In the May 29 edi­tion of the Busi­ness Guardian, in this space, I wrote a com­men­tary head­lined, “Can Kam­la ex­pose ‘forex dis­tri­b­u­tion car­tel?” which ad­dressed com­ments made at the post-Cab­i­net news con­fer­ence on May 15 by Prime Min­is­ter Kam­la Per­sad-Bisses­sar. At that news con­fer­ence, Mrs Per­sad-Bisses­sar said that she had man­dat­ed three of her min­is­ters—Min­is­ter of Fi­nance, Dav­en­dra­dath Tan­coo, Min­is­ter of Plan­ning, Eco­nom­ic Af­fairs and De­vel­op­ment, Kennedy Swarats­ingh and Min­is­ter of Trade, In­vest­ment, and Tourism, Satyaka­ma “Ka­ma” Ma­haraj—to pro­duce a re­port on for­eign ex­change dis­tri­b­u­tion and leak­age over the past 10 years.

The Prime Min­is­ter em­pha­sised that she ex­pect­ed the re­port to fo­cus on the for­mal dis­tri­b­u­tion sys­tem of for­eign ex­change, but al­so on the “leak­age” of for­eign ex­change from the for­mal dis­tri­b­u­tion sys­tem, which she de­scribed as “a se­ri­ous mat­ter.”

She said that one of the con­cerns the cur­rent ad­min­is­tra­tion has heard from its sup­port­ers is the is­sue of for­eign ex­change avail­abil­i­ty.

“So we need to know where the forex went, to whom it went, why it went, how it went and how it was de­ployed, how it was used...Then this re­port, as I say, will be made pub­lic to iden­ti­fy the main users, the main fa­cil­i­ta­tors of this un­fair dis­tri­b­u­tion, and ex­plain to the pub­lic how this en­tire forex dis­tri­b­u­tion car­tel and con­spir­a­cy be­tween cer­tain op­er­a­tives and busi­ness­es were func­tion­ing,” she said.

Now, it is clear to me that T&T’s Prime Min­is­ter de­lib­er­ate­ly used the words ‘car­tel’ and ‘con­spir­a­cy’ to con­vey a neg­a­tive nar­ra­tive.

By de­f­i­n­i­tion, a car­tel is “an as­so­ci­a­tion of man­u­fac­tur­ers or sup­pli­ers with the pur­pose of main­tain­ing prices at a high lev­el and re­strict­ing com­pe­ti­tion,” and a con­spir­a­cy is “a se­cret plan by a group to do some­thing un­law­ful or harm­ful.”

So by us­ing the words “car­tel” and “con­spir­a­cy,” Mrs Per­sad-Bisses­sar is, at the very least, sug­gest­ing that cer­tain of T&T’s au­tho­rised for­eign ex­change deal­ers, which are most­ly com­mer­cial banks, are pro­vid­ing some com­pa­nies with ac­cess to for­eign ex­change in a way that is harm­ful to oth­er busi­ness­es.

The Prime Min­is­ter, it seems, has al­ready made up her mind that cer­tain large com­pa­nies in T&T are get­ting priv­i­leged for­eign ex­change ac­cess in a way that gives them a com­pet­i­tive ad­van­tage over oth­er large and medi­um-sized com­pa­nies. She is, in ef­fect, ac­cus­ing some un­named au­tho­rised deal­ers of dis­crim­i­nat­ing against cer­tain busi­ness­es and favour­ing oth­ers.

While Mrs Per­sad-Bisses­sar sees car­tel-like be­hav­iour and con­spir­a­cies, I view the forex dis­tri­b­u­tion is­sue in terms of re­la­tion­ships and the vol­ume of busi­ness a com­pa­ny does with a bank. Ex­plain­ing that by way of ex­am­ple: Take an im­port-ex­port com­pa­ny that has been in ex­is­tence for decades, which has over $1 bil­lion in ex­ist­ing loans with a lo­cal com­mer­cial bank and that ex­ports goods worth US$75 mil­lion a year, while im­port­ing goods worth US$150 mil­lion.

Com­pare that to a cloth­ing re­tail com­pa­ny that has been in busi­ness for three years, has a $100,000 loan with the same bank and on­ly im­ports goods for sale on the do­mes­tic mar­ket.

Two ques­tions for read­ers:

* Which com­pa­ny do you think the man­ag­er of the bank is go­ing to have a bet­ter re­la­tion­ship with and is more like­ly to ac­com­mo­date when there is a re­quest for for­eign ex­change?

* Giv­en the two ex­am­ples, which com­pa­ny should pub­lic pol­i­cy en­able to get con­tin­ued ac­cess to for­eign ex­change...the small com­pa­ny that is on­ly im­port­ing to sell on the lo­cal mar­ket or the large com­pa­ny that is earn­ing for­eign ex­change by ex­ports as well as im­port­ing to sell on the lo­cal mar­ket?

Such re­la­tion­ships be­tween bankers and their best cus­tomers hap­pen in most coun­tries in the world and has hap­pened through­out the his­to­ry of bank­ing.

In T&T in 2025, is it fair and eq­ui­table for com­mer­cial banks to treat their best cus­tomers more favourably than oth­ers?

There are many peo­ple who would ar­gue that treat­ing one cus­tomer bet­ter than an­oth­er is nei­ther fair nor eq­ui­table.

