On Sep­tem­ber 4, Gov­er­nor of the Cen­tral Bank of T&T, Lar­ry Howai, held an en­gage­ment with the lo­cal me­dia dur­ing which he re­vealed that the Bank’s in­ter­ven­tion in T&T’s for­eign ex­change mar­ket amount­ed to about US$2.2 bil­lion a year. That mon­ey, he con­firmed, comes from the coun­try’s for­eign re­serves.

Just to re­fresh the rec­ol­lec­tion of read­ers, Prime Min­is­ter Kam­la Per­sad-Bisses­sar said she had man­dat­ed three of her min­is­ters to pro­duce a re­port on for­eign ex­change dis­tri­b­u­tion and leak­age over the past ten years, which she pro­posed to make pub­lic.

“Then this re­port, as I say, will be made pub­lic to iden­ti­fy the main users, the main fa­cil­i­ta­tors of this un­fair dis­tri­b­u­tion, and ex­plain to the pub­lic how this en­tire for­eign ex­change dis­tri­b­u­tion car­tel and con­spir­a­cy be­tween cer­tain op­er­a­tives and busi­ness­es was func­tion­ing,” she said.

At his me­dia en­gage­ment, Gov­er­nor Howai clear­ly stat­ed that the Cen­tral Bank does not have any ev­i­dence of the ex­is­tence of a for­eign ex­change car­tel in T&T, con­tra­dict­ing the Prime Min­is­ter’s com­ments.

On Sun­day, fol­low­ing the Ex­im­Bank’s pub­li­ca­tion of lists of the top 30 re­cip­i­ents of im­porters of es­sen­tial goods and phar­ma­ceu­ti­cals and the top 30 man­u­fac­tur­ers who re­ceived for­eign ex­change from the Ex­im­Bank, Guardian Me­dia Ltd’s new­ly ap­point­ed lead ed­i­tor, pol­i­tics, Akash Sama­roo, sent the Prime Min­is­ter ques­tions on the for­eign ex­change is­sue.

“There are tens of thou­sands of busi­ness­es in our coun­try, but many are ground­ed in­to fail­ure and bank­rupt­cy by the car­tels at bank­ing in­sti­tu­tions. It’s clear that the man­age­ment at Ex­im­Bank has failed to func­tion prop­er­ly and fair­ly. These forex car­tels at the com­mer­cial banks are even worse than at the Ex­im­Bank.

“For greater trans­paren­cy and ac­count­abil­i­ty, we will pro­pose leg­is­la­tion in the Par­lia­ment to make the Cen­tral Bank of Trinidad and To­ba­go legal­ly dis­close to the pub­lic the forex al­lo­ca­tions. This will ex­pose the forex car­tels and show cit­i­zens how the banks have worked to crush SME’s and con­cen­trate wealth in the hands of a few peo­ple.”

When I first read her com­ments, I won­dered why the Gov­ern­ment would need leg­is­la­tion to make the Cen­tral Bank “legal­ly dis­close to the pub­lic the forex al­lo­ca­tion,” when the Min­istry of Fi­nance knows how much mon­ey each of the com­mer­cial banks gets from the Cen­tral Bank. That arrange­ment has been in place for over a decade.

It is clear to me that what the cur­rent ad­min­is­tra­tion pro­pos­es to leg­is­late is not on­ly an amend­ment to the Cen­tral Bank Act, but al­so an amend­ment to the Fi­nan­cial In­sti­tu­tions Act (FIA), which states at sec­tion 8 (1):

“No di­rec­tor, of­fi­cer or em­ploy­ee of the Cen­tral Bank or per­son act­ing un­der the di­rec­tion of the Cen­tral Bank shall dis­close any in­for­ma­tion re­gard­ing the busi­ness or af­fairs of a li­censee or any of its af­fil­i­ates or in­for­ma­tion re­gard­ing a de­pos­i­tor, cus­tomer or oth­er per­son deal­ing with a li­censee, that is ob­tained in the course of of­fi­cial du­ties.”

Sec­tion 8 (2) of the FIA states: “Notwith­stand­ing sub­sec­tion (1) or any oth­er writ­ten law, the Cen­tral Bank, or a per­son au­tho­rised in writ­ing by the Cen­tral Bank may dis­close the in­for­ma­tion re­ferred to in sub­sec­tion (1) to—

(a) any lo­cal or for­eign reg­u­la­to­ry agency or body that reg­u­lates fi­nan­cial en­ti­ties, for pur­pos­es re­lat­ed to that reg­u­la­tion;

(b) the De­posit In­sur­ance Cor­po­ra­tion for pur­pos­es re­lat­ed to its op­er­a­tions; or

(c) the des­ig­nat­ed au­thor­i­ty un­der the Pro­ceeds of Crime Act,

If the Cen­tral Bank is sat­is­fied that the in­for­ma­tion will be treat­ed as con­fi­den­tial by the agency or body to whom it is dis­closed and used strict­ly for the pur­pose for which it is dis­closed.”

The FIA at sec­tion 8 (5) al­so al­lows the dis­clo­sure of in­for­ma­tion ob­tained by the Cen­tral Bank ob­tained “as a re­sult of any in­dus­try-wide or sec­toral sur­vey con­duct­ed by the Cen­tral Bank in re­la­tion to an is­sue or cir­cum­stance that could have an im­pact on the fi­nan­cial con­di­tion of fi­nan­cial in­sti­tu­tions gen­er­al­ly or the fi­nan­cial sys­tem of Trinidad and To­ba­go.”

