

But what does the IWC have to do with all this?

You see, the various UDeCOTT supporters have continued to applaud this project as the flagship and a leading example etc. etc.. Even Jearlean John seems to be going in that direction.

So here are a few facts on that project –

The break-even rent – This is the rent a project needs to earn to repay its cost (those costs include land, professional fees, construction and finance – they do not include for profits or maintenance). In the case of the IWC, that break-even rent was calculated by me, in this column and prior to the Uff Enquiry, as being of the order of $30 per sq. ft. Please note that rents of good quality space in POS at the time this project was approved would have been in the $12 psf range.
The Feasibility test – I questioned Calder Hart under oath at the Uff Enquiry and he stated that only one UDeCOTT project had been the subject of a feasibility test- the very IWC. He stated that its ‘break-even rent’ was ‘…under $20psf…‘, but when I questioned what was the value he had attributed to the land, he replied ‘NIL’. Bogus and unprofessional approaches to massive investments. Hart was prepared to omit the property in order to carry out a feasibility test on a property development. That is the sheer scale of the failure we are looking at. All these projects were approved by the Cabinet, according to Manning’s 13th May 2008 statement to the Senate.
The financing model – UDeCOTT’s 2006 Annual Report was strong on the point that that project in particular did not require a State letter of comfort or guarantee. It was meant to demonstrate the scale of achievement and independence.
When will the IWC break even? – The best offices in POS are rented in the $15 psf range and the IWC comprises some 900,000 sf of offices – that is about nine times the size of the Nicholas Towers on Brian Lara Promenade. Due to its size, it would be reasonable to expect the IWC to fetch a rent of about $12-13psf now, if one were fortunate. Given that background, it seems that this project will never break even.

If UDeCOTT’s best project will never break even, the entire company must be insolvent or so close as to not make a difference.

If their best project is a big-time loser, it is no wonder that the last administration was reluctant to publish UDeCOTT accounts. The very year (2006) that project started was the very year the accounts stopped being published.

The profitability of the Hyatt, which was reportedly cited by John in last week’s article, needs to be backed up by those accounts. In any case the unprofitable offices far eclipse the Hyatt.

It is clear that UDeCOTT’s new Board have a heavy task before them in terms of fixing its many ills, but they need to start with an honest and straightforward approach. If the country has to count our losses, you need to do so now, Chairwoman John. Do so.

There is no right way to do the wrong thing.

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

14^th February 2011

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

This submission is being made in my personal capacity and does not represent the position of either Raymond & Pierre Limited or the JCC.

My work on this vital issue has all been based on the public record and can be seen at www.afraraymond.com.

I am willing to give oral evidence before the Commission.

My areas for focus in this submission are –

Fiduciary Duty of Directors and Officers

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

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

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

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

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

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

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

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

It would be important to examine that AGM very carefully.

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

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

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

If that approach were taken, the suggested questions would be

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

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

Executive Flexible Premium Annuity (EFPA)

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

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

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

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

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

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

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

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

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

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

Political Party Financing

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

……………………………………………..

Afra M. Raymond B.Sc. FRICS

www.afraraymond.com

Property Matters: Housing Policy Review as an element of the Welfare State

There has been a recent, refreshing discussion on the shape and necessity of our welfare state. The Welfare State is used to refer to the various administrative arrangements which redistribute the nation’s wealth to assist the more needy citizens in our midst.

The discussion was initiated in the T&T Review of January 3 in Gregory McGuire’s thoughtful and solidly-based review of the welfare spending trends and their wider consequences. The responses ranged from a two-part article (Part I & Part II) in the Express from Professor John Spence, with an attempted rebuttal from Dr. Errol Mathura in the same newspaper. From the Guardian, there has been a serious commentary on Sunday 16 by Dr. L Trevor Grant – ‘Curb escalating poverty in rich T&T’ – and the editorial of Monday 17, dealing with the fate of the empty HDC houses.

That Guardian editorial – ‘Housing Shame’ – was based on the reports of an investigation into the situation at several of the HDC virtually-completed, but unoccupied housing projects.

Sunday’s Guardian headlined with ‘Scandalous’ on an abandoned $156M HDC project and that is my point of discussion on this Welfare State matter. The empty homes built by the HDC are symbolic of a serious need to re-examine our housing policy.

