Category: Private sector

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Obituary – Naeem Nasir – January 8, 1960 – October 9, 2012

Introduction
The 1986 lifting of the four and a half years ban on the importation into Guyana of wheaten flour was of national significance in our economic history. But it was historic too for an individual who not too long after the resumption visited our office with his wife Annetta for a conversation. Nothing was more striking about the young man Naeem Nasir than his modesty, quiet confidence, conviction and focus. Later in a relationship that extended beyond business, other qualities which I came to associate with Mr. Nasir were his unerring flair to identify business opportunities, his ability to lead with inspiration rather than command, his commitment to his faith, his generosity and compassion, his energy and dynamism.

Mr. Nasir’s business acumen and success have been recounted ever since his death on October 9 at the age of fifty-two. But anyone who knew him recognised his life as one of unending generosity and dedication to any and all Guyanese, supporting countless individuals, families, organisations and Muslim communities in Guyana and Orlando. From my limited vantage point, but knowing how he sought to promote the knowledge and practice of Islam I believe that when the modern history of Islam in Guyana is written Naeem and his family will be recognised as pivotal forces behind the increasing confidence in that religion.

But Mr. Nasir was more than an astute businessman or staunch follower of Islam. His prep school colleague remembers his kindness while his workmates from National Bank of Industry and Commerce remember how he would offer to drop them home after balancing the books at 2 AM.

More recently he set a standard of philanthropy unknown in Guyana and a model for others – with bigger organisations and purses – to emulate. But what is perhaps less known is his management style and his relationship with those who worked for him and who showed their appreciation and their loss by some of the strongest expressions of emotions at his funeral service. His lieutenant Rajin Ganga praises him for his style of decision-making and leadership – a readiness to listen to others challenging his views, comfortable with delegating authority but taking full responsibility when anything goes amiss.

Entrepreneur extraordinary
As one of the softest touches of businesspersons in town, he was accessible while not craving publicity, raising and giving money for any person, cause or interest. Until the day he was admitted to the Dr. Balwant Singh Hospital complaining of head pains, Mr. Nasir was engaged in several projects including the Soup Kitchen, the construction of the Queenstown Jama Masjid, Church Street, the GPO food outlet and the recently established Doobay Medical Centre at Annandale. One of his associates explained that he managed to do all of these things while supervising a round-the-clock business because for him schedules and routines were sacred.

I never had the impression that it was due to the fact that he was the only of the Nasir siblings to be born at the North Road Georgetown Building that led him to start his business right there.

Seems to me more a matter that his job at the National Bank of Industry and Commerce and in Barbados where he had worked for a short while, did not allow him enough savings to rent any place to start his business. Whatever it was, it was a remarkable coincidence that the bakery empire he launched was only a few doors away from the home of the then President Hugh Desmond Hoyte, the man who courageously lifted the ban on wheaten flour imposed earlier by Forbes Burnham.

In a fiercely competitive industry to which the barriers to entry were not too high or too formidable, in a country where success depends less on integrity and competence than on connections and favours, and in a line of product where reputation can be destroyed by a single production run, Naeem decided that he was up to the challenge.

Background and giving back
Yet, nothing in his background had prepared him for or suggested that this was the direction his life would take. In his primary school education at Baird’s Primary School (a private school) in Robb Street and Central Primary School, his interest was in the numerate subjects – arithmetic, algebra and geometry – and in problem solving. His performance at Central earned him a place at Queen’s College where another great influence on his life came to the fore.

The son of attorney-at-law S. M. A. Nasir, OBE, CCH, a founder and first President of the Central Islamic Organisation of Guyana and Fazeela Nasir, a Trinidadian, Naeem had Islam in his blood and its promotion on his mind from a very young age. He himself was a founder member of the Islamic Society at QC doing Islamic studies in the afternoons at the Queenstown Mosque and at the age of 8 was able to recite the Quran.

More than a bookish student, he never regretted forgoing the opportunity to attend university in Canada. He was an affable, outgoing regular person. At school he played cricket and table tennis, two games he loved with a passion and over the past few years took up tennis and developed into a good doubles player.

