Asha Javeed

Sole com­mis­sion­er in­to the col­lapse of Cli­co and the Hin­du Cred­it Union, Sir An­tho­ny Col­man, ad­mit­ted he is hav­ing a hard time get­ting hold of wit­ness­es for his in­quiry.Col­man said there were sev­er­al peo­ple his com­mis­sion would like to sub­pe­ona, among them be­ing for­mer Cli­co di­rec­tors, but the sec­re­tari­at was un­able to "trace them."At the be­gin­ning of the in­quiry's third ev­i­dence hear­ing yes­ter­day morn­ing at Win­sure Build­ing, Port-of-Spain, Col­man called on the pub­lic to as­sist in help­ing him lo­cate those per­sons.

"It's nec­es­sary for the com­mis­sion to col­lect in­for­ma­tion from any­one who has to give," he said.Col­man made that dis­clo­sure even as he pushed back sev­er­al wit­ness­es for the com­mis­sion's fourth ev­i­dence hear­ing, card­ed for Jan­u­ary 3.Among those sched­uled for the two-week hear­ing were for­mer fi­nance min­is­ter Karen Tesheira, for­mer fi­nance di­rec­tor An­dre Mon­teil and Hin­du Cred­it Union boss Har­ry Harnar­ine.

Those three wit­ness­es have been pushed back to Jan­u­ary.Among those sched­uled to ap­pear are Methanol Hold­ings chief ex­ec­u­tive Ram­per­sad Moti­lal, for­mer cor­po­rate sec­re­tary Gi­ta Sakal, at­tor­ney Joanne Julien and for­mer Cli­co di­rec­tor Hay­den Charles. For­mer fi­nance di­rec­tor Michael Car­ballo would con­tin­ue his cross-ex­am­i­na­tion.Af­ter hes­i­ta­tion based on "client con­fi­den­tial­i­ty," Ernst &Young re­leased two redact­ed re­ports to the com­mis­sion-one on Cli­co In­vest­ment Bank (CIB) and an­oth­er on British Amer­i­can Trinidad (BAT).

Ernst & Young was com­mis­sioned by the Cen­tral Bank to pro­vide state of af­fairs re­ports on the two CL Fi­nan­cial com­pa­nies, post-Gov­ern­ment in­ter­ven­tion in 2009.Se­nior part­ner Maria Daniel, who was led in­to ev­i­dence by Dou­glas Mendes SC, told the in­quiry CIB was a "fil­ter through" for the CLF Group of Com­pa­nies while BAT was in­sol­vent since 2008.Daniel re­vealed that CIB's man­age­ment ac­counts at Jan­u­ary 31, 2009 put CIB as­sets at $1.5 bil­lion and li­a­bil­i­ties at $10.6 bil­lion

How­ev­er, Ernst & Young's eval­u­a­tion put CIB in the red by $4.6 bil­lion with li­a­bil­i­ties at $11 bil­lion.Daniel's re­port gave sev­er­al rea­sons for the in­sol­vent state of CIB:

1. In­ter-com­pa­ny trans­ac­tions which were built up as a re­sult of ac­qui­si­tion trans­ac­tions on be­halt of CLF. "The most sig­nif­i­cant con­trib­u­tor to CIB's fi­nan­cial dis­tress and to its even­tu­al in­sol­ven­cy is the lack of re­cov­ery of these in­ter­com­pa­ny bal­ances from CLF and oth­er re­lat­ed par­ties," the re­port stat­ed.

2. In­vest­ment port­fo­lio: CIB's port­fo­lio had $7.5 bil­lion in re­lat­ed par­ty in­vest­ments. For its $1.2 bil­lion in­vest­ment in the Ja­maican con­glom­er­ate, Las­celles de Mer­ca­do, the com­pa­ny held an in­vest­ment par­tic­i­pa­tion cer­tifi­cate.

3. Dis­tressed loan port­fo­lio: CIB's loan port­fo­lio was de­scribed as "high risk and of poor cred­it qual­i­ty."

"This con­cen­tra­tion pre­sent­ed sig­nif­i­cant risks to CIB, which fur­ther ham­pered CIB's liq­uid­i­ty po­si­tion. In fact, 40 per cent of CIB's top 20 loans were non-cash gen­er­at­ing as at 31 Jan­u­ary 2009."This ex­cludes CIB's oth­er less sig­nif­i­cant third par­ty and in­ter-com­pa­ny loans which were in ar­rears and thus al­so non-cash gen­er­at­ing," the re­port said.

4. CIB was used as a ve­hi­cle to swap as­sets and li­a­bil­i­ties among the CLF Group.

5. Poor con­trols and fi­nan­cial re­port­ing; and

6. CIB's liq­uid­i­ty is­sues be­gan be­fore 2009.

Daniel de­ter­mined that CIB's sur­vival was de­pen­dent on the fi­nan­cial state of its par­ent com­pa­ny, CLF.Through CIB's In­vest­ment Note Cer­tifi­cate (INC) $2 bil­lion was sold in 2008 and on­ly $800 mil­lion used for re-in­vest­ment.She ex­plained that track­ing in­for­ma­tion at times was dif­fi­cult, giv­en that CIB op­er­at­ed with two soft­ware sys­tems and in­ad­e­quate pa­per­work for cer­tain in­vest­ments.Among CIB's many flaws, said Daniel, were no re­pay­ments of loans in 2007; no fea­si­bil­i­ty stud­ies on in­vest­ments; loan pay­ments made and not record­ed; dis­burse­ments made and not record­ed and dis­burse­ments paid and al­so not record­ed.

"E&Y as­sessed their qual­i­ty to be poor," she told the in­quiry.

British Amer­i­can Trinidad

Daniel said be­fore Ernst & Young start­ed their state­ment of af­fairs in­to British Amer­i­can, they were al­ready in­sol­vent.BAT, she said, was in­sol­vent in 2008.But Ernst & Young deemed it "more in­sol­vent."BAT's bal­ance sheet, she ob­served had a net de­fi­cien­cy of $227 mil­lion but Ernst & Young had to re-ad­just its net de­fi­cien­cy to $836 mil­lion.

There was al­so a deficit on the Statu­to­ry Fund.

BAT's bal­ance sheet re­flect­ed a deficit of $795 mil­lion while E&Y had to re-ad­just to $890 mil­lion.

BAT's Ernst & Young re­port not­ed that BAT was in­sol­vent be­cause:

"BAT's in­abil­i­ty to sat­is­fy its oblig­a­tion to cred­i­tors par­tic­u­lar­ly re­lat­ed to amounts owed to hold­ers of ma­tured EF­PA and FPAII poli­cies as at De­cem­ber 2008.

"The in­abil­i­ty of British Amer­i­can Caribbean, BAT's im­me­di­ate par­ent, of CLF to pro­vide ad­di­tion­al fund­ing or to re­pay in­ter-com­pa­ny bal­ances or to pro­vide suf­fi­cient cap­i­tal to BA to sat­is­fy its oblig­a­tions and to ren­der it com­pli­ant with the Statu­to­ry Fund and oth­er re­quire­ments of the In­sur­ance Act.," the re­port said.Col­man ques­tioned whether BAICO be­came the own­er of BAT's in­vest­ments.Daniel said that BAICO end­ed up with mon­ey but she was not sure where the in­vest­ments end­ed up.Daniel will be fur­ther cross-ex­am­ined to­mor­row.