Above and beyond the case of the vandalized HDC homes, the fundamental public housing situation is scandalous. Scandalous is my word to describe a policy of allocating of scarce resources to build homes, without satisfying the needs of the poorest applicants. That is a blatant misallocation of public resources.

As I wrote in the Trinidad Guardian newspaper in 2007, our housing market is divided into 5 layers, moving from the neediest to the wealthiest –

Homeless – People who have nowhere to live or rely on charity for shelter.
Permanent Renters – People who can never afford to buy.
Transitional Renters – People who are renting now, but will end up as home-owners.
Home Owners – People who own their homes.
Multiple Home-owners – People who are wealthy enough to own more than one home – these people are also the ones who rent property to the others.

According to the latest figures released by the Housing Development Corporation in March 2010, there are over 10,000 empty homes in their stock of newly built units. In addition, there is a waiting-list of hopeful applicants believed to be in excess of 100,000 people. How can we reconcile those figures?

Dr. L Trevor Grant is the only author, to my knowledge, to have written on the plight of the homeless in our society and his column in Sunday’s Guardian gave telling details on the level of need in those communities.

We have constructed a national housing policy which pays only lip-service to the housing needs of the poorest applicants. The clear preference – PNM or PP – is for the applicants who qualify to buy a home from HDC. That is the only explanation for the reality of 10,000 empty new homes and 100,000 waiting applicants.

There have been some recent handovers of new HDC homes to applicants featured in the press and those have all detailed the incredible length of time these applicants waited for their new homes. Waiting periods in excess of 20 years have been mentioned.

There is a severe disconnect between these expensive policies to provide subsidized housing and the reality of being a poor applicant on HDC’s waiting-list.

At this point, an estimated 76% of our people live in owner-occupied property. That is comfortably above the comparative figures for the USA or the UK, where the numbers are in the 68-69% range. It seems clear that we are approaching the limits to which we can realistically grow home-ownership in our country. In some ways we may already have exceeded those limits.

Another point I detailed in my 2010 series ‘Housing Policy Imperatives’, was the nature of the housing subsidy being offered by the HDC. For example, if the HDC sells a home with a market value of $500,000 to an applicant for a price of $325,000, the difference between those two figures is the housing subsidy. Yes, in this example there is a $175,000 housing subsidy to each of those people who buy those homes from HDC.

The big question is – if the HDC can afford to provide these benefits to applicants in the layer of ‘transitional renters’, what are the levels of subsidy and number of new homes being provided to those in the poorer layers?

If that relationship does not improve to favour those who cannot ever afford to buy, we will be stuck in an increasingly frustrating housing fix.

The housing fix is notable for the inequity with which the country’s scarce resources are allocated and the hopelessness of the poorer applicants.

There are also secondary problems which run very deep and those include the issues highlighted in the Guardian’s story on the abandoned HDC estate.

What is the cost of securing all these virtually complete, but vacant homes? I am reliably informed that the annual cost of security is of the order of $50M, yet there are still significant episodes of vandalism and squatting.

Additionally, we have to factor in the cost of maintaining and repairing the unoccupied homes. Empty properties deteriorate at a faster rate and that is a cost to the HDC which could be avoided by putting people to live in these empty homes.

The estimated annual sum of $50M to secure these homes is staggering. That sum of money could build over 200 badly-needed low-income homes every year.

There is a newly-appointed HDC Board and the time is now opportune for a review of this important Welfare State policy.

A critical factor in all this is the role of rent controls, since the long-established rent control boards were allowed to wither on the vine by the last administration.

Rent controls and the planning regime need to form a part of the Housing Policy Review.

There is no right way to do the wrong thing.

Creating a Context – the role of planning

investment-decision For me, the key point at which we lost our way in the UDeCOTT/HDC/NIDCO bobol, was the crossroads of the Investment Decision.

That Investment Decision is an indispensable part of any rational process of development, for families, businesses and countries alike. The national level is my concern and there must be broader considerations in making those decisions.

It is clear from the depth of the failure, that the last administration lost its way completely, insofar as elementary concepts such as opportunity cost, payback periods, cost-benefit analysis and so on. We have only now begun to scratch the surface in terms of understanding the extent of the losses and corruption – readers, please be reminded that as yet, we have no accounts for UDeCOTT or HDC for several years. In normal business thinking, the failure to publish accounts without even an attempt at an explanation is tantamount to an admission of the most serious problems. Only State-owned organisations can get away with that kind of irregular conduct, which is maybe why they do it.

