Tuesday, February 20, 2018


First Citizens chairman and three directors voted out at heated AGM


APOLOGISED: Nyree Alfonso

Mark Fraser

Nyree Alfonso walked into First Citizens’ annual general meeting yesterday morning as its chairman and left in the afternoon as merely a shareholder.

Alfonso, who has been heavily criticised for her statements on morals and ethics following former chief risk officer Philip Rahaman’s share purchase during the bank’s Initial Public Offering (IPO), was effectively sacked by the Corporation Sole (Ministry of Finance).

Alfonso and three other directors—Rishi Baddaloo, Shobee Jacelon and Marlene Juman (who is the permanent secretary in the Ministry of the Attorney General)—were voted out of office by the Corporation Sole when their re-election was put to shareholders.

Despite the IPO, shareholders only amounted to 20 per cent of voters. The Ministry of Finance ultimately had the deciding vote with its 80 per cent shareholding.

That vote was vested in the Ministry of Finance’s Permanent Secretary, Vishnu Dhanpaul.

Minutes before Dhanpaul announced the Ministry of Finance would not support the re-election of directors, Alfonso and Baddaloo announced they would not seek re-election.

Their decision was met with surprise by the shareholders who were waiting to vote on the directors at the heated AGM.

When Jacelon’s name was put for re-election, Dhanpaul stood up and said the Corporation Sole, who has 80 per cent shareholding, would not vote in favour.

At that point, Dhanpaul also put on the record that despite Alfonso and Baddaloo’s announcement that they would not seek re-election, the Corporation Sole would not have supported them.

That statement was followed by loud applause and cheers from the shareholders.

During the four-hour- long AGM which was held at NAPA, Alfonso’s moral and ethics were taken to task by shareholders as well as her compensation at First Citizens and the board’s role in the bank’s IPO which resulted in Rahaman being able to acquire 656,588 shares. 

 Rahaman, the former chief risk officer at the bank, was fired after he purchased 659,588 shares from the bank’s employee bucket during its IPO last August allegedly as a front for his cousin, Imtiaz Rahaman, his aunt and five Rahaman-controlled businesses. 

Imtiaz is the chairman of Bourse Securities, owned by former independent senator Subhas Ramkhelawan. Ramkhelawan has since resigned as chairman of the Trinidad and Tobago Stock Exchange (TTSE)  and as an independent senator. The matter is still under investigation by the Securities and Exchange Commission.

The Rahaman scandal has brought the board’s role in the transaction under scrutiny with many calls for them to be dismissed.

Dhanpaul also requested the bank hold a special AGM within 30 days to determine new directors.

Questioned on the decision, he referred all questions to Finance Minister Larry Howai. He said the meeting would be to re-elect four new directors from names proposed by Cabinet.

“Did the Cabinet decide that these four directors have to go?” he was asked. 

“That is for Mr Howai,” he responded.

Corporate secretary Sharon Christopher and chief executive Larry Nath yesterday expressed surprise by the Ministry of Finance’s position.

“They never indicated how they intended to vote. They said they would be sending a representative, not a proxy,” said Christopher.

“If you are a majority shareholder, you can requisition it,” explained Christopher on the meeting to be held in the month ahead.

She noted that the Rahaman issue has generated “much emotion”.

“Government was prepared to take certain kinds of decisions that will give people confidence that the bank is a solid bank,” she said.

Asked her thoughts on one PS (Dhanpaul) voting against another (Juman), she replied: “He voted against her as a board member, not as a PS.”

Christopher said the turn of events at the end of the meeting was a surprise as Alfonso and Baddaloo’s re-election were down on the agenda to put to shareholders.

“Maybe they got some info. Up to that stage of the meeting, we were proceeding on the business of the meeting,” she said.

“I would hope that they would have a discussion with the members before. Maybe they did. I didn’t know. I would hope that would have happened.

“I presume that something was indicated to all of them before. I wouldn’t like to think that members came here and didn’t understand the majority shareholder would vote against them. I, as company secretary, did not know because the majority shareholder did not indicate how they intended to vote,” she said.

Questioned yesterday on the decision, Alfonso said she did not expect the Ministry of Finance’s position on the board.

She said she was now “resting and reflecting.” 

Alfonso “Resting and Reflecting”

At the start of the session, Alfonso sought to address the issue of her statements.