In fact he was a founding member of the Le Ressouvenir Tennis Club and in an unprecedented gesture, personally financed the construction of a tennis court at the President’s College.

But while we in the Tennis Association could claim a part of him, he was just as generous with football, cricket and other sports with popular appeal. For him, opportunities to deprived communities to participate in sports took youths off the street corners and on to the playing field where they could enhance their talent and constructively use their energies.

As a kid, like most youngest sons of better-off Indian families, Naeem spent very little time in the kitchen although on visits to Guyana from Barbados where he was employed in the hospitality business, he would drop by his brother-in-law who carried on a small bakery operation.

It would be a great irony indeed if his most lasting public legacy turns out to be the soup kitchen on which he was partnering with the Government spearheaded by then Minister of Human Services Ms. Priya Manickchand.

When operational, the project will serve to the poor and the needy some 2,500 meals per day, three hundred and sixty-five days per year.

Partnership
Surprised but supportive of his son’s new-found interest and experiment with bread, his father suggested that he could utilise the area with fruit trees in the back of the yard on the southern side of the house to start his own bakery.

His wife Annetta gave up her salon business to join him in one of the most successful husband/wife partnerships since Alston and Lyla Kissoon started their furniture empire in the sixties.

He and his wife would work day and night to push the business – adding both volume and range to the products on offer. It was a measure of his success that eponym worked in reverse with him, many persons referring to him as Mr. Bakewell. His experiences and exposure in Orlando, Florida where Bakewell products were sought after by non-Guyanese as well, led him to set and maintain standards that were first world.

Whenever he and I were in Orlando at the same time we always went to dinner but never at the same place. For him dining was a discovery and an experience to be shared and he always strove to offer Guyanese whatever was available elsewhere.

On any day, at the various food outlets he operated, there are over two hundred products from which the consumer or connoisseur can choose.

There are not many places you can travel in the Caribbean and find a shop or chain that offers all of the following: roti and curry, Danish pastries, Swiss Rolls, fried or curried chicken, English Muffins, chowmein and fried rice, French toast, Jamaican patties, channa, Haagen Dazs Ice Cream and Starbucks type American coffee.

As an entrepreneur Mr. Nasir shunned red tape and bureaucracy and believed in the flat organisation model in which there are few layers of decision-making. He anchored his business in a clear vision, worker empowerment and a simple but uncompromising guide with people as its centre.

For him contributing to social causes was not about promoting one’s products or about photo opportunities but about giving back to society, helping the needy. More informed than many, he stayed clear of politicians.

Yet he was always willing to work with those whose contribution he felt served the public interest: former President Desmond Hoyte was as prominent as acting President Samuel Hinds at the commissioning of the company’s Triumph factory operations.

Challenge
But life for Nasir was not without its challenges. Throughout his teenage years, he used to complain about tummy aches, and was taken to every doctor his parents could think about. At 18 however, the pain was unbearable, and he soon discovered after a kidney test that one of his kidneys was already gone and the other one needed repairs. He went to Canada at age 20 and removed the failed kidney and had the other one repaired.

At age 40 the repaired one failed, so he had a transplant from his elder brother. Its efficacy started to diminish early in 2011 and many of his close friends offered a transplant. As a result of the medication used to prevent rejection of the transplanted kidney, he gained weight and his mobility was restricted. But Naeem never allowed this to slow him down as he moved from one idea to another, one project to another. For him, complaining was not an option and he continued to live a life of service, optimism and an example of the possible.

Naeem is survived by his wife Annetta, children Anisa, 15 and Ahmad, 7 and his four siblings including his sister Aleema.

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Clico Liquidator lodges first liquidation statement – Part 3

Introduction
Today completes a series on the liquidation process of the insurance giant that collapsed spectacularly in early 2009 after news came out of Trinidad and Tobago that the company’s parent had been taken over by that country’s central bank following a dramatic run on the company mainly by policyholders. As we looked with amazement at the manoeuverings of those involved including President Jagdeo, Drs Ashni Singh and Roger Luncheon and Ms Maria Van Beek and Ms Geeta Singh-Knight we learnt that the Guyana subsidiary was resting on a foundation of sand, that the company had been managed recklessly, and that the regulator had failed to do its job. Then we saw what the Insurance Act and the Companies Act had intended, namely, to regulate the orderly liquidation of a failed business, turn into a series of legal and professional infractions.

