Posts Tagged corruption

CL Financial Bailout – Duprey’s Gambit

Lawrence Duprey. Photo courtesy the T&T Review

Lawrence Duprey

Last week we learned that Lawrence Duprey and his fellow CL Financial shareholders are victims of a badly-handled bailout. According to the Duprey version, the State must halt all asset disposals and he must regain control of the CL Financial group of companies. In what seemed to be an immediate response, Minister of Finance & the Economy, Colm Imbert, said he was so alarmed at the gross mismatch in the bailout figures that he decided to order a forensic audit on the entire process. These two contrasting stories are the latest big news on the CL Financial bailout.

I have always objected to the CL Financial bailout and is has become a strong example of how the Public Interest can be perverted under a series of disguises.

The Duprey Gambit is just the latest attack on good values in our country. It is a nasty, shocking outbreak of moral hazard. It needs to be dismantled and discredited, nothing less will do.

The Imbert Initiative looks like a welcome move to examine the details of this scandalous waste of Public Money. The proposed forensic audit seems to signal some official appetite for disclosure. However, if this is to properly protect the Public Interest, there are some ‘litmus tests’ which can show the official commitment to disclosure

This article will examine those two proposals so that some meaning might emerge from this utter, deliberate confusion.

The Duprey Gambit

The CL Financial group was the largest commercial group ever in the Caribbean and its collapse in January 2009 had an immense impact across our region. Apart from Lawrence Duprey’s single, brief speech at the press conference to announce the bailout on 30th January 2009, there has been no proper forum at which the CL Financial chiefs have been made to give an account of this catastrophic collapse. Duprey has offered no cogent explanation for this failure, only a series of bizarre periodic interviews. I can even remember one amazing November 2012 interview in which he claimed to be ‘flat broke’ at the same time as enjoying his new life of philanthropy. I have never heard of a flat broke philanthropist, but that just goes to show.

Duprey, Monteil, Sakal

Lawrence Duprey, Andre Monteil, Gita Sakal

Even when the Commission of Enquiry was established under the Chairmanship of Sir Anthony Colman, both CL Financial chiefs, Lawrence Duprey and Andre Monteil, refused to appear to answer questions. Both men invoked their right to avoid self-incrimination, but they were both represented by high-calibre attorneys who seemed to take every point during that Enquiry. At one point, I can remember a slightly bemused Colman describing those two chiefs as ‘The Dynamic Duo‘ and asking CLF’s former Corporate Secretary, Gita Sakal, whether she would agree that ‘Duprey was Batman and Monteil was Robin‘. The room echoed with our startled laughter, but Sakal did not answer.

One of the greatest pieces of mischief in all this is the recurrent attempts to compare our bailout to the Wall Street one. Apart from the refusal to offer any public explanation, there are two further details which separate the CL Financial bailout from the US example.

The CL Financial shareholders have never lost their shares. Which is why they can be confronting us with all kinds of options and proposals, not to mention threats of lawsuits and so on. In the US bailout, the troubled companies were forced to give equity to the Federal Government. In order to receive taxpayers’ money in the USA, Fannie Mae (the huge mortgage company) gave 79.9% of its equity; while AIG (at that time the world’s largest insurer) gave over 85% of its equity; 36% of Citibank belonged to the US government in February 2009.

In addition, in the Wall Street bailout of AIG for example, the Public Money advanced to cover AIG’s exposure was lent at 11.5% interest. At that time, LIBOR (the base rate) was 3%, so it was a clear signal from the State that the bailout was being conducted on the most punitive terms. These details were found in Andrew Ross Sorkin’s ‘Too big to Fail’. In contrast, our government agreed to bailout CL Financial at ZERO-percent interest. In the language of the financial world, that implies a ‘sweetheart deal’. To my eye, it really resembles a marriage. Definitely, the parties appear to be related.

There are three implications of the zero-interest rate enjoyed by CL Financial –

  1. firstly, the public interest was seriously prejudiced by our government effectively ignoring the time value of money;
  2. secondly, the amount of interest which would have accrued over the ensuing seven years would have placed the company completely in the State’s hands – i.e. the interest of the shareholders would have been extinguished by the effluxion of time and,
  3. thirdly, the CL Financial Shareholders’ Agreement of 12th June 2009 has been extended several times and for me, that raises the pregnant question of why the State did not subsequently negotiate a proper interest rate for these vast sums of Public Money being lent to the wealthiest person in the Caribbean. I will return to this issue.
Michael Carballo. Photo courtesy Trinidad Guardian

Michael Carballo

One of the most sobering things about this unfolding crisis is the extent to which the public interest has been diluted to almost a mere talking-point. For those readers who are wondering just how could Lawrence Duprey be insisting on regaining control of his companies, it is interesting to consider this explanation from Michael Carballo, the then Group Finance Director of CLF –

“…Carballo said the government was in control of the management and running of the Caribbean conglomerate, but what has not changed is the ownership.

