Posts Tagged transparency
This is the Order by Justice Boodoosingh to grant me the right to have the Judicial Review heard in Court…our first hearing is set for 1 May 2013
The case is a critical challenge to the detrimental notion that $24Bn of Public Money can be spent without Accountability or Transparency. That notion does violence to any healthy conception of the Public Interest, so I expect this contest to be a sharp one.
“Power concedes nothing without a demand…”
Frederick Douglass…Freedom Fighter and esteemed ancestor…
“Sunlight is the best disinfectant!”
Former US Supreme Court Justice Louis Brandeis…
The simple, inescapable fact is that the State could have lawfully acquired the ‘Eden Gardens’ property for less than $40M. The HDC paid $175M in November 2012 to Point Lisas Park Ltd (PLP) for that property, which is the reason I am calling this an improper use of Public Money.
Despite having available the advice of the Commissioner of State Lands, the Commissioner of Valuations and various attorneys at HDC and so on, the Cabinet approved this transaction. This Cabinet, with two Senior Counsel at its head and several other seasoned legal advisers, appears to have been unaware of, or intentionally ignoring, the legal safeguards.
Some readers may be surprised at those assertions, so here are my reasons for making such.
The last two articles examined the steps leading to the HDC’s purchase of land at ‘Eden Gardens’ in Calcutta Settlement. In my opinion that transaction, as well as the one which preceded it, are both highly improper and very probably unlawful. The HDC purchase must be reversed and the responsible parties investigated/prosecuted as required by our laws.
This ‘Eden Gardens’ episode is an object lesson in what can go wrong when elementary policy is set aside for stated reasons of expediency. Apart from the lack of any Needs Assessment, the unclear role of the Commissioner of State Lands is a source of serious concern. That Commissioner’s role is to advise the State on the strategic implications of its land policies and transactions, so this is a straight example of a case which required a solid input from that critical State Officer.
So, what should have happened? How would a proposal like the ‘Eden Gardens’ one have been handled if the various parts of the system were functioning properly?
When parties are in commercial negotiations, there is always a Plan ‘B’, to be adopted in case the main plan goes awry. Each side has a different Plan ‘B’, since they have different interests.
What was Point Lisas Park’s Plan ‘B’ in case their negotiations with the State were unsuccessful? While we can never know for sure, PLP being a private company, the fact that those lots were widely offered at $400,000 can allow us to form a view as to the benchmark they were likely using.
The State’s Plan ‘B’ is far simpler to establish, since there exists the legal power to compulsorily acquire private property for a public purpose. That was the third unique facility enjoyed by the State as set out in the previous article.
In the case of a landowner making unreasonable demands, the State has the lawful option of compulsorily acquiring the property.
The Land Acquisition Act 1994 (LAA) establishes the right of the State to compulsorily acquire private property for a public purpose. At S.12, the LAA specifies the rules of assessment used to arrive at the sum offered to the owners of private property interests being acquired.
S.12 (4) states –
“…(4) In making an assessment under this section, the Judge is entitled to be furnished with and to consider all returns and assessments of capital value for taxation made or acquiesced in by the claimant and such other returns and assessments as he may require…”
The point in this case being that, having registered a purchase at $5M in February 2010, PLP would have been unable to legally resist a compulsory purchase which adopted that price as its basis. Even if the State, in recognition of the roughly $29M spent by PLP on building the infrastructure for ‘Eden Gardens’, were to add that sum, the final offer would only be about $34M.
Those provisions at S.12 (4) of the LAA are a critical safeguard against persons who might seek to under-declare their properties to evade taxes, then seek to make exorbitant claims if the State seeks to acquire compulsorily. S.12 (4) prevents the State from falling victim to any such games, it is a critical safety-valve to protect our Treasury from those who seek to pay as little as possible when taxes are due, but boldly make huge claims from the Treasury when seeking to sell.
That is why I am calling for this matter to be swiftly investigated and the responsible parties prosecuted to the full extent of the law.
This was in reality a potent dilemma for PLP, in that if they were served with a proper compulsory purchase notice, they would have either had to stick with the $5M figure as a 2010 baseline, or reject that deed and incur the strong penalties at S.84 of the Conveyancing and Law of Property Act.
One of the three deeds executed on Wednesday 3 February 2010 recorded the purchase of ‘Eden Gardens’ for $5M, which is a massive understatement of consideration. The true market value of that undeveloped property at that date would have been of the order of $50M, so the loss of Stamp Duty to the Board of Inland Revenue would have been in excess of $3.0M. The underpayment of Stamp Duty is tantamount to a defect in title of a property. Are we witness to the State making a massive over-payment for marginal lands with defective title?
Did the Cabinet and the HDC receive the proper advice from the Commissioner of State Lands and the Commissioner of Valuations, as well as the other legal advisers? If yes, that advice was plainly not followed, so in that case the question would have to be ‘What caused the Cabinet and the HDC to abandon that sound advice?‘
If the true situation is that the proper advice was not provided, we need to know why. If the advice was not sought, then we need to know why. If the advice was sought, but not provided, those advisers need to be rusticated so that our processes are protected from more of this nonsense.
The State has an overriding duty to comply with the law and be exemplary in its conduct. That is not negotiable, if we are to build a society which is orderly, progressive and just.