This series of three parts began following the lodging of a Liquidator’s Statement of Receipts and Payments more than one year beyond the statutory deadline. If readers thought the elementary errors in the preparation of the statement by the liquidator and his team were bad, they must now confront worse. If the high priced professionals knew what they were doing, it is not reflected in their work. Their carelessness, shoddiness and poor standard of work have done nothing to minimise, let alone reverse the massive losses to Clico’s creditors, the NIS and the country.

Today’s Business Page concludes its short series with the regret that when the government prefers loyalty to competence, all we end up with are avoidable losses and lessons from which we do not learn.

Source: Statement lodged with the Registrar of Companies

Earlier, I had reproduced the Liquidator’s Statement of Account in which Mr Williams misleadingly described total receipts as ‘Realisations‘ and separately, disclosed those payments in relation to Insurance transactions and those he described as Liquidation Expenses. For the purpose of this instalment, I think readers might find the information in the table set out above of some assistance in understanding how the liquidator has conducted the financial transactions for the period for which he has made a report.

Insurance payments
But before turning to those payments, a general comment on the $4,584.2 million in insurance payments. The information lodged with the Registrar shows only the classes of the payees. There are no supporting schedules or particulars. As a result there can be little commentary on those payments and whether for example the NIS, by far the company’s major annuitant, has so far received any cash from the liquidator. But the NIS is not the only creditor which has been made to sweat, despite the key role being played in the liquidation by their long-serving director Mr Maurice Solomon, a member of Williams’s triumvirate.

NIS massive losses
Whatever duty Mr Solomon may consider he owes the NIS, he appears to have done very little to protect or speak up for the tens of thousands of pensioners and other beneficiaries who are staring at the loss of billions of dollars of NIS investments in Clico. Worse, the famous assurances by Drs Jagdeo and Luncheon that the NIS would get back all its money have so far proved to be no more than the idle words of insincere politicians. On his part, Mr Solomon has annually approved financial statements of the NIS which make no provision for the losses which the NIS is already incurring, as it looks helplessly at its financial statements and sees over $5,000 million of investments in Clico producing no income and on a balance of likelihood, having to be written off sooner rather than later.

This is not scaremongering. The information provided in the June 2012 statement, the first filed by the liquidator since his appointment nearly two years ago, is hopelessly deficient to allow for proper analysis; well outside of the statutory deadline; uninformative about the current financial status of the company; and useless when it comes to assessing the prospects for the remaining creditors. What I know based on professionally prepared information collected in 2009 is that the total liabilities of Clico at the date of the appointment of the liquidator amounted to close to $15 billion. At June 30, 2012, just under $5 billion had been paid towards those liabilities leaving around $10 billion to be paid towards the capital sums outstanding, since interest is out of the question.

Already it seems that some $600 million will be paid to the NIS by way of an effective exchange of property in part settlement for its debt. That will leave little else for them or for the other creditors. In other words, as things stand the NIS is likely to lose over $5 billion, and other creditors, whose names are known by the liquidator but who have not been listed, will lose around $4 billion.

Liquidator’s expenses
Now let us turn to an amount of $301 million referred to by Mr Williams and his team as ‘Liquidator’s expenses.’ Because of the amateurishness in the preparation of the statements, a review or comment has to make certain assumptions or consider certain possibilities. For example, it is hard to believe that the payment to RK’s Security of $67.0 million could possibly be for the period since the liquidation, and one wonders what it would have taken for the liquidator to state the period to which the payment applied.

This is not simply amateur accounting. It has legal implications. When an entity goes into liquidation, the law provides a scheme for the payment of debts, starting with preferential creditors. Charges by RK’s Security prior to the liquidation are not priority debts and it must be assumed therefore that the $67 million was paid for services received after Williams’ appointment. Surely these must be justified by way of proper disclosure.

Another interesting item is that relating to taxation. The sale of properties gives rise to potential capital gains tax while payments made to non-residents may be subject to withholding tax. My experience is that a number of accountants, in carrying out receiverships and liquidations, routinely overlook their obligations under the tax laws. So before Mr Williams undertakes another transaction with tax implications, he should invite the GRA to examine his stewardship’s compliance with the tax laws.