‘The shareholding hasn’t changed. There is no intention to change the shareholding. It’s an agreement for about three years whereby the assets are managed and restructured and then the company will be returned to the shareholders,’ he said…
— “Lascelles untouched – Duprey remains chairman.” Jamaica Gleaner. Wednesday June 17, 2009.

Finally, the simple fact is that Lawrence Duprey and the other CL Financial chiefs would not be allowed to regain control of the financial parts of this empire since they can not be considered as ‘fit and proper persons’. That means that CLICO, British American, Republic Bank, COLFIRE cannot lawfully return to the ownership and control of those persons, as detailed in ‘Steal of a Deal‘, earlier in this series.

The Imbert Initiative

Min of FInance, Colm Imbert, MP

Min of FInance, Colm Imbert, MP

I have long campaigned for full disclosure of the details of the bailout – all the details of all of the payments must be published. I therefore have to say that Minister Imbert’s call for a forensic audit of the payments made under the bailout is welcome. That is exactly what I was calling on him for in ‘Finding the Facts‘.

Imbert explained at the post-Cabinet briefing on Thursday 28th April 2016 that the gross differences in the stated amounts paid in the course of the bailout had so concerned him that he had decided to proceed with a forensic audit.

We are now witness to a new appetite for disclosure on the details of this CL Financial bailout and that is good. If we are proceeding along that road, these are the ‘litmus tests’ I am proposing so that this progress can be accepted –

  1. The CLF Shareholders’ Agreement has been amended several times since its establishment in June 2009. I obtained a copy of that Agreement in March 2010 via the Freedom of Information Act and I am now requesting Minister Imbert to publish the subsequent amendments, extensions and revisions.
  2. Colman Commission Report – There was a report in June 2015 that the completion of the Colman Commission’s Report into the failure of CL Financial was being effectively strangled by a lack of resources. I am reliably informed that proper resources have since been made available for completion of that important Report. The Colman Report into CLF must be published.
  3. Forensic Audit – The Report of the forensic audit into the CL Financial bailout must also be published when it is completed.
  4. CBTT (Amendment Act) – One of the most serious steps taken in this entire affair was the Central Bank (Amendment) Act passed in September 2011 to prohibit any lawsuit against or judicial review of the Central Bank’s actions. In November 2013, the High Court ruled that Act to be unconstitutional in a case brought by Andre Monteil’s Stone St Capital, but the State has appealed. The State must reconsider this course of action and withdraw its appeal.
  5. Freedom of Information Ruling – In July 2015, the High Court ruled in favour of my Freedom of Information request to obtain the details of the bailout, but the then Minister of Finance appealed. I have requested that the new Minister withdraw that appeal and publish the requested details.
  6. Interest – Finally, we come to the issue of the various demands and proposals from Lawrence Duprey and the other CLF shareholders. It is my view that the Minister of Finance must now insist on a proper rate of interest for the Public Money advanced in this scandalous situation. That rate of interest must be well in excess of the base rate.

The stage seems set for a legal mangle of epic proportions – we will soon see.

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AUDIO: The Breakfast Roundtable interview on Sky 99.5FM- 28 January 2016

sky995fmAfra Raymond is interviewed on the ‘The Breakfast Round Table‘ show on Sky 99.5 FM by Eddisson Carr and Jessie May Ventour in light of the fact that he spoke at “Corruption Perceptions Index 2015: Facts and Findings”, the seminar hosted by the Trinidad and Tobago Transparency Institute, in collaboration with the Trinidad and Tobago Chamber of Industry. He shares highlights of the discussion he led in that seminar. 28 January 2016. Audio courtesy Sky 99.5 FM

  • Programme Date: Thursday, 28 January 2016
  • Programme Length: 37:49

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AUDIO: The Showdown Show Interview, i95.5FM – 7 June 2015

Afra Raymond is interviewed on the ‘Showdown‘ show on i95.5FM by Jennifer Baptiste-Primus and Ralph Maraj on the former PP government’s ‘Land for the Landless’ policy and bill. 7 June 2015. Audio courtesy i95.5FM

  • Programme Date: Sunday, 7 June 2015
  • Programme Length: 1:13:27

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TEDx Talks: Is it only White People who can be racist?