Episodes such as the ‘Eden Gardens’ sale and the THA/BOLT deal continue the erosion of Public Trust and the loss of that intangible, almost-forgotten, source of ‘soft power’, the Benefit of the Doubt.
This Prime Minister has made repeated statements that any evidence of wrongdoing will be investigated, so that the offenders can be prosecuted according to law. These three articles have detailed the evidence and breaches of sound public policy, so it is now over to the authorities.
The ‘Eden Gardens’ transaction is a prime example of a large-scale economic crime against the State and the interests of its citizens.
Again, I ask – ‘Who were the beneficiaries?‘
The final point here is that the parties to the PLP purchase and improvement of ‘Eden Gardens’ are now in litigation, with the contractors – SIS Ltd. – suing Point Lisas Park Limited for various monies and demanding an account of the $175M. Case CV 2012 – 5068, so we have interesting times ahead.
What is being pursued here is our right as citizens of a modern republic to the details of these huge expenditures of Public Money – the CL Financial bailout is costing some $24Bn, about $3.5Bn USD! – and the background to how critical legislative support is obtained. It is my view that S.34 was not the first time and that the spectre of ‘regulatory capture’, which underlines much of the discourse around the Great Depression 2, is in fact founded on a sinister degree of ‘legislative capture’.
Having had a series of ‘cat and mouse’ exchanges with the Ministry of Finance since my Freedom of Information Act application made on 11 May 2012, this is my pre-action protocol letter sent to them by my attorney on Thursday 7 March, seeking their proper reply in 7 days…that time expires at midnight today, Wednesday 13 March, so stay tuned, because we are going to the High Court after that…
Last week I set out my main concerns in relation to poor procurement processes with the THA/BOLT project. A large amount of Public Money was being committed to a project with little apparent regard to Value for Money concerns in an arrangement which seems to expose the THA to the principal risks at a time of limited financial resources.
This article is a critical examination of the controversial proposed purchase of 50.6 acres of land at Calcutta Settlement by the Housing Development Corporation (HDC).
The HDC’s role is to build and maintain homes to satisfy the requirements of its main client, the Ministry of Housing and the Environment. According to that Ministry -
The Corporation is mandated by the Act to:
- Provide affordable shelter and associated community facilities for low and middle income persons and;
- Carry out the broad policy of the Government in relation to housing.
With over 125,000 applicants on the HDC’s waiting-list, there is no doubt that, for many poor people, the HDC is their only hope of getting a reasonably affordable home of decent quality. That means that the HDC is an important implementing agency in our nation’s welfare provisions, which is a role I fully support.
This post is about ‘Eden Gardens’, which is on the western side of Calcutta Settlement Road No. 2 in Freeport, just north of Central Park, opposite to Madoo Trace. The property comprises 264 residential lots at an average size of 5,600 square feet, 2 residential/commercial lots, 2 nursery school sites, 2 recreation grounds and 4 playgrounds.
In November 2011, the HDC obtained a valuation from Linden Scott & Associates at $52M. In January 2012, the owners of Eden Gardens, Point Lisas Park Limited, offered the property to the HDC at $200M.
That is an intriguing sequence of events, since the HDC would hardly pay for a valuation on a property they were not interested in. If we accept that the property was likely offered to the HDC before they ordered the Scott valuation, then one has to ask on what terms was it offered. That letter of offer, the original one, must be disclosed now.
In April 2012 the Commissioner of Valuations advised the HDC that the current open market value of the property was $180M. In June 2012 Cabinet approved the HDC purchase of that property for $175M, which is $663,000 per lot – at an average lot size of 5,600sf that equates to $118 per sf.
The normal professional and commercial practice when buying in this quantity, is to obtain a discount on the unit price. It would be reasonable to expect that these lots could be sold for significantly more than the HDC agreed to pay. We will see.
There was a lot of argument in the public about this transaction, so I was prompted to look closely at the deal.
I have these serious concerns –
- Point Lisas Park Limited (PLP)
- On 1 June 2004, Anthony Sampath, Patrick Soo Ting and Azad Niamat agreed with the owner, Sookdeo Deousaran, to buy the property for $17M. That Sale Agreement is registered as deed # DE2006 023638 20D001.
- On 26 April 2007, PLP was incorporated as Co. # P2956 (95), with the same three individuals who agreed to buy the property for $17M as its Directors. On 6 May 2011, the Companies Register recorded that Kayam Mohammed became a Director.
- On 3 February 2010, according to deed # DE2010 007816 95D001, PLP purchased the property from Sookdeo Deousaran for $5M, paying Stamp Duty of $350,000.
These purchasers were prepared to pay $17M for this undeveloped property in mid-2004, but ended up paying only $5M for it in early 2010. This is the same property which was offered to the HDC at $200M in early 2012, two years later. Literally unbelievable.
The stated payment of $5M shown in that 2010 deed is a massive understatement of value, probably being only 10% of the true market value. The Stamp Duty properly payable on a $50M sale of land would have been $3.5M. The Stamp Duty Section of the Board of Inland Revenue has the discretion to refer transactions to the Commissioner of Valuations in cases where they suspect that the consideration shown on the deeds is understated. I am reliably informed that in this case the BIR did not seek an opinion from the Commissioner of Valuations.
I am calling for that 2010 transaction to be revisited immediately, with a view to the State recouping the proper Stamp Duty. The Public Interest demands no less.
