(Trinidad Express) The Securities and Exchange Commission (SEC) has called on the board of the Trinidad and Tobago Stock Exchange (TTSE) to replace its chairman, Independent Senator Subhas Ramkhelawan.
The SEC, Opposition Leader Dr Keith Rowley and shareholder rights advocate Peter Permell are now all calling for Ramkhelawan to be replaced.
The Transparency Institute, in a release yesterday, said it was disappointed by the “reported actions” of First Citizens prior to and subsequent to the sale of shares through its initial public offering (IPO) in July 2013.
Following an onsite inspection, which the regulatory agency conducted on TTSE in the aftermath of former First Citizens chief risk officer Philip Rahaman’s purchase of 656,588 bank shares and the sale of 634,588 of those shares four months later, the SEC’s Compliance and Inspection Unit submitted a report, with recommendations for the TTSE.
Ramkhelawan is the managing director of Bourse Securities, which was the broker in the Rahaman transaction.
A Sunday Express investigation revealed Rahaman disposed of 634,588 of the 659,588 to his cousin Imtiaz Rahaman, the chairman of Bourse Securities; to his mother, Alia Rita Rahaman; and to five companies of the Rahaman-family-controlled Rahamut Group on January 14.
Ramkhelawan has previously maintained he is bound by client confidentiality but “no laws have been broken”.
The SEC document, dated March 5, which is signed by the TTSE’s deputy chief executive, Lystra Lucillo, stated: “TTSE current chairman is not independent, which is not in accordance with principles and best practice. He (Mr Ramkhelawan) is the principal of Bourse Securities Ltd, one of the TTSE member firms, and also has an interest in one of the listed securities on the exchange. In addition, he is also a politically exposed person (PEP), having served as an Independent senator and a past member of a joint select committee of the Parliament.”
The SEC noted although measures have been taken by TTSE to ensure the independence of its directors, it observed the Trinidad and Tobago Corporate Governance Code stated: “The chairperson of the board should be a non-executive director and preferably an independent director. Where the chairman of the board is not an independent, non-executive director, the board should appoint a lead independent director.”
As such, SEC further recommended, “TTSE should seek to appoint an independent, non-executive director as chairman of the board or, alternatively, a lead independent director, in accordance with the principles of best practice.”
An informed source at SEC explained this meant Ramkhelawan should step aside as stock exchange chairman.
‘This transaction has highlighted the obvious conflict of having a broker as the chairman of the TTSE,” the SEC source told the Express.
Chief executive of TTSE Michelle Persad told the Express the content of the report was with the regulatory subcommittee of the board.
“They are currently reviewing the SEC report and would prepare a response. I cannot provide any details because it’s under review,” she said.
Persad replaced former chief executive Wain Iton, who is now the chief executive of SEC. She said TTSE has not yet completed its own investigation of the Rahaman transaction.
A TTSE source explained Ramkhelawan had offered himself as chairman because the incumbent chairman, Ranjit Jeewan, did not want to be re-elected and TTSE had exhausted its options of independent directors to serve.
The Express understands when the votes were taken by the board of TTSE to select the chairman, there was one objection because of what was perceived as a potential conflict of interest, with him being a broker and a politically exposed person.
The Express understands TTSE is expected to hold an annual general meeting to select a new chairman this month.
The board of TTSE includes deputy chairman Peter E Clarke, Ian Narine, Ray A Sumairsingh, Michael Phillip, Andrew Mc Eachrane, Terrence Chang, Donna-Marie Johnson, Ranjit Jeewan, Alvin Johnson and Godfrey Gosein.
Shareholder rights advocate Peter Permell yesterday reiterated his call for Ramkhelawan to do the honourable thing and resign, not only as TTSE chairman but also as an independent senator, “failing which, I am calling on the relevant authorities to have him removed as chairman; and for His Excellency the President to have his senatorial appointment revoked forthwith”.
“I am humbled to know the SEC agrees with me,” Permell said. He observed a PEP is defined by the Financial Action Task Force (FATF) as “an individual who is or has been entrusted with a prominent public function”.
“The FATF recognises that due to their status and influence, many PEPs are in positions that can be platforms for committing money laundering and related predicate offences. These include corrupt practices and bribery, as well as conducting activity related to the financing of terrorism. It is not to be inferred that all PEPs are involved in criminal activity or that they have been incriminated in any corruption. PEPs are aware that their status as a public figure may facilitate the detection of their illicit activities. PEPs may therefore attempt to shield their identity to avoid detection,” Permell quoted from the FATF’s definition.
“The PEP seems generally uncomfortable to provide information about source of wealth or source of funds. The PEP has control over regulatory approvals, including the award of licences and concessions. The information that is provided by the PEP is inconsistent with other (publicly available) information, such as asset declarations and published official salaries. The PEP (wholly or partially) owns or controls financial institutions or listed business, either privately or ex officio,” Permell noted.
“In light of this development and given last Sunday’s Express exposé, it begs the question: What else is Senator Ramkhelawan waiting for to do the honourable thing and step down as chairman of the T&T Stock Exchange? The public needs to know,” he added.
On Thursday, Opposition Member Colm Imbert said the Rahaman transaction has thrown a spotlight on TTSE.
“What it has highlighted is that it is not a good idea to have a politically exposed person as a director of the stock exchange, I think that was an oversight. That was an error,” Imbert had said.
“If there are any laws that have been broken, if I have not acted in accordance with the laws of Trinidad and Tobago, then it (the issue of being compromised) could be a valid argument. But as far as I am concerned…and I wear various hats, and questions have been raised with regard to my chairmanship of the stock exchange…. But I don’t think there is any matter as far as that is concerned,” Ramkhelawan had said in the Senate on Wednesday.