An­tho­ny Wil­son

On Tues­day, I at­tend­ed the an­nu­al gen­er­al meet­ings of Guardian Me­dia Ltd and the ANSA McAL group at which ex­ec­u­tives of both com­pa­nies pro­vid­ed share­hold­ers with re­ports of the per­for­mance of their com­pa­nies in 2012 and some analy­sis of how cur­rent con­di­tions are ex­pect­ed to im­pact on per­for­mance in 2013.

At both meet­ings, com­pa­ny ex­ec­u­tives re­spond­ed to ques­tions from share­hold­ers, which were of a high lev­el.

For pub­licly-list­ed com­pa­nies, the an­nu­al gen­er­al meet­ing is the one time of the year at which the own­ers of a com­pa­ny are pro­vid­ed with an ac­count by the ex­ec­u­tives of a com­pa­ny of their stew­ard­ship of the com­pa­ny.

In terms of ac­count­ing to share­hold­ers, pub­lic com­pa­nies are not on­ly re­quired to pub­lish their an­nu­al au­dit­ed re­ports (most­ly in the news­pa­pers and on the Web sites of the T&T Stock Ex­change and the com­pa­ny) and host an­nu­al gen­er­al meet­ing, these com­pa­nies are re­quired to pub­lish quar­ter­ly unau­dit­ed re­ports.

The re­quire­ment to ac­count to a com­pa­ny's stake­hold­ers is so im­por­tant that gov­ern­ments past and present have in­sist­ed that some of this coun­try's larg­er and more im­por­tant state-owned com­pa­nies pub­lish their ac­counts on a reg­u­lar ba­sis.

For state com­pa­nies, the process of ac­count­ing to stake­hold­ers may be more pro­tract­ed be­cause of the in­volve­ment, in some cas­es, of the Au­di­tor Gen­er­al and the re­quire­ment to ac­count to the Pub­lic Ac­counts Com­mit­tee or the Pub­lic Ac­counts (En­ter­pris­es) Com­mit­tee.

So, both pub­licly-list­ed com­pa­nies and those that are owned by the state are re­quired to ac­count to the pub­lic. In fact, the on­ly com­pa­nies in this coun­try that are not re­quired to ac­count to the pub­lic are lo­cal pri­vate­ly-owned com­pa­nies as very soon there will be some mea­sure of ac­count­abil­i­ty from the for­eign, pub­licly-owned en­er­gy com­pa­nies that op­er­ate in T&T.

If ac­count­abil­i­ty has be­come the or­der of the day in pub­lic com­pa­nies and in com­pa­nies in which the Gov­ern­ment has a share­hold­ing, how does one ac­count for the lack of ac­count­abil­i­ty by the Gov­ern­ment (both past and present) for their stew­ard­ship of CL Fi­nan­cial and Cli­co when these com­pa­nies have sucked up some $20 bil­lion in tax­pay­ers' funds al­ready?

How does one ac­count for the fact that none of the last three min­is­ters of fi­nance (Howai, Dook­er­an or Tesheira) who have dealt with the is­sue of the res­o­lu­tion and bailout of the cor­po­rate em­pire that Lawrence Duprey con­struct­ed (and then de­con­struct­ed) have made a com­pre­hen­sive state­ment to Par­lia­ment on the Gov­ern­ment's stew­ard­ship of these com­pa­nies?

How does one ac­count for the fact that the last an­nu­al re­port pub­lished by CL Fi­nan­cial was for 2007 (some­time in No­vem­ber 2008), when bil­lions of dol­lars have flowed in to and out of that group in the last four years?

How does one ac­count for the fact that there has been so lit­tle ac­count­abil­i­ty when as­sets worth bil­lions of dol­lars have been dis­posed of (Las­celles de­Mer­ca­do, Burn Stew­art, Primera Oil and Gas Com­pa­ny) and as­sets worth more bil­lions of dol­lars are be­ing bit­ter­ly fought over (Methanol Hold­ings Trinidad Ltd and CL World Brands)?

And how does one ac­count for the fact that Cli­co, which I main­tain is the key to the res­o­lu­tion of the $20 bil­lion owed to the state by CL Fi­nan­cial, pub­lished stel­lar ac­counts for 2011 on its Web site in the very re­cent past and has not sought to draw any at­ten­tion to the fact that it is no longer in the red? (For a re­port on those ac­counts, please read pages 4 and 5 of this pub­li­ca­tion)

Why are those who have stew­ard­ship over Cli­co not trum­pet­ing the fact that the in­sur­ance com­pa­ny may be a more com­pelling turn­around case study than Guardian Hold­ings and An­gos­tu­ra?