- The missing link
Between 2004 and 2012, the infrastructure for Eden Gardens was built, which included the roads, street lights, drains, water and electricity supply. Eden Gardens lots were available in 2011 via at least two real estate agents – Golden Key Real Estate Ltd. and Samko Realty – at $400,000 per lot. This was widely advertised.
- The valuations
- Linden Scott & Associates in November 2011 – $52M
- Commissioner of Valuations in April 2012 – $180M
Those lots were known to have been on sale at $400,000 in 2011, so the entire development of 264 lots could have earned its owners a total of say $106M. Even if we allow a figure of $5M for the “2 residential/commercial lots and the 2 nursery school sites”, we are still in the range of $110M as the ‘Gross Development Value’.
Given that these lots were clearly not selling at the $400,000 price-point, those estimates are at the upper end of possibility. Which means that we have to adopt a lower ‘Gross Development Value’, say $95M-100M.
If the entire development is to be acquired by a single purchaser in early 2012, that purchaser must deduct from the Gross Development Value to cater for –
- Stamp Duty – at 7% of the Purchase Price;
- Legal Fees;
- Developer’s Profit – at a minimum of 25%;
- Agents’ fees for the sale of the lots;
- Cost of Finance to account for the cost of borrowing that sum until the lots are sold;
- Time Value of Money, to account for the element of delay in recouping one’s investment.
I estimate that those discounts would amount to 35-40% of the Gross Development Value. If we adopt that approach, the maximum net present value of Eden Gardens in early 2012 as a fully-infrastructured property would be in the $60M range.
The meaning of it all
The usual accepted practice of residential development can be expressed by this ‘rule-of-thumb’, to spend less than twice the cost of the lot does not make best use of that land.
Even if we ignore the ‘rule-of-thumb’, one has to wonder
‘In what way does this transaction satisfy the HDC’s mandate?’
It is most disturbing that there has been this amount of debate without the issue of the end-user ever being mentioned. How do the real needs of the homeless feature in this massive HDC transaction, if at all?
To my mind this Calcutta Settlement scheme resembles the HDC’s flagship project at Fidelis Heights in St. Augustine which created an elaborate, expensive multiple-family project with no allocation of new homes to the needy people on the waiting-list.
I have established via a separate enquiry that only about 2% of the HDC output of new homes is allocated to those who can only afford to rent and this project is likely to be a continuation of that detrimental trend. The HDC continues to allocate vast sums of money to housing those who can afford to buy, while leaving the left-overs for those who can only afford to rent. That policy is inimical to the interest of the poorest members of the public, to whom the HDC is literally the last refuge for decent housing.
In all the circumstances, it seems that we need to have the air cleared on these issues –
- What is being done about the under-stated consideration in the 2010 deed for the sale of Eden Gardens?
- How many of the 264 lots were sold at the 2011 asking-price of $400,000? That is important since it establishes a benchmark for the proper value of these lots in the open market.
- When did Eden Gardens receive all the required approvals?
- When was the infrastructure completed at Eden Gardens?
- On what terms was Eden Gardens originally offered to the HDC?
- There is an abundance of develop-able State-owned lands in the vicinity, particularly since the 2004 closure of Caroni Ltd. So why did Cabinet agree to buy private lands in Calcutta Settlement at these prices?
- Who owns Point Lisas Park Limited?
I close by reminding readers of the corruption ratio set out in the first article. As I wrote in June 2008, referring to the Manning government and its UDECOTT antics –
…Either the Cabinet or its advisers are responsible. We are either dealing with a lack of rectitude at the highest level of our republic or a sobering naivete…
- Raymond & Pierre Limited, under my leadership, provided certain professional advice on this property in 2007. No aspect of that advice has formed part of this article.
- Linden Scott is a former colleague of mine, having trained at Raymond & Pierre Limited. He is now a rival professional.
- Raymond & Pierre Limited have provided professional advice to the HDC in the past.
With the THA elections having become a kind of national contest, the issues of governance and integrity loom large. The two relevant controversial issues, both of which emerged late last year, were the THA/BOLT office project and the HDC’s proposed purchase of land at Calcutta No. 2 Settlement.
Both those projects have given me serious cause for concern in terms of proper public procurement practice, so much so that I see them as being two sides of the same coin. Both these cases are models of inadvisable dealings in Public Money of a type which no prudent or reputable company would undertake. I am choosing my words carefully since recent reports are that litigation has already started on both projects.
I do not at all agree with the widespread myth that corruption is a minor thing which adds maybe 10% or 15% to the cost of projects. That misinformation is nothing but public mischief which has blinded us to the scale of the theft of Public Money, so it must be completely demolished. In the case of the 1970s to 1980s ‘Government to Government Arrangements’ the then PM, George Chambers, told the nation that two out of every three ‘Petro-dollars’ was wasted or stolen. In the ongoing imbroglio over the $1.6Bn Piarco Airport project, we learned from the DPP’s S.34 statement that $1.0Bn of Public Money had been located in offshore bank accounts.
The DPP’s S.34 Statement on Wednesday September 12, 2012
“…These cases involve allegations of a conspiracy to defraud the Republic of Trinidad and Tobago of over TT$1 billion by the fraudulent use of bonds and the rigging of the contracts for the various Construction packages for the Piarco Airport Project…”
The DPP’s full statement is here.
