First Citizens chair Nyree Alfonso yesterday came to the defence of a senior officer of the majority state-owned bank, whose purchase of 659,588 shares during last year's initial public offering (IPO) has been questioned in some quarters of the public.Phillip Rahaman, First Citizen's Group chief risk officer, spent about $14.5 million to acquire the shares, which were listed on the local stock exchange on September 6 last year, according to the disclosure made in the bank's 2013 annual report.Government last year divested 19.3 per cent of its stake in the bank, equal to 48.5 million shares, to employees of the bank, individual investors, local financial institutions and companies.Of the 48.5 million shares, 15 per cent were allocated to employees of the bank, who only took up half of their allocation, even though they were allowed to buy up to 5,000 shares at a ten per cent discount of the offer price, which was $22 a share.
The number of shares purchased by Rahaman was more than three times greater than shares purchased by any other executive or director of the bank.In a statement sent to the T&T Guardian yesterday, minority shareholder activist Peter Permell called on the bank "to clear the air on this particular transaction as failure to so do would invite unnecessary speculation and has the potential to erode confidence and trust in senior management. Silence is not an option."Opposition leader Dr Keith Rowley also told a radio station that given the subsidy on shares sold to the employees, the Government had a responsibility to clear the air.But Alfonso described the comments as a "political storm in a teacup."Alfonso, who is a practising attorney, said she was confident there were no breaches of regulations, policies or procedures in the senior executive's purchase of the shares worth $14.5 million.She said: "I am so confident that I am willing to take a deep dive into the process. The bank has nothing to hide in terms of how this process was run. I will stake my confidence in the way the bank ran the process, which was transparent, fair and unassailable."The purchase of the shares is perfectly legitimate, in that it breaches no part of the allocation policy given to us. It does not breach any regulations of the Securities and Exchange Commission. It does not breach any Stock Exchange regulations and it does not breach any internal policies or procedure of the bank."It is from those factors that I draw the conclusion and am of the view that it is a perfectly legitimate transaction."
Questioned about the strict anti-money laundering controls that banks are required to implement, Alfonso said the bank did review the executive's source of funds both at the application stage and subsequently. "The bank satisfied itself about the sources of funds and I can say that he did not receive any money from First Citizens, which is in keeping with our policy, which prohibited managers from accessing the zero per cent interest loans that were offered to employees to purchase the shares," she added.On the issue of whether the allocation policy should have capped the number of shares that employees were entitled to apply for, the bank's chair questioned the legality of such an acquisition cap.She added that the allocation policy for the First Citizens' share offer would have been approved by the Ministry of Finance and the SEC and the Stock Exchange would have had sight of it."The First Citizens share offer was an opportunity for the Government to share its wealth with the population. How much you can circumscribe that opportunity?" she asked.Asked whether it was true that Rahaman had sold his shares at a significant profit, Alfonso said that would have been the senior officer's private business.But she added that there was a 90-day blackout period after the IPO in which no director, or employee or senior officer was allowed to trade in the shares.First Citizens declared an after-tax profit of $606.5 million for the year ending September 30, 2013. This was an increase of $160.1 million or 35.9 per cent when compared with 2012.