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An Overview on the CIVIL SOCIETY submission to the Joint Select Committee on PUBLIC PROCUREMENT

This special publication is dedicated to the important issue of Public Procurement.  It is written by the a private sector group, headed by the Joint Consultative Council for the Construction Industry (JCC).  The JCC consists of:

  1. Association of Professional Engineers of Trinidad & Tobago (APETT)
  2. Trinidad & Tobago Institute of Architects (TTIA)
  3.  Board of Architecture of Trinidad & Tobago (BOATT) – observer status
  4. Trinidad & Tobago Society of Planners (TTSP)
  5. Trinidad & Tobago Contractors’ Association (TTCA)
  6. Institute of Surveyors of Trinidad & Tobago (ISTT) comprising Land Surveyors, Quantity Surveyors and Valuation Surveyors.

The private sector group consisted of –

  • Joint Consultative Council for the Construction Industry
  • Trinidad & Tobago Chamber of Industry & Commerce
  • Trinidad & Tobago Manufacturers’ Association
  • Trinidad & Tobago Transparency Institute.

The members of that Private Sector group were part of the Working Party on the Public Procurement White Paper, which was published in August 2005 and laid in Parliament the following month.

The Peoples’ Partnership’s manifesto, at page 18, commits to –

Procurement

  • Prioritise the passing of procurement legislation and appropriate rules and regulations
  • Establish equitable arrangements for an efficient procurement system ensuring transparency and accountability by all government departments and state enterprises…

In keeping with those campaign promises, the Minister of Finance tabled two legislative proposals in Parliament on 25 June 2010.  Those were a Bill to amend the Central Tenders’ Board Act (originally prepared in 1997, when Ramesh Lawrence Maharaj was Attorney General) and the Public Procurement Bill (originally prepared in 2006, after publication of the White paper).  A Joint Select Committee (JSC) was established on 1 October 2010 to examine those proposals, invite submissions and make recommendations.

The stated target of the PP government is to have the new Public Procurement legislation in place by the first anniversary of their electoral victory – i.e. by 25 May 2011.

Our Private Sector/Civil Society group reconvened last year and made a joint submission to the JSC in December 2010 – it is available here from the JCC‘s website.  Our Private Sector group has had several meetings with the JSC – which was chaired by Education Minister, Dr. Tim Gopeesingh – but the results of those are not featured in this publication.

This special publication is intended to inform readers of the necessity for new Public Procurement legislation in our country and to set out the objectives of our proposals.

The guiding Principles

 These are –

  • Transparency
  • Accountability
  • Value for Money

The broad picture

One of the most serious findings of both the Bernard Enquiry (Piarco Airport Project) and the Uff Report (UDeCOTT and HDC) was the extent to which the largest State projects were being executed outside of any normal system of accountability.  The very purpose of setting up these companies and procurement methods was to bypass the Central Tenders Board.  The natural consequence of that way of proceeding being that if the CTB could be sidelined as a deliberate act of public policy, then other important elements of the regulatory framework are violated as a matter of course.  In the case of both UDeCOTT and NHA/HDC, accounts were not filed for years – since 2006 for the former and 2002 for the latter – in flagrant violation of the rules and laws.

These were the largest State projects – often described as being the flagship or centre-piece of this or that government’s policy – yet they were breaking the main rules and getting away with it.  The ‘getting away with it’ is the cloudy part of the picture, because we never hear of any penalty being sought against those State Enterprise Directors who broke the governance rules.

But that is the very centre of the puzzle and we need to understand it before we can try to unlock it.  So, we are told, time and again, that the only way to really get important and urgent projects done in the correct fashion is to go outside the rules.  The stated reasons are that the old rules are too cumbersome, slow etc… and yet, we end up, time and again, in the same mess.

Some of the features of these fiascos are –

  • Huge cost over-runs on virtually every project.
  • Unfinished projects which virtually no one can make sense of – to date there is no proper rationale for the huge and loss-leading International Waterfront Project, apart from Calder Hart’s bogus explanation to the Uff Enquiry.
  • A gross burden on our Treasury going forward – The continuing delay in completing the accounts for these State Enterprises shows how difficult it is to work out exactly what the State owes and to whom.

What all that tells us is that the existing rule-book seems to be blocking progress and the attempts to bypass it have done little better, if not far worse.

The dismal picture on public procurement is not limited to construction projects and can be found in all the other areas.

A new approach is needed and that is what is at the foundation of these legislative proposals.

