Howai: First Citizens board remains under review
Finance Minister Larry Howai said the role of the First Citizens board “remains under review”, with regard to the Rahaman transaction.
The block of shares Rahaman, as a bank officer at the time, had purchased has come under scrutiny, given that public demand had exceeded what was available on the market by nine times.
Rahaman had applied for his shares, about 17.4 per cent of the shares allocated to employees, in July 31, 2013.
In an emailed response to questions from the Sunday Express, Howai said: “While I have been advised and have agreed that it is sensible to allow the investigations to take its course and to limit my comments on the matter, I should say that this issue is far from over, and it is the Government’s intention to ensure that nothing is done to appear to prejudge the case against anyone or to do anything that would compromise the investigation or the case that may be built.”
Howai said the role of all the players, which include the board, remains under review.
The Trinidad and Tobago Transparency Institute has questioned how employees were able to purchase huge quantum of shares.
In his first budget presentation in October 2012, Howai announced that First Citizens, which he had exited four months earlier, would make an initial public offering (IPO).
In a letter dated November 15, sent to the bank’s chairman, Nyree Alfonso, Howai outlined policy guidelines for employee allocation:
“1. Each employee should be given the right to buy a specified minimum allocation of shares in an amount of 500, but each employee could purchase additional shares up to 5,000 and the shares so purchased would be subject to a discount of ten per cent of the offer price
2. An employee can purchase at the offer price any amount of shares in excess of 5,000.”
In an e-mail to all staff sent by the bank’s deputy chief executive, Sharon Christopher, she noted: “Please note there is no limit for staff. Staff can apply for any number of shares. The discount applies up to 5,000 shares.”
“Given the importance of this first issue, the chief executive officer and the board must lead the effort, notwithstanding the involvement of your management team,” Howai wrote.
Seventy employees subscribed for more than the allotted 5,000 shares, with 39 of the 70 between 5,000 and 10,000 shares and another 19 between 10,001 and 20,000 shares.
There are now 11 employees, as well as Rahaman, with over 20,000 shares. Following Rahaman’s sale, First Citizens’ CEO Larry Nath is now the largest employee shareholder at the bank. He owns 215,000 shares. Nath applied for the shares during the period August 8, just before the IPO was closed.
When asked whether he was concerned about the bank’s declining share price, Howai responded: “The institution is strong, well capitalised and very profitable. It built up its franchise in the most difficult circumstances, arising from the failure of its three component banks and with the stigma of being local and unable to compete against well-established players, all of whom had an international background. I am certain that the institution will be able to capably deal with the risks arising from this matter.”
He also addressed the issue of whether there was a conflict of interest with
First Citizens Investment Services (FCIS)
being the broker for the bank’s IPO and why the broker was not tendered.
“FCIS was the lead broker but all brokers were used, which was necessary, given the size of the issue. I know that certain brokers felt that they should have been the lead or co-lead on this issue, but it was a sensible approach for the seller of the shares (First Citizens Holdings) to use its own brokerage company as the lead broker,” he said.