Also, from “Cops target MP in $1Bn airport scam” in Trinidad Guardian of Friday 5 March, 2004 –
“…TV6 News reported last night that Lindquist and Interpol officers had discovered more than $1billion stashed away in off-shore accounts, arising out of corruption in the airport project…”
This article deals with the THA/BOLT project, which is a Public Private Partnership. The PPP is a procurement model now being pursued by this government, according to the strategy outlined in the 2013 budget.
Build Own Lease Transfer (BOLT) is a subset of the PPP procurement method. Under a BOLT arrangement a client has a facility built by the private sector at their expense – the client makes agreed rental payments so that the developer can cover the cost of building the project and a reasonable profit. At the end of the agreed lease period, the facility is transferred to the client.
There has been effective use of PPP to produce Public Goods like the Brian Lara Promenade. BOLT has also been used to procure prominent POS buildings such as NALIS, UTC HQ and Ministry of Works HQ (via Republic Bank) and the AG’s office at Cabildo Chambers (via NIPDEC).
The PPP can be a feasible method of procuring public goods, offices or other facilities in situations where the State is unable to commit to the capital expenditure and there is a pressing need. The strong selling-point of the PPP is that the private sector takes the risks and is allowed to make a reasonable profit while the public sector can add to its stock of capital goods without the risks of project execution.
These PPP arrangements are now being intensely criticized in developed jurisdictions as having served the public interest very poorly. The focal point of much of the criticism has been the fact that, despite the rubric, the private sector has seldom taken any genuine risk.
Turning to the actual THA/BOLT deal, I have to say that the decision to publish a large number of the important documents in relation to this arrangement is to the credit of the THA. The 225-page ‘bundle’ is here.
In response to the request from the Minister of Finance, THA leader Orville London said:
…that under the laws and the T&T Constitution the Finance Minister has no authority to instruct him to provide information to him within any timeframe.
However, London said, in the interest of public disclosure and considering that this particular transaction has generated so much discussion he believed that he had a responsibility to make the information available to the public and the Minister…
This is a bold and in my view admirable initiative by a leading Public Official and I have to say that it has tempered my scepticism over this project. I only wish that Cabinet Ministers took a similar view of their responsibilities.
The THA ‘bundle’ details the ongoing financial shortfall in allocations from Central govt, the main point of which is the fact that the THA is definitely resource-starved in relation to the arrangements with Central govt. When one considers the financial state of the THA alongside the national economic outlook – we are in our fourth year of deficit financing in relation to the national budget – it is a sobering background to this discourse.
I have spoken with all the main parties to this arrangement and this is a summary of the THA/BOLT deal. The THA purchased a 3-acre parcel of land at the corner of the Claude Noel Highway and the Shirvan Road from private landowners for $12M and immediately leased it back to them for a 199-year lease at a nominal rent. The private developers have agreed to erect an 83,000sf office building at a cost of $143M and the THA has agreed to lease it for 20 years at a fixed rent of $15.61psf – an annual rent of about $15.55M, totalling some $311M over the term of the 20-year lease – with the property reverting to the THA at the end of the lease. Those offices are to be built for the THA’s Division of Agriculture, Marine Affairs, Marketing and the Environment.
My concerns arise at the level of the Needs Assessment, which must be the first stage of any proper procurement process, public or private. The purpose of the Needs Assessment is to determine the rationale for and scope of the project so that preliminary consideration can be given to the key elements before any high costs are incurred. In this case, we are told that the developer approached the THA, which is unusual to the extent that best practice requires that extra care be taken with unsolicited proposals.
The main points concerning me are that once again we are seeing large-scale expenditure of Public Money without a proper business case having been made. The opinion of Hamel-Smith & Co as to the legality of the transaction is of no comfort to me, this is a matter of making a sound investment decision. A legal opinion is necessary but not sufficient.
That 6-page legal opinion,dated 3 January 2011,by Timothy Hamel-Smith (who was appointed Senate President on 18 June 2010) is at page 168 of the ‘bundle’.
- Quantity of space – at pages 68 and 69 of the THA ‘bundle’ there is a ‘Note for Executive Council’ which summarises that the offices occupied by that Division – a total of 22,500sf is detailed, while a further 6,000sf can be reasonably surmised for the last Department. The average rent being paid by the THA for this Division is $8.17psf, also please note that a total of 28,500sf is now occupied by the Division for which the THA is procuring an 83,000sf office building.
- Quality of space – The cost of $143M for that space equates to $1,723 per square foot and I am reliably informed that the contract calls for a fully fitted and finished office building. That figure is at the absolute upper end of the range of costs for office buildings.
- Rent levels – According to the THA’s adviser on this project, Peter Forde, at the THA Press Conference on 10 September 2012 – see
…the monthly payment of $15.61 per square foot per month was not an unreasonable rate because there were properties in Scarborough where tenants were paying as much as $10.00 per square foot. He stressed that even if there was inflation the rate will remain the same…
The first issue I have with that is the attempt to use the $10psf comparable to justify the $15.61psf rent. That is an unreasonable ‘stretch’ by my standards as a professional valuer. Did the THA seek the opinion of the Commissioner of Valuations? Secondly, the fact that the rent cannot be increased in the event of inflation is a distraction, since the likely effect of this new, huge THA office building is that the rental market in Tobago will become saturated with the offices they vacate. The result of that is the decline in office rental values, so in the absence of any provisions of provisions for rent adjustments, the burning question has to be ‘What real risk is this developer taking?’. Risk Allocation remains a real issue.
