No bailout for wrongdoers
By Andre Bagoo and Clint Chan Tack Thursday, May 29 2014
THE GOVERNMENT yesterday paused the passage of legislation authorising the final stage of the bailout of the Hindu Credit Union (HCU), after the PNM’s Diego Martin North/East MP Colm Imbert said the legislation was not water-tight enough and potentially allowed persons responsible for the HCU collapse to benefit from a $500 million bailout.
The legislation authorises the State to pay out to persons with interests in the HCU in the form of bonds or otherwise. However, Imbert said, the bill has a gap because it does not specifically bar even former HCU officials from having their holdings restored under the terms of any bailout.
“Where does it say connected parties will not benefit from this payout?” Imbert queried, speaking during debate of the Purchase of Certain Rights (HCU) Bill 2014, at the International Waterfront Centre, Wrightson Road, Port-of-Spain. He said a specific provision should state that former directors, shareholders and senior managers will not benefit from the bailout. Otherwise, he argued, given the current phrasing of the legislation, these persons could file a lawsuit in court arguing that their constitutional right to equality of treatment had been violated.
“I am urging the Government to pause the passing of this bill,” Imbert said during the morning segment of the sitting. “Persons will be able to file actions in court saying this is unconstitutional because they have a right to be treated just like the other ordinary shareholders....This legislation is a recipe for corruption.” Imbert also queried why it took so long for the bill to be tabled, noting the HCU collapsed since 2008.
“It took four years to draft a bill that has eight clauses?” Imbert said. “You are opening the door for (former HCU president Harry) Harnarine and other officials involved to profit from this legislation because it is not tight enough.”
In an immediate response to Imbert, Finance and Economy Minister Larry Howai, in wrapping up debate yesterday afternoon, said the Government would defer the committee stage of the legislation in order to consider an amendment addressing Imbert’s concerns.
Howai said, “Under no circumstances, is this Government prepared to make any payment to any related parties. This is not about bailing out wrongdoing. We are bailing out innocent victims.”
“I had explored that issue with my technical staff and they did advise me that the liquidator could have proceeded, because a liquidation is different from the situation that existed in Clico,” he said. Howai said an amendment would be prepared addressing Imbert’s concerns and the Government looks forward to the Opposition’s support “for that amendment to the legislation.”
Expressing optimism about bringing closure to the HCU issue, Howai disclosed, “In the end, it’s going to cost us about $500 million to regularise this position.”
Imbert said the HCU’s Harry Harnarine funded the UNC’s 2007 general election campaign to the tune of $3 million, but the HCU involved “all sides” of the political spectrum.
“Politics is involved and intermingled with the HCU story on all sides,” Imbert said. The Colman Inquiry heard claims of lobbying from the HCU’s Harry Harnarine at Balisier House under the Patrick Manning administration leading to an apparent back-down on plans to intervene; as well as claims that Harnarine assisted the PNM and UNC parties.
Of the legislation, which allows the State to buy-out remaining holdings of persons with interests over the value of $75,000, Howai said, “With this final act we now embark on the process of bringing to a close this entire sordid affair.”