TT$78m was withdrawn from troubled credit union accounts though members could not access deposits

(Trinidad Express) A total of TT$78 million in cash was withdrawn from the Hindu Credit Union (HCU) even as its members were unable to access their deposits, Queen’s Counsel Edwin Glasgow said yesterday.

No reason was ever found for the purpose for the cash withdrawals by auditors PricewaterhouseCoopers (PwC), Glasgow said.

When a liquidator was appointed only a total of TT$89,000 was found in all of the bank accounts bearing the name of the HCU.

Glasgow, lead counsel to the enquiry, told of the multi-million-dollar cash withdrawals yesterday as he re-examined Ernst & Young partner Maria Daniel during the Commission of Enquiry into the collapse of CL Financial and the HCU being held at the Winsure Building, Richmond Street, in Port of Spain.

Glasgow said PwC prepared a “report advising the directors (of the HCU) of the unsatisfactory state of affairs in the number of cashed cheques that were being drawn to cash”.

GLASGOW: I was wondering if you were aware that PricewaterhouseCoopers had discovered that a total of TT$78 million had been written to cash during the period when the members could not be paid?

DANIEL: Yes, I know there was a report done.

GLASGOW: But you did no research yourself as to where that cash went.


GLASGOW: Well perhaps Mr (Harry) Harnarine will be able to help the commissioner with that.

Farid Scoon, attorney for former HCU president Harry Harnarine, yesterday said “the whole board was insulated from cheque writing and that part of the operation”.

In June 2008, Ernst & Young conducted a “due diligence investigation” into the operations of the HCU.

Daniel yesterday said a “forensic audit” is needed into the HCU.

“A forensic audit will take it (the investigation into the HCU) into a deeper level. It will be able to substantiate movement of funds that may have taken place. It will go back to bank accounts. At the end of the day cash is fact,” Daniel said.

“So a forensic audit will be able to go deeper than we would have been able to,” she said.

Following the testimony of Daniel, Ramdath D Rampersad took the witness stand.

Rampersad was appointed liquidator of the HCU on the October 9, 2008.

Both Daniel and Rampersad criticised the HCU’s record-keeping.

Senior Counsel Fyard Hosein, the legal representative for the Ministry of Finance, yesterday questioned whether the shoddy record-keeping was “a deliberate attempt to have chaos”.

Rampersad was yesterday led into evidence by Senior Counsel Deborah Peake, the attorney representing the liquidator.

Many of the files relating to the approximately 7,000 loans in the HCU could not be located, Rampersad said.

Rampersad yesterday told the enquiry some of the findings he made on July 24, 2008 after he made a preliminary assessment of the HCU’s “financial and operational status”.

• Only TT$89,000 was available in all the bank accounts in the name of the HCU.

• TT$3.1 million owed to the Board of Inland Revenue in respect of PAYE (pay as you earn) and health surcharge.

• TT$1.6 million owed to the National Insurance Board in respect of contributions deducted from employees’ salaries.

• TT$598,000 in unpaid salaries for HCU employees who were terminated as at 17 July, 2008.

• TT$191,000 owed in land and building taxes.

• “Substantial amounts” owed to utility providers (TSTT, T&TEC, TTPost and WASA).

• HCU had several loans it was not servicing including:

• TT$35.2 million loan from CLICO at a rate of 10 per cent per annum.

• US$2.5 million loan from SR Projects Ltd at rate of 12 per cent per annum.

• US$4.8 million loan Eximbank at a rate of 10 per cent per annum.

• TT$7 million overdraft from Intercommercial Bank at a rate of 15 per cent per annum.

• TT$3.5 million loan from Intercommercial Bank at a rate of 11.5 per cent.

• US$53 million owed depositors from judgments.

• No audited accounts prepared subsequent to September 30, 2005.

• Over 50 per cent of the loans granted by the HCU were delinquent. This amounted to some TT$59 million.

• The HCU should not have paid dividends in 2004 and 2005.

• The HCU financial complex is a fire hazard and failed OSHA tests.

• The Regional Corporation cannot locate the file of the HCU multi-million-dollar “megaproject” Pine View. No planning approval.

• Depositors funds were used to buy land in Florida from Harnarine’s brother, Seepersad.

• Harnarine’s sister reimbursed TT$34,000 for a trip to Walt Disney.

•TT$17.5 million paid to Caribbean Airlines deputy chairman Mohan Jaikaran for a television station but rights not transferred.

• TT$27.9 million paid to HCU marketing personnel Gordon James for construction and janitorial services.

The HCU and CLICO, two of the entities that are the subject of this commission of enquiry, also entered a TT$200 million asset swap.

The HCU’s convention centre was mortgaged to CLICO as part of the transaction.

Sir Anthony Colman, the lone commissioner in the enquiry, labelled the entire transaction as “peculiarly opaque”.

Scoon complained that Ernst & Young had been “unfair” in investigation and subsequent report into the HCU.

Harnarine has been given until this morning’s session to submit his witness statement to the enquiry.