VIDEO: Morning Edition 10 December 2012

Afra Raymond chats with Fazeer Mohammed on the Morning Edition show giving a year end wrap up of issues including the Colman Commission and The CL Financial bailout. Video courtesy TV6

• Programme Air Date: 10 December 2012
• Programme Length: 0:31:49

VIDEO: Morning Edition 10 December 2012

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The Colman Commission – The Importance of Money

The Colman Commission was established about a year ago as a Public Enquiry into the failure of the CL Financial group, some of its subsidiaries, and the Hindu Credit Union.  The Commission is also mandated to report on the causes of these costly failures, so that it can make recommendations for possible prosecutions and the regulatory or systemic changes needed to avoid further collapses.

There has been a lot of fresh information revealed at the Commission and that is good, since the public now has a much better view of the various episodes behind the scenes.  The sole Commissioner, Sir Anthony Colman, has now made a statement which outlines his progress in this huge and complex matter.  Colman expects to take at least one more year and will be continuing his examination of the HCU matter when the CL Financial stage is completed.

Despite all the evidence about staggering sums of money and the heated public discussion that has sparked, I am perturbed by the way the essential information is being handled.

Since it is a Public Enquiry into a huge financial collapse, the financial information has to be front and centre if we are to get at the facts.

It is common knowledge that the link between performance and pay is essential in obtaining quality results in any competitive situation.  That basic fact, with which most people would agree, is now seriously challenged by some of the key events in the global financial meltdown.  It is beyond the scope of this article to delve into the new learning emerging from this global crisis, suffice to say that the old learning has literally been ‘tested to destruction’.

An unhealthy relationship between pay and performance would be a problem for any company, but in a financial company the issue is worse.  That is because the investors expect those companies to endure and prosper, so that they can collect the expected returns.

The Colman Commission will be unable to fulfill its mandate if it does not uncover the relationship between pay and performance in the failed companies.  Colman will also need to consider the motives and behaviour of the investors, who must also form a significant part of the story.  Without their participation and investments, the failed companies would have had no money to lose.

There is a strong interest in keeping the real figures and circumstances out of the news and some of the main items are –

• The Accounts
• The true levels of salaries, fees, dividends and bonuses
• The identities and sums of money returned to those who have benefited from the bailout
• The delinquent borrowers who owe the failed companies huge sums of money
• The extent to which the failed companies and their chiefs complied with our tax laws

In ‘The Colman Commission – Cloudy Concessions’, published here on 1 September, 2011, I pointed out the danger of allowing the HCU claimants to testify without stating the amounts invested for the public record.  It was my view that those concessions represented the ‘thin edge of the wedge’ in terms of the entire exercise being a Public Enquiry into a series of financial collapses.

In this recent, third session of evidence Hearings, we have had three examples of the ‘widening wedge’ in respect of financial information.

1. The first example is the recent imbroglio on the testimony of the CEO of Methanol Holdings (MHTL), in which significant financial information was excluded, apparently by agreement between the various parties and the Commission.  This is exactly the kind of danger I had been warning about, since MHTL is a significant, supposedly healthy, part of the failed CL Financial group and there is bound to be considerable public interest in its financial performance.  Yet, the Colman Commission agreed to exclude that financial information, so the public is none the wiser as to the overall health of the CLF group, despite paying for a public Enquiry.  This issue was highlighted in the Guardian editorial of Tuesday 15 November, 2011, which ended by emphasizing the public’s right to know.
2. The second example was the decision on Directors’ monies – as reported in the Business page of this newspaper on 16 November, 2011 “…Commission Colman has ruled that the means of remuneration for CL Financial officials should be disclosed  to the Commission but not the actual quantification of them…”.  That bizarre concession removed any possibility of reporting on the real state of affairs at these failed companies.  If the Commission continued with that arrangement, it would have been impossible for any real understanding of the crisis and its causes to be derived from their work.
3. The third, most notable, example was even more noteworthy, being the reversal of that decision and the grounds for that reversal, as reported in the Express of 16 November, 2011
   

   …The board appearance fee was revealed yesterday on the same day that Sir Anthony Colman, the lone commissioner in the Commission of Enquiry, ruled that the remuneration packages of those involved with the conglomerates collapse could be made public….

