A continuation of interlocking directorships in Trinidad and Tobago’s public and private enterprises allows for the door to ’remain open for conflicts of interest to tempt those in positions of power to abuse their status for personal gain’ says Transparency International (TI).

’The government’s failure to address the implications of highly overlapping directorships undermines public trust and threatens the integrity of the State,’ TI stated in its 2009 Global Corruption Report.

TI raised the concern as it dedicated close to three pages in the report on the $110 million share purchase in the Home Mortgage Bank (HMB) in 2007 by Stone Street Capital which was then co-owned by ruling party’s treasurer at that time, Andre Monteil.

When the share purchase occurred, Monteil was the chairman of the HMB, the privately-owned CLICO Investment Bank (CIB) and the Housing Development Corporation (HDC).

Both the Central Bank and the Securities Exchange Commission concluded there was no evidence of wrongdoing in the share purchase.

’Whereas even a few years earlier the purchase might not have been legal, legislative changes in 2005 and 2007 paved the way for the sales,’ TI noted.

While TI noted that ’avoiding overlapping directorships may not be possible in a market as small as Trinidad and Tobago’, the local regulatory framework could be reformed ’to require enterprises with overlapping directorships to exercise much higher standards of transparency and accountability.’

On August 29, 2007 Prime Minister Patrick Manning condemned the HMB share purchase by Stone Street Capital ’whether it is legal or not’ and promised to ensure that the shares were transferred back to the HMB at the same price.

Minister in the Finance Ministry Mariano Browne told the Senate on May 20, 2008 that no laws were broken when Stone Street Capital purchased the HMB’s shares since Monteil paid for it himself.

The TI Global Corruption report stated, however, that in November 2008, ’the promised ’re-transfer’ of shares took place when HMB’s board of directors approved the National Insurance Board’s acquisition of seven million HMB shares held by Stone Street Capital.’

’Along with the re-transfer of the shares, HMB confirmed in a statement that Monteil had resigned as chairman and director of the bank. This news came as a surprise to the country, which had been led to believe that Monteil had resigned in May 2007,’ the TI report stated.

The matter has been the subject of an investigation by the Anti-Corruption Investigations Bureau (ACIB) after Prime Minister Patrick Manning referred the matter to the Commissioner of Police, the Director of Public Prosecutions and the Integrity Commission in August 2007.

To date, there has been no word as to whether that ACIB has completed its investigation and, if so, what it had found.

The CIB, together with three failed or failing other subsidiaries of CL Financial, have benefitted from an initial $1.3 billion taxpayer bailout approved by the Government earlier this year.

TI’s 2009 Global Corruption Report noted that in 2007, a member of the Opposition (then MP Ganga Singh) alleged in the Parliament that CIB accepted a deposit of $100 million ($US$16.5 million) from the HDC.

’Because the deposit occurred a matter of weeks before CLICO sold HMB shares to Monteil’s Stone Street Capital, some speculated that the HDC deposit to CLICO Investment Bank gave the bank sufficient liquidity to be able to lend Monteil’s Stone Street Capital the money to pay for HMB shares,’ the TI report stated.

It noted that while both events led to a review of the share purchase by government oversight bodies, ’little has been uncovered.’

The Ministry of Finance discovered no evidence of wrongdoing in the sale of HMB shares and the Trinidad and Tobago Securities and Exchange Commission found the sale did not violate the Securities Exchange Act because HMB was not listed on the country’s stock exchange,’ the TI report stated.

It also recalled that the Central Bank concluded that the share purchase ’met the conditions established by the revised Home Mortgage Bank.’