So, in summary, we have a semi-autonomous Public Authority contracting, at a time of tremendous financial strain, to build first-class facilities three times larger than the second-class ones it currently occupies. Finally, please note that according to the ‘Note’ I cited earlier, the current monthly rent bill of the THA Division is $231,788, while the new monthly rent under this arrangement will be $1.295M – over five times more.
At the start of this article, I gave examples of the ratio at which Public Money was wasted or stolen, so just compare this project to those figures.
My next article will delve into the Calcutta Settlement land deal and its own peculiarities.
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
We are entering the endgame of the Colman Commission, so we need to maintain full vigilance. We must bear witness in a sober manner.
The PNM element
Former PNM Ministers Danny Montano, Conrad Enill and Mariano Browne were recently named by Commission Chairman Sir Anthony Colman as having declined to testify.
“It is noticeable that there has been a remarkable lack of cooperation from others, who were responsible for political decision-taking — to mention a few names: Mr. Enill, Mr. Browne and Mr. Montano in particular — have not offered to come and give evidence,” Sir Anthony said at Winsure Building, Richmond Street, Port-of-Spain.
“It is surprising perhaps that those who were the political representatives of the people of Trinidad and Tobago have not been able to provide assistance to the Commission in circumstances where it might have been expected of them,” he added.
“Colman chides 3 ex-ministers.” Trinidad and Tobago Newsday. October 23 2012.
Colman then named three former Cabinet ministers who had been previously named in testimony at the enquiry in relation to the HCU.
“To mention but a few names Mr (Conrad) Enill, Mr (Mariano) Browne and Mr (Danny) Montano in particular have not co-operated to come and give evidence,” Colman said.
“Colman praises Nunez-Tesheira for co-operating.” Trinidad Express Newspapers. October 22, 2012
That refusal to appear before a Commission of Enquiry amounts to a kind of contempt of court, since it is wilful disrespect for a lawful enquiry. These are PNM Seniors, whose testimonies would have been invaluable in unraveling this series of financial collapses.
Here is why those missing testimonies are so important –
- Mariano Browne is a Chartered Accountant who left a successful career as a Banker – including a significant part of that career spent at CLF, Browne was the first head of Clico Investment Bank and CLF’s Barbados Banking arm – to become Minister of Trade and Minister in the Ministry of Finance after the 2007 general elections. In addition, he is PNM Treasurer, so he could have given a rare insight into the linkages between these collapses and the large-scale donations made by both the CL Financial Group and the Hindu Credit Union (HCU).
- Conrad Enill comes from a Credit Union background, was also Minister in the Ministry of Finance up to the 2007 general elections and served as PNM Chairman up to their 2010 election loss. Enill called for an investigation into the finances of HCU as far back as mid-2002, but swiftly withdrew from that course of action after reportedly being pressured by then PM Manning.
- Danny Montano is also a Chartered Accountant, who was Minister of Labour at the time of the HCU collapse (that Ministry has supervisory responsibility for Credit Unions).
“…THE Hindu Credit Union (HCU) financed Karen Nunez-Tesheira’s successful campaign to become the Member of Parliament for D’Abadie/O’Meara in the 2007 general election.
However, Nunez-Tesheira was not the only People’s National Movement (PNM) candidate who secured campaign financing from the HCU during that election.
This was revealed yesterday as the commission of enquiry into the collapse of CL Financial and the HCU resumed at the Winsure Building on Richmond Street in Port of Spain.…”
“Karen: HCU financed my election campaign.” Trinidad Express Newspapers. October 22, 2012
“….THE Hindu Credit Union (HCU) financed the campaigns of the country’s two major political parties—the People’s National Movement (PNM) and the United National Congress (UNC)—in the 2007 general election, former HCU president Harry Harnarine said yesterday….”
“Harnarine: HCU financed UNC and PNM.” Trinidad Express Newspapers. October 23, 2012.
It is clear that the testimony of these three former PNM Cabinet Ministers would have been crucial to the Colman Commission unravelling this financial fiasco. I am convinced that the matter of what Cabinet knew at the time it took the bailout decision is crucial. For one thing, was Cabinet told that the beleaguered CL Financial group had paid a dividend on 16 January 2009, three days after they had written to the Central Bank for the bailout? If the Cabinet knew of the illegal dividend payout, why were no provisions made in the MoU of 30 January 2009 for the recovery of those monies? If the Cabinet were not told, then we are contemplating what might be a prior case of a senior Minister misleading colleagues to get the required result. A kind of pre-S.34 situation.
Both Browne & Montano are Chartered Accountants, so this reported refusal to give evidence seems to be a case of ‘conduct unbecoming a professional’.
The PNM is now making serious efforts to market itself as a party which stands for good values in terms of Accountability, Transparency and Good Governance. Given the PNM’s track record that is a great challenge. These reported refusals are doing great damage to those efforts.
Ironically enough, at this moment Dr. Bhoe Tewarie and Karen Nunez-Teshiera, are both looking better than these three former Ministers, given that they have appeared before the Commission. Just imagine that.
Sir Anthony Colman was reported to have issued subpoenas for certain missing witnesses in the HCU matter and held them in contempt of court when they failed to appear. I am waiting to hear whether the same treatment will apply to these PNM Seniors.