What is Public Money?

Central to the new proposals is that any new Public Procurement system must be in full effect whenever Public Money is spent.

‘Public Money’ is defined at page 5 of our proposals as money which is either due to, or ultimately payable by, the State.

Our proposals are intended to form part of a financial management reform package to include for a National Audit Office and a Financial Management and Accountability Bill.

The intended move is towards a greater transparency and duty of care in terms of how taxpayers’ money is spent.  Our citizens, particularly the unborn ones who will have to pay for some of the wasteful schemes which are littering the landscape, deserve no less.

The new equation confronting us is –

Expenditure of Public Money
minus            Accountability
minus            Transparency
equals         CORRUPTION

We must fix that.

So, what is at stake here?

Our society is beset by large-scale corruption, which sustains wrong-headed decision-making.  The wider social consequences of that toxic culture are now hatching, with a vengeance, in the naked violence and wily crimes which pre-occupy our head-space.

The killing-fields of East POS, the decimation of African urban youths, the URP and CEPEP gangs and the battle for turf are all part of this picture.

As long as our society continues to applaud and reward dishonest, corrupt behaviour, we will continue sliding downhill.

The structure of our economy is that most of the country’s foreign exchange is earned by the State in the form of oil & gas earnings.  The rest of the society relies on the State and its organs to recycle those earnings for the benefit of those of us not directly engaged in the energy sector.

For that reason, the State casts a very long shadow in our country, far more so than in other places.  Virtually every substantial business relies on the State and its organs for a significant part of its earnings.  A healthy connection with the State is essential for good profits.

But that is where the particular problem is, since the conduct of the State and its organs is often found to be lacking in the basic ingredients of fairplay, accountability and transparency.

If the State is the biggest source of funds in the place and the State is not playing straight at all, a serious question arises – How can we hope to uplift our society?

The State has an over-riding duty to behave in an exemplary fashion in its policy and operations.

Due to its tremendous footprint, the State has to behave in that exemplary fashion if we are to move out of this mess.  A positive shift in State conduct will have a salutary effect on the commercial culture and wider society, one that is long overdue.

So, who spends Public Money?

We have a vast, expensive and confusing array of organs, all of which are authorized to spend our money.  For a country of about 1.4M people, we have 26 Ministries.  Just consider that the UK, with a population of about 65 million, has 19 Ministries and the USA, with a population of about 300 million, has 16 Ministries.  For a Caribbean example, Jamaica has twice our population and 16 Ministries.

Quite apart from the number of Ministries, there are two further layers of agencies which also have the power to spend – our country has 73 Government Bodies and 58 State Enterprises.

Given the vast range of operations undertaken by these agencies, any new system would have to be flexible in order to cover all those types of transactions.

The main features of the new system

Three new independent organs will be created –

    1. The Procurement Regulator (PR), with the duty to create overall Guidelines and a common handbook to guide the public procurement process.  The Regulator is appointed by the President in his own discretion and reports only to the Parliament.  Agencies can create their own procurement handbooks, once these conform to the overall Guidelines, as approved by the Procurement Regulator.
    2. The Public Procurement Commission (PPC) will be the investigative arm of the new apparatus to which complaints will be directed.
    3. The National Procurement Advisory Council (NPAC) will be purely advisory and comprises 14 members from a broad range of named private sector/civil society organisations – the JCC, Manufacturers’ Association, Chamber of Commerce, Transparency Institute – as well as the Ministry of Finance and the Tobago House of Assembly.

All expenses are to be drawn on the Consolidated Fund, with the Procurement Regulator and Advisory Council required to report annually to Parliament.

A vital part of our proposals is that Cabinet, Government Ministers or politicians are prohibited from instructing or directing these new agencies in any way.

They are intended to be entirely independent of political influence, which conforms to the proposals in the White Paper.

That freedom from political influence was also specified in both the 1997 and 2006 draft legislation.

A Complaints Procedure

The proposed system will create clear rights to make complaints or report wrongdoing.  Those rights are an important aspect of any modern procurement system and we propose three types of complaints/investigations –

  1. Potential tenderers/suppliers can complain, in the first instance directly to the Agency with which the tendering opportunity resides, then, if that is not dealt with satisfactorily, they can complain to the Public Procurement Commission.  Ultimately, the right to seek the protection of the High Court is preserved, once the established complaints procedure has been followed.
  2. The Whistleblower – We are proposing that whistleblowers be given legislative protection and practical means to bring their complaints direct to the Public Procurement Commission.
  3. The Public Procurement Commission can also, on its own initiative, start an investigation into an area of concern.

