On The Trail Of The Missing Money

One Year After The CL Bailout

By AFRA RAYMOND

As we enter the wrong side of the boom, it is a little like travelling to the dark side of the moon. Familiar navigation points fade from view and we are forced to use bearings that are new.
The quality of our political rulers has now joined in unholy matrimony with the sheer recklessness of their anointed deal-makers to put our economy into an entirely new and perilous place.
At these moments of turmoil and impending crisis, it is always interesting to observe closely what key people are not saying. Their pauses and silences can be very instructive.
The seriousness of the evolving situation now requires that we discipline the national appetite for melodrama, bacchanal and comesse and face up to the challenges ahead.. 
The main case involves the CL Financial bailout, which was announced a little over a year ago when the first Memorandum of Understanding (MoU) was signed on 30th January 2009.  Given the subsequent revelations as to the withdrawals of funds by important people and the shareholdings of the Minister of Finance in CLF, it is impossible to say exactly when the actual bailout began.  All we can say for sure is that we, the public, were told of a bailout on 30th January 2009.
There has been a cascade of bewildering and disturbing events—those are set out at my blog, www.afraraymond.com—and we are now at a position of deep confusion.  The resignations of three top-level executives of the group and the subsequent bald press releases are most disturbing.  They speak of disputes and jostling taking place in terms of this huge group we are now committed to rescue. For the record, those resignations were: 

12th January – Steve Bideshi, CLF Group CEO, effective 31st January
19th January – Michael Carballo, CLF Group Finance Director, also effective 31st January
3rd February – Claude Musaib-Ali, CEO of CLICO, effective 14th February

The growing sound we are hearing is that the Bob Lindquist forensic report into the dealings of CLICO etc. was due for completion at the end of February. While many anxiously await its release (or leak) for evidence of  possible wrong-doing, the more responsible position would be for the citizenry to press for publication of the Audited Accounts of the CL Financial group as at 31st December 2008. Those accounts should be signed-off by the same professional firm which had done the 2007 audit, PriceWaterhouseCoopers. 
CL’s audited accounts constitute the most important single document, since it will fix an asset value at the end of 2008. That is—12 months after the last audited accounts, which showed a total asset value of $100.666Bn. (http://www.clico.com/pdf/AR07/CL%20Financial%20Annual%20Report%202009.pdf🙂
55 days after Michael Carballo, the then-Group Finance Director, gave statements to the Business Guardian that the group had assets of $100Bn and could weather any storm. (http://legacy.guardian.co.tt/archives/2008-11-07/bussguardian1.html.)
13 days before Lawrence Duprey, the group’s Executive Chairman, wrote to the Governor of the Central Bank to request urgent financial assistance.  That letter was accompanied by a table setting out the group’s asset values – totaling $23.9Bn – and was read into the Hansard by the Minister of Finance on 4th February.
(http://www.ttparliament.org/hansards/hh20090204.pdf at page 628.)
16 days before a dividend of $3.00 per share was paid to the CL Financial shareholders.
30 days before the historic press conference to announce the bailout, at which it was repeatedly stated that the CL Financial group had $100Bn in assets.

Despite its obvious importance in the mystery of the missing money, there is complete silence regarding the progress of the 2008 audit.  It is almost a full year overdue and the only accounts being given to taxpayers are the forensic and confidential ones. The public must insist on this information as a non-negotiable condition of the bailout with taxpayer funds.
Let us mark this moment well, because if the 2008 audited accounts are allowed to fade into obscurity, please worse should be expected with the 2009 accounts.  
There are also other facts, now in the record, which cry out for early attention, without need for special reports or melodrama.
Was the payment of a dividend to CL Financial shareholders, after writing to seek urgent financial assistance, an illegal act by its Board of Directors?  If yes, then what actions are to be taken to both a) recover those sums of money and b) punish the Directors of CL Financial for such action?  If no, then we need to hear the argument to support that conclusion.   As incredible as it might seem, is it possible that the Board of CL Financial did not know that Duprey’s letter had been sent to the Central Bank?

The State is in control of the CL Financial group and ought to be able to present a picture as to who broke their deposits in the last 90 days.  That is guaranteed to be an interesting read and no need for any forensic report there, either.  Maybe more importantly: who borrowed from the floundering group in its last days and on what terms?  
The Governor of the Central Bank has, on several occasions, publicly and clearly stated his deep concern at the actions of the CL Financial chiefs. Two examples:
At a press conference on 22nd April—”If you ask me whether CL Financial did everything that was honourable and beyond reproach, the answer is no! The answer is no!” (http://guardian.co.tt/business/business/2009/04/24/cl-financial-bailout-cost-5-billion-over-two-years.)
Speaking on 10th November 2009, at a conference on The Global Financial Crisis – “I prefer, however, to focus on the governance issues because, without doubt, the failure of Clico was a failure of Governance … it was absence of controls from the Board of Directors.” ( http://www.centralbank.org.tt/news/speeches/2009/sp091110.pdf.)

The Central Bank issued updated regulations as to the qualities of person considered to be fit and proper to serve as Directors or Senior Officials of Financial companies – that is at http://www.central-bank.org.tt/news/releases/2005/mr050510.pdf. At 3.1, it states—
“In accordance with governing legislation a person is considered to be fit and proper if the person essentially is of good character, competent, honest, financially sound, reputable, reliable and discharges and is likely to discharge his/her responsibilities fairly.” The Governor of the Central bank has spoken, in unmistakable terms, about the conduct of CL Financial officials. Does the evidence in his possession rise to a level that contravenes “fit and proper” regulations? And if it does, what will the Governor do about it?
We do not need to wait for any forensic report to be leaked or any opinion from expensive foreign lawyers.  Sweet as the melodrama can be, it is a highly dangerous distraction for all of us.

—www.afraraymond.com  afra@tstt.net.tt

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