A commission of enquiry has the same status as that of a High Court.
Those deemed to be in contempt of court yesterday by commissioner Sir Anthony Colman are former chief executive officer of HCU Communications, Gawtam Ramnanan, former HCU financial consultant Jameel Ali and Dave Jagpat…“
“Colman to deal with 3 witnesses in contempt.” Trinidad Express Newspapers. June 15, 2012
It seems like this is yet another episode of inconsistent behaviour which serves to reinforce my belief in this potent ‘Code of Silence’. Let me explain with these facts set out above. One group of witnesses have offered weak excuses of the familiar kind – questionable medical certificates and so on – they were served with orders compelling their attendance (those are called subpoenas) and when they failed to respond, Colman made a ruling that they were in contempt of court. That group was HCU witnesses.
Another group of witnesses took a different approach….they actually have decided not to testify and communicated that to the Colman Commission as described above. Why has Colman not issued subpoenas or made any adverse rulings against these reluctant witnesses?
They are former member of the PNM cabinet, so I have to ask myself if there is a tacit agreement as to areas which will not be ventilated in this Enquiry.
Those areas which are seemingly off-limits now seem to include serious questions as to whether the Cabinet was misled. This is a sobering example of the channels of power. We have to bear witness.
The DPP’s role
“…I am particularly concerned that an otherwise credible prosecution might be stopped by the court on the grounds that a defendant’s right to a fair trial had been fatally compromised by the publicity attendant upon your enquiry. As such, I shall be issuing a press release warning the media against the publication of any material which may jeopardise the police investigation and any potential criminal proceedings…“
We also read that “…Gaspard also issued a stern warning to media houses last night to cease publication of “anything which might jeopardise, hinder or otherwise prejudice the investigation or any possible proceedings which might result from it…“.
The Colman Commission has maintained the modern standard of Public Enquiries in that the public can choose from attendance in person, live TV, streaming webcasts, online transcripts and online witness statements. It seemed to me that the position being taken by the DPP could jeopardise the public interest in having this information broadcast in the widest possible terms.
On 10 November, my mind churned as I read this – “…Meantime, the Commission of Enquiry is set to restart on December 3 with former Central Bank Governor Ewart Williams and Inspector of Financial Institutions Carl Hiralal expected to take the witness stand…”
At this stage we are expecting to hear the testimony of the Chiefs in this series of disasters – Lawrence Duprey, Ewart Williams, Carl Hiralal, Robert Mayers, Ram Ramesh, Faris Al-Rawi, Amjad Ali, Anthony Rahael, Andre Monteil. I am very concerned that we are now seeing what appears to be a detrimental development in terms of complete transparency.
I was encouraged to read the DPP’s statement that
“I remain mindful of competing public interest factors including the fair trial rights of potential defendants, the freedom of the press and the requirement of open justice.”
This is definitely an aspect which needs our most intense scrutiny.
The former CLICO CEO
I have read his material and he takes a completely opposite view to me as to what has happened here.
My own view is that the CL Financial group was able to use its track-record of huge political donations and other links to obtain full State support on favourable turns when the inevitable crisis emerged. The CLF group was able to use its links to take advantage of the State. Dziadyk’s view is that the State used the crisis to take advantage of the CLF group in general and the CLICO policyholders in particular.
I cannot see any way that we could both be right. The critical point is that only the publication of the audited, consolidated accounts and other details I have been pursuing will allow us to see the truth of this matter.
But the fact that Dziadyk is a trained actuary, who was at the centre of the scene for so long, makes his testimony invaluable for the insights it will allow the Colman Commission. I was therefore very surprised to read that he is not going to be called as a witness.
Readers who are interested in having the testimony of Gene Dziadyk form part of the Colman Commission to state their support for that to happen – the Secretary to the Enquiry is Judith Gonzales and her email address is email@example.com.
These kinds of issues are exactly the ones on which the public input of Seenath Jairam, SC is sorely missed. Having decided to take the Ministry of Finance brief and later deciding to return it, any of Jairam’s subsequent public utterances will be coloured by those decisions.
That is the point I was making in the previous column on the sacrifices which leadership demands.
“Blind man’s buff [or Blind man's bluff] is played in a spacious area, such as outdoors or in a large room, in which one player, designated as “It”, is blindfolded and gropes around attempting to touch the other players without being able to see them, while the other players scatter and try to avoid the person who is “it”, hiding in plain sight and sometimes teasing them to make them change direction.”
Wikipedia contributors, “Blind Man’s buff.” Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/wiki/Blind_man%27s_buff (Accessed October 7, 2012)
In this rounds, we, The Public, are ‘it’…you see?
The entire ‘section 34 fiasco’ is churning in my mind, so I am calling it the Plot to Pervert Parliament.
The way in which the country, its significant institutions and its legislature have been misled for the benefit of political financiers has given me pause. The entire episode is truly revolting, even for those of us who have little faith in our political rulers.
Having listened to the PM’s address on this S.34 fiasco there are now more questions than answers. The silence by the PM and other leading MPs on these documented facts during the Parliamentary debate on the repeal seems to amount to a calculated decision to withhold information.
The main questions for the PM are along two limbs –
- Firstly, how does the AG’s absence overseas for a few days exonerate him? We need to stay with this line, given that it is the principal one advanced by the PM after her research into the issue.
