“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.”
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 23rd 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 30th 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 and the Securities and Exchange Commission are 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 14th September. According to a report in this newspaper, 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 –
- 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 30th January and the CL Financial Shareholders Agreement of 12th June – 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.
- 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 (PDF) 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.
- 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.
Afra Raymond is a Chartered Surveyor. He is President of the Joint Consultative Council for the Construction Industry and Managing Director of Raymond & Pierre Limited. This series on the CL Financial bailout can be viewed or readers’ comments made at www.afraraymond.com.