Tuesday February 9th, 2010
- Last update:12 hours 58 min ago
Central Bank Governor warns investors
Williams hints at fraud in Clico, HCU collapse
Published: 8 Aug 2009
The nation’s top banker has warned investors to be wary of investment opportunities that offer returns that seem too good to be true, and he provided the first hint that fraud may have caused the high profile collapse of Clico, Hindu Credit Union and Clico Investment Bank.
“If there is one thing the HCU, Clico and CIB situations have in common, is that if it is too good to be true, it is, and may probably be fraudulent,” says Central Bank Governor, Ewart Williams. “Any institution that offers you interest rates that are way out of line with the market, is more than likely taking you for a ride,” he added. Speaking at the close of a Financial Literacy Course for schoolteachers and lecturers at the Central Bank conference facility yesterday, Williams said the ongoing financial crisis at home and abroad, has bought home to many countries, the critical importance of early education in finance.
“There is a growing consensus among policy-makers (and educators) that a country’s lack of financial sophistication was one major cause of the current economic problems. “In the US for example, policy-makers point to the fact that the economic recession found too many households buried in debt, stuck with unaffordable mortgages with far too little savings and stung by huge investment losses” added Williams. “In Trinidad and Tobago, while we at the Central Bank were always convinced of the benefits of financial literacy to our people and to our national aspirations, the severe economic slowdown with which we are now confronted, as well as the recent challenges in our financial sector, have underscored the need to ramp up the financial literacy programme – in fact to make it more of a crusade.”
He said current economic circumstances have forced families to make ends meet, to plan and budget their incomes, and generally to make difficult consumer choices – a situation for which many people are not prepared. “While the National Financial Literacy Programme (NFLP) continues to work with adults to shift how they think about personal finance and to help change their habits, the benefits of working with young people in their schools are overwhelming.” He said the rational is simple – catch them early to change their path going into adulthood. We need to start from early to help our children understand the relationship between risk and return.
“Our schools should teach our children the basics of debt and credit and the implications of having bad credit. “Teaching these concepts in school will save our children considerable hardships in adulthood,” he added. Last year the NFLP conducted courses in 488 primary schools covering 27,860 students, as well as conducted pilot courses with 930 students in seven secondary schools.
Don't only drop hints,
Don't only drop hints, Governor, drop some charges on these crooked directors of these failed companies.
Instead of dropping hints, the Governor of the Central Bank ought to be actively pursuing these directors for possible theft and mismanagement of depositors and shareholders' hard -earned funds. In addition, he should be spearheading efforts to force the government to formulate regulations to prevent any such failures in the financial sector and to prosecute wrongdoers.
Ever notice that the directors of the failed finance companies don't end up poor? From the days of the 1980s to now, all these people continue to be rich and the poor depositors are left holding the dirty end of the rope.
If this were the US, the directors of these companies, who probably are guilty of theft (or at least mismanagement) of depositors' and shareholders' money, would have been hauled before the courts just like Madoff and Stanford.
One hopes that these pronouncements are not public relations gimmicks just designed to fool the public into believing that somebody is doing something to help them get back their money.
The victims of financial scams really have no one to turn to in this country.
ajfyzabadbutlertown
all members of the same
all members of the same country club.
The assessment of our CB
The assessment of our CB Governor seems skewed and reflects a lack of understanding of the realities of the business world.
If it is true that Clico, HCU and CIB practiced fraud in their promises to investors, the Governor convicts himself and the watchdog authorities who failed to do their obvious duty in those circumstances.
In my view, the exaggerated promises made by those institutions were based upon overly optimistic business success expectations.
CLFinancial had made tremendous investments in very profitable enterprises globally, and promised returns premised on a continuing global expansion and on proven historical earnings.
HCU entered a range of businesses expecting overnight financial success which would have justified its promises.
Certainly HCU was credited with greater business acumen than its head possessed and apart from whatever internal fraud that may have occurred, yet to be discovered, its expectations of returns were made through rose tinted lenses and not from hard business experience.
Fraud would have occurred had the investments made by the public been misappropriated in a pyramid type scheme. Instead, those investments were channelled into grandiose business ventures that were legitimate but unfortunately unrealistic pipe dreams.
In addition to its National Financial Literacy Programme (NFLP), the CB must consider a Basic Business Literacy Program (BBLP) designed to teach realistic business goals for new entrepreneurs.
Statistics on failed businesses must be common information. Too many enter business expecting certain success, never considering the prospect of failure that often wipes out savings and nest eggs.
"Hope springs eternal in the human breast" is the cause of many ill advised ventures that fail.
MFRahman
I suspect what they're
I suspect what they're finally unravelling with CL, and what would have been deliberately obscured from external auditors (PWC) and the CBTT, is the extent of related-party transactions. So revenue from one company in the CL conglomerate being "loaned" to another company and recorded as profits to mask poorly performing entities. It wasn't illegal to do so, but was frowned upon by the CBTT. They've taken a much less tolerant approach to such transactions in the wake of the CL demise.