- Secondly, there is the burning question of what is Volney’s true role in all this? Did the PM ask him why he misled his Cabinet colleagues and the Parliament? If so, what did Volney say? If the PM did not ask Volney for his reasons, one has to be deeply skeptical about the idea that this single Minister outwitted the entire Cabinet.
The fact that this episode centred on the actual 50th Jubilee weekend was a powerful wake-up call to us all. History is rich in irony.
For my part, there is no way we are lightly ‘moving on’ from this tragic place…this is the occasion to resolve a lot of this nonsense and put us on the road to a much improved system of governance. It is going to be a hard campaign, but we must have a realistic appreciation of our situation if we are to have any chance at prevailing.
After the PP’s election victory, the Steve-Ish issue presented a conundrum since the USA wanted them and the public wanted to see them face justice. The Extradition request was refused so that they can be tried here. That ruling was not appealed by the AG, who stated that the reason is to allow them to be tried here.
The result of the sudden reversal in the face of mounting protest, is that the Piarco Accused can now say to the Court that Parliament exercised its powers to repeal legislation upon which they were relying to seek freedom. Parliament acted to reduce the rights of two individuals and the Court may be asked to rule that those actions of the Parliament have oppressed these men. The recent repeal of this section seems to have fortified the case of the Piarco Accused in seeking freedom.
Sidebar – Was S.34 the first time?
I am now recalling that the CLF bailout and shareholders agreement were never debated, they were both declared as fait accompli. What is more, as I wrote in this space recently, the Ministry of Finance is claiming that the contents of the presentation to Members of Parliament on the new bailout laws is secret. The S.34 fiasco involved an alleged stealing of $1Bn in Public Money and we are all now seeing the extent to which these white-collar criminals and their servants will go to cover their tracks. It is truly revolting. So, the question is ‘‘Given what we now know and the fact that the CLF bailout involves many billions of dollars in Public Money, is it reasonable to assume in good faith that our Parliamentarians and Public Officials will be responsible and honest in their dealings?’ I will be returning to this, it is turning in my mind.
Proper Priorities of our Parliament
Our Parliament has been on holiday since 11 July, but it has been reconvened twice in that period. The first occasion was in mid-August to satisfy an upcoming evaluation by the Financial Action Task Force of our Financial Intelligence Unit. All members voted in support of that Bill. The second occasion was for the repeal of the controversial s.34 and that raised a question for me. Why did the government agree to reconvene to repeal? Was it because of our objections and criticisms, or was it the stated concerns of the USA? In our 50th year of Independence, did the concerns of the USA outweigh our strong concerns? A sobering reflection.
The Title of this article is a kinda medley, when you study that, in Whe Whe, #34 is ‘Blind Man‘, we have been outwitted. One of my favourite moves, in those well-plotted spy thrillers, is the ‘Double-Bluff‘…This S.34 episode is a real cynical game of Blind Man’s Bluff….you see?
“…They’ve got 12 Aces up their sleeve!
So who the Hell can we believe?!
Not even the love of your children’s enough…
To quell this cynical pain!
Can you show me a directing-sign?
Show me a sign!
On this Highway of Big-Tief and Fools…
You tief yours and I shall tief mine!
Leh we go down the Road an break the broken rules
So in this morning of another day
When decency will lose its way
There goes another $100 Million again!
Back to the Same Ole Same!
The self-contempt is like a Badge of Hate!
It’s not too late!“
© Lypsoland Music. Lyric used by Permission. All Rights Reserved.
From the opening stanza of David Rudder’s ‘Back to the Same Ole Same‘ on the 2001 album ‘Autobiography of Now’
Where do we go from here? That question is for the second part of this column.
The CL Financial bailout continues to be a major failure on any scale, both in the causes of the fiasco and especially the manner in which it has been handled.
This is my update on what has been the progress in this campaign.
The equation for our reality check is –
Expenditure of Public Money Minus Transparency Minus Accountability Equals CORRUPTION
In May 2009, I wrote that the Directors and Officers of the CL Financial group should be required to file declarations under the provisions of the Integrity in Public Life Act (IPLA).
According to the IPLA, the Schedule detailing those persons is at page 31 – one of the classes of person required to file declarations to the Integrity Commission is –
“Members of the Boards of all Statutory Bodies and State Enterprises including those bodies in which the State has a controlling interest.”
I have put the last part of the sentence in italics to emphasize the deliberate choice of language by the legislators. The drafting of legislation is a painstaking exercise of strategy, debate and sometimes compromise…my point being that the inclusion of that last phrase must mean that the legislators intended to go beyond merely saying ‘Statutory Bodies and State Enterprises’, which would be the obvious, to specify that the IPLA must also apply in situations where the State has a controlling interest.
The CL Financial Shareholders Agreement (the Agreement), of 12 June 2009, which I obtained by using the Freedom of Information Act, specifies at clause 3.1 that the Board of Directors of CLF shall consist of seven Directors, four of which shall be nominated by the Government. The government has been exercising its rights under this clause, so it is clear that the State’s controlling interest in the CL Financial group is effective.
Quite apart from the four companies named in the bailout Memorandum of Understanding of 30 January 2009 and the Agreement – i.e. CL Financial, CLICO, British American Insurance and Caribbean Money Market Brokers – it is also clear that CL Financial controls the other companies in the group. This effective State control therefore extends to include enterprises which are majority-owned by CL Financial, such as Home Construction Limited, Angostura Holdings Limited, Republic Bank Limited and Methanol Holdings Trinidad Limited.
