Excerpt of the Commission of Enquiry report into the Hindu Credit Union dealing specifically with former HCU president Harry Harnarine:
The conduct of Mr Harry Harnarine was such that the Director of Public Prosecutions (“DPP”) should take immediate steps to test the sustainability of criminal proceedings against him. The following aspects of his conduct could be found upon further investigation to give rise to or evidence of criminal liability in respect of the following criminal offences.
M1 (a.) Conspiring during the period from January 1, 2002 to July 23, 2008 with the principal officers and members of the Board of Directors and/or the managers of HCU, namely Gayndlal Ramnath, Yadwanath Lalchan, Jameel Ali, and Ravindra Bachan (referred to collectively as “the Co-conspirators”) to defraud members of HCU and their depositors in HCU by agreeing dishonestly to put at risk the value and recoverability of the members’ investments and/or deposits by members and others as evidenced by some or all of the following conduct more fully described in Section F of this report.
(i) The commercial relationship between Mr Harnarine and the co-conspirators, which was dominated by Mr Harnarine, supported particularly by Mr Ramnath.
(ii) Recklessly pursuing an improvident investment policy by causing HCU to purchase tangible assets at an over-value, without the prior approval of the board and without the prior valuation of such property by independent valuers and without obtaining prior adequate advice on title, for example causing HCU USA to purchase in 2003-4 the Miramar Property in Florida, the property of Seepersad Harnarine in Pembroke Pines, Florida, and the property at Macaya Trace, Florida.
(iii) Recklessly causing HCU to form and/or acquire subsidiaries and to manage them without prior permission from the CCD and without exercising prior due diligence and without any or sufficient business plan, which subsidiaries were incapable of producing sufficient revenue to finance their day to day operations and which could only survive with loans from HCU and recklessly failing to procure adequate monitoring of the deteriorating financial condition of those subsidiaries.
(iv) Knowingly or recklessly causing HCU to solicit deposits at a time (2005-2008) when it could not meet its immediate liabilities.
(v) Causing HCU’s reckless and excessive expenditure on items which were not in the interests of HCU or its members, specifically payments for personal purposes to Mr Harnarine (amounting, according to the Liquidator to $5,994,953) and to HCU’s directors and managers and to related parties.
(vi) Knowingly or recklessly causing HCU to use moneys derived by HCU from members’ deposits or other payments to support, by means of loans the operating expenses of loss-making subsidiaries.
(vii) Knowingly or recklessly causing the misappropriation of HCU funds deposited by members and others for the personal benefit of other directors and managers, in particular the purchase of property later transferred to directors and related persons, for example the Macaya Trace transaction more fully described in Sections F and G of this report.
(viii) Recklessly causing HCU to diminish liquidity without regard to the risk of the repayment requirements of depositors and in particular to solicit funds from members in order to pay moneys due from HCU to other members.
(ix) Knowingly or recklessly causing HCU to make loans to non-members, such as subsidiaries in breach of the CS Act 1971 and in breach of HCU’s bye-laws.
(x) Knowingly or recklessly causing HCU to make loans to members of the board and senior management in excessive amounts and without security or the completion of the normally required application forms and even when the borrower was already in default on previous loans in respect of repayment of the principal due or the payment of accrued interest.
(xi) Knowingly or recklessly causing HCU to fail to acquire and maintain sufficient liquid assets to enable it to meet its liabilities to its members.
(xii) Knowingly or recklessly causing HCU and its subsidiaries and the subsidiaries of HCU Financial to trade while insolvent.
(xiii) Knowingly causing HCU to fail to comply with its statutory duties to provide accurate financial statements to the CCD.
(xiv) Knowingly or recklessly causing inaccurate and misleading financial statements to be issued to members of HCU.
(xv) Knowingly or recklessly inducing members of HCU to retain deposits in HCU by issuing to them misleading letters of comfort and assurances that HCU was solvent.
(xvi) Knowingly or recklessly causing HCU to acquire illiquid assets without regard to the risk of the repayment requirements of HCU members and other depositors.
(xvii) Knowingly or recklessly causing HCU to make imprudent loans to subsidiaries which were unlawful and irrecoverable, those loans having been made without the prior consent of the CCD to non-members of the credit union.
(xviii) Recklessly causing HCU to diminish its liquidity without regard to the risk of the repayment requirements of depositors by failing to make any or any sufficient provision for defaults on unsecured loans.
M1(b) Contrary to Section 34 of the Larceny Act causing HCU to obtain deposits of money from members and others by falsely representing that HCU was solvent by misrepresenting in management financial statements the value of assets and other accounting information.
M1(c) Contrary to Section 34(2)(b) of the Larceny Act causing HCU to cause or induce by false pretences other persons to accept a valuable security by knowingly or recklessly drawing or causing to be drawn cheques in settlement of depositors’ withdrawal claims.
M1(d) Contrary to Section 3 of the Larceny Act causing HCU to transfer property (vehicle PBN 2827) to Mr Harnarine’s wife.
M1(e) Contrary to Section 3 of the Larceny Act causing HCU to make payments to Mr Harnarine in 2003, 2004 and 2005 in response to his claims for foreign travel expenses which were not established by vouchers or other contemporary or other evidence to have been incurred for the purposes of HCU.
M2) There were also facts which would have justified further investigation by the DPP into the possibility of the commission of numerous summary offences had it not been for the fact that such offences are now all time-barred.
(i) Causing HCU to be in breach of Regulation 14 by its failure to obtain prior consent of the CCD for increases in its maximum liability.
(ii) Causing HCU to obstruct inspection by the CCD as explained in the evidence of Mr Maharaj.
(iii) Causing HCU to fail to provide timely financial statements to the CCD.
(iv) Causing HCU to make investments in and from subsidiary companies without the prior approval of the CCD.
(v) Causing HCU to make loans to non-members without the prior approval of the CCD.
(vi) Causing HCU to make ultra vires payments of fees and stipends to directors.
questionable hcu transactions:
1. Purchase of real estate in 2001 and resale at a loss in 2007
to Mr Harnarine’s wife.
2. Purchase in 2003 of a Toyota Land Cruiser from Mr Har-
3. Purchase in July 2004 of real estate at Pembroke Pines,
Florida, from Mr Harnarine’s brother and ultimate resale of
the same property to Mr Harnarine’s sister, all without ac-
4. Payments totalling $986,000 in 2002-2003 to Mr
Harnarine’s sister said to be as reimbursement of expenses
incurred by her on behalf of HCU.
5. Payments totalling $1,001,631.64 to Mr Harnarine’s sister
said to relate to expenses incurred on behalf of HCU.
6. Purchase in 2002 of real estate at Macaya Trace and
subsequent resale at a loss to members of the senior
management in 2004 and 2005.
7. Payments to Mr Harnarine in 2002 and 2008 totalling
$7.6 million in respect of expenses, including $5 million in
respect of foreign travel, comprising $3,402,585 in the year
to September 30, 2004 and $1,617,742.34 in the year to
September 30, 2005, most of such expenditure being
unsupported by vouchers and not shown to have been
related to HCU’s business.
8. Monthly payments to Mr Harnarine from June 2006 in
respect of his function as chairman of HCU USA after it had
been sold to CLICO.
9. Mr Harnarine’s indebtedness as at June 2012 at $3,737,133,
notwithstanding which he continued as president contrary
to the HCU bye-laws.
10. Advance by way of loan to Mr Harnarine in July 2006 of
$800,000 for investment purposes.
11. Advance of $100,000 by way of loan to Mr Harnarine in July
2007 for investment purposes.