I am mystified by the recent pronouncements by First Citizens chairman Nyree Alfonso, that she can see nothing wrong with recent purchase of IPO shares by bank officials. This comes on the heels of a statement by her “boss”, the Minister of Finance, that he is requesting a report on the matter.
From my understanding there were groups of investors in this IPO.
1) Individual investors could apply for up to 1,000 shares at $25 each. Above that amount they would be given a proportion of what they requested.
2) Institutional investors
3) Bank employees who were guaranteed up to 5,000 shares at $20 each.
I was allocated a total of 1,158 shares from my original request to purchase shares. However it is reported that five First Citizens officials were able to purchase shares in excess of that 5,000 limit.
If this in fact correct, the bank and the Minister of Finance must move swiftly before any improper motives are implied. We all remember the speed with which the Minister moved to fire the entire Caribbean Airlines board over issues less damning than this.
The following questions must be answered so the image and credibility of the bank is not affected:
1) How were officials of the bank able to acquire more than 5,000 shares? Was there anything in the prospectus that allowed for this?
2) Were these shares accessed from the pool of employee shares that remained unsold?
3) If so, were the other employees of the bank advised that they could avail themselves of this new investment opportunity? If not, why not?
4) What price did the officials pay for the shares in excess of 5,000. Was it $20 each?
5) Did persons put in charge of allocating these shares raise any alarms or concerns about the unusually high internal transaction activity? If not, why not?
The recent anti-money laundering laws that were passed have required the banks to request from customers, the source of funds.
Perhaps it’s not too late for the Minister of Finance to request a visit by Board of Inland Revenue officials to check on the validity of source of funds.
Had I known that working in a bank was such a lucrative and financially rewarding profession, I would never have wasted all my years acquiring a PhD in engineering.
Meantime, while I await the report from the minister, I reminisce on the words of Shakespeare’s Hamlet: “Something smells rotten in the state of Denmark”.