The unnamed professional firms
Returning to the statement, the most startling item is the sum of $76.8 million paid to “professional firms,” a term, which obviously rules out both Mr Williams, and Ms Gibson, a member of his supporting cast. So how does Mr Williams explain the $76.8 million paid to “professional firms,” which perhaps not surprisingly, he does not identify? He gives not a least hint. What we do know is that this sum cannot include any payment to the actuary since that is separately itemised with its own amount ($2,123,815). It cannot be audit since that too is separately itemised with its own amount ($1,740,000). It cannot be for valuation services since that is also separately identified with its own amount ($3,110,215). Mr Williams the liquidator, Ms Gibson, the actuary, the valuer and the auditor having been eliminated, one is left only with the providers of legal and accounting services.

The accountants and the lawyers
Based on the public records, legal services, including conveyancing and litigation work, were provided mainly by the law firm of Mr Ashton Chase SC. In accounting, Nizam Ali and Co prepared for then Commissioner of Insurance Maria van Beek, a statement of net assets at February 28, 2009 and Mr Maurice Solomon provides to the liquidator, services such as cheque-signing. Since Clico retained the services of CEO and Chartered Accountant Geeta Singh-Knight as well as key accounting personnel of the failed company, all of whose emoluments are accounted as staff cost, the $76.8 million paid to “professional firms” seems hardly justifiable.

Adding insult to injury, the liquidator, possibly on the advice of Ms Geeta Singh-Knight paid some $23.2 million to a company that is part of the group which cheated Guyana of some $7 billion.

Conclusion
Ever since the matter of Clico surfaced in Guyana following the collapse of its parent in Trinidad and Tobago, Guyanese have been subject to misinformation, distortions and silence. Guyanese reacted favourably to the false assurances and actually praised President Jagdeo for helping out with money he negotiated from the Petroleum Fund and from raiding the Forestry Commission of moneys that should have been paid into the Consolidated Fund.

Informed opinion thought otherwise. That group wanted an investigation and prosecution of the directors of Clico as contemplated by the Insurance Act and the criminal laws. The Commissioner of Insurance had the power to appoint a Special Prosecutor to pursue any wrongdoing. But her failure to do so, her rush to liquidation and her appointment of Ms Geeta Singh-Knight to continue in the management of the company were as mysterious as her subsequent shooting in downtown Georgetown.

Some of us felt that the move to have a liquidator appointed premature; they were convinced that certain of Clico’s business not only could, but also should have been saved in the public interest. They were not only ignored but also ridiculed.
We are the only country that made no attempt to save the salvageable parts of the company. Indeed Trinidad, which was the worst hit, is now being rewarded with a Clico that is reporting improved performance and a significant rise in its assets value. As the financial press in that country reports earlier this month, Clico’s portfolio of listed investments is now worth T&T$6.3 billion. We ought to have been in a position to make a case against the Trinidad and Tobago parent. Jagdeo’s rushed deal to extract money from the Caricom Petroleum Fund probably ruled that out.

While the company may have some time to go before it is finally dissolved, the chances of any inquiry are not high since neither the government nor the opposition seems to have any interest in the fate of the company. Given the consequences for the NIS – a potential loss of more than $5,000 million – their lack of interest is a shame. They must insist on a full inquiry. Compare our situation with Trinidad where their central bank Governor on Thursday September 6 admitted to public perceptions that the Bank faltered in relation to its supervision of Clico; that there is likely to be psychological damage from the Clico failures; that the Bank would be subject to the first Commission of Inquiry in its 48 year history; and that the Bank would be transparent in accounting for its regulatory and supervisory actions in respect of the Clico companies.

The bunglers who are administering the Guyana Clico have allowed Caribbean Resources Limited to be dissolved without pursuing the $1.5 billion which CRL owed to Clico. Mr Lawrence Williams has double the obligation of his Trinidad counterpart. The Guyana central bank messed up big time when it failed to challenge Clico’s marketing of deposits masquerading as insurance. Now as liquidator, its Governor and its head of the Insurance Supervision Department are botching the company’s liquidation.

