Fresh evidence presented to the Integrity Commission has prompted it to reopen an investigation into People’s National Movement Chief Whip Marlene McDonald.
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Kamla on report into collapse of HCU
Eighteen criminal charges could be brought against former Hindu Credit Union president Harry Harnarine. That’s the finding of the Commission of Enquiry into the collapse of the CL Financial Group of Companies and the Hindu Credit Union Co-operative Society Ltd. Prime Minister Kamla Persad-Bissessar presented the almost-400-page report in Parliament yesterday. In a statement, she said the report was to be sent to the Director of Public Prosecutions (DPP) and the acting Commissioner of Police for investigation.
The report was compiled by Sir Anthony Coleman, who was the only commissioner. The enquiry began in November 2010 and the report was presented to President Anthony Carmona earlier this week. Persad-Bissessar said the report dealt with the HCU, and a second report relating to the CL Group of Companies was being prepared. The PM said the report stated: “The conduct of Mr Harry Harnarine was such that the DPP should take immediate steps to test the sustainability of criminal proceedings against him.”
She also said she had instructed Attorney General Anand Ramlogan to pursue civil action for the recovery of monies and damages, in accordance with the recommendations. And she also said Finance and the Economy Minister Larry Howai would examine the relevant section of the report “which deals with attempts to reform the regulation of credit unions so this can inform the drafting of a new law for the proper and effective monitoring and supervision of credit unions to prevent a recurrence of this debilitating fiasco.”
Persad-Bissessar apologised to citizens for the pain and suffering, distress and inconvenience they had been forced to undergo as a result of the shortcomings and failures on the part of so many, including the regulatory mechanisms of the State. She said she wanted to assure that “those responsible for their hurt and pain will feel the full brunt and weight of the law. The chips will fall where they must. No stone shall remain unturned in this quest for social justice on behalf of the people.”
Among the offences for which Harnarine should be investigated
• Conspiring during the period from January 1, 2002 to July 23, 2008 with the principal officers and members of the BOD and/or the managers of HCU, namely Gayndlal Ramnath, Yadwanath Lalchan, Jameel Ali and Ravindra Bachan (“the co-conspirators”) to defraud members of HCU and their depositors in HCU by agreeing dishonestly to put at risk the value and recoverability of the members’ investments and/or deposits by members and others as evidenced by some or all of the following conduct more fully described in Section F of the report.
• The commercial relationship between Harnarine and the co-conspirators, which was dominated by Harnarine, supported particularly by Ramnath.
• Recklessly pursuing an improvident investment policy by causing HCU to purchase tangible assets at an over-value, without the prior approval of the BOD and without the prior valuation of such property by independent valuers and without obtaining prior adequate advice on title, for example causing HCU USA to purchase in 2003-4 the Miramar Property in Florida, the property of Seepersad Harnarine in Pembroke Pines, Florida, and the property at Macaya Trace, Florida.
• Recklessly causing HCU to form and/or acquire subsidiaries and to manage them without prior permission from the CCD and without exercising prior due diligence and without any or sufficient business plan, which subsidiaries were incapable of producing sufficient revenue to finance their day-to-day operations and which could only survive with loans from HCU and recklessly failing to procure adequate monitoring of the deteriorating financial condition of those subsidiaries.
• Knowingly or recklessly causing HCU to solicit deposits at a time (2005-2008) when it could not meet its immediate liabilities.
• Causing HCU’s reckless and excessive expenditure on items which were not in the interests of HCU or its members, specifically payments for personal purposes to Harnarine (amounting, according to the liquidator, to $5,994,953) and to HCU’s directors and managers and to related parties.
• Knowingly or recklessly causing HCU to use money derived from members’ deposits or other payments to support, by means of loans, the operating expenses of loss-making subsidiaries.
•Knowingly or recklessly causing the misappropriation of HCU funds deposited by members and others for the personal benefit of other directors and managers, in particular the purchase of property later transferred to directors and related persons.
• Recklessly causing HCU to diminish liquidity without regard to the risk of the repayment requirements of depositors and in particular to solicit funds from members in order to pay moneys due from HCU to other members.
• Knowingly or recklessly causing HCU to make loans to nonmembers, such as subsidiaries in breach of the CS Act 1971 and in breach of HCU’s Bye-Laws.
• Knowingly or recklessly causing HCU to make loans to members of the BOD and senior management in excessive amounts and without security or the completion of the normally required application forms and even when the borrower was already in default on previous loans in respect of repayment of the principal due or the payment of accrued interest.
•Knowingly or recklessly causing HCU to fail to acquire and maintain sufficient liquid assets to enable it to meet its liabilities to its members.
• Knowingly or recklessly causing HCU and its subsidiaries and the subsidiaries of HCU Financial to trade while insolvent.
• Knowingly causing HCU to fail to comply with its statutory duties to provide accurate financial statements to the CCD.
• Knowingly or recklessly causing inaccurate and misleading financial statements to be issued to members of HCU.
• Knowingly or recklessly inducing members of HCU to retain deposits in HCU by issuing to them misleading letters of comfort and assurances that HCU was solvent.
• Knowingly or recklessly causing HCU to acquire illiquid assets without regard to the risk of the repayment requirements of HCU members and other depositors.
•Knowingly or recklessly causing HCU to make imprudent loans to subsidiaries which were unlawful and irrecoverable, those loans having been made without the prior consent of the CCD to non-members of the credit union.
•Recklessly causing HCU to diminish its liquidity without regard to the risk of the repayment requirements of depositors by failing to make any or any sufficient provision for defaults on unsecured loans.
• Contrary to Section 34 of the Larceny Act, causing HCU to obtain deposits from members and others by falsely representing that HCU was solvent by misrepresenting in management financial statements the value of assets and other accounting information.
• Contrary to Section 34(2)(b), causing HCU to cause or induce by false pretences other persons to accept a valuable security by knowingly or recklessly drawing or causing to be drawn cheques in settlement of depositors’ withdrawal claims.
• Contrary to Section 3, causing HCU to transfer property (vehicle PBN 2827) to Harnarine’s wife.
•Contrary to Section 3, causing HCU to make payments to Harnarine in 2003, 2004 and 2005 in response to his claims for foreign travel expenses not established by vouchers or other contemporary or other evidence to have been incurred for the purposes of HCU.
• There were also facts which would have justified further investigation by the DPP into the possibility of the commission of numerous summary offences had it not been for the fact that such offences are now all time-barred.
• Causing HCU to be in breach of Regulation 14 by its failure to obtain prior consent of the CCD for increases in its maximum liability.
• Causing HCU to obstruct inspection by the CCD as explained in the evidence of Mr Maharaj.
• Causing HCU to fail to provide timely financial statements to the CCD.
• Causing HCU to make investments in and from subsidiary companies without the prior approval of the CCD.
•Causing HCU to make loans to non-members without the prior approval of the CCD.
• Causing HCU to make ultra-vires payments of fees and stipends to directors.