In an interview with the Express on March 13, Alfonso was questioned on Rahaman’s purchase.

She had responded that no regulatory rules were broken.

 “If you can identify to me what rule or regulation was breached, I will be happy to direct the group internal auditors and even the PriceWaterhouseCoopers forensic auditors to investigate it. But you cannot use morals and ethics because everyone’s are different,” she had said.

She was taken to task for those comments. 

She maintained yesterday that there were no breaches in the allocation policy.

“What I could not do is use my personal moral compass, the ethical values and moral standards that are internal to me over and above the said established regulations, processes and rules to judge the relevant employee’s conduct as, in my view that would be morally and legally wrong,” she said.

“I am at loss to explain how these comments came to be published under the headline “First Citizens executive cleared”. This headline lead to a veritable maelstrom of criticism which included a very personal attack on my morality and that of the  institution.

“I accept unreservedly responsibility for how my comments were construed by employees of the bank, the shareholders and public at large. In hindsight (which is always 20/20), I should have taken greater time to explain to the reporter what I meant to convey,” she said.

Alfonso yesterday apologised “to the hardworking management and staff of the bank for any and all embarrassment caused by my statements.  I assure you that the way the comments were reported was unintended.  Indeed, the comments were meant to be merely in the nature of a status report and I was careful to relay to the reporter that investigations were ‘continuing’”.

She said: “I have also been criticised for failing to publicly explain both my and the bank’s position with regard to the now infamous share purchase by the bank’s former chief risk officer. 

“I will be the first to confess that I retreated into the business of the board’s investigations because it did not seem to me that I had the ability to completely answer the swirling criticisms without fully understanding what had transpired in this now infamous transaction.  

“I will also admit that nothing in my training and experience prepared me for the unrelenting verbal and written fire which the bank and board were subjected to.”  

Shareholders protest board fees 

But Alfonso’s comments did little to quell the hour-long set of questions shareholder activist Peter Permell had for the board and management. Permell questioned the compensation which Alfonso received as chairman.

Alfonso responded: “I don’t think this is the appropriate forum” to a collective “What?” from the shareholders.

Permell insisted that Alfonso answer the question to the shareholders, as “these are the people who are paying you”.

First Citizens chief financial officer (CFO) Shiva Manraj observed that out of the $45.2 million attributed to administrative expenses, $2.1 million was paid in directors’ fees.

As chairman of First Citizens, Alfonso is paid $10,000 a month with a $1,000 monthly travelling allowance. 

For her chairmanship of seven other subsidiaries—First Citizens (St Lucia) Ltd, First Citizens Financial Services (St Lucia) Ltd, First Citizens Investment Services Ltd, First Citizens Brokerage & Advisory Services, First Citizens Investment Services (Barbados) Ltd, FCCR-First Citizens Costa Rica SA and First Citizens Bank (Barbados) Ltd—she is paid $6,500 a month and a travelling allowance of $750 for each.

The Express calculated that Alfonso’s fees would be $61,750 per month.

Permell concluded that her directors fees would amount to about $63,000 and put that figure to Alfonso.

Alfonso said that figure does not take into account taxes which amount to 25 per cent.

Further, the board’s compensation was guided by the State Enterprises Monitoring Manual.

“But madam chairman, you are making more money than the Prime Minister as the chairman of a State-owned bank,” Permell stated.

Alfonso replied that she was unaware of Prime Minister Kamla Persad-Bissessar’s compensation but explained that she entered into the bank with the interlocking directorships and “that was the way it has always been held”. 

“That statement does not do you credit, madam chairman,” charged Permell, noting that the total fees impacted on the bank’s bottom line, to much clapping from the shareholders.

“It does not make it right that some members are being recycled,” he said to more applause.

Director Ved Seereeram noted that by changing directors, it does not mean that the fees will go down. 

Questions over Rahaman 

Corporate secretary Sharon Christopher, chief executive Larry Nath, general manager of FCIS also came under fire from Permell over why the Rahaman transaction was not picked up before by her office.

As corporate secretary, Christopher would have had a list of shareholders where Rahaman’s purchase would have been registered.

She maintained that she only became aware of his 656,588 shares when she was given a copy of the bank’s annual report. She said the Share Registrar was lodged with the Trinidad and Tobago Central Depository.