My concern in this article, is that apart from the Investment Decision in the case of specific projects, the State has an obligation to consider the wider picture in terms of fine-tuning, timing and phasing those projects. Our last land-use plan in our country was approved by the Parliament in 1984 and we have had several fruitless attempts to revise that plan.

The focus here is on the need for a proper practice of integrated planning, in particular long-term land-use and town-planning. By integrated planning I am speaking to an approach which takes account of varying principalities, such as land-use, financial constraints and national targets. In addition, the approach allows a balance to be struck between the competing demands within various time-horizons, such as immediate demands, medium term demands (say, 10 to 20 years) and longer-term considerations.

Lack of an updated national Land-use plan
As I wrote in the Business Guardian of 9^th October 2008 –

Dr. Emily Gaynor Dick-Forde, former Minister of Planning, 2007-2010

“The Minister of Planning, Housing and the Environment spoke at a breakfast meeting of the Couva/Point Lisas Chamber of Commerce on September 10, and some of her reported comments deserve our close attention.

The minister told her audience that the National Physical Development Plan was passed in 1984 and had been continually updated, but that “that plan has somehow never reached to Parliament.” Somehow. The mind boggles.

One report said, “Dick-Forde said the external and internal committees on national development were working towards the completion of the National Development Plan, which will be taken to Parliament in the next two years.”

When this tidal wave of development is at an ebb, we will then have a plan tabled in Parliament for discussion. To what end?” see http://www.newsday.co.tt/politics/0,85974.html

Given the last Minister’s stated timetable, we ought now to be having a draft plan published for consideration. Where is this, Minister King? When do the consultations start?

Transportation planning

Austin 'Jack' Warner, MP, Minister of Works & Transport

This is a vital, related area and Minister of Works & Transport, Jack Warner, told us that the PNM government paid $21M for an incomplete Comprehensive National Transportation Study (CNTS) – see http://guardian.co.tt/news/general/2010/10/09/warner-pnm-paid-21m-non-study – and I agree. That fact only makes the situation more doubtful, since we seem to be making major transportation system decisions in the absence of a strategic plan.

Just consider –

The Tunnel to Maracas
This was first announced in the 2011 Budget – see http://www.finance.gov.tt/content/Budget%20Statement%202011.pdf at page 24

…We all know how difficult it is to access Maracas Bay through the North Coast Road.

Currently, it takes approximately 45 minutes to get from Santa Cruz to Maracas Bay. Furthermore, landslips on the North Coast road are a major deterrent to persons wishing to access this scenic route for pleasure or business. As a result we will do a business plan for a new: ‘Connective Development Project’. This project would create an underground tunnel from Maracas Valley to Maracas Bay, to enable quicker access to the North Coast…

That strange project was then taken up by Warner at length – see http://guardian.co.tt/news/general/2010/09/26/warner-s-tunnel-take-next-year
The expansion of the Highway Network
We are now aware that the National Infrastructure Development Company (NIDCO) is proceeding with ambitious Highways packages from San Fernando to Point Fortin, with the San Fernando to Mayaro route under active discussion – see http://www.newsday.co.tt/politics/0,124988.html.
Coastal Water Taxis
It seems that the government has changed its mind, three times, on this part of our public transportation system. Firstly, we were disposing of two of the four new water-taxis as being superfluous. Secondly, there was an about-face, in which it was decided to keep the new water-taxis. Most recently, I have seen advertisements for the provision of brokerage services for the disposal of these vessels. Again, what is the basis?

Sewer Treatment plants and the threat of cholera
We recently had shocking stories about the leaking of significant amounts of untreated sewage into the Maraval reservoir – see http://guardian.co.tt/news/general/2010/11/19/wasa-boss-moka-residents-must-pay-repair-sewerage-plant. That is no surprise, given the widespread practice of property developers walking away with their profits in hand upon completing the sales of their properties, but with no proper plan for the maintenance of the sewer treatment plants.

Once again, this is an area which urgently needs to be addressed in terms of town planning, local health, WASA regulations and adequate financial mechanisms for ongoing maintenance of these facilities.