There are strict time-limits for acknowledgement and resolution of complaints.

Our proposal is for the Public Procurement Commission to have powers to punish both frivolous complainants as well as parties found to be in breach of the new system.  Those can range from fines to embargoes, during which offending parties can be banned from tendering opportunities.  Offending public officers can be subject to both fines and/or imprisonment.

The concern over the cost of the new apparatus

One of the most frequently expressed criticisms is that as critics of the rationale and operations of significant State Enterprises, we seem to be proposing a new series of state-funded agencies.  Some people have pointed out that these offices are unlikely to be cheap, particularly the PPC, which is to be constituted as a standing Commission of Enquiry under those existing legal provisions.

Yes, there will be new agencies and yes, they will cost money.

Given the recent revelations as to the cost of the Uff Enquiry – already estimated to exceed $50M – there are genuine concerns that we could soon have three new state-funded agencies which could absorb maybe $100M a year.

The challenge here is to move beyond the obvious and factual observations so that we can consider the decisive factors.  Our proposals have the promotion of Value for Money as one of its founding principles and that is good for the public.  So, how can we measure the value for money of these proposals, at this stage?

The scale of public procurement spending

In the case of expenditures direct out of the Ministries, the 2011 Budget has an anticipated capital expenditure for the Ministries of $7.050Bn, as per para 8 at page 4 of the Public Sector Investment Program (PSIP).

Also in that Budget there is an anticipated capital expenditure for the State Enterprises of $6.725Bn, as per the Foreword at page 4 of the Supplementary Public Sector Investment Program (Supplementary PSIP).  The combined figure of $13.775Bn is only for projects, so it excludes the salaries, rents and normal running expenses.  Please note that other elements in public expenditure, beyond just capital projects, will be covered by these proposals.  The guiding principle being that those activities involve the expenditure of Public Money.

There are very limited exemptions from the proposed provisions and those can be viewed at the JCC website.

I am also sure that there are other ways in which Public Money is being expended which are not shown in the national Budget, so the amounts are surely larger than that estimate.

The potential for savings

The scale of the public transactions, involving Public Money, which will come under the control of this new system is huge, at least $14Bn in size.  Even if the new system only saves 5% of that sum every year, we can easily justify an annual running expense in the $100M range, as mentioned earlier. 5% of $14Bn is $700M.

In the next 30 days, we expect our Legislators to make the crucial decisions on this series of proposals and we all need to be vigilant to preserve the key points.

Those key points would include –

  • Heads of Independent organs to be appointed by the President
  • Separation of the Regulator from the Investigator
  • Regulations laid in Parliament for negative resolution, with no Ministerial or Cabinet approval required.
  • Independent Organs funded from the Consolidated Fund, with no requirement to seek a Ministerial approval or Budget vote.
  • Accountability is ensured by the requirement to report annually to Parliament.
  • Private Sector/Civil Society oversight via the National Procurement Advisory Council.
  • Proper provisions for complaints and Whistle-Blowers.

The ultimate question, given what we know now, is – Can we afford not to take this step?

At this unique and challenging moment in what has been a long, twisted journey, the prospects of more corruption and waste are grim.

For these proposals to succeed, the legislators will have to vote in favour of a new law which reduces their power and discretion.  To some, that might be an impossible contradiction and an unreasonable thing to expect, but there will be considerable political credit to the account of those who make this change happen.  Our citizens deserve no less.

CL Financial Bailout – Retirement Planning

When you consider increasing lifespans, inflation and the greater likelihood of major medical expenses as one ages, it is clear that proper retirement planning should be a major factor for most people.

Some extracts from relevant advertisements to start off –

Company A

“Maintain your lifestyle – even after retirement…”

The time passed so fast and now you cannot imagine life without the luxuries you have come to know, the luxuries you deserve. The Company A annuities and pension plans allow you to live the lifestyle that you have become accustomed to – even after you’ve retired – without sacrifices that will affect your current quality of life.

Company B

“I WANT TO RETIRE COMFORTABLY”

It can be daunting to consider how much money it takes to retire in comfort. And government pensions do not provide the guarantees that they once did. But it’s never too late – or too early – to get started.

Company C

“At the rate things change today, long-term financial planning has become a concern for all of us.”