In this provocative talk, Afra Raymond takes a deeper look at race and racism. He successfully uses the talk to place a new perspective on how we think about race and its role in corruption. TEDxPortofSpain. 14 October 2015.

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CL Financial bailout – Finding the Facts

Min of FInance, Colm Imbert, MP

Min of FInance, Colm Imbert, MP

On 10 August 2015, the then Minister of Finance and the Economy appealed the High Court’s 22 July 2015 judgment which ordered the release of the details on the CL Financial bailout. My protest at this action was published in this space as ‘Studied Disdain‘. Since then, the General Election of 7 September 2015 brought about a change of government – the People’s Partnership is now the official Opposition and the People’s National Movement is once again the government.

It is essential to now determine the areas in which we can expect changes in policy and the areas in which we can expect business as usual. Those perspectives informed my letter of 15 September 2015 to the new Minister of Finance & the Economy, Colm Imbert.

Imbert asked for more time to consider my request, so I consented to his application to the Appeal Court – the next hearing in this matter is therefore set for 25th January 2016.

My exchanges thus far with Imbert have been straightforward ones, but it is always important for us to be vigilant and aware.

15th September 2015
By email & hand
Mr Colm Imbert MP,
Minister of Finance & the Economy,
Ministry of Finance & the Economy,
8th Floor,
Eric Williams Financial Complex,
Brian Lara Promenade,
Port-of-Spain
Honourable Minister,
Request for Official Publication of Suppressed Details relevant to CL Financial bailout
The controversial CLF bailout is the largest payout of Public Money on a single project/issue in the history of our Republic. The entire operation has been conducted in conditions of complete secrecy with all the usual standards on transparency and accountability being ignored by the responsible public officials – a timeline showing the various official versions of the cost of this bailout is attached for ease of reference.
The PNM conducted its successful campaign for the recently-concluded 2015 General Elections on the commendable principles of Accountability, Transparency and Good Governance. I have been campaigning for the restoration of those standards to this CL Financial bailout and have gone so far as to sue the Ministry of Finance (CV 2013-00162) for the details of the bailout, at my own expense and in the Public Interest.

The High Court ruled in my favour on 22 July 2015 and ordered the publication of the requested details, but on 10th August 2015 the Ministry of Finance appealed that ruling (P201 – 2015). Our next hearing is set for Monday 19th October 2015, to argue the State’s application for extension of the stay of execution. It is my intention to strongly oppose that application for any extension of the stay of execution.I am formally requesting that you take the necessary actions to restore the Public Interest in the Accountability, Transparency and Good Governance in relation to this vast, opaque expenditure of Public Money.In specific terms, I am requesting three actions from you –

  1. Formal withdrawal of the State’s appeal in this matter;
  2. Urgent publication of the details of the CL Financial bailout to include the audited accounts for CL Financial 2008-2014 or any interim, preliminary, draft or unaudited statements of CL Financial Limited; the full details of the official briefing to Independent Senators in September 2011 preparatory to the debate on The Central Bank (Amendment) Bill and The Purchase of Rights and Validation Bill 2011 (to include copies of all slides. Power-Point slides, tables, charts, schedules, text or other information which comprised that presentation) and details of the funds paid in the bailout to include – a full list of creditors as at the commencement date of the bailout and at the date of my FoIA request (8th May 2012); the names of the EFPA holders; the dates of the repayments of the EFPA holders, together with details of the amounts received; the identities of all those who have received public money in the conduct of this exercise, together with details of the amounts received. These details are no doubt electronically stored, so I would request that the answers be provided in a searchable database;
  3. Refund of my reasonable legal fees in this matter – The High Court awarded 70% of my costs.

In anticipation of objections to disclosing these details on the grounds of the right of private investors to confidentiality, my response would be to point out that all other recipients of Public Funds are liable to having detailed information disclosed, upon request and without notice. A request for information on the details of a Public contract would include the identities of the parties; the contract itself; the dates and amounts of payments. Such requests are routinely handled without resort to attorneys or even the Courts, even if administrative delay is also a reality. That is the common and accepted practice in relation to all Public contracts and payments, which is fortified by the provisions of the Freedom of Information Act, under which my litigation was successful. There is no case made for any special status of financial investors to enjoy rights of confidentiality which are not available to other recipients of Public Funds.

