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Monday, July 7, 2025

Depositors in dark about $31m loss (with CNC3 video)

Au­di­tor ac­cused of col­lu­sion with man­agers

by

20121023

British bar­ris­ter Mar­i­on Smith has sug­gest­ed that au­di­tor Chanka Seeter­ram col­lud­ed with the Hin­du Cred­it Union (HCU) to pull the wool over the eyes of its mem­bers by not dis­clos­ing its fi­nan­cial weak­ness­es to them. Smith yes­ter­day sug­gest­ed to Seeter­ram that weak­ness­es he iden­ti­fied in the HCU's fi­nan­cial ac­counts were not dis­closed to mem­bers.

She was cross-ex­am­in­ing the au­di­tor at the Cli­co/HCU com­mis­sion of en­quiry at the Win­sure Build­ing, Rich­mond Street, Port-of-Spain. Seeter­ram was ap­proached by the HCU in?Oc­to­ber 2003 to au­dit its ac­counts as a re­place­ment for Madan Ram­nar­ine, who had found se­ri­ous dis­crep­an­cies in the cred­it union's fi­nan­cial state­ments.

Giv­ing an ex­am­ple of how Seeter­ram with­held crit­i­cal in­for­ma­tion from the gen­er­al mem­ber­ship of the HCU, Smith said there was a $25 mil­lion gain in ap­pre­ci­a­tion in cer­tain prop­er­ties in 2005. At the same time loss­es were in­curred amount­ing to $31 mil­lion, the com­mis­sion heard.

How­ev­er, Seeter­ram did not show that loss in the au­di­tor's 2005 re­port. How­ev­er, he in­clud­ed it in a sep­a­rate state­ment in Sep­tem­ber 2006, Smith said. Seeter­ram, re­spond­ing, said re­ports of the $31 mil­lion loss were in­deed left out of the HCU's 2005 fi­nan­cial state­ment and agreed with Smith that was de­lib­er­ate­ly done by HCU man­agers.

"You are the au­di­tor. Part of your task is to as­sess this ap­proach," Smith told Seeter­ram. He said it was a very del­i­cate mat­ter he had to de­cide up­on and he had to make a com­pro­mise. He added: "Peo­ple were de­mand­ing funds. I was think­ing about the mem­bers, in­vestors. It was a com­pro­mise in that it would buy some time for the HCU to get its act to­geth­er. If it was put in the 2005 re­port, the HCU would not have been able to face the im­pact.

"I felt the man­agers need­ed some time to get ex­ter­nal help. They agreed to my sug­ges­tion to go to the Gov­ern­ment for help." Smith again sug­gest­ed to Seeter­ram that it was a dif­fi­cult de­ci­sion and one that was made be­hind closed doors. "On­ly you and the HCU di­rec­tors," she said. "How would the av­er­age mem­ber be­gin to pick up what this meant? That the $31 mil­lion should not be there. It should be here," she said.

At the HCU's 2005 an­nu­al gen­er­al meet­ing, Seeter­ram made no ref­er­ence to the fact that the treat­ment of the $31 mil­lion was wrong, Smith said. In the pres­i­dent's ad­dress con­tained in a book­let to mem­bers at the 2005 an­nu­al gen­er­al meet­ing, HCU?pres­i­dent Har­ry Harnar­ine told mem­bers there was a 15 per cent prof­it in share­hold­ers' re­turns.

Seeter­ram agreed with Smith that in­for­ma­tion was er­ro­neous but ad­mit­ted he did not seek to cor­rect it in his au­di­tor's re­port. More vi­tal in­for­ma­tion was with­held from the mem­ber­ship at the 2006 AGM, Smith said. A man­age­ment let­ter in?Oc­to­ber 2006 dis­closed the HCU was los­ing $2 mil­lion a month and had in­curred a con­sol­i­dat­ed loss by Sep­tem­ber 2006 of $150 mil­lion, Smith said. There were grave prob­lems in re­pay­ing de­pos­i­tors, she said.

"This piece of in­for­ma­tion was not re­port­ed to the AGM in 2006. None of the mat­ters dis­cussed to­day (in the en­quiry) were raised," she told Seeter­ram. Smith said all HCU man­agers were made to un­der­go eight-hour train­ing ses­sions to ex­plain to mem­bers what had hap­pened. Seeter­ram said he was not a part of those ses­sions.


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