The responsibility for securing a comfortable retirement continues to shift from employers to the individual. Whether your goal is saving for retirement or you’ve already reached that goal and you want to be sure that you will never outlive your savings, an annuity may be just what you’re looking for. In Trinidad & Tobago as in the wider world, life expectancy has lengthened considerably with people living well past their retirement age. This introduces a new risk – outliving your savings.

Company C’s preferred plan features “…guaranteed income for the rest of your life…”

Yes, Retirement Planning is an essential part of any good investment planning.

Central to the growth and long-term success of the CL Financial group was its ability to mobilise the retirement savings of the Caribbean people in pursuance of its wider commercial objectives.  I have been writing on how it all went wrong and who is to blame.

In preparing my submissions for the Colman Commission it occurred to me that the financial provisions made for the 3 CL Financial chiefs who departed in the last 12 months before the group collapsed is central to understanding the entire fiasco.  It is rich in irony.

Fiduciary Duty of Directors and Officers

The burning questions are –

  1. When did the Directors and Officers of CL Financial (CLF) know that the group was heading to collapse?
  2. When did the Directors and Officers of the failed subsidiaries know?
  3. What did they know and when did they know it?
  4. How much warning did their management controls give them?

The questions are pertinent and the time-line is instructive –

Timeline to CLICO Bailout

  • 31 March 2008 – Andre Monteil retires as CLF’s Group Finance Director.
  • 6 August 2008 – Anthony Fifi retires as Managing Director of the Home Construction Limited (HCL) group, which is wholly-owned by CLF.  Fifi remained on the board of the parent company, CL Financial.
  • Mid-October 2008 – CLF purchases Jamaica Money Market Brokers’ 45% shareholding in CMMB.  Please note that CLF owns 40% of JMMB.
  • 7 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.
  • 18th November 2008 – CLF 2007 Annual Report is published – its Consolidated Balance Sheet disclosed a Total Asset Value of $100.666Bn.
  • 8 December 2008 – Robert Mayers proceeds on pre-retirement leave from his position as Managing Director of CMMB, pending his scheduled retirement, on 28th February 2009, as Managing Director.
  • 13 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 August 2009 for the text of that letter.
  • 16 January 2009 – CLF pays a dividend of $3.00 per share.
  • 23 January 2009 – CLF has its final and fateful Annual General Meeting at Trinidad Hilton.
  • 30 January 2009 – The bailout is announced at a Press Conference at the Central Bank.

What benefits did the departing Directors and Officers enjoy?  Three of the most important and senior CLF chiefs departed in the 12 months prior to the collapse.  To be fair, Fifi was retiring from HCL, which has not been described as a failed company, despite its challenges.  To understand the picture properly it will be necessary for the Colman Commission to examine the terms of the retirement of these CL Financial chiefs.

Those departures must be examined from the documents if they were to be approached from the compensation aspect.  What I mean is that these chiefs would have been paid upon departure and that would likely have been documented.

The suggested line of enquiry is –

  • How much did Messrs. Monteil/Fifi/Mayers receive upon retirement?  Does anyone believe that these chiefs left without compensation after years of service, at the highest possible level?  The amounts actually received and the bases on which those sums were calculated promises to be very interesting.
  • How were those retirement payments calculated? – Were the amounts arrived at by a ‘set’ formula?  Was that formula specified in their employment contracts?
  • Were those sums reduced to reflect the impending crash? – That alternative is the crux of the issue, coming to the point of what did they know and when.   If the sums were reduced to reflect the poor performance of those failed companies, we need to question the misleading accounts given as to the group’s health right up to the very brink of the collapse.
  • Shifts in asset values – I am also wondering if the sudden drop in asset values from $100Bn + to just under $24Bn, in the space of less than 2 months is part of this aspect of the story.  Only when we have those employment contracts published will we be able to consider whether there was any connection between the chiefs’ compensation formula and the asset values or, to put it another way, their departures and the sudden drop in asset values.
  • Performance-related? – Ultimately, we have to wonder as to the implications of the other alternative.  If we learn that these CL Financial chiefs were able to depart the failing group with no reduction in their retirement payments, that would be very serious indeed.  If that were the case, we would be contemplating employment contracts which divorced pay from performance.  Given contemporary norms that link pay and performance, that would be an appalling vista.  We would be seeing that our region’s largest investment group was saddled with a leadership which had constructed for itself the ultimate high-return, no-risk employment and retirement benefits, all at the expense of everyone else.  The ultimate irony.

