Afra Ray­mond

The word "con­do­na­tion' has been turn­ing through my mind since the start of this fi­as­co. It refers to a pat­tern of con­duct in which some­one who could, or should, have done some­thing to stop wrong­do­ing does noth­ing. The si­lence of the per­son prac­tic­ing con­do­na­tion ef­fec­tive­ly al­lows the con­tin­u­ance of the wrong­do­ing, even if that per­son's ac­tions do not quite amount to con­spir­ing with the wrong­do­er. To put it plain­ly, in those fam­i­lies where chil­dren are abused by one par­ent, it is al­most al­ways the case that the oth­er par­ent knew. The con­tin­ued si­lence of one par­ent al­lows the abu­sive one to con­tin­ue. Even if the oth­er par­ent did not com­mit any act of abuse, theirs is a se­ries of in­ac­tions which al­low wrong­do­ing to con­tin­ue. It could be ar­gued that the si­lence can im­ply for­give­ness. Yes, that is con­do­na­tion.

In re­la­tion to the CL Fi­nan­cial bailout, there is plen­ty of ap­par­ent con­do­na­tion. So much so that fresh per­ils could now be com­ing to­ward us.

I read the re­ports that a group of Unit­ed States-based in­vestors in the Stan­ford In­ter­na­tion­al Bank Ltd have filed a law­suit against the An­tiguan gov­ern­ment, claim­ing some US$8 bil­lion. That law­suit al­so al­leges that the An­tiguan au­thor­i­ties "be­came a full part­ner in a fraud and reaped enor­mous fi­nan­cial ben­e­fits from the scheme." My main read­ing for that case came from David Jes­sop's Trinidad Ex­press col­umn on Ju­ly 18, "A case that hits home"–that col­umn can be ac­cessed at: http://www.trinidad­ex­press.com/in­dex.pl/ar­ti­cle_opin­ion?id=161505942.

One of the telling points in that An­tigua sit­u­a­tion is that that case is filed in the US and so one has to won­der whether "small-is­land" arrange­ments can with­stand a US-style court case.

Some peo­ple might even be ask­ing: what has this An­tigua case got to do with us here in T&T? Af­ter all, our Gov­ern­ment has pledged to bailout all pol­i­cy­hold­ers and de­pos­i­tors, right? Not so fast, be­cause it is a con­di­tion of the CL Fi­nan­cial bailout that we are not as­sist­ing over­seas pol­i­cy­hold­ers and de­pos­i­tors.

If our Gov­ern­ment is not go­ing to pay, it seems that over­seas pol­i­cy­hold­ers and de­pos­i­tors will have to get com­pen­sat­ed in some oth­er way. Will they choose a Stan­ford-type law­suit?

The im­pli­ca­tions of this pos­si­bil­i­ty are sober­ing when we con­sid­er the An­tigua case fur­ther. When we con­sid­er the tan­gled web of con­nec­tions here in our coun­try, can we se­ri­ous­ly ex­pect to sur­vive US-style lit­i­ga­tion?

We have a Min­is­ter of Fi­nance who is al­so a share­hold­er of the failed group, to­geth­er with a Gov­er­nor of the Cen­tral Bank who warns of in­vest­ments which are "too good to be true," yet holds de­posits with CIB. My crit­i­cism of the Min­is­ter of Fi­nance goes be­yond the share­hold­ing is­sue and is set out in "Judg­ment Time," pub­lished in these pages on May 28. In ad­di­tion, we have a rul­ing par­ty which is re­port­ed to have ac­cept­ed sub­stan­tial do­na­tions from the CL Fi­nan­cial Group and, yes, the par­ty's trea­sur­er was al­so the fi­nance di­rec­tor for the group. The CL Fi­nan­cial Group dis­trib­uted div­i­dends to its share­hold­ers af­ter writ­ing to the Cen­tral Bank for ur­gent fi­nan­cial as­sis­tance and as yet, none of its di­rec­tors have been cen­sured.

The share­hold­ers of CL Fi­nan­cial have al­so been al­lowed to keep their div­i­dends as the group drift­ed to­ward the rocks. Some of the as­sets pledged to match the cost of the bailout are al­ready pledged else­where, some­thing the CL Fi­nan­cial ne­go­tia­tors must have known. The Gov­er­nor of the Cen­tral Bank is re­port­ed to have said that all the as­sets are pledged else­where: see hy­per­link, http://guardian.co.tt/busi­ness/busi­ness/2009/04/08/govt-left-emp­ty-hand­ed-cl-fi­nan­cial-bailout.