   Colman yesterday reversed a decision he made on Tuesday…

   “My attention has been drawn to the fact that in fact some evidence has already been circulated in regard to Mr (Michael) Carballo’s remuneration package and also Mr (Lawrence) Duprey’s remuneration,” Colman said.

   “I have come to the conclusion that it would be grossly unfair if there were a general bar on further evidence as to remuneration of participants so I reverse the ruling which I made yesterday and the result would be that the remuneration of participants can be put into evidence,” he said.

   “I do not accept that if the remuneration emanated from any of the companies involved there could be any question of confidentiality,” Colman said”

   It is remarkable to me that an appeal restricted to the principle of fair-play seemed to have caused this reversal, in a situation where the initial concession was toxic to the fundamental enquiry which is being conducted at public expense, supposedly for our benefit.

This is an Enquiry into a colossal financial collapse, so therefore the money must be front and centre at all times.  We must have scrutiny as to its origin, rationale/contract for payment and its disposition for tax purposes.

Sir Anthony Colman needs to be watchful of the wily attorneys, who may seek again to tempt him to agree to conceal some more financial information which might be awkward for their clients.  The fact is that all those companies are now being funded by the Treasury and we have a right to know what caused this huge mess.

It is not a concession, we now own the mess, so we must be allowed to see all of its parts.  No sacred cows.

Sidebar: Colman’s Challenge

Colman’s statement as to the difficulty of running the Enquiry was most instructive, with a total of 49 lawyers appearing for various parties and a further 5 for the Commission.

Colman has had to maneuvre between 18 parties to the Enquiry, three non-parties and over 800,000 documents.

Which only makes it all the more important that the Colman Commission be given the necessary administrative/legal support and multi-media resources so that it can better serve the purposes for which it was established.

We have the resources in this country to give each SEA student a new laptop, so it should be no challenge to provide those resources to the Colman Commission.

CL Financial bailout – The Final Solution?

The new bailout formula was approved, as two new Acts, by our Parliament on 14 September –

• The Central Bank (Amendment) Bill, 2011
• The Purchase of Certain Rights and Validation Bill, 2011

The first one prevents any lawsuits against the Central Bank by claimants, while the second gives the Minister of Finance the right to borrow up to $10.7Bn and places the Republic Bank Ltd. (RBL) shares formerly held by CLICO into a new investment vehicle, NEL 2.

These seem to represent what I am calling the Final Solution, in that the clamour and protest which had marked the last year seems to have been fading away.  There have been queries from the various ‘Policyholders’ groups’, but those have been limited.

Whatever one thinks of the actual bailout, which I maintain is a perversion of our Treasury, there are valuable lessons to be learned from all this.  The main lesson for me is the Power of the Few.  In that although only about 16,000 investors were affected, they were able to mount a successful campaign to improve their position.  We need to note that lobbying and campaigning can be effective in gaining benefits for limited groups.  To all the weak-hearts who say nothing ever changes, please take note.

We also saw the position set out by the PM in her important speech on 1 October 2010 being reversed, in that the claimants’ rights to sue the Central Bank have been extinguished.  There are rumblings about a challenge to the constitutionality of that restriction, but we will have to wait on that one to play out.  The fact that the right to challenge the Central Bank’s actions in respect of the bailout has been removed opens fresh dangers in terms of the payout process.

We have all had bad experiences of what usually happens when serious unrestricted power is held by someone who does not have to answer for their actions.  My concern is that there does not seem to be any avenue for oversight of or appeal/redress against the Central Bank, in the event that claimants feel they are receiving unfair treatment.  That concern will have to be addressed at some stage.

Even as an account of the payout, we have deficient reporting with no true profile of the wealth being returned having been presented for public consideration.  The Central Bank and Ministry of Finance is in possession of this critical information as to the amounts of money to be returned to claimants, but that is being suppressed, for whatever reason. This episode has been a real stain on our stated ambitions towards accountability, transparency and the ever-distant ‘Good Governance’.