But sec­tion 8 (7) of the FIA states: “Noth­ing in this sec­tion au­tho­ris­es the Cen­tral Bank, or any per­son act­ing un­der the di­rec­tion of the Cen­tral Bank, to dis­close in­for­ma­tion about a par­tic­u­lar de­pos­i­tor or cred­i­tor of a li­censee, ex­cept where such dis­clo­sure is re­quired by any writ­ten law or or­dered by the Court.”

For the pur­pose of this com­men­tary, and the for­eign ex­change al­lo­ca­tion de­bate that is rag­ing in T&T, sec­tion 8 (7) of the FIA is most im­por­tant. That sub­sec­tion out­lines the com­mon law po­si­tion, which is that cen­tral banks are re­quired to main­tain the con­fi­den­tial­i­ty of the in­for­ma­tion re­ceived from com­mer­cial banks. And that “in­for­ma­tion about a par­tic­u­lar de­pos­i­tor or cred­i­tor of a li­censee,” can on­ly be dis­closed “where such dis­clo­sure is re­quired by any writ­ten law or or­dered by the Court.”

In Oc­to­ber 2023, the Privy Coun­cil de­liv­ered a judg­ment in the Mau­ri­tius case of Stan­ford As­set Hold­ings Ltd and an­oth­er v AfrA­sia Bank Ltd.

In that mat­ter, the Privy Coun­cil held that the Supreme Court of Mau­ri­tius was wrong to refuse to grant a ‘Nor­wich Phar­ma­cal’ or­der re­quir­ing a Mau­rit­ian bank to dis­close in­for­ma­tion about a cus­tomer’s ac­count to the vic­tims of an al­leged fraud, to as­sist them in trac­ing mis­ap­pro­pri­at­ed funds.

In its judg­ment, the Privy Coun­cil stat­ed that it is well-es­tab­lished that an oblig­a­tion of con­fi­den­tial­i­ty is owed at com­mon law, be­fore quot­ing the Mau­ri­tius Supreme Court’s judg­ment in the case:

“It has been con­sis­tent­ly held in Mau­ri­tius that, in line with the well-es­tab­lished prin­ci­ples both in Eng­lish com­mon law and the ap­proach adopt­ed in French ju­rispru­dence and doc­trine, there is an im­plied term of con­fi­den­tial­i­ty be­tween a banker and his cus­tomer (vide for in­stance State Bank In­ter­na­tion­al Ltd v Per­sh­ing Lim­it­ed [1996 SCJ 331]).

“The bank owes a du­ty of se­cre­cy and con­fi­dence to its cus­tomer such that the bank is pre­clud­ed from di­vulging or dis­clos­ing any in­for­ma­tion con­cern­ing the cus­tomer’s ac­count to any third par­ty save in cer­tain ex­cep­tion­al cir­cum­stances.”

It is, there­fore, a well-es­tab­lished le­gal prin­ci­ple in the T&T, which fol­lows Eng­lish com­mon law, that a com­mer­cial bank’s du­ty of se­cre­cy and con­fi­dence to its cus­tomers pre­vents it, the bank, “from di­vulging or dis­clos­ing any in­for­ma­tion con­cern­ing the cus­tomer’s ac­count to any third par­ty, save in cer­tain ex­cep­tion­al cir­cum­stances.”

The ex­cep­tions by which a court can force a com­mer­cial bank to di­vulge pri­vate and con­fi­den­tial in­for­ma­tion of a cus­tomer have been en­shrined in what is called a Nor­wich Phar­ma­cal or­der.

A Google search re­veals that a court will on­ly grant a Nor­wich Phar­ma­cal or­der if the fol­low­ing con­di­tions are gen­er­al­ly met:

1. Ar­guably wrong: There must be co­gent and com­pelling ev­i­dence that se­ri­ous wrong­ful ac­tiv­i­ty has oc­curred;

2. “Mixed up” third par­ty: The third par­ty from whom the in­for­ma­tion is sought must have be­come in­volved in or “mixed up in” the wrong­do­ing. A mere by­stander or a wit­ness is not suf­fi­cient;

3. Ne­ces­si­ty in the in­ter­ests of jus­tice: Dis­clo­sure must be nec­es­sary to fa­cil­i­tate the vin­di­ca­tion of rights, for ex­am­ple, to iden­ti­fy a wrong­do­er and en­able pro­ceed­ings;

4. Not a “fish­ing ex­pe­di­tion”: The or­der should not be for the pur­pose of mere­ly in­ves­ti­gat­ing whether wrong­do­ing has oc­curred.

Al­though this com­men­ta­tor has no le­gal train­ing, fol­low­ing the log­ic of the Privy Coun­cil judg­ment and the ap­pli­ca­tion of the Nor­wich Phar­ma­cal or­ders, it seems clear to me that no court in T&T is go­ing to al­low the Gov­ern­ment to force com­mer­cial banks to dis­close in­for­ma­tion on who are its largest pur­chasers of for­eign ex­change.

The Nor­wich Phar­ma­cal or­ders clear­ly pre­clude fish­ing ex­pe­di­tions through which the Gov­ern­ment would seek to in­ves­ti­gate whether wrong­do­ing has oc­curred.

Can T&T’s com­mer­cial banks be com­pelled to dis­close their top pur­chasers of for­eign ex­change to the Cen­tral Bank, if both par­ties know that the in­ten­tion is to “name and shame” T&T’s top pur­chasers of for­eign ex­change?

I think not, but we shall see.