De­spite the pro­hi­bi­tion against sell­ing any as­sets, CL Fi­nan­cial was found to have been try­ing to sell its share­hold­ing in Cli­co En­er­gy just five days af­ter sign­ing the mem­o­ran­dum of un­der­stand­ing (MoU).

This was re­port­ed at: http://guardian.co.tt/news/gen­er­al/2009/03/24/duprey-en­er­gy-fire-sale-raise-sev­er­ance-mon­ey. The "fit and prop­er" guide­lines pub­lished by the Cen­tral Bank are not im­ple­ment­ed in the CL Fi­nan­cial case.

In ad­di­tion, the new chief ex­ec­u­tive of­fi­cer of the prin­ci­pal com­pa­ny, Cli­co, tells us that some $5 bil­lion is miss­ing from that com­pa­ny's statu­to­ry fund and can­not be found.

This was re­port­ed at: http://guardian.co.tt/news/gen­er­al/2009/03/01/where-mon­ey-gone. There has been no fur­ther of­fi­cial word on the miss­ing funds, de­spite the in­volve­ment of Bob Lindquist, KP­MG Foren­sic and the con­tin­u­ing as­sis­tance of the CL Fi­nan­cial chiefs.

None of this has been de­nied or con­test­ed. It is all so in­cred­i­ble that no fic­tion writer, not even one of the more out­landish ones, could ever con­coct such a sto­ry. A per­cep­tive ed­i­tor might even re­ject it, but the fact is that we have to deal with these el­e­ments.

In an ear­li­er col­umn in this se­ries, I com­ment­ed on the de­mo­c­ra­t­ic deficit which al­lowed our elect­ed rulers to pro­ceed with vir­tu­al carte blanche, the law be­ing the on­ly im­ped­i­ment. Some would say that that arrange­ment is a work­able one which al­lows the rul­ing par­ty ap­pro­pri­ate scope with­in which to run the coun­try. That is not a de­bate for this space, suf­fice to say that the CL Fi­nan­cial sit­u­a­tion is pos­ing a fresh se­ries of ques­tions.

Those ques­tions arise in the as­pect of scale; to get prover­bial for an in­stant:

Q: Where does an ele­phant sit?

A: Any­where it wants, sil­ly!

Point be­ing that an ele­phant is so huge that if it de­cid­ed to sit, we would all have to make way for it, what­ev­er the in­con­ve­nience. In both cas­es, the Stan­ford In­vest­ment Bank and the gov­ern­ment of An­tigua, as well as the CL Fi­nan­cial group and our own Gov­ern­ment, the com­pa­ny was so huge that it ex­ert­ed a se­ri­ous in­flu­ence on na­tion­al af­fairs. Econ­o­mists use the terms "ex­ter­nal­i­ties" or "ex­ter­nal costs" to re­fer to quan­tifi­able costs which are not di­rect­ly con­sid­ered as an as­pect of the mat­ter un­der ex­am­i­na­tion. In this case, the ex­ter­nal­i­ty is that none of the three ma­jor po­lit­i­cal par­ties are speak­ing on this mon­u­men­tal event. The si­lence is chok­ing, and even the Gov­ern­ment, with all its huge pub­lic­i­ty ma­chin­ery, is on­ly speak­ing when it has to.

Apart from some ear­ly sound bites, the UNC is ab­solute­ly silent. Even a par­ty with such a sta­ble of not­ed "fire­brands" is si­lenced by the deep re­la­tion­ship be­tween Lawrence Duprey and its leader. In the case of the "third par­ty" CoP, it is even more galling since they have a "front bench" of un­matched depth in the fields of fi­nance and eco­nom­ics. One can on­ly won­der at the rea­son for their si­lence. That si­lence is a huge ex­ter­nal cost im­posed on us all by the very size of the CL Fi­nan­cial Group. The irony is that this very is­sue, which needs to be de­bat­ed, is the one on which our rulers are silent. That is a colo­nial pat­tern of pub­lic dis­course and it is in­im­i­cal to our na­tion's de­vel­op­ment. Such are the con­se­quences of con­do­na­tion.

Afra Ray­mond is a char­tered sur­vey­or.

This se­ries on the CL Fi­nan­cial bailout

can be viewed or read­ers' com­ments made at:

www.afraray­mond.com.