The only way for the required level of transparency and accountability to be achieved is by the responsible officials publishing all the details of all the payments of Public Money.

The equation for the reality check is –

         Expenditure of Public Money
Minus    Transparency
Minus    Accountability
Equals   CORRUPTION    

I can appreciate that the impending 2016 budget would likely demand your attention for the next three weeks. I would like to know the State’s position in this matter before the next Appeal Court hearing on Monday 19th October 2015, so I would appreciate your reply by Friday 9th October 2015.

This request was made in the Public Interest, so I trust that it will receive your positive attention.

Yours sincerely,
……………………………………………….
Afra Raymond

c.c. – Dr. Keith Rowley MP, Prime Minister,
Mr. Faris Al Rawi MP, Attorney General

http://www.afraraymond.wordpress.com

How much has the CL Financial bailout cost?’
TIMELINE

DATE

EVENT

SOURCE

with live hyperlinks

30th January 2009

Bailout announced at an estimated cost of $5.0 Billion

CBTT Statement of 13th February 2009

12th June 2009

CL Financial Shareholders’ Agreement signed, which for the first time made it a priority to protect shareholders’ rights.

https://afraraymond.files.

– see Para ‘A’ of the Preamble at page two.

8th September 2010

Winston Dookeran’s first Budget Statement, in which he formally proposes to drastically reduce the rate of payout of Public Money in the bailout.

2011 Budget Statement 

pages eight through ten.

1st October 2010

Then PM confirms that $7.3 Bn had been spent and that a further $7.0 Bn needed to be spent (pg 31). The burning need for an explanation of where the $7.3 Bn went…(pgs 25-26)

Hansard for 1st October 2010 

pages 19 through 34.

3rd April 2012

Then Finance Minister Winston Dookeran confirms that $12 Bn had been spent.

Affidavit to High Court in Percy Farrell & Ors vs AG 

para 21.

1st October 2012

New Finance Minister Larry Howai confirms that $19.7 Bn had been spent, which is an additional $7.7 Bn in six months.

2013 Budget Statement 

page six.

17th May 2013

Formal confirmation of bailout cost “over $25 Bn

Formal Press Release from Office of the AG 

para eight.

2nd April 2014

Then Finance Minister Howai confirms bailout cost as – “… the cost to the country of the CL Financial bailout—the actual cash that has been put out—is approximately$20.8 billion...”

Hansard for Senate sitting of 2ndApril 2014 

page 35.

7th August 2015

Then Finance Minister Howai confirms bailout cost as ‘not quite $20 Bn‘.

CNMG interview

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VIDEO: “IN THE CHAIR” on Synergy TV

SynergyTVAfra Raymond is interviewed by a group of young people on Synergy TV’s pre-election discussion series, “In The Chair”.

The discussions covered the CL Financial bailout, the role of campaign financiers and corruption in our country’s public affairs.

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Our Land – The Review

“…A small State such as Trinidad & Tobago must accord a very high priority to the judicious management and utilization of its land resources or perish. All elements of land policy must be designed to ensure that these finite resources are efficiently utilized and husbanded in such a manner as to serve the long term interests of the national community…”
—Conclusion of “A New Administration and Policy for Land” (19 November, 1992)

The PNM won national elections on 7 September 2015 by 23-18.

Two key themes emerged during the PNM’s successful campaign –

  1. Firstly, there was a strong emphasis on the critical need to restore proper standards of Accountability, Transparency and Good Governance;
  2. Secondly, a commitment was given to ‘keep the various promises made by the PP government’.

When one considers the various promises, policy changes and actions of the PP in relation to land and property, it seems clear to me that those two campaign commitments made by the PNM are entirely incompatible.

Our country has a very high population density and the previous Minister of Land and Marine Resources estimated that some 63% of our country’s land belongs to the State. It is therefore a cardinal State responsibility to properly manage those critical resources so that short and long term interests can be reconciled in a sustainable manner. The present situation is so serious and damaging to our collective interests that I am calling for a halt to any attempt to keep promises with respect to land and property while a fact-finding and policy review is conducted.

landpolicyThe opening quotation is from the National Land Policy 1992, which is now a virtually unknown document since its very existence is denied by all the relevant agencies. This Policy provides critical guidance for how this scarce resource should be best managed in the Public Interest.