Is Car­olyn John ashamed of the fact that Cli­co has gone from an af­ter-tax loss of $9.5 bil­lion in 2008 to a prof­it of $702 mil­lion in 2011? Is Cli­co chair­man Ger­ry Yet­ming em­bar­rassed by the fact that un­der his stew­ard­ship Cli­co was able to re­duce the in­sur­ance com­pa­ny's neg­a­tive net worth from $9.7 bil­lion in 2010 to $2.2 bil­lion in 2011?

The fig­ure for Cli­co's neg­a­tive net worth in its au­dit­ed 2011 ac­counts, which were pre­pared by KP­MG, is list­ed as $7.2 bil­lion, but it is very, very cu­ri­ous that in Note 1 of those ac­counts, the au­di­tors state: "On Sep­tem­ber 10, 2009, the Gov­ern­ment of the Re­pub­lic of T&T in­ject­ed ad­di­tion­al cap­i­tal in­to the com­pa­ny by the ac­qui­si­tion of or­di­nary shares and pref­er­ence shares. This trans­ac­tion re­sult­ed in GORTT's own­er­ship of 49 per cent of the share cap­i­tal of the com­pa­ny."

How is it that when one goes to Note 14 of the Cli­co 2011 ac­counts, one finds that the com­pa­ny's is­sued share cap­i­tal is 2,950,000 or­di­nary shares worth $14.5 mil­lion and there is no men­tion of the re­deemable pref­er­ence shares worth $4.9 bil­lion ac­quired by the Gov­ern­ment?

And why are the Gov­ern­ment's re­deemable pref­er­ence shares list­ed as li­a­bil­i­ties of $4,992,751,000 ($4.9 bil­lion), when ac­cord­ing to KP­MG's own Note 1, the Gov­ern­ment "in­ject­ed ad­di­tion­al cap­i­tal in­to the com­pa­ny by the ac­qui­si­tion of or­di­nary shares and pref­er­ence shares?"

Is there any oth­er coun­try in the whole wide world in which some­thing can be a li­a­bil­i­ty and eq­ui­ty at the same time?

Do the new ac­count­ing stan­dards al­low this prac­tice?

How does one rec­on­cile KP­MG's treat­ment of the $4.9 bil­lion in re­deemable pref­er­ence shares as a li­a­bil­i­ty on Cli­co's bal­ance sheet when Cli­co "agreed by board res­o­lu­tion dat­ed Sep­tem­ber 16, 2009, that it was in the best in­ter­ests of Cli­co to is­sue the fol­low­ing shares to GORTT:

"�2 Or­di­nary shares rep­re­sent­ing 49.2 per cent of its is­sued and out­stand­ing share cap­i­tal; and

�2 Four bil­lion, nine hun­dred and nine two, sev­en hun­dred and fifty thou­sand cu­mu­la­tive pref­er­ence shares in the spe­cial terms and con­di­tions set out in the said let­ter from the Min­istry of Fi­nance."

The con­di­tions out lined in the let­ter from the Min­istry of Fi­nance, which was is­sued on Sep­tem­ber 9 and signed by Per­ma­nent Sec­re­tary, Al­i­son Lewis:

1) The pre­ferred shares shall be is­sued at the val­ue of one dol­lar T&T cur­ren­cy each;

2) The pre­fer erred shares shall be per­pet­u­al and cu­mu­la­tive and shall bear a div­i­dend rate of 4.75 per cent;

3) The pre­ferred shares shall be non-vot­ing and non-con­vert­ible;

4) The com­pa­ny shall not be al­lowed to is­sue any fur­ther or­di­nary shares ex­cept with the ap­proval of the pre­ferred share­hold­er;

5) The com­pa­ny shall not be per­mit­ted to make any div­i­dend pay­ments to or­di­nary share­hold­ers un­til the full dis­charge of the oblig­a­tion to re­pay all ad­vances made by the cu­mu­la­tive pre­ferred share­hold­ers;

6) Part or all of the pre­ferred shares may be re­deemed or re­paid by the ap­pli­ca­tion of as­sets or pro­ceeds of sales of as­sets by the com­pa­ny, or by the is­sue by the com­pa­ny, with the agree­ment of the pre­ferred share­hold­ers of a pub­lic of­fer­ing of or­di­nary shares, the pro­ceeds of which are ap­plied to­wards the re­demp­tion of the pre­ferred shares."

The doc­u­ment that this in­for­ma­tion forms part of was dat­ed Feb­ru­ary 4, 2010, and is signed by Eu­ric Bobb, the for­mer CL Fi­nan­cial chair­man.

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