I am fully expecting that there will be further legal arguments to silence or shroud any efforts by the Colman Commission to delve into this aspect of things.  Colman must be robust in his probe – he must follow the money.

Colman Commission – A crucial choice

Image Illustration by NiCam GraphicsThere were several important developments in the Colman Commission last week, with the widely reported appeals of Sir Anthony Colman QC for the Central Bank to change its position with respect to the presentation of accounts to the Enquiry.

From my own attendance at the opening session of the Colman Commission on Friday 11th March and the various reports, it seems that there are various moves afoot to restrict or stop the enquiry.  I expected this sort of scenario in declaring the main players to be part of a ‘Code of Silence’ – it is no surprise to me.

There are three strands which are becoming evident as we move into the new phase, with the Colman Commission and several legal actions swinging into action.

  1. Firstly, we had former HCU boss Harry Harnarine challenging the Colman Commission in Court, claiming it to be illegal etc.  Obviously, Harnarine did not relish the thought of having to answer questions on TV.  The Appeal Court rejected those claims on Monday 4th April and the reports were contradictory, to say the least –

    “Speaking with reporters following the ruling, Harnarine said he was not satisfied with the panel’s ruling.
    Harnarine said he welcomed the enquiry and would make objections “at the right time”.
    Harnarine wanted the court to declare the commission null and void, that it was an abuse of the court’s process and that it was unlawful and illegal, among other requests.”

  2. Secondly, the Central Bank’s action to wind-up Clico Investment Bank (CIB) was challenged by the National Gas Corporation (NGC) and the National Insurance Board (NIB).  On 27th January the judge in that case ruled that the petitioner must be questioned.  The Central Bank’s attorneys had fought very hard to resist that.  The petitioner was the Inspector of Financial Institutions, Carl Hiralal.  I have already questioned the apparent anomalies in his affidavits – in ‘The House on the Corner’ parts 1 & 2 – so Hiralal’s cross-examination was one to be anticipated.  On 28th March, NGC withdrew from that lawsuit, which was to recover some $1.1Bn from CIB.  There has been no statement as to why that was done.  Given that the missing $1.1Bn is our taxpayers’ money, an urgent statement to clarify this decision is needed.
    WHERE IS THE NGC’s MISSING $1.1Bn?
    The NIB’s lawsuit is still ongoing and I await that cross-examination of Hiralal with great interest.
  3. Thirdly, we now have reports of various objections being raised by the attorneys in respect of the accounts for CL Financial.

Readers need to be clear that there are three types of accounts in this matter.  Given the room for error it is important to get this straight:

  1. Annual Audited Accounts – These are routine and ought to have been filed by now.  The last accounts for the CL Financial Group and its subsidiaries were by PriceWaterhouseCoopers (PWC) as at year-end 2007.  We therefore have a situation in this country with two insurance companies – CLICO and British-American – open for business with no accounts filed for 2008, 2009 or 2010.  That is unacceptable and further delaying will only bring discredit to the responsible parties.  The sidebar contains more on this.
  2. The Reviews of Accounts – Post-bailout, the Central Bank has hired Ernst & Young (E&Y) to review the accounts of the Clico Investment Bank and CLICO.  In addition, the Commissioner of Co-operatives had hired E&Y to do the same for Hindu Credit Union (HCU).  From what I have read, E&Y seem to be objecting to both the production of those reports to the Colman Commission and the subpoena to its Executive Chairman, Colin Soo Ping Chow – see Trinidad Express   of 6th April – see here.  I am not at all clear what is the objection to releasing those reports, after all, the E&Y report into CIB formed part of the Central Bank submissions to the High Court in the winding-up petition.
  3. Forensic Audits – These were reportedly done by Bob Lindquist and KPMG Canada for the Central Bank on CLICO, with the latter firm now claiming that their client is objecting to disclosure.  The grounds appear to be that if those reports were disclosed, it would undermine the intended prosecutions.  That seems to me to be a reasonable rationale to pause the publication of those reports until that impasse is resolved.

So, what is at stake here?

Sad to say, but this is reminding me of the actions of Calder Hart/UDeCOTT in trying to derail and frustrate the Uff Enquiry.  On that infamous occasion we had the spectacle of a State-owned company challenging the Uff Commission – which had been established by the State – in the High Court.  I hope that my view is incorrect.

