Monday, February 19, 2018

First Citizens back in the spotlight

Express editorial logo407

Mark Fraser

The spotlight falls squarely today on the directors of First Citizens at the bank’s annual general meeting scheduled for 10 a.m. at NAPA in Port of Spain. The directors will arrive at the meeting fully aware that a group of concerned shareholders has threatened to make this meeting the “mother of all AGMs” and are determined to boot them out if the board’s answers do not satisfy them.

Shareholder rights activist Peter Permell, who has been leading the satirical “We-Put-You-Last” IPO protest, claims that there is overwhelming shareholder support for the lobby to remove the current crop of directors. Whether or not the lobby achieves its desired outcome, it has done the business environment a favour by increasing shareholder awareness and involvement in the activities of businesses in which they have a financial stake. Every public corporation benefits from being kept on its toes by competent management, involved shareholders and accountable directors.

From the perspective of the Permell-led shareholder group, the key issue at today’s meeting is the First Citizens IPO, in particular the sale of 659,588 shares to FCB executive Philip Rahaman at a cost of $14.5 million. The group’s ire is sharply focused on chairman Nyree Alfonso who had dismissed their early concerns just before the bank’s decision to fire Rahaman. Also in their sights is corporate secretary Sharon Christopher, chairperson of the IPO Steering Committee.

The “We-Put-You-Last” lobby group builds on the activism that developed in the aftermath of CL Financial’s collapse when investors rallied together to force the authorities to take their losses into account and put them among the first claims to be settled. The result is that today’s small investors and shareholders are more enlightened about their rights and more empowered in their quest to secure their interest.

In this, the AGM is a key avenue for intervention since it offers a rare face-to-face opportunity for shareholders to hold directors and management to account.

In recent days, the First Citizens IPO controversy has gone quiet, possibly because of the impending AGM as well as ongoing investigations. With many questions arising from the Rahaman purchase still unanswered, the directors should come to today’s meeting well prepared to respond to shareholders’ concerns. In a country where shareholders, especially small ones, are often not given their due, the First Citizens board has the opportunity to reduce the acrimony between the parties by setting a standard of respectful accountability.

Ultimately, however, today’s AGM is just one of the many arenas in which the IPO issue will be played out. The far-reaching nature of the incident has brought several key institutions and entities under public scrutiny, most of which are outside the purview of the bank’s AGM. For the wider public, the controversy is far from played out. The public awaits the findings of the investigations being conducted by the Securities and Exchange Commission (SEC), the Trinidad and Tobago Stock Exchange and PricewaterhouseCoopers on behalf of the Ministry of Finance. The outcome of these will determine whether the public trust that First Citizens has enjoyed since inception will remain intact.