Oct 2010 Financial News

British QC for Clico, HCU probe. One-man commission of enquiry…

Oct 15, 2010

British Queen’s Counsel Sir Garvin Lightman will form a one-man commission of enquiry into the financial crisis at CL Financial’s subsidiaries and the Hindu Credit Union, Attorney General Anand Ramlogan announced yesterday. Speaking at the weekly post-Cabinet media briefing, Ramlogan said the commission’s terms of reference included determining and making recommendations on whether there were any grounds for criminal and civil proceedings against any person or entity in the issue of the companies. Ramlogan said the commission would also investigate the distribution of the $7 billion which the previous administration pumped into a bailout plan for CL Financial. “That is, where the money gone,” Ramlogan emphasised. The commission will investigate various aspects of the crisis concerning the following companies: CL Financial, Colonial Life Insurance Co, Clico Investment Bank, British America Insurance Co Trinidad Ltd, Caribbean Money Market Brokers (CMMB) Ltd and the HCL.

Ramlogan said the commission would have an outer limit of six months to complete the probe, with a preferred inner limit of four months. “The purpose of this commission is to prevent the recurrence of the financial crisis that has an ‘octopus’ effect, where tentacles seem to stretch in every nook and cranny of the financial system,” he said. Lightman is a specialist in insolvency, arbitration, intellectual property and administrative law. He holds first-class honours in law, is a Fulbright scholar and has handled trials in the UK, Singapore, Hong Kong and the Caribbean. Counsel to the commission will be another British QC, Peter Carter, a specialist in financial crime and fraud. Among his work, Carter was involved in the BCCI probe which found the former BCCI treasurer guilty of an $18 million fraud. Assisting the commission will be local counsel Kelvin Ramkissoon and Celeste Jules.

On HCL’s status as a private company under probe, Ramlogan said the commission of enquiry had to be respected by all. He said the commission would have the right to summon people. The AG said he expected that all those who had nothing to hide would co-operate. Among the terms, the commmission will make findings, observations and recommendations on policies, measures or systems that should be implemented to detect, counteract and prevent a recurrence of the situation. It will also establish a standard, co-ordinated and effective system of responses to be implemented by institutional regulatory and statutory bodies, and which may require the rehabilitation of such institutions to protect stakeholders.

Other terms of reference include:

• The circumstances, factors, causes and reasons the led up to the January 2009 intervention into Clico and subsidiaries.

• The legal and fiscal basis for the 2009 decision. How the injection of capital structured and what policies and procedures were used in distribution.

• The causes, reasons, circumstances leading to the deterioration of the companies’ financial condition.

• The effectiveness and accountability of the auditing firms of the institutions which could include Central Bank, Securities and Exchange Commission, and the weaknesses/shortcomings of these, if any, in relation to the crisis.

• The extent to which the existing accounting and auditing firms and other regulatory bodies fulfilled their responsibilities under the law and best practice.

• The assets and liabilities of the companies and extent to which existing assets are capable of meeting financial demands of depositors and other investors.

• The identity of any accounting/auditing firm, person, entity or institution (whether local or otherwise), who/which directed, conspired to, participated in, aided or abetted, knew or ought to have known or could be implicated in any act or deed leading to the crisis.

• If prudent and proper corporate financial practices were adhered to, whether such a situation would have occurred.

• The extent to which it may have been possible to prevent stakeholders interests from becoming compromised and whether the accounting and other firms, plus those with oversight, acted in accordance with best practices and in the best interest of stakeholders.

• Whether any third party acted in a manner that would have misled any depositors or stakeholders, by negligently or fraudulently misrepresenting the true financial status of the companies.


Source:
Gail Alexander
Trinidad Guardian
Friday October 15, 2010

http://guardian.co.tt/news/politics/2010/10/14/british-qc-clico-hcu-probe