Q: I graduated from college with a degree in entrepreneurship from a Nigerian institution. Thanks to my course of study, I have...
Attorney Nyree D Alfonso does not feel she will ever offer herself up for public service—not after the way the former chairman of the First Citizens Bank and her fellow board members were unfairly treated in the bank’s IPO affair. Last Monday, Alfonso declined to seek re-election to the position during a rather stormy AGM of the bank in Port-of-Spain. She claimed the board had been blamed for something it did not do.
Mrs Alfonso, I attended that AGM and at no time did you appear to be planning to quit the job...What happened? Or did you get “lick up?”
I had undertaken to the Minister of Finance that I would chair the AGM and, therefore, the only opportunity I had to withdraw was by not seeking relection.
Was that anger we saw justified?
It was anger from different quarters; there was the Peter Permell group who now felt they were empowered to criticise because the board had done something wrong. I was taken by surprise with anger being expressed by the attendees at the meeting…I was expecting Mr Permell, because he had been quite consistent in his attack on the board. But I was surprised by the employees the most because...
What caused that?
From what I heard from the few employees who spoke, the issue seemed to be the outstanding wage negotiations.
The employees were aware that the issue did not reside with this board. Being a state enterprise, the Government will set a maximum that you could work with, so you would have to increase wages within the parameters that they give you. I did make representations that those parameters should in fact be expanded because the bank was doing well, and I am of the personal philosophy that if you are making profits you have to reward the people who assist you in making those profits.
Is it your view that you were justly treated by the entire outcome of that AGM?
(Swift response) No. I do not think so. No member of the board was justly treated, and that conclusion comes from knowing that the board did not have a role to play in the IPO process, and knowing that the policy and framework was designed in a way...I do not know if it was designed to exclude us, but it had the effect of excluding us.
In hindsight, would you say this policy or framework was in any way flawed?
The policy did not match the philosophy, that’s the short answer; the philosophy was the widest distribution of Government’s assets. The policy provided no caps to employees’ purchases, no caps for any purchase for that matter, so if you really wanted to guarantee the widest possible distribution then the smallest group of people who would be buying should have been given a smaller percentage.
Certainly, Mrs Alfonso, the biggest talking item at the AGM was definitely the purchase of $14.5 million in shares by its now dismissed chief risk officer Phillip Rahaman. When this purchase was made, didn’t it raise a red flag to you all?
(Clasping her palms just off her chest) Every member of the board was collectively shocked. But again, the time frame of our knowledge is being questioned. The last annual report was being circulated on January 15, 2014, and at that point you could spot how many shares all of the directors and management had bought.
I did not know about the shares before that time…I have no doubt that other people knew, but I did not know and neither did any member of the board. If I had seen it any time between August and January, it would have been possible to do an early investigation into the purchase.
At that stage could you, meaning the board, have stopped the sale...if that is possible in the realm of big business?
(Smiles) We couldn’t stop the sale. And in my interpretation as an attorney, once your cheuqe is in order, once it hasn’t bounced as they say in Trinidad, you fill out your application, disclose the source of funds, you are going to be allocated shares. I have heard the argument that the prospectus gave one discretion to refuse. That is not true, we had no power over the allocation of shares.
Mrs Alfonso, did you believe that when the fact became public it would have generated this kind of furore?
Yes. As soon as members got the draft annual report by email on January 15 the telephone calls started immediately from all board members (Gesticulating with hands wide opened). We immediately regrouped and we said, “Okay, this is going to be an issue.” Not because we believed something was wrong, you know? We thought the optics would be bad...just the optics, not the policy or that something was wrong or illegal. We knew the policy had not been breached.
You could have gotten any amount of shares, right?
The flip side of that is, now I have given a recommendation after the fact and they say that hindsight is 20/20, you could have allowed employees to buy an amount of shares and then, after that amount, at a discount, you could have bought as individuals. That, perhaps, would have been fairer.
By purchasing those shares, Mrs Alfonso, do you believe he did the bank an injustice?
(Pensive mood) I really don’t want to comment on the employee’s action too much, other than...I don’t think it was a justice point. Perhaps he did not contemplate the optics, the way that people would take it, and he did not contemplate the individual bucket, as we call it, would have been nine times oversubscribed.
Of course, there was a feeling now that Mr Rahaman had “fixed” himself and his family?
He received a benefit by buying in a bucket of a more reserved nature and that other people, like myself, bought as individuals. We bought in a bucket which became nine times oversubscribed. But I have never been convinced of that argument. He saw an opportunity, he used it, and he really did not consider the implications to the bank and the fall out of taking that opportunity. The financing and sale of the shares is currently the subject of a SEC investigation.
Did Minister Howai ask you and three other board members not to seek re- election?
He did not do that. He asked the whole board to resign, and all board members agreed on the condition he make a definitive and uneqovical statement that we, the board, had done no wrong in accordance with the findings of the PWC report. We also asked him to publicly identify where culpability had been found. All we wanted was for our professional reputation to be preserved.
What about the role of the SEC in this affair?
As far as I know, they are doing an investigation now...I know that people have been commenting negatively that they should finish quickly because it is one transaction and really it would bring...not closure...but it should bring disclosure to the situation, and it could identify the parties who have done something wrong and who perhaps were guilty of criminal conduct. I think that is important.
Is it your firm belief when you say that the system was flawed?
By putting that framework in place...with the IPO Steering Committee and others having control had the effect of excluding the board and the board’s oversight, so we would have been another layer of oversight, and I have heard Mr Permell and others say...
The buck stops with you…
I suppose it is difficult for people to accept that a non-executive board will know what it is told, and what is brought to its attention by the executive managers of the institution.
You are of the belief that you and the three other board members were treated unfairly. What does that say to anybody being member of a government board?
I have told people that I am returning to the private sector, which I understand. I don’t understand why a chairman and board members who actually gave up their ordinary duties—in my case a substantial part of my practice in order to give public service—being denigrated and embarrassed.
I agreed to serve, and you sacrifice your heath, your wellbeing, and you give your everything. I wanted this institution to do well, it did well; every year it made increased profits. We went into Barbados, we went into Costa Rica, and were in the midst of a number of initiatives….All of us gave 115 per cent. We wanted our tenure to be an unqualified success, and I maintain the IPO was successful.
What if you are offered another government board?
(Chuckling)...I have been bruised and wrongly so, and that withering personal attack (a half-hearted laugh) that…I didn’t think it was called for... And Clevon, you know something, there are people who have served on state boards in all of the administrations who have done wrong things. This board has been blamed for something it did not have a participation in, and as much as people don’t believe it, it is the truth, and I cannot overemphasise that.
So this board has been rejected and pilloried on the basis of something we did not do. There is no allegation of corruption or dishonesty. I prided myself that the board and bank did well with me at the helm...it ended so very badly.