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Clico Liquidator lodges first liquidation statement – Part 2

Introduction

Here is a cheque drawn on the account of Clico – in Liquidation.

The court-appointed liquidator of Clico is Mr Lawrence Williams whose substantive office is Governor of the Bank of Guyana. If you were familiar with Mr Williams’ signature you will notice that he is not a signatory on this cheque. The reason is that Mr Williams has single-handedly converted a personal appointment as liquidator with strict fiduciary responsibilities and obligations into what I referred to last week as a triumvirate operating it seems in the most outside-of-the-law process.

On that occasion I named as one of the triumvirate Ms Geeta Singh-Knight who played a lead and illegal role in the collapse of Clico. But you will note that Ms Singh-Knight is not a signatory either. She has carefully stayed out of the limelight while the other two members of the triumvirate, Ms Tracy Gibson who had taken over from Ms Maria Van Beek as Commissioner of Insurance, and Mr Maurice Solomon, Chartered Accountant and a favourite of the government, are in the forefront. They are the ones who signed the cheque, the identity of the payee being redacted.

A diversion into legislative confusion
Let me divert a bit and look at the law establishing the Commissioner of Insurance. After Ms Van Beek migrated, the Insurance Act was amended to transfer to the Bank of Guyana the responsibility for the general administration of the Insurance Act subject to directions by the Minister of Finance. Unfortunately the amendment did not indicate what functions, if any, the Commissioner of Insurance now exercises. Surely the insurance industry is too important to be left in such a messy state of uncertainty.

Jagdeo’s legacy
Now I return to Clico. Clico was racked by illegalities before it went into liquidation. Just prior to its avoidable demise, former President Bharrat Jagdeo showed that he, and not the court, the Commissioner of Insurance or the Liquidator was really in charge. The stamp of Mr Jagdeo has been worse than the albatross around the neck of the Ancient Mariner for those with any interest in the law, in corporate governance or who believe that crime should not pay. Unfortunately none of the professionals who followed the politician seems to have made any effort to repair the damage or restore any respect for legality, sense of competence or interest in professional discipline.

From day one into the liquidation, I questioned the decision by Mr Jagdeo to ignore the principle of pari passu under which returns to creditors and contributories in a liquidation are made proportionately. And when disposal of assets began, I had cause to question the sale of properties and the granting of (fraudulent) preference to one of the creditors of the company.

The triumvirate
Nothing has changed, as evidence of the roles being played by Ms Singh-Knight, Ms Gibson and Mr Solomon challenge all the norms of decency or professional ethics imaginable. Ms Singh-Knight breached the Insurance Act and ignored the request of the then Commissioner of Insurance to comply with the law. Incredibly, after being appointed Judicial Manager under the very Insurance Act, the then Commissioner of Insurance turned around and rewarded her with an appointment as Assistant Manager of Clico, with even less oversight!

And what about Ms Gibson and Mr Solomon? It may be argued that the former is now acting not in her regulatory capacity but as an agent of the liquidator. She signs as Assistant Director, Insurance Supervision Department, Bank of Guyana. Her substantive responsibilities must surely be to oversee compliance with the Insurance Act in which capacity she should be overseeing the Insurance Act and overseeing the liquidation of the insurance company. By accepting an executive function in the liquidation, she has effectively abdicated her regulatory responsibilities.

Mr Maurice Solomon is a director of the National Insurance Scheme, by far Clico’s largest creditor. As a director of the NIS, Mr Solomon has a first obligation to the Scheme and should owe no loyalty to any other entity which would place him in a conflict of interest position. The liquidation process has brought all of those into question.

Fees, fees and more fees
As will be seen in the concluding instalment next week, the Liquidator’s Receipt and Payments Statement reveals payments for professional services amounting to $76 million between October 2010 and June 2012. By a process of elimination, this huge sum could only have been paid mainly to any or all of Mr Williams, Ms Gibson and Mr Solomon and Mr Ashton Chase, SC. Except for a block figure, the statement is amateurishly unhelpful. This is the first Liquidator’s Receipt and Payments Statement I have seen where such vital information is not disclosed.

