An internal investigation by the remaining board members of State bank First Citizens has recommended that disciplinary action be taken against three bank officers following the Hassan Philip Rahaman Initial Public Offering (IPO) scandal.
The bank officers are Group chief executive Larry Nath, deputy chief executive and corporate secretary Sharon Christopher and Head of Legal Department, Lindi Ballah-Tull.
During the bank’s IPO, Rahaman, the bank’s former chief risk officer, bought 659,588 shares from the employee bucket and sold 634,588 of those shares four months later to his cousin Imtiaz Rahaman, his aunt and five Rahaman-controlled businesses. The share purchase raised questions about ethics while the financing of the transaction is under investigation.
The bank had already conducted a preliminary audit on the IPO share allocation in which Rahaman and Nath’s shares were examined.
Nath is now the largest shareholder of employee stock. He owns 215,000 shares. Nath applied for the shares during the period August 8, just before the IPO was closed.
However, the board did another investigation into management’s responsibility during the IPO where the role of the three bank officers came under scrutiny.
The findings were shared with the three officers at a special board meeting after which a report was finalised by acting chairman Anil Seeteeram to be submitted to the Ministry of Finance.
That investigation concluded that Nath knew about Rahaman’s purchase after the IPO was closed last August as he was alerted by Jason Julien, head of First Citizens Investment Services, a subsidiary of the bank.
The board was not informed of Rahaman’s purchase.
Christopher did not inform the Trinidad and Tobago Stock Exchange (TTSE) on why Rahaman’s trades were not reported according to Rule 604.
Christopher, in a letter to the TTSE on February 20, had said the error was one of “inadvertence”.
However, the Sunday Express understands that the bank’s officers have threatened legal action over the contents of the report and have sought legal advice on the matter.
The directors who finalised the report are the remaining members of the board previously led by attorney Nyree Alfonso who were not voted out during the annual general meeting on May 12.
They include Ved Seereeram, Anthony Mohammed, John Tang, Nian Vishnu, DK Musai and Ramish Ramanand.
Contacted on the matter last week, Howai said he had not yet had sight of the report but “matters involving disciplinary action against management would be the remit of the Board. The line Ministry would not normally be involved in a disciplinary measure involving employees.”
On June 17, First Citizens is expected to hold an extraordinary general meeting to elect a new board.
Howai has nominated former attorney general Anthony Smart to be the new chairman of First Citizens.
Smart will replace Alfonso, who retired from the board at the bank’s annual general meeting on May 12.
Smart, Jean-Pierre du Coudray, Joel Pemberton, Michelle Durham-Kissoon, Courtenay Williams and Hazar Hosein are nominees to the board to replace the four directors who exited the company at the last AGM in Port of Spain.
Two other directors are expected to join the board, one member from the Chamber of Commerce and another from the Trinidad and Tobago Manufacturers’ Association (TTMA).
The IPO scandal has had several casualties: Rahaman; Subhas Ramkhelawan, the managing director of Bourse Securities, who resigned as an independent senator and former chairman of the Trinidad and Tobago Stock Exchange; and the four First Citizens directors.
It is still the subject of two investigations—one by the Securities and Exchange Commission (SEC), the Central Bank.
An audit done by PricewaterhouseCoopers has been handed over to the Director of Public Prosecutions Roger Gaspard.
Rahaman’s LinkedIn profile says he is “taking a sabbatical”.
Contacted last night, Nath said the report was unsigned, had not been tabled in for discussion and its contents were subject to legal consideration.
Asked if the bank’s officers were informed of the contents at the board meeting, he replied: “I would not say so.”
“At the end of the day, the report is subject to legal consideration and I cannot make a comment on an unsigned report,” he said. “It has a long road to go if it has to go anywhere.”
Asked if he had been informed of Rahaman’s purchase beforehand, Nath said the matter was still the subject of a Securities and Exchange Commission investigation and he could not speculate or pronounce on the matter.
Head of Legal Lindi Ballah-Tull could not be reached for comment last week.