Good idea with the basic
Good idea with the basic business literacy program. Instead of failed business statistics, what about successful business stats. If people hear more stories of what successful entrepreneurs do then this can be a realistic guide for budding entrepreneurs.
FinancialCoachingCentre.com
....hurry up Ewart!!!close
....hurry up Ewart!!!close and bolt the barn door..the horses have already galloped away!!!!
This man serious ? He
This man serious ? He "hinting" at fraud after he, Karen & many others broke their deposits before the collapse? This place sweet too bad. Mr Williams, where you invest your money? We need "sound" advise.
It is good to practice what
It is good to practice what you preach and preach what you practice. Good Comment Epsomsalts. FinancialCoachingCentre.com
Mr. Williams needs to take
Mr. Williams needs to take the nextstep - if there is even a 'smell' of fraud, forensic autitors should be brought in. After all, Duprey himself has admitted that he was driven by one word - 'GREED''. How much more obvious does it have to get ? I agree with 'trinigirl' that related party transactions likely led to their downfall.
On the other matter, a financial planning course should be mandatory for anyone seeking a mortgage. I know of too many people getting mortgages, when they know they cannot easily afford the subsequent maintenance on the homes; taxes etc.
Basic Financial Literacy courses should be part of the secondary school curriculum. If it is, I for one would suggest tutoring even on a volunteer basis (no strings attached). It is imperative to educate kids early and get them involved in the household budget; many have no idea how hard their parents have to work to buy them the basics.
While it is good to point
While it is good to point out the failed examples of HCU,CIB and the near collapse of Clico, I am concerned that there are other questionable financial houses which are still operating among us.
If the Country's economy continues to slide more people will lose their earnings.
Let us focus on those firms that are outside the radar.
Where is the information that depositor's monies are at risk right now? Are there any Ponzi schemers in disguise scrambling right now to straighten out their vicious tricks?
Who will give us this information in this dynamic financial meltdown?
The crisis is not over, I repeat the crisis is not over !
Ewart, why did you sign a
Ewart, why did you sign a MOU before doing a due diligence??? And this was a privately owned company. Wasn't there any hint of fraud then? Taxpayers are now saddled with a $10B debt.
Smithee
And all this occurred while
And all this occurred while the central bank was sleeping and snoring away while CLICO was playing mas with poor pensioners money, lending CL tonnes of it to go into fanciful ventures, paying themselves unbelievable salaries (imagine one deceased agent taking home TTD 4 million a year)and the company secretary paying herself a giganctic bonus even when the company faced near collapse. That is a good example of the corporate ethics that the CBTT allowed.
But now they only hinting. Perhaps someone will make a hint of a gaol, a year perhaps and then come out on good behaviour to do the cocktail circuits after spending the time in prison sick bay, planning the next strategy.
All man rat quiet now ent?
Mr. Williams Please!!! Here
Mr. Williams Please!!!
Here we have a man who never run a parlour pontificating about all that is wrong with CLICO. Mr. Duprey may not be your favourite person but we must acknowledge his business acumen in that he took an Insurance Company and transformed it into a 100 BILLION DOLLAR EMPIRE!!!! How many of our so called businessmen can boast of this WITHOUT MONEY LAUNDERING!!! Mr. Duprey's mantra was that ' Greed is good'. Well from where I sit there is nothing wrong with that when all shareholders want are consistent and maximum returns on their investments. I suspect that is why Karen and you, Ewart held investments there !!! You all seemingly withdrew your monies when you realised that the going was getting tough and left John Public out in the cold!!! So please give us a break and instead try to convince the emperor that the time to loosen your belt has not yet come.
justin2... one little
justin2... one little question
(quote)Mr. Duprey may not be your favourite person but we must acknowledge his business acumen in that he took an Insurance Company and transformed it into a 100 BILLION DOLLAR EMPIRE!!!! How many of our so called businessmen can boast of this WITHOUT MONEY LAUNDERING!!! (unquote)
I do not know Mr Duprey. Neither I, nor my people, have seen the accounts. There is however, one little question I must ask of you.
How do you know the 100 billion dollar empire was based on actual revenue or sales, rather than the 'simple' shuffling around of money, in what ever form that may take? (That in itself takes a certain acumen, to remember what you put where aka "What lie did I tell today"?)
Other major organisations and companies have imploded without 'money laundering'... and as I understand it from reports in the media, concerns were raised about CL Financial's liquidity a few years ago.
I too, have won a few times at Monopoly, including owning all of Park Lane.
PS. You talk about 100 billion empire. I presume you are talking TT$?
La Diva
HCU "C.E.O" back to selling
HCU "C.E.O" back to selling roti the ONLY thing he was qualified to sell to the public! I recall when a junior minister wanted to investigate HCU the Indian members protested in front of the PNM party headquarters! "LEAVE WE LEADAH ALONE" HCU IS PERFECT AS IT IS RUN BY INDIANS FOR INDIANS)
Submitted by MFRahman on 8 August 2009 - 12:43am.
The assessment of our CB Governor seems skewed and reflects a lack of understanding of the realities of the business world.
