A few weeks ago, I wrote an article in this column entitled "No country for honest men". The burden of the article had to do with the ever-growing mountain of evidence which was, and still is, emerging from the (Sir Anthony) Colman commission of enquiry into the collapse of CLICO and the HCU of rampant fiduciary irresponsibility and potentially criminal behaviour on the part of some of the very senior managers in both those institutions.
I went on to ask the following question: "How could such pernicious and predatory behaviours continue under our noses for so long without some agency of financial regulation or corporate governance intervening to put a halt to it or, at the very least, to alert the population so that they might act to protect themselves?"
In suggesting an answer to that question, I argued that a big part of the problem was that while there had been rumours circulating for a long time about what was happening in these institutions, that "there was nothing done, not by the State, by the financial associations, by the banking association, by the Chambers of Commerce, to raise a flag of warning".
I further suggested that while the Central Bank had a lot to answer, for it was "not the only culprit in this sorry scenario. The bankers clearly knew what was going on. Directors of other financial corporations knew what was going on. A lot of business people in general knew what was going on. Yet not one of these bodies, or institutions or individuals, perceived it as their bounden duty to call for investigation or action".
In response to that article, I recently received a letter from a reader who took me to task for my blanket condemnation of the banking fraternity and reminded me of the monumental battle of corporate titans which took place in this country 16 years ago, when the board of Republic Bank Ltd (RBL) sought to block what was, in effect, an attempted take-over of the bank by the CL Financial Group.
For those readers who are unaware of this major financial battle or who, like myself, had forgotten, a short re-cap of the events of those days may be in order. CLICO had been, for a long time, a major shareholder in Republic Bank, with some 34 per cent of the shares. CLICO had acquired these shares before 1993, the year in which the Financial Institutions Act limited the shareholding (without first obtaining the permission of the Central Bank) of any individual or corporation in any financial institution to 25 per cent.
Notwithstanding the provisions of the Act, and almost immediately after it came into effect, CLICO sought and succeeded in increasing its shareholding in the bank through a manoeuvre which has become notorious in the financial annals of this country.
The additional shares in the bank were purchased through a company called Viveka Holdings Ltd. Viveka was owned by five individuals who were, at the same time, members of the executive board of the CL Financial Group. One of these was Andre Monteil.
In April 1992, the then People's National Movement government led by Patrick Manning appointed Mr Monteil, who was also the party treasurer, to be chairman of the board of T&TEC. Shortly afterward, the T&TEC board appointed Mr Monteil as chairman of the management committee of the T&TEC pension fund.
In February 1995, the management committee of the pension fund took a decision to sell off its entire portfolio of equity stock, including 5,738,956 shares in Republic Bank. On March 10 that year, the entire equity portfolio was offered for sale on the stock exchange and Viveka Holdings purchased all the Republic Bank shares.
When Republic Bank learned of this transaction, it refused to register Viveka as the lawful holders of the former T&TEC shares and sued CLICO, Monteil, Viveka and the management committee. CLICO's response came on July 1, 1996, when it served notice on the bank to summon an extraordinary general meeting for the purpose of replacing eight members of the bank's board with its own nominees.
On July 15, the bank's board sent a letter to all shareholders, signed by then chairman Frank Barsotti, urging shareholders to reject the CLICO resolution. It is on the basis of the contents of that letter that my reader and critic disputes my allegations against the banking fraternity, (or Republic Bank at least) of culpability in the CLICO debacle.
Among other things in that letter, the Republic Bank's board declared that the CLICO/CL Financial Group were not "fit and proper" persons to hold a controlling interest in the bank. The letter further stated that the Viveka transaction violated a fundamental principle of trust law (that a trustee cannot purchase the trust's assets for his own benefit) and went on to list a number of examples of the CL Financial Group's conduct and activities which demonstrated their "total disregard for agreements, Stock Exchange regulations, Insurance regulations and legal fiduciary obligations and generally dishonourable conduct".
I am obligated to my reader for his critical comments. They forced me to go back and research this important series of events in our financial history and I am satisfied that, in this instance at least, Republic Bank did more than raise a warning flag about the CLICO empire.
But my reader's comments and my research have done more than that. In reflecting on these past events, two points came to mind. The first is very clear. It is that the complicity of the Central Bank in these matters and its abject failure to exercise its regulatory powers is a pattern of long standing. Given that, and given the current changing of the guard at the helm of that institution, it becomes an urgent imperative that we seek to devise more stringent, constitutionally mandated, ways and means to insulate that institution from the political directorate. Without this, proper financial governance will remain an elusive dream.
The second point is less clear and more speculative. As an acquaintance of the late Frank Barsotti, I knew him to be a man of intelligence and integrity. He was the product of a certain educational and cultural milieu which emphasised the virtues of honesty and the courage to speak truth to power and to stand up publicly for what is right.
Our world, and our society, has changed since Mr Barsotti's formative years. And I cannot help but wonder whether, notwithstanding all the legislative safeguards we might devise, the critical requirement of which I spoke in my previous article—that "the only antidote to the spread of the infection of corruption in a society is for men and women of honour, honesty and integrity to stand up and speak out against evil wherever and whenever they see it"—has not now passed out of our realm for good.
For all our sakes I hope not. Once again, my sincere thanks to my reader.
• Michael Harris has been for many years a writer and commentator
on politics and society in Trinidad and the wider Caribbean.