At the same time, the Colman Inquiry yesterday heard of the HCU’s purchase of a Florida house from Harnarine’s brother, Seepersad Harnarine, in 2005 at a price tag of $1.2 million, in the absence of board approvals.
Ernst and Young partner Maria Daniel, testifying for the second and final time this month at the Winsure Building, Richmond Street, Port-of-Spain, also confirmed that Harnarine’s sister submitted bills meant to cover her brother’s expenses for his Florida trip to the Hilton Orlando Lake Buena Vista. In what capacity the sister was acting was unclear to accountants.
Under re-examination by counsel to the inquiry Edwin Glasgow QC, Daniel confirmed details of the Disney World trip after lawyer for Harnarine, Farid Scoon, used documentation submitted by Harnarine’s sister in relation to the trip as an example of transparency and “accountability” on the part of the former HCU president.
While Scoon had argued that the submission of bills in relation to the Florida trip showed how Harnarine was accountable, Glagow said, “these documents were submitted to the HCU by a relative. It’s a sister apparently. They are a justification for her reimbursement.” He said a contractor who got about $27 million in construction contracts and $1 million in janitorial contracts accompanied Harnarine.
“Mr Gordon James seems to have gone to Walt Disney on a business trip with Mr Harnarine,” Glasgow said. He added wryly, “I think these were presented as an example of due diligence on the part of Mr Harnarine.”
Scoon argued that the invoices submitted to the HCU did not disclose that Harnarine had gone to Disney World. “There is no suggestion on the receipt that there was any going to Walt Disney,” he said. He said an address on the invoice was that of a neutral address.
However, Daniel noted the address on the invoice pointed out by Scoon would have been for a company owned by Gordon. Glasgow said another portion of the invoice revealed the address of the hotel was that of the Hilton Orlando Lake Buena Vista, which is 1751 Hotel Plaza Boulevard, Lake Buena Vista, Florida. The website for the hotel notes that it is “located in the Walt Disney World® Resort” and is “the only Hilton in the Walt Disney World Resort” that offers “Disney’s exclusive Extra Magic Hours benefit” and is “located directly across from Downtown Disney”.
Last week, Daniel noted that much of the travel which was billed by Harnarine was ostensibly in order to set up remittance business. She saw no evidence this business materialised.
The bills submitted in relation to the Disney trip included about $35,000 in expenses, however the full extent of the travel expenses remains unclear to date due to the lack of supporting evidence.
In her report to the commission over the findings of a State-commissioned inquiry into the HCU in 2008, Daniel noted a total of $988,310 in reimbursement to Harnarine’s sister, some of which related to travel and to the sale of the Florida house.
A presentation on the report notes a “purchase of property in Florida from a related party without a valuation report of board of directors approval”.
Further, there was “reimbursement totalling $988,310 to the President’s sister which, according to HCU representatives, was for a down payment made by this related party on behalf of HCU in relation to a business transaction. Moreover, the related party (sister) was not listed as an employee or agent of HCU authorised to conduct business on behalf of HCU. Additionally, no evidence was presented by management to support the payment by the related party on behalf of HCU. In addition, there were numerous reimbursements for foreign travel and payments to this related party without supporting documentation.”
Among the 28 subsidiaries of the HCU were three travel companies: Trans World Travel (1995) Limited (which once operated but was later deemed insolvent when it lost its IATA designation and had $5.2 million in liabilities); HCU World Travel Ltd (profitable) and Jovi’s Island Park Company Limited (non-operating).
The inquiry last Friday heard evidence from Daniel in relation to the $1.2 million house in Orlando, Florida.
The house was bought by an HCU subsidiary company called HCU Financial USA LLC, a company incorporated on July 21, 2000. The company listed Harnarine as a director and a shareholder, but there was no trust document showing that Harnarine held the company on trust for the HCU, meaning he appears to be the outright co-owner.
HCU Financial USA LLC got millions from HCU for several real-estate transactions including the rental of a property at Miramar, Florida, for about $1 million. Another property bought was one at Pembroke Pines, which was owned by Harnarine’s brother.
According to Daniel, her team saw no evidence of board approvals for the $1.2 million transaction. The purchase from the related party is also not disclosed in the HCU 2005 accounts. The only trace of the reported transaction is a series of wire transfers with explanations noted on them.