A related point is that the PM gave a clear commitment to revealing who benefited from the first wave of bailout funds, said at the time to be of the order of $7.3Bn. The PM’s speech is at pages 19 to 34 of Hansard – at pg 24 –

…The previous administration injected $5 billion into Clico and they spent $2.3 billion to bail out the other distressed entities such as CIB in particular, so coming to a total of $7.3 billion has gone into that hole and yet today the Government and, therefore, the taxpayers of this country have been called upon to come up with another $16 billion to $19 billion. So what happened to that $7.3 billion? Where did it go? Who are the people that were paid? How was it utilized? What happened to that $7.3 billion?…

The concern here is that we are not at all sure that this new arrangement will in fact yield the required information as to who are the real beneficiaries of this bailout.  In view of the fact that the entire deal is a burden on our Treasury, this opaque arrangement is unacceptable.

After all –

Expenditure of Public money – Accountability – Transparency = CORRUPTION

Quite apart from those concerns, the fact is that provisions should have been made for Anti-Money Laundering and Tax Evasion screening.  The Treasury must not be used for Money-Laundering and the proper safeguards need to be put in place to prevent this.

The lack of accounts for the CL Financial group, after 31 months under State management, is also unacceptable.  The essential terms of the bailout are being sidelined, since the original agreement was for the State injections of cash to be repaid via asset sales.  Both 2009 agreements – the January MoU and the June CL Financial Shareholders’ Agreement – also spoke to the preparation of accounts and provision of information.

The perturbing aspect is that there continues to be a uniform silence as to the preparation of these overdue accounts, so the taxpayer must wonder just how, or if ever, these vast sums of bailout money are to be recovered.  This is the burning question which is at the root of my outrage.

The new arrangement is also silent as to the position with respect to other creditors of the CL Financial group, so there is no certainty as to how those claims would be treated.  On 31 October, Trinidad and Tobago Newday reported on ‘CLICO Bahamas seeks $365M from CL Financial’.  There are substantial regional and local claims outstanding, so the entire cost appears is an unknown quantity at this time, given the lack of accounts.

As I pointed out previously, the Directors and Officers of the CL Financial group and its subsidiaries ought to be subject to the provisions of the Integrity in Public Life Act, by reason of its being a State-controlled company.  The Integrity Commission needs to demand the required declarations from those persons, if we are to secure the required level of transparency.

The continuing failure of the Central Bank to make rulings as to the extent to which CL Financial’s Directors and Officers at the time of the collapse are ‘fit and proper persons’ is the final piece of the sorry picture.

The State’s period controlling the CL Financial group, ends on 11 June 2012 – a mere 7 months away – at which time the group will return to its owners.  Given the fact that the Central Bank has not made an adverse ‘Fit & Proper’ finding against Lawrence Duprey, in the absence of accounts and with a significant part of the RBL shares divested in this fashion, what will be the out-come?  Is the stage now set for Lawrence Duprey to return?

I spent last Wednesday afternoon in New York’s Zucotti Park, with so many points to share on that experience.  For now, I leave this striking slogan of the Occupy Wall Street movement –

If you are not outraged, you haven’t been paying attention…

AUDIO: Checkpoint Caribbean Interview – 25 September 2011

Afra Raymond is interviewed along with Baba Elombe Mottley of Jamaica on the “Checkpoint Caribbean” show on the Caribbean Superstation, hosted by David Ellis on the Colman Commission and the revelations and possible consequences.

• Programme Date: Sunday, 25 September 2011
• Programme Length: 0:57:36

AUDIO: High Noon Interview – 22 September 2011

Afra Raymond is interviewed on the “Centre Stage” show on Power 102 FM in Trinidad and Tobago, hosted by Chris Seon, Cliff Learmond and Sherma Wilson, on the Colman Commission and the revelations and possible consequences.

• Programme Date: Thurday, 22 September 2011
• Programme Length: 0:23:21

The Colman Commission – Preserving Natural Justice

Following my last article on the Colman Commission -Balancing the Scale - in which the recent private meeting of Attorneys was discussed, I wrote the following to its Secretary.

From: Afra Raymond <afraraymond@gmail.com>
To: judith gonzalez <comsecclfhcu@gmail.com>
Sent: Wednesday, September 21, 2011 9:02 AM
Subject: To the Colman Commission

To – Judith Gonzalez, Secretary to the Colman Commission

Dear Ms. Gonzalez,

I was perturbed to learn, only recently, that the Commission had convened a meeting on Friday 8th July at which one of the items discussed was whether my various submissions should be admitted as evidence and if so, what should be the ‘status’ accorded it.