This led to Colman’s appeal to the public as reported in the Trinidad and Tobago Guardian on 7th April and Trinidad Express of Friday 8th April.  The first of those reports contained an intriguing fragment in which former AG and Law Association President, Russell Martineau SC raised objections on behalf of his clients, PWC, on grounds of confidentiality. That mystified me, since PWC’s audits seem to be confined to the first, most innocuous group, as outlined above.

According to Colman, if the Commission has to get fresh reports into these matters it will mean more delays and more expense.  He said that would be a matter for the public to decide if that is in their interest, hence these efforts.

The Central Bank made a press release on 14th April which confirmed that they intend to take legal actions. Please note that the press release was silent as to the Annual Audited Accounts. For whatever reason, the Central Bank is continuing its silence as to the status of the most innocuous class of accounts.

It is unacceptable for these issues to be mixed in this misleading fashion. Simple and inescapable questions need to be answered now –

  • Are the CL Financial annual audited accounts for 2008, 2009 and 2010 ready?
  • If yes, why have they not been published?
  • If not, why not?
  • What is the objection to publishing the Reviews of Accounts?

It seems that we are being given a tough choice, between –

  1. a solid investigation, which preserves the secrecy of the forensic reports, with probable prosecutions, or
  2. a wide-open investigation, with a high level of information emerging about the entire fiasco, but little chance of successful prosecutions.

The Trinidad and Tobago Guardian editorial of Tuesday 12th opted for the former, while the Trinidad Express editorial of the same day took the opposite view, favouring the latter.

The decisive question, for me, is whether the Central Bank has a track record upon which we can rely. The basis of their objections is the notion that prosecutions are to be mounted against the offending parties. Can we really accept that?

The Central Bank’s track-record on these matters has been doubtful and people are right to be concerned.  From the CIB’s reported failure to file Corporation Tax returns for 2007, 2008 and 2009 to the continued inaction on the ‘Fit and Proper’ regulations, to the failure to recover the dividends CLF paid after the bailout was requested. A poor record of proper enforcement.

We are now being asked to believe that an organisation which is unable or unwilling to pick those ‘low-hanging fruit’, will be able and willing to prosecute ‘high-flying smartmen’.

I am being reminded of those childish spelling-games we all played –

A for Apple
B for Bat
C for yuhself!

Trinidad & Tobago Transparency Institute made a press release on the issue, which called on the Central Bank to act in an exemplary fashion. That is a welcome statement.

My vote, for what it is worth, is that we should preserve the secrecy of the forensic reports so as to remove any escape hatch for these fraudsters and their accomplices. Leave them no avenue to claim that if this or that had not happened they would have been able to prosecute. There is probably enough material in the other two classes of accounts to progress the Colman Commission.

SIDEBAR

Freedom of Information – Having had three applications under the FoI Act ignored, I have now given the Ministry of Finance ten (10) days to provide a copy of CL Financial’s letter of 13th January 2009 requesting the bailout and the 2008 Audited Accounts for the CLF group – see here .  If those documents are not supplied, it is off to Court we go.

Legal Opinions – At this point in the mix, we sorely need to hear from the legal columnists as to what is the position in this heated contest – Martin Daly, Dana Seetahal, Ken Lalla and Martin George, we await.

Freedom of Information in the CL Financial bailout

This – clfFoI-1 – is a copy of the letter sent today from my attorney to the Ministry of Finance, requesting that they provide –

  • ‘The Duprey letter’ – The fateful 13th January 2009 CL Financial letter, signed by Lawrence Duprey, seeking urgent and massive financial assistance from the Central Bank.
  • CL Financial’s 2008 audited accounts – These should have been prepared by PriceWaterhouseCoopers, as at 31st December 2008 and of course those are of great interest, since the 2007 audited accounts (published on 18th November 2008) disclosed assets of $100.6Bn, while ‘the Duprey letter’ showed assets of $23.9Bn.

The letter invites the Ministry of Finance to send the documents in 10 days or we go to the High Court.

Given the current state of play at the Colman Commission, there are no prizes for guessing which of those is going to happen.

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

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 –

  1. CL Financial Chiefs – The people who had Direction and Control of the entire failed group – that would include the shareholders.
  2. The Regulators – The Supervisor of Insurance, Securities and Exchange Commission (SEC) and the Central Bank.
  3. The Auditors – PriceWaterhouseCoopers and Ernst & Young – the former being auditors for the CL Financial group and the latter acting for the Central Bank.
  4. 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.

  1. 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.
  2. 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.
  3. 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
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?