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Auditors must ask the right questions

 Ever since the announcement of the First Citizens’ initial public offering (IPO) by the Finance Minister, I have publicly expressed concerns about whether the allocation formula and/or policy as proposed by the bank’s senior management and approved by Minister Howai, in his capacity as corporation sole, would ensure a fair and equitable allotment of these shares to small individual investors. 

 It is therefore against this background and in the wake of the recent revelation that a senior employee of the bank was permitted to purchase 659,588 shares valued in excess of $14 million in the IPO to the disadvantage of these very same small investors that I welcome the Finance Minister’s response to this latest controversy.

 It is my understanding (according to media reports) that the Minister has already ordered a “detailed” audit which is a usually a euphemism for a “forensic” audit.

 Accordingly, the only thing that I would wish to say further at this time is that Minister Howai needs to ensure that the auditors ask the “right” questions, for instance:

 1. How long has this senior employee been employed with the bank?

 2. What was the source of funds for the transaction and did he accurately declare same?

3. Was the senior employee involved/connected in any way with actual IPO share allocation process, and if so, what was the nature/extent of same?

 4. Are the shares purchased in the IPO still registered in the name of the senior employee, and if not, has he sold or transferred same to a third party or connected party, and if so, when and what were the terms of the transaction? 

 It should be noted that the above list is not exhaustive.

  Peter Permell

Minority Shareholder Rights Advocate

 
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