Here we had the situation of a Public Enquiry into a matter of Public concern, convening a private meeting which discussed as one item of business my inclusion as a witness.  As a participant in the Enquiry, not a party, I was excluded from the  discussion as to whether my evidence should be omitted…I was not invited to that meeting and only found about this afterwards, almost in passing.  I also understand that the various parties are to be given the opportunity to make submissions on those issues on my testimony, on which the Commissioner can make a ruling.

My work on this matter of grave public concern has been a solo exercise, except for the occasional assistance of friends. I am without legal representation at this important forum.

Given the substantial parties involved – all of whom are represented by attorneys – and the limits placed on my input by the Commission’s decision to deny me the status of a party, one can scarcely imagine a more lop-sided scenario than this one. Natural Justice is not negotiable.

All that said, the meeting in question has already taken place, so I am requesting that you give proper consideration to inviting my participation when this matter is next to be discussed.

Thank you for your consideration.

Afra Raymond

www.afraraymond.com

Purchase of Certain Rights and Validation Bill, and Central Bank (Amendment) Bill, 2011

These are the two draft Bills which contain the Government’s proposals to resolve the CL Financial bailout fiasco. The latest article on this blog ‘Balancing the Scale‘ deals with some of the issues arising from these proposals – Purchase of Certain Rights and Validation Bill 2011, and Central Bank (Amendment) Bill 2011.

These Bills are part of the Order Paper (Agenda) for Parliament’s sitting today, Wednesday 14 September 2011.

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

13^th September 2011

Afra Raymond’s sixth 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

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 can be seen at www.afraraymond.com.

I am willing to give oral evidence before the Commission.

This submission is supplementary and comprises a single article, published on 15^th September 2011, titled ‘The Colman Commission – Balancing the Scale‘.

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

……………………………………………..

Afra M. Raymond B.Sc. FRICS
www.afraraymond.com
Apt. #14, Highsquare Condominiums,
1a Dere Street,
Port-of-Spain
625 8168 (h)
678 9802/350 6215 (c)
625 6230 (d)
afraraymond@gmail.com

The Colman Commission – Balancing the Scale

The Colman Commission into the failure of CLF Financial and the Hindu Credit Union is just about to move into its second round of Hearings and the public can expect to have further testimony on the losses suffered by people who deposited monies with CL Financial.

I have made several submissions to the Commission and have been invited to give evidence.  I am reliably informed that there have been strong and unanimous objections to my participation in the Colman Commission.  It would seem that only the Commission itself is interested in having my testimony go onto the record.

It is not surprising to me that objections of that sort would be arising now, but readers need to have a context.

The Colman Commission was established to find out how this fiasco occurred, recommend methods to stop a recurrence and also to identify responsible people who are apt for lawsuits or criminal charges.  The main parties can be expected to give self-serving evidence, designed to exonerate themselves from any blame.  We can also expect to hear more attempts to put the blame onto Wall Street, despite the claims in the CL Financial 2007 Annual Report– this is from the preamble -

…“The Next Wave of Growth” is the theme of this annual report, highlighting, to quote our Chairman, “that out of any crisis opportunities will emerge and our progress during the year under review prepares us to seize those opportunities and unlock value.” We have confidence in our ability to not only navigate this financial storm but to find fresh and profitable opportunities within it…

That Annual Report was published on 23 January 2009 – yes, that is 10 days after Duprey wrote to the Central Bank Governor for urgent financial assistance and one week before the bailout was signed on 30 January.

The Colman Commission is a Public Inquiry into a matter of major importance; it was approved by the Cabinet and installed by the President of the Republic.  A Commission of Enquiry can only make findings on the evidence submitted to it, so it would be very important for some people to have certain evidence omitted.

One of the most outrageous aspects of the entire Uff Enquiry was the use of public money by UDECOTT to attempt to block certain documents coming into evidence.  Those various attempts to limit the scope of the Uff Enquiry were disgusting to all right-thinking people and seemed to be a straight case of the ‘tail wagging the dog‘.

It is unacceptable that the Ministry of Finance could be taking a position which is seeking to exclude my evidence from the Commission.  If that were so, it would mean that Ministry is acting in a manner which effectively dilutes the Commission and what is more, appears to be incompatible with the intention of the Cabinet to have a full public enquiry into this matter of national concern.  In addition, the Central Bank is also reported to have objected.

The Colman Commission needs to be robust in getting at the truth of this financial disaster.

