“Today Cabinet agreed to the terms of reference (TOR) and to the appointment of a one-man Commission of Inquiry in the interests of time and saving costs...,” said Ramlogan, at the post- Cabinet news briefing at the Office of the Prime Minister in St Clair.
He said counsel to the Commission would be British QC, Peter Carter, aided by junior counsel in the person of local attorney Kelvin Ramkissoon, both instructed by another local attorney, Celeste Jules.
The AG expects the Commission to complete its work in four to six months.
The COI, he said, covers CL Financial, Colonial Life Insurance Company (Clico), Clico Investment Bank, British American Insurance Company and the HCU.
“The terms of reference of this Commission of Inquiry are geared towards preventing a recurrence of the kind of financial crisis that is very octopus-like in nature and the tentacles of which reach into every nook and cranny of our financial system, such that they could threaten the very stability and viability of the financial sector as a whole,” said Ramlogan.
He said the inquiry would probe the “circumstances, factors, causes and reasons” (TOR (a)) that led to the former government’s intervention in January 2009 into Clico and its subsidiaries. “You may recall that this (present) Government expressed great alarm at the first bailout of Clico and the manner in which that bailout was effected, and indeed what was done with the money that was literally dumped into Clico.”
The AG lamented that 18 months later, very precious little was seen by way of results to alleviate the hardship and the financial crisis. “It is for this reason that we wish to inquire into the “legal and fiscal basis” (TOR (b)) for that particular decision in January 2009; how that injection of capital was structured; what were the policies, procedures and processes which were used in the distribution of that actual funding.
“In other words what happened to the first set of money that was pumped into Clico, and where the money gone?”
Ramlogan cited TOR (c), saying, “The causes, reasons and circumstances leading to the deterioration of the financial conditions and health of the above-mentioned entities which has threatened the interest of depositors, investors, shareholders, creditors and indeed has had a ripple and domino effect on other sectors and financial institutions in our economy.”
The AG said the financial watchdogs would also be scrutinised. Reading TOR (d), he said, “We want as well to review the effectiveness or suitability of the accounting and auditing firms (and) the institutional, regulatory and statutory bodies that have supervisory and oversight responsibility for bodies such as Clico and the Hindu Credit Union. This may for example include the Central Bank and of course the Securities and Exchange Commission and the Commissioner of Cooperatives.”
He hoped the probe would expose the weaknesses, shortcomings, failures, deficiencies, breaches and omissions that may or may not have occurred that led to the financial crisis. Citing TOR (e), he said he’d like to know whether these regulatory bodies complied with their responsibilities by law and by good corporate governance and practise. “It doesn’t take a financial whiz or a magician to tell you that if you are charged with responsibility for regulating or supervising, then that is in fact what your mandate is.”
He said the inquiry would also probe, “the identity of any accounting or auditing firm, person, entity or institutions —whether local or regional, corporate or otherwise — who may have directed, conspired towards, participated in, aided or abetted, knew or ought to have known, or could be otherwise implicated in any omission, act, deed, or thing, that would have led to the compromising of the interests of depositors, investors, policy-holders, and shareholders” (TOR (g)).
The probe would also examine the extent to which good financial supervision could have prevented the crisis. He said the inquiry would ask whether any third party acted to mislead the interested parties such as investors by negligently or fraudulently misrepresenting the true financial status of these companies.
“As you know, every year accounts would have to be signed off. They would have to be independently and eternally audited, and investors would use and rely upon those representations as a true state of the financial health of an institution, before they choose to renew or before they choose to carry on with an investment.”
Did this occur, he asked?
“The Commission of Inquiry is geared towards analysing the situation that is before us, looking at what happened in the past that may have precipitated and led to this crisis, whether it was properly handled in the first place by the previous administration, and of course to look to the future to prevent a recurrence.
“When it comes to looking (into) the future the issue of wrongdoing has a prominent role to play in this Commission of Inquiry, and it is for that reason (that) the commissioner will need to resolve and answer the question whether there are any grounds for civil or criminal liability that may result in recommendations to the Director of Public Prosecutions (DPP) to consider laying criminal charges in his own sole discretion, or for the consideration of the Attorney General whether civil proceedings may need to assume at any offending party.”
Ramlogan hoped the commission could spell out any policies, mechanisms or systems that could be introduced to detect, counteract and prevent a recurrence of this problem.
“We want to have recommendations to modernise (and) harmonise the international best practices and the statutory framework that governs financial institutions, to prevent a recurrence of this crisis.”
He envisaged the establishment of an effective system of responses to be implemented by institutions and regulatory bodies, so that if this crisis should happen against in the future, at the earliest milestone if a distress signal is observed, a red flag would be raised, followed by a coordinated, prepared response by the regulatory bodies, to stop the situation worsening.
Ramlogan said after meeting top British law lords and senior members of the UK Bar recently in the UK, he had selected Sir Gavin Lightman, who is a retired High Court judge from the Chancery Division in England, to be the sole Commissioner in the matter.
Lightman is one of the world’s leading practitioners in the area of insolvency, arbitration, intellectual property, and administrative law, Ramlogan disclosed. “He is one of the leading authors in the area of insolvency and is widely regarded as one of the leading lights in this area.”
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Counsel to the Commission is Peter Carter QC whom the AG said is no stranger to Trinidad and Tobago, having appeared at the Privy Council and at the Court of Appeal in several leading cases. “He has also been a lecturer to several in the Judiciary of this country, as part of the continuing judicial studies education programme, under the auspices of the Office of the Chief Justice. Mr Carter was selected as lead counsel to advice the Commissioner because of his unparalleled experience in the area of financial crime and fraud.”
Carter had advised in the BCCI scandal, where he was instructed by the UK Serious Fraud Office in a matter of ?18 billion, and has acted for the UK Customs and Excise Department.
“Mr Peter Carter is ably well-qualified and eminently well suited for the job,” Ramlogan said.
Local junior counsel to the commission will be Kelvin Ramkissoon, while Celeste Jules will instruct, both being of the local Bar.
“It is my intention that this commission of inquiry will have an outer limit of six months but an inner limit of four months. We consider this to be an urgent and pressing matter, and that is why the efficiency conduct of this commission of inquiry is uppermost in my mind, when I selected the team...,” said the AG.
He confirmed a Central Bank report on the crisis has been sent to the DPP whom he said is giving it his urgent consideration.
Hitting back at criticism from some Clico claimants, he said the Government is offering to directly buy out claimants’ rights to sue the company, a sinking institution, rather than giving any such monies to Clico.
The AG assured the Commission of Inquiry would be powerful enough to summon persons to help the probe into the HCU, adding, “We expect all who have got nothing to hide to cooperate.”