The Housing Development Corporation (HDC)
The HDC’s new target for 2011 is 6,500 new homes and that is still a huge number. Given our limited land resources and the absence of a national planning framework, how is this to proceed?

There remains the unanswered question as to what is the basis for these decisions?

The Limits of our financial resources

The Minister of Finance recently called for Ministries to not implement any new large projects, due to the financial limits constraining state expenditure – see http://www.newsday.co.tt/news/0,129148.html. That is a valid call, which shows that the time is ripe for us to plan our major strategies and projects so that they can conform to some sort of national context.

That context would have to include elements such as land-use, transportation implications, financial limits and the question of the capacity of the economy to meet the targets being set.

SIDEBAR: Fuel subsidies in national planning

The question of fuel subsidies is an important part of this integrated planning discussion, since, at approximately $2.8Bn, they are a large part of our national expenditure. More to the point, the effect they have on our behaviour is largely unremarked, which is paradoxical – the gas price being so low that we do not really consider it in our daily choices.

It is a classic example of the sort of ‘policy silos’ which the integrated planning approach seeks to overcome.

The Minister of Works & Transport speaks out strongly against the heavy subsidies necessary for the operation of the Coastal Water Taxis – no statement from Warner on the larger sums spent on the fuel subsidy. The Minister of Energy, in the run-up to the budget, says that these fuel subsidies may need to be reduced. The Minister of Finance, in his budget address, said –

“…The largest Subsidy is on petroleum products, particularly gasoline which usually represents one to two percent of GDP per annum. All of our citizens benefit from this subsidy. It is often difficult to determine whether resources are being used wisely to achieve the intended objectives of subsidies. We are currently reviewing whether alternate options are more efficient…”

We need to develop a holistic view of the various subsidies being paid in our economy and transportation subsidies, including fuel, are important considerations.

The goal of promoting the wider use of public transportation has to be adopted with some vigour and creativity. The fuel subsidies enjoyed by small vehicles – say, less than 12 passengers – should be gradually reduced with a shift of those subsidies to larger-capacity vehicles. They make more efficient use of our limited roadways and would reduce the adverse effects of traffic and pollution.

The three Ministries concerned should join with the Ministry of Planning in mapping out these strategies and policies.

The strategic goal should be to decrease the convenience of individual car-journeys and increase the convenience of the mass-transit approach.

It is no easy shift to go from today’s congested reality to the medium-term goal of a much-improved transportation system with travelers having several choices. That journey would involve a virtual culture-shock for most of us, but it is one we should start, sooner than later, for our common good.

That is one of the examples of how an integrated planning approach can offer fresh solutions to serious problems.

The State of the Media

The recent series of changes at CNMG have sparked a series of evolving discussions. I was one of the three people ‘let go’ from CNMG and that was reported briefly on my blog.

I am starting to reflect on some aspects of all this recent interest, but no, this not an anti-PP column or one about how wicked politicians are and so on.

What kind of talk is that?
The first thing that occurred to me is how the media conversation has blown up in sheer size and how that has had an effect on the quality of our national conversation.

In the so-called ‘good old days’, before the shift I am about to describe, the only people who really had a voice in our society were those who were approved, such as government ministers and their spokespersons, established journalists, the ‘great and good‘ and of course the brave and imaginative ones who were our activists. In fact, the last-named group were the voice of the voiceless, who fought to uplift our society. Of course in that group you would have to include the leading calypsonians and ‘troublemakers’ of their era.

From its beginnings about 20 years ago, we have moved far from the post-independence period in which the voices heard on the national media of Radio and TV were very limited. The NAR regime 1986-1991 decisively brought that to an end with the grant of more broadcast licences and the real birth of ‘talk radio’. TV call-ins soon followed and of course, the internet/email broke onto the scene in the mid-1990s. The final stage in this progression is the growth of new-wave social media – such as Facebook, YouTube, Twitter etc. – to the point where they have now eclipsed the older formats like web-pages.

As a result of all that, we now have many people, who never had a voice as individuals, being able to project their ideas onto a huge stage. That is literally unprecedented. The new conversation has opened up serious new challenges and opportunities.

One of the most detrimental of our habits is mauvais langue – just plain bad-talking people behind their back, but not showing it when you meet those same people. As young people would say – Pure hate, just acting normal.