The new Bailout Plan

At the time of writing I have no details of the new bailout plan, proposed to be laid in Parliament for debate on Wednesday 14 September.  According to a report in the Trinidad and Tobago Guardian, the proposed plan is in two limbs, the first includes the issuance of new bonds to raise monies for the payment of policyholders, while the second is the creation of a prohibition against lawsuits against the Central Bank.

The three concerns I have at this stage are –

1. Accounts– The last published audited accounts for the CL Financial group were for 2007, but despite the tremendous resources which have been deployed by the State in this matter there is no clue as to when accounts are to be brought up to date.  Given that both the 2009 agreements – the MoU of 30 January 2009 and the CL Financial Shareholders Agreement of 12 June 2009– exist in a framework of State funds being paid to the group’s creditors and recovered by asset sales, this situation is totally unacceptable.  What is more, there has never been any attempt to explain the delay in completing those accounts.

   As a result we have two insurance companies operating in our country without any accounts, which is in breach of the very regulatory framework of the Central Bank.

   The Finance Minister must address these relevant concerns if this proposal is to gain any support.  It brings to mind the recent point made by Independent Senator Subhas Ramkhelewan, in debating the recent proposals to increase the State borrowing limits, that the Parliament needs proper details of the ways in which those monies are proposed to be spent, because no person could borrow money from a diligent lender without giving details.  We need, as a country, to insist on these higher standards.

   We need to move away from the black box and the magician’s hat, towards a more transparent situation in which large-scale public spending decisions are based on a solid series of rationales.

2. Colman Commission – The concern here is that the second limb of this proposal will prevent lawsuits against the Central Bank; at this point I am not sure if that only applies to CL Financial-related matters.  The Terms of Reference of the Colman Commission state –
   

   …2. To make such findings, observations ad (sic) recommendations arising out of its deliberations, as may be deemed appropriate, in relation to:

   (i) whether there are any grounds for criminal and civil proceedings against any person or entity; whether criminal proceedings should therefore be recommended to the Director of Public Prosecutions for his consideration; and whether civil proceedings should be recommended to the Attorney General for his consideration;

   It seems to me that the result of these proposals could be to thwart that part of the functions of the Colman Commission as they relate to the Central Bank.

3. Insurance Act – Finally, I am concerned that as we are on the eve of a possible ‘solution’ to the problems of the policyholders, there may be other fragile insurance companies with solvency issues.  The fact that these matters are now so high on the public agenda means that we should not waste the opportunity to bring forward the new Insurance Bill, which has been drafted for some time, for discussion.

It is at moments like this that a responsible and long-term approach to these huge issues is in the interest of the entire nation.

CORRECTION

In this article, which was published on September 13th 2011, I stated that there were unanimous objections to my appearance as a witness at the Colman Commission. I wrote that on the basis of certain reports given to me by persons who were present at those meetings, but after receiving a challenge from the attorneys for the Trinidad & Tobago Securities & Exchange Commission (TTSEC), it was impossible to corroborate that aspect of the article – i.e. that the TTSEC had objected to my appearance.

This notice is to correct the record in that respect, I do regret any inconvenience or damage caused to the TTSEC by my publication of those allegations. – a Correction with similar effect was published in the Business Guardian of 18th November and I do regret the delay in publishing this one here for blog-readers.

Afra Raymond

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

9^th September 2011

Afra Raymond’s fifth 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

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 can be seen at www.afraraymond.com.

I am willing to give oral evidence before the Commission.

This submission is supplementary, providing an update on the work which I have published since the fourth 4^th July 2011.

The three articles in this submission are -

Date of Publication	Title	Abstract
6th July 2011	Colman Commission considerations	Questioning the reluctance of persons who lost monies in the CL Financial fiasco to appear as witnesses.
27th July 2011	Lessons from the Financial Crisis	Probing the causes and consequences of the crisis.
30th August 2011	The Colman Commission – Cloudy Concessions	The concession to allow witnesses’ statements as to the quantum of their investments to go unpublished is critiqued.

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

……………………………………………..
Afra M. Raymond B.Sc. FRICS
http://www.afraraymond.com

Apt. #14, Highsquare Condominiums,
1a Dere Street,
Port-of-Spain
625 8168 (h)
678 9802/350 6215 (c)
625 6230 (d)
afraraymond@gmail.com