Those in favour of Mrs Per­sad-Bisses­sar’s po­si­tion ar­gue that the cur­rent sys­tem of for­eign ex­change dis­tri­b­u­tion by the Cen­tral Bank to 13 au­tho­rised deal­ers—nine of which are com­mer­cial banks—is se­cret and po­ten­tial­ly cor­rupt. And that by re­fus­ing to dis­close the names of the top users of for­eign ex­change in this coun­try, the Cen­tral Bank is pro­tect­ing the so-called one per cent.

Mrs Per­sad-Bisses­sar quite like­ly has strong sup­port for her an­ti-com­mer­cial bank cam­paign among the vot­ers and fi­nanciers of the Unit­ed Na­tion­al Con­gress, who des­per­ate­ly want the top users of for­eign ex­change to be ex­posed.

But con­sid­er the fact that com­mer­cial banks are be­ing asked to make choic­es about who gets ac­cess to for­eign ex­change in a sit­u­a­tion in which the de­mand for for­eign ex­change far out­stripes the sup­ply of it at the cur­rent max­i­mum US-dol­lar sell­ing rate of US$6.799.

And con­sid­er al­so that the Cen­tral Bank sells more than US$1.2 bil­lion a year to the au­tho­rised deal­ers of for­eign ex­change in T&T to fill the gap be­tween what those deal­ers can buy from the “pub­lic,” (most­ly en­er­gy com­pa­nies) and what the deal­ers sell to the pub­lic.

It is ob­vi­ous that the cur­rent sys­tem of for­eign ex­change dis­tri­b­u­tion does not al­low every­body to buy all of the US dol­lars they need or want. And it is al­so ob­vi­ous that the cur­rent sys­tem is forc­ing many busi­ness­peo­ple to ac­cess the so-called black mar­ket or to use mul­ti­ple cred­it cards to pay for im­port­ed goods. Those add to their cost of do­ing busi­ness.

My po­si­tion on the is­sue of the for­eign ex­change al­lo­ca­tion has been, and will con­tin­ue to be un­less negat­ed by over­whelm­ing ev­i­dence, that the on­ly fair and eq­ui­table sys­tem for T&T would be a man­aged float, sim­i­lar to the regime that was in­tro­duced in April 1993.

Un­der a man­aged float regime, there would be no is­sue of bank man­agers favour­ing their large cus­tomers, who gen­er­ate sig­nif­i­cant fees and oth­er busi­ness.

CBTT se­cre­cy

It is clear that the cur­rent Cen­tral Bank Gov­er­nor, Dr Alvin Hi­laire, is not go­ing to make the same mis­take his im­me­di­ate pre­de­ces­sor, Jwala Ram­bar­ran made in dis­clos­ing in 2013, 2014 and 2015, the names of the 18 top users of for­eign ex­change in T&T .

In pe­rus­ing Jan­u­ary 11, 2025 judg­ment of Jus­tice of Court Jus­tice Nolan Bereaux, I was struck by the fact that on De­cem­ber 7, 2015, Re­pub­lic Bank Ltd wrote to the Gov­er­nor com­plain­ing about the dis­clo­sure of con­fi­den­tial bank in­for­ma­tion and that on the same date, the Massy Group and Smith Robert­son and Co, wrote to the then Min­is­ter of Fi­nance, Colm Im­bert, com­plain­ing about the breach of con­fi­den­tial­i­ty.

It was al­so strik­ing that Jus­tice Bereaux, af­ter quot­ing the Cen­tral Bank Act and the Fi­nan­cial In­sti­tu­tions Act on the re­quire­ment for con­fi­den­tial­i­ty among cen­tral bankers, stat­ed, “On the face of it, the dis­clo­sures ap­pear to be a clear breach of both Acts.”

What op­tions does the Gov­ern­ment have?

1) Giv­en the fact that Dr Hi­laire is un­like­ly to dis­close con­fi­den­tial in­for­ma­tion, the Gov­ern­ment can amend the Cen­tral Bank Act and the Fi­nan­cial In­sti­tu­tions Act to elim­i­nate the re­quire­ment for con­fi­den­tial­i­ty at the Cen­tral Bank. The cur­rent ad­min­is­tra­tion cer­tain­ly has the ma­jor­i­ty to amend those Acts.

But amend­ing leg­is­la­tion to re­move the con­fi­den­tial­i­ty re­quire­ment is out of line with cur­rent think­ing on cen­tral bank in­de­pen­dence. This is one of the few things the In­ter­na­tion­al Mon­e­tary Fund in­sists on in dis­cus­sions with coun­tries that need its as­sis­tance.

2) Sec­tion 3 of the Ex­change Con­trol Act pro­vides some in­ter­est­ing pos­si­bil­i­ties for the Gov­ern­ment, if it is re­al­ly in­tent on chang­ing the for­eign ex­change al­lo­ca­tion regime.

(1) “The Min­is­ter may by or­der des­ig­nate the Cen­tral Bank es­tab­lished un­der the Cen­tral Bank Act, or an of­fi­cer in his Min­istry to be in charge of Ex­change Con­trol.

(2) Sub­ject to sub­sec­tion (1), the Cen­tral Bank shall be charged with the gen­er­al ad­min­is­tra­tion of this Act and in the ex­er­cise of its pow­ers and the per­for­mance of its du­ties the Bank shall con­form with any gen­er­al or spe­cial di­rec­tions giv­en to it by the Min­is­ter.”

The Cen­tral Bank “shall con­form with any gen­er­al or spe­cial di­rec­tions giv­en to it by the Min­is­ter (of Fi­nance).”