This very issue of the meaning of the IPLA in relation to state-controlled companies was ruled upon by the High Court in HCA1735 of 2005, in which one of the two issues being determined was –
“…(2) What is the meaning of the expression “Members of the Boards of all Statutory Bodies and State Enterprises including those bodies in which the State has a controlling interest” in paragraph 9 of the Schedule to the Integrity in Public Life Act as amended?…”
The written judgment of Justice Judith Jones states in its conclusion –
248. In my opinion therefore the words “Members of the Boards of all Statutory Bodies and State Enterprises including those bodies in which the State has a controlling interest” as found in the Act must be taken to mean:
‘the members of the management or decision making body of:
- all organisations or bodies established by Statute;
- all businesses or companies controlled by or on behalf of the State’.
249. Further for the purpose of determining control by or on behalf of the State a business or company shall be taken to be controlled by the State if the State exercises or is entitled to exercise control directly or indirectly over its affairs; if the State is entitled to appoint a majority of the directors of the Board of Directors or holds at least fifty percent of the capital of that body.
250. This interpretation to my mind is in accord with the purpose and intention of the legislation as expressed by the Constitution and the Act, that is, to preserve and promote the integrity of persons exercising executive or legislative functions on behalf of the State…”
I am advised that TSTT appealed that High Court decision and that judgment is awaited since mid-2010.
I confirmed that key CL Financial Directors have not been filing declarations under the IPLA. On Monday 10 September, I consulted in person with Integrity Commission staff who confirmed to me that none of these people have filed declarations or been required to file such for 2009, 2010 or 2011 –
- Gerald Yet Ming (CLF’s current Chairman)
- Hayden Charles (CLICO Director)
- Ronald Harford (Republic Bank’s Chairman)
- Dr Euric Bobb (former CLF Chairman)
- Rampersad Motilal (Managing Director of Methanol Holdings Limited)
According to the 3 April 2012 affidavit of then Minister of Finance, Winston Dookeran, the public money committed to this colossal bailout is –
Para 21 (a) $5.0Bn already provided to CLICO; (b) $7.0Bn paid to holders of the EFPA and Para 22 $12.0Bn estimated as further funding to be advanced.
That is a total of $24Bn in public money being paid to satisfy the creditors of the CLF group.
I wrote on Monday 10 September to both the Integrity Commission and the Minister of Finance & the Economy to report my serious concerns on this unacceptable state of affairs. It simply cannot be right that the Directors of this huge state-controlled group are allowed to escape the provisions of the IPLA. There must be proper transparency in matters of this kind, if good order is to be preserved in our society.
- CL Financial accounts and if those are not available, the figures on which the Minister of Finance has been relying – The reply is to ask me to provide further information as to what I mean. The Minister of Finance is making analyses and justifying his positions in public, including proposing legislation to Parliament – he must therefore be relying on some figures or estimates to proceed in this way. When I ask for those details, the Finance Ministry is mystified and needs me to explain what I really mean. Just imagine that!
- The presentation made to Members of Parliament in September 2011 to brief them prior to the debate on the Central Bank (Amendment) Bill and the Purchase of Certain Rights and Validation Bill 2011– The reply is to claim that the presentation is an exempt document which the Ministry is therefore unable to provide. The official presentation made to our Members of Parliament in this matter is deemed secret, which seems incompatible with the notion of a free, democratic society, so it will not rest there.
The recent revelations about the Plot to Pervert Parliament in relation to the S.34 debacle and the way in which the country, its significant institutions and its legislature have been misled for the benefit of political financiers have given me pause. I am now reflecting that the bailout and shareholders agreement were never debated, they were both declared as fait accompli. What is more, the new 2011 laws I am writing about here have a similar flavour of Abuse of Office in that we are being told that the contents of that presentation to Members of Parliament are secret. The S.34 fiasco involved an alleged stealing of $1Bn in Public Money and we are all now seeing the extent to which these white-collar criminals and their servants will go to cover their tracks. It is truly revolting. So, the question is ‘‘Given what we now know and the fact that the CLF bailout involves many billions of dollars in Public Money, is it reasonable to assume that our Parliamentarians and Public Officials will be responsible and honest in their dealings?’ I will be returning to this, it is turning in my mind.
- Details on the composition of the creditors of the CL Financial group, in particular EFPA holders. I was asking who was owed money and who got paid. That is at the centre of this issue – The reply states that the information requested is likely to be exempt from the Freedom of Information Act. That is another aspect of this to be challenged.
- Declarations filed by Directors and Officers of the CL Financial group under the IPLA – The reply points out that those declarations are secret, which is correct, but also goes on to state that this is not to be construed as an admission or denial that the IPLA applies to those Directors and Officers. Well I tell you.
The region’s largest privately-held group of companies is now under State control, in a situation of huge insolvency, with no proper accounts and no declarations being filed by the Directors.
It is as if the sheer size and power of this CL Financial event is warping all the usual rules – like a black hole or anti-matter – to the extent that it seems like the Freedom of Information Act is now being used for the Incarceration of Information!
This development is a serious peril to our Treasury. It must be a matter of the gravest possible concern to all right-thinking people that our fundamental Integrity safeguards appear to have been circumvented or ignored in a matter of this size and consequence.