(READ BLACKMAN DOES NOT KNOW ANYTHING ABOUT BUSINESS)
If it is true that Clico, HCU and CIB practiced fraud in their promises to investors, the Governor convicts himself and the watchdog authorities who failed to do their obvious duty in those circumstances.(MORE RACIAL NONSENSE CAREFULLY DISGUISED)
In my view, the exaggerated promises made by those institutions were based upon overly optimistic business success expectations.
(THE INDIAN HCU DID NOT FAIL BECAUSE OF FRAUD)
CLFinancial had made tremendous investments in very profitable enterprises globally, and promised returns premised on a continuing global expansion and on proven historical earnings.
HCU entered a range of businesses expecting overnight financial success which would have justified its promises.(HAHAHAHAHAHAHAHA)
NO MENTION IS MADE OF THE GOV'T MINISTER WANTING TO INVESTIGATE HCU FOR FRAUD ALMOST 7 YRS AS IT WOULD GIVE THE BLACKMAN PNM PARTY TOO MUCH CREDIT IN TRYING TO PROTECT INDIAN INVESTORS FROM AN INDIAN CROOK!
TRY HARDER MR RHAMAN WHENEVER YUH TRYING TO REWRITE RECENT HISTORY, I SEE UTC IS GOING FROM STRENGH TO STRENGH OVER THE YRS HOW COME A PNM CREATED INSTITUTION IS DOING SO MUCH BETTER THAN ONES MADE BY INDIANS?
HOW COME YUH DID'NT MENTION SUMMIT FINANCE CORP FROM THE 80'S? AN INDIAN CREATED "FINANCIAL HOUSE" WHOSE COLLAPSE IN THE 80'S WAS ALSO BLAMED ON THE PNM GOV'T BY MANY INDIANS(ITS NEVER AN INDIAN FAULT)
Agreed lahaina - Basic
Agreed lahaina - Basic Financial Literacy is badly needed to protect consumers.
The Central Bank has made a commendable start, but it needs to be more visible, and should be expanded.
And dan, there is at least one other finance house operating which is a concern but nothing is being publicly said just yet. I suspect the CBTT's intention was to try to address the Clico Investment Bank mess and allow the dust to settle first. I think they were thinking that too much too soon would give an impression of instability in the financial sector, which is actually not so. Our Financial Sector regulations are in much better shape than those of the US which contributed to their fiascos, and our local banks, for the most part, should be commended for their excellent Risk Management. The CBTT know who the questionable ones are - one hasn't published Annual Financial Statements as mandated by law for almost a year now. I'm curious about what's being done to monitor them.
DON'T BE DUPED Remember, in
DON'T BE DUPED
Remember, in the current scenario in T&T, all political appointees are duty-bound to create red-herrings. They must do so on command or resign their posts so that more willing sycophants can take their place. From CPEP to the President is the same old "do as I say or be dammned". The political appointees then spinelessly spew shallow intellectualisms to distract the nation from the more grave acts of roughshod corruption that are being perpetrated with unprecedented disregard for the citizens at large!
Watch for it and you will see, but alas, there are none so blind as would not see! Lord, deliver us from evil, for Thine is the Kingdom the power and the glory. Let the nation say "Amen"!
On second thoughts...
On second thoughts...
(quote)There is a growing consensus among policy-makers (and educators) that a country’s lack of financial sophistication was one major cause of the current economic problems. “In the US for example, policy-makers point to the fact that the economic recession found too many households buried in debt, stuck with unaffordable mortgages with far too little savings and stung by huge investment losses” added Williams. (unquote)
Actually, wasn't it because certain people (the bankers) were 'too sophisticated' which resulted in the "current economic problems"? I mean, one set of 'sophisticated' bankers selling sub-prime mortgages, repackaging them and then selling them on to other 'sophisticated' bankers, who bought those packages, which contributed to the situation we (the world) are in?
Add to the broth, companies/banks retrenching and letting go of staff when they ought to have been prudent in the 'boom' years vis-a-vis bonuses etc and bingo! The world economic is spiralling out of control as people lose their jobs => mortgages defaults and total reduction in spending (holidays, cars, household goods, withdrawing children from private schools etc) => further business losses => further retrenching... and the circle continues.
In addition, greed, on the part of home sellers and estate agents contributed to the spiralling costs of home ownership. Can you really blame someone who has a dream of wanting to be 'King of their own castle' to not do all they can to accomplish that dream? If I am also not mistaken (please note, I was NOT around at the time!), a property crisis sparked the Great Depression of 1927.
Some of the most 'highly educated' people were/are behind the credit crunch and where was their financial literacy training, when it came to setting up these mortgage packages? All the man/woman in the street knows is, they want to own their own 'castle', even if it means taking out a mortgage repayable over 100 years. Who, can blame them? What does that have to do with financial literacy? It is easy for someone like Mr Williams to talk, who possibly has more than one home to his name. Why begrudge someone who just wants to have *one* and will do what ever it takes or is necessary to accomplish that dream?
A poor workman will always blame his tools, never his own decisions, services/products sold.
La Diva
About Time!
About Time!