By the numbers, Philip Rahaman, the former chief risk officer of First Citizens, had quite the coup.
In September 2013, he was able to buy 656,588 bank shares from an undersubscribed employee bucket during the company’s initial public offering (IPO), at a time when the market demand in the public bucket was oversubscribed by nine times.
He paid $14.5 million, which was done through two cheques.
In December 2013, he had also pocketed $718,950.92 in dividends from the bank on the shares.
On January 14, 2014, he sold 634,588 of the shares for $26.7 million, making a profit of approximately $12.2 million.
By the numbers, $13 million is a handsome return on a four-month-old investment.
But it was just numbers and not actual money.
The profit remains on paper.
Rahaman, the Sunday Express understands, did not actually collect millions when he sold the 634,588 shares on the Trinidad and Tobago Stock Exchange (TTSE) at $42.15 a share.
The shares were sold to Rahaman’s cousin Imtiaz Rahaman; Imtiaz’s mother, Alia Rita Rahaman; and five companies owned by the Rahaman family-controlled Rahamut Group.
Continuing Sunday Express investigations into the purchase and sale of Rahaman’s shares have revealed cash was not passed during the transaction, even though it caused the market to peak on that day.
The Sunday Express understands Rahaman’s transaction was a simple share swap to his family.
“Why would someone have paid $42.15 a share? It did not make sense. Imtiaz would have lost money on that transaction. The price of the shares have been declining,” an informed source explained.
The share swap, the Sunday Express understands, would have to be done with the knowledge of the broker of the transaction.
Imtiaz is the chairman of Bourse Securities, the broker that both he and Rahaman used in the transaction.
Bourse Securities is owned by Subhas Ramkhelawan, who is an Independent senator and the chairman of TTSE. The Securities and Exchange Commission (SEC) has raised concerns with the board of TTSE about the conflict of interest of Ramkhelawan.
On Friday, Bourse defended
Imtiaz in a newspaper advertisement, observing he is not involved in the day-to-day operations of the company but has been with the company for the past 18 years.
Bourse had maintained it cannot “divulge whether an individual or group is a client”.
But Imtiaz, the Sunday Express learned, is one of several borrowers from Bourse’s Savinvest Structured Investment Fund (SSIF) by means of promissory notes.
According to documents obtained by the Sunday Express, he accessed the facility since 2007 and has pledged various local equity securities as collateral.
As at February 27, 2014, the total promissory notes outstanding in his name at Bourse were $14,991,198.54.
From that sum:
1. $6,000,000 was provided on September 16, 2013, collateralised by units/shares in Clico Investment Fund, National Flour Mills, Sagicor Financial Corporation and Savinvest India Asia Fund. It is to be repaid by September 2014.
2. $191,198.54 was provided on January 2014 to be repaid in January 2015.
3. $8.8 million was provided on February 27, 2014, and was collateralised by 377,000 FIRST shares and 60,000 units in the Clico Investment Fund.
The Sunday Express understands as at February 28, 2014, the unaudited value of the Savinvest Structured Investment Fund was $93,439,147. The total exposure to promissory notes in the name of Imtiaz Rahaman represents 16 per cent of the total fund.
“A mutual fund like any other investment vehicle is supposed to have, by best practice, a diversified investment portfolio. A concentration of 16 per cent in any one class of assets is not best practice. A concen-
tration of 16 per cent to one individual who provides a promissory note, even when the note is collateralised, is quite simply insane.
“When the fund is open to the public, a higher duty is placed on the fund manager to ensure that the underlying investments are diversified and sound. It can hardly be the case that a fund that is open to the public invests 16 per cent of its assets available for investment in loans to its chairman,” an industry source explained.
Bourse falls under the review of the SEC.