Friday, February 23, 2018

First Citizens fires Rahaman


Sent to staff: A scanned image of the e-mail sent to First Citizens staff by CEO Larry Nath yesterday, advising them group chief risk officer Philip Rahaman had demitted office.

Mark Fraser

State-owned bank First Citizens has fired its group chief risk officer, Philip Rahaman.

It said he was dismissed yesterday because the bank lost confidence in Rahaman’s ability to carry out his duties.

Rahaman was fired following an internal audit by the bank on his purchase of 659,588 bank shares during its Initial Public Offering (IPO), and the subsequent sale of 634,588 of those shares four months later.

In a four-sentence statement issued yesterday evening, First Citizens said: “As a result of an extensive internal investigation carried out by First Citizens Bank, the chairperson and the board of directors reached a determination that they have lost confidence in its chief risk officer’s ability to carry out his duties. Consequently, he has been dismissed from his position. First Citizens Bank is committed to maintaining the trust of the public and providing appropriate updates to its stakeholders. However, given the other ongoing investigations, it would be inappropriate to comment further at this time.”

Rahaman spent about $14 million to acquire the First Citizens shares.

The sale of almost all the shares, which netted Rahaman a $12 million profit, has come under scrutiny, given the position he held and how it was conducted. 

It is the subject of investigations by the Securities and Exchange Commission (SEC), the Trinidad and Tobago Stock Exchange and PricewaterhouseCoopers on behalf of the Ministry of Finance. 

The Central Bank’s Inspector of Financial Institutions, Carl Hiralal, has also written to the bank, seeking answers from the bank’s board and management on whether the transaction met a “fit and proper” test.

The Express understands Finance Minister Larry Howai was briefed on the audit by the bank’s chief executive, Larry Nath, on Monday and he gave approval for dismissal.

Yesterday morning, Nath issued an e-mail to bank staff members which stated: “This is to advise that Mr Philip Rahaman has demitted office and is no longer with the First Citizens Group effective 25th March 2014.”

Nath noted that as an interim measure, the areas which fell under Rahaman’s portfolio would be split up. Credit risk will report to Nath, market risk will report to the bank’s chief financial officer, Shiva Manraj, and operational risk will report to the group chief internal auditor, Anthony St Clair. (See full statement at top right.)

First Citizens, later yesterday, sent a statement to the Stock Exchange, which stated: “First Citizens Bank Ltd informed the Stock Exchange that Mr Hassan Philip Rahaman, the chief risk officer of the bank is no longer employed with the bank effective March 25, 2014.”

First Citizens chair Nyree Alfonso had previously defended Rahaman.

Shareholder activist Peter Permell yesterday said he was “taken aback” about Rahaman’s sudden departure.

“I have been hearing since over the weekend that the audit, although not yet made public, may have turned up certain matters that only the erstwhile chief risk officer (CRO) would have been in a position to explain. And when one couples that with his sudden departure from office prior to the report being made public, it tells me that he may not have been able to provide answers to the satisfaction of the forensic auditors, or may have politely refused to so do,” he said in a statement sent to the Express yesterday.

“Regardless of the reason(s) for his sudden departure, I am of the considered opinion that this matter cannot end with Mr Rahaman’s departure nor will it go away anytime soon. Since there are several loose ends that still have to be tied up and a number of unanswered questions that can only be properly addressed when the contents of the still to be completed forensic audit report is known,” he said.

He questioned if Rahaman had declared his source of funds for this transaction and what evidence he provided and whether Rahaman, as the seller, was related or connected to the buyer of the First Citizens shares on January 14.  

Investigations by the Express have shown the sale of 634,588 of Rahaman’s 659,588 bank shares was not flagged by the Stock Exchange on January 14 because it was conducted in his legal name, Hassan Philip Rahaman.

The TTSE, the Express understands, has security software that tracks the trades of directors and senior officers of listed financial institutions.

The TTSE had Rahaman listed as Philip Rahaman—as he is on First Citizen’s website and its annual report—and not his legal name, which did not trigger an alert when the transaction was concluded.

On professional online network LinkedIn, Rahaman is identified as Hassan Philip Rahaman who has been employed at the bank since January 2012.

The TTSE software is a complimentary, or a back-up, measure to the TTSE’s own Rule 604 that stipulates shares traded by directors and senior officers be submitted to the institution within five days.

The Express was told the software failed to flag the transaction because of the different names.

The Express understands Rahaman disclosed the acquisition of 659,588 shares to the First Citizens board and wrote to the Securities and Exchange Commission (SEC), as he is legally bound to do, on the share acquisition.

The share sale was on January 14, the First Citizens annual report published on February 17 on the TTSE, but it was only on March 12 that First Citizens informed the TTSE a senior officer sold 634,588 bank shares.