The severe crisis now evident in relation to our State Lands resembles a ‘Tragedy of the Commons‘ in which this crucial resource which should offer long-term collective benefits is effectively abused by self-seeking individuals. The pattern of abuse is facilitated by gross mismanagement, in profitable partnership with deliberate obscurity in how the State Land system actually operates.

Food Security

foodplan-2012-15This remains elusive since in March 2012 the Ministry of Agriculture, Land & Marine Resources published its Food Production Action Plan 2012-2015. The major goal of that Action Plan was to halve the country’s annual $4.0 Billion food import bill. Yet in March 2014, the Food Production Minister, Senator Devant Maharaj, stated that the food import bill had been reduced by only 2% since 2010.

The significant reduction of our food import bill will require a flexible plan, with dedicated implementation and continuous monitoring. The one inescapable requirement is for farmers to have access to land of suitable quantity, quality and location. Without a good supply of land, no food security plan can succeed.

Land for the Landless

The proposed revisions to the State Lands Act 1998 were approved by the Lower House of Parliament on 3 June 2015 and withdrawn after the JCC raised certain objections. The proposed change in the ‘Land for the Landless’ policy were approved by Cabinet on 19 March 2015 with these main elements –

  • Occupation Date – Was moved from January 1998 to June 2014, which means many more persons would qualify.
  • Income Limits – Previously the maximum monthly family income was $8,000, this was now revised to $30,000.
  • Definition – the 1998 Act defined a landless person as one who was ‘disadvantaged’ according to the Ministry of Social Development, that word was deleted from the revised proposals.
  • Designated Areas – these were specified in an extensive list of over 400 areas covering the entire country.
  • The Numbers – The total number of persons identified was 250,000 and a commitment was given to regularise some 60,000 of those.

A policy which was originally intended to alleviate the plight of our poorest citizens has now effectively been extended to offer ‘Land for Everybody’. The existing commitment in respect of 60,000 lots will consume about 8,000 acres of land.

EMBD

embd logoThe EMBD website states that it is responsible for the development of the former Caroni lands – some 7,500 residential lots are being prepared for ex-Caroni workers as part of their retrenchment package, with a further 8,400 agricultural leases of 2-acre parcels reportedly being processed. That means about 940 acres are to be used for the residential lots, with at further 18,500 additional acres for the agricultural plots. The total land area to be used would be about 19,420 acres, which is about a quarter (26%) of the estimated area of the Caroni lands.

Caroni Lands

caroni1975_logo_smallCaroni Lands were leased to ex–Caroni workers as part of their retrenchment compensation – they were entitled to one residential lot and a two-acre parcel for food-crop farming. The use of those lands for those purposes was intended to be controlled by the restrictive covenants in those leases. For instance, the residential lots were to be developed by a residential building within three years and the agricultural lots were to be held by the ex-workers for food-crop farming. In the 2015 budget, the restriction on sale of those agricultural lands was removed (pg 14). In addition, Cabinet Minute 3093 of 6 November 2014 approved the removal of the restrictive covenants in the leases to ex-Caroni workers – both agricultural and residential. No restriction on sale and no requirement to build on the lots.

This is tantamount to the State entirely gifting the development and transactional rights to these lessees, with no effective means of ensuring the originally desired results.

Housing Development Corporation (HDC)

hdc-logoThe HDC sells new homes at heavily-subsided rates to middle-income families, subject to restrictive covenants which prohibit open-market sale within the first ten years. Under the terms of that clause, the owner of one of these homes is required to offer the property to the HDC at the original price. It now seems that the HDC has relinquished those restrictive covenants. I have seen several letters signed by the HDC which authorise the open-market sale of those homes within the ten-year embargo period. I am not aware of any policy decision which supports that pattern of approvals and none of the vendors I have spoken with have paid any penalties of profit-share to the HDC.

This is yet another example of the State or its agents abandoning its fundamental duty to properly manage the public property rights within its remit.

Property Tax

The proposed Property Tax would require a live, open-access database which would allow anyone to examine the details of any property in the country. Those details would include land area, building area, number of bedrooms/bathrooms and other facilities, transaction history, ownership and assessed taxes. One of the strongest sources of opposition to the Property Tax is persons who would wish to keep the details of their property holdings and dealings as secret as possible.

The new Property Tax system and the modern database is in fact a key element in unearthing the facts of our country’s property ownership and occupation.

Property Tax must therefore be a priority in this arena.

The unrealistic policy of homes with gardens consumes too much land and will jeopardise our country’s sustainable future.

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