I hold the view that mauvais langue is the biggest cultural obstacle to our development as a nation. I say that because it is my view that without an open exchange of ideas, the possibility of change is very limited. In this new situation, someone can add a mischievous or irrelevant comment to the discussion, without ever identifying themselves or backing-up what they are saying. As a result of those possibilities and its combination with our habits, we now have most of our blog commentators and callers-in choosing to remain anonymous.

But what are we saying to each other? The essential message of a large number of the comments on these T&T blogs boil down to ‘Shut Up…I don’t agree with you and don’t want to hear what you have to say…Go away!‘ Our new national conversation is on a huge scale and on a range of issues which is extremely fertile, but the dominant habits of that conversation are perturbing.

To be fair, there is a solid body of research to show that anonymous conversations of this type are extremely effective at finding-out the views of the public, workers or customers. Indeed, this social media is now a very important part of how progressive states and corporations take their bearings as to where things stand.

One important difference I have seen is that the blogs for newspapers and news-sites in the advanced world have almost no anonymous content – people actually write as themselves.

opm website More to the point, we have a situation where we have embraced the new situation and its possibilities, while our leaders and organisations lag far behind. Just as an example, the website for the Prime Minister is http://www.opm.gov.tt/ – the last officeholder had no publicly-available email address and that website is now temporarily offline, being under re-construction.

There is also the secondary aspect of all this, the essence of our commitment to a free press. Of course, I am talking about the silence of Newsday – ‘The People’s Newspaper which offers daily news from Trinidad & Tobago’. There was a huge response to the news on Monday 8^th November, that Fazeer Mohammed was removed from CNMG’s morning line-up. I think that article in the Express of the next day had over 825 comments – which must be some kind of local record. It is staggering to me that Newsday had nothing to say about this, until the Thursday after, even as a pure item of news. Just unbelievable.

It is easy to criticise the politicians and their mistakes, but this silence by Newsday is just another level of irresponsibility which would make any right-thinking person pause. Newsday have their own patchy track-record in that they forced-out Kevin Baldeosingh over his challenge to Fr. Henry Charles for plagiarism. The parliament discussions on Friday 12th and the news releases from both the Media Association of Trinidad & Tobago (MATT) and the Congress of the People (CoP) formed the basis of articles on the issue from Thursday 11th. Given that behaviour it is interesting to watch them, as The People’s Newspaper, minimizing a matter of such great concern to so many people. A matter concerning an apparent threat to freedom of the press.

We have to be honest and admit that a significant part of the national conversation is the impatient snarl to ‘shut-up’ the person we do not agree with. That tendency has borne some strange fruit in the case of Newsday and Fazeer.

Yes, I think Fazeer was forced-out too – given his popularity, it all seems very wrong-headed to me. At several levels, but the pregnant question here is how come the State owns companies which are in competition with private ones. The notion of the State Enterprise was originally one which performed some specialist task which the private sector did not provide, but the discussion is an involved one.

One of the criticisms of our State Enterprises is that in significant cases, they they are in competition with private business interests. For example, First Citizen’s Bank, Udecott, HDC, EFCL and so on. Of course the closest example of this is CNMG. Ironically enough, the Special Purpose Entities/State-owned sector were the topic of my last show on CNMG and we did discuss this issue of competition.

So, exactly why does the State own CNMG? How fair is it for the other media houses to have to compete with a State-funded entity? In my view, CNMG had established a solid reputation as a topical and fearless current affairs and news source. Of course, all of this is going to damage the brand, so its private sector rivals would be smiling to themselves.

Returning to one of my earlier discussions on the ‘Two Tendencies‘ – published in this space on 16^th May 2010 – it seems clear that these are a big part of this story. The first tendency is to say that our State Enterprises are too important to be run by anyone but the best people. The second tendency says that, having won an election, all these bodies are ours to command and that is all. The second tendency can distort good sense and professional standards to the bizarre extent we saw in the Udecott case. This case of the Fazeer Mohammed ‘re-assignment’ is definitely one in which both tendencies have battled it out on the blogs and the airwaves.

It is unlikely to be settled anytime soon.

The big questions for me are –

Which of the Two Tendencies is in control?
How committed are we to a conversation with people who hold different views?

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