The Trinidad and Tobago Transparency Institute (TTTI) has said it is disappointed by the reported actions of banking group First Citizens prior to and subsequent to the sale of shares through its initial public offering (IPO) in July 2013.
“We regret the tarnishing of the bank’s reputation now, given that for 20 years, First Citizens has generally exhibited good governance, fiscal husbandry, exemplary leadership and has garnered many international awards based on that track record.
“We consider unfortunate the initial response of the chairman of First Citizens Bank (Nyree Alfonso) that “you cannot use morals and ethics because everyone’s are different.... No regulatory rule was broken”. Despite this assertion, the former chief risk officer of First Citizens, Hassan Philip Rahaman, was fired two months after his sale of 659,588 shares in the IPO,” the body which promotes good corporate governance stated in a press statement yesterday.
Transparency said there’s a “need for answers” from First Citizens, which is owned by taxpayers, from the Minister of Finance and from the SEC. (See box at right)
Transparency expects the results of the Ministry of Finance’s investigation will be made public promptly.
“We also urge the minister and the SEC to indicate what steps will be taken to preserve the integrity of the stock market and future IPOs in Trinidad & Tobago,” it said.
questions for First citizens
1. Why was there no “cap” on the quantity of shares which individual First Citizens staff and executives could purchase? This would seem to be a basic omission, given that the proportion of shares for approximately 1,700 staff far outweighed the allocation for many thousands of citizens.
2. Was there at any time, in any of the drafts of the prospectus for the IPO or in any board or management discussion relating to its preparation a suggested “cap” on the number of shares that employees of First Citizens could purchase? If so, why was this recommendation ignored?
3. Did any other staff/executives purchase any significant number of shares in the offering?
4. Was the source of such funds for these purchases (including over $14 million which H Philip Rahaman used to purchase his shares) clearly traceable to longstanding personal assets?
5. Major sales of shares by directors or senior executives of publicly traded entities should trigger an alert at the SEC, as well at the entity itself: what actions were taken on this occasion? The SEC must elaborate on what were the failures of its systems in the case of the sale of Mr Rahaman’s shares; and how are these being addressed.