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Howai gets $10m parting gift from First Citizens
The board of state-owned bank First Citizens approved the payment of $10 million to its departing chief executive officer, Larry Howai, two days before Prime Minister Kamla Persad-Bissessar announced that Howai would be the country’s new Minister of Finance—a job that gives him as Corporation Sole oversight of all state-owned companies, including First Citizens.
The payment to Howai, who took early retirement from the bank effective June 24, is over and above the pension and gratuity that he is entitled to receive as an employee who worked for 32 years at the bank and its predecessors, National Commercial Bank and Workers’ Bank (1989) Ltd, said the chair of First Citizens, attorney Nyree Alfonso.
She said: “The payment is in recognition of his exceptional service to the organisation as well as for the benefit of the bank in terms of attracting and retaining the best personnel who would be assured that they too would be rewarded if they give long and meritorious service to First Citizens.” Asked if the $10 million was an ex-gratia payment, Alfonso resisted the use of the term, which refers to a sum of money paid when there is no obligation or liability to pay.
But she admitted: “We were not under an obligation to pay, but decided to pay the sum based on precedent and our ability under the Companies Act to make such a payment.” Alfonso said all of the $10 million was based on internal precedent, from calculations going back to 2005, of what three senior managers who left the company received.
Based on his salary at the time of his departure and his 32 years of service, the formula used to calculate the consideration to Howai was not in any way different or preferential than that received by senior managers departing from the bank in circumstances which were not dissimilar to his, she said. The decision was taken by non-executive directors of the bank only, with two directors recusing themselves.
The matter was first discussed at a board meeting on June 11 but that meeting was adjourned pending the receipt of legal advice, which was sought and received from Russel Martineau, SC. “The final decision, which was taken on June 20, was based on both the precedent and the advice received from Martineau,” said Alfonso. The Prime Minister reshuffled her Cabinet on June 22.
Alfonso conceded that the public perception of the $10 million payment “might be awkward,” but she maintained that she “would have made the payment had he received another portfolio. I will take the jabs for saying that I was trying to placate the new boss. It does look a little awkward but only because of the portfolio he assumed.”
Asked whether the decision had the approval of Corporation Sole, which owns 97 per cent of the shares in First Citizens, Alfonso said the role of a board of a state-owned company is oversight and governance. “As a matter of governance, I don’t need the line minister to direct me on an issue like this, nor would I have tried to seek such approval in these circumstances,” she said, adding that as the chair of a state-owned company, she does not take day-to-day instructions from the Minister of Finance, but that that relationship is governed by checks and balances. Efforts to contact the Minister of Finance proved futile up to press time.
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