The public and policy-holders have a legitimate interest in knowing whether all professionals engaged in this liquidation were paid, and if so, how much.

The statement has been lodged with the Registrar of Companies who as this column noted last week must cause an audit to be carried out. She has had the statement more than a fortnight and should have taken steps to comply with the law.

Misleading description
Let us return to the Receipts and Payments Statement of the Liquidator at June 30, 2012 (sic) which appeared last week. That statement discloses what is described as Realisation and Disbursements. The statement would have us believe that some $3,650.9 million of the $4,595.9 million was in fact Realisation. It is not. In fact, that sum is made up of approximately $3,000 million which came from the Caricom Petroleum Fund in exchange for the $7,000 million which the T&T owned Clico cost this country. Under the unexplained, lop-sided deal negotiated with Trinidad and Tobago by President Jagdeo our country effectively lost any right to bring legal action against Clico or the Central Bank of Trinidad and Tobago which took over the assets of Clico’s T&T parent company, the parent company of the Bahamas Clico. That is the company in which Geeta Singh-Knight and Lawrence Duprey had “invested” over $7.1 billion of Guyana policyholders’ funds. The other major receipt was $650 million hijacked from the Guyana Forestry Commission which the Commission received from the Indian Coffee maker Vaitarna. This sum should have been paid into the GFC from which, subject to the Act, surpluses could be paid into the Consolidated Fund.

Lucky bridge company
The next highest receipt is some $464.1 million being repayment of a loan made by Gita Singh-Knight’s Clico to Geeta Singh-Knight’s Berbice Bridge Company Inc (BBCI). Interest received from the Berbice Bridge Company amounted to $22.4 million, bringing the total received from that company to $486.5 million. The indebtedness of the Berbice Bridge Company to Clico at the last report date was $605.9 million, and how the difference of close to $125 million will be accounted for is a matter for speculation, since neither the de jure liquidator nor the de facto triumvirate (Geeta Singh-Knight, Maurice Solomon or Tracy Gibson) have shown themselves duty bound to offer any explanation. I am sure we did not even notice and by now have forgotten that NICIL unlawfully waived almost half a billion dollars to the Berbice Bridge Company Limited; now it seems that a company in liquidation – Clico – may be unlawfully waiving close to $125 million.

The only other receipt over $50 million was the sum of $390.3 million being proceeds from sale of assets. This is how this sum was made up:

Next week I will turn to the payments.

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Clico Liquidator lodges first liquidation statement – Part 1

Introduction
This column is about Clico Life and General Insurance Company (South American) Limited (Clico), a regional insurance giant whose Guyana subsidiary collapsed spectacularly when Mr. Ian Chang, Chief Justice appointed Mr. Lawrence Williams, Governor of the Bank of Guyana to liquidate the company. Since 2010 when Clico began to implode I have written forty-nine pages on the company – all of which are posted on my website chrisram.net. In those many pages I questioned the role of then President Jagdeo’s compulsive, misguided and irresponsible direction of the judicial management and subsequent liquidation of Clico.

I noted that his action exacerbated the colossal and unlawful serial acts of Clico’s CEO Ms. Gita Singh-Knight who shifted billions of dollars belonging to Guyanese policy holders in breach of the Insurance Act 1998 and in defiance of the then Commissioner of Insurance Ms. Maria van Beek. Unfortunately for Guyana, Ms. van Beek hardly distinguished herself with her indecision and failure to act against Ms. Singh-Knight whose immunity from prosecution under Jagdeo appears to have continued under his successor.

Brief recap
But let us go back a bit to what might seem to be the genesis of the collapse of the Guyana company. On January 30, 2009 the authorities in Trinidad and Tobago announced that they were taking over certain assets of CL Financial Limited including Colonial Life Insurance Company Limited, the parent company of the Guyana company Clico Life and General Insurance Company (S.A.) Limited. Further references to Clico and the company are to the Guyana company unless otherwise stated.

Prior to February 25, 2009 the company was unable to raise additional funds or liquidity from its parent or recoup US$34 million invested by its management in its Bahamian fellow-subsidiary which itself had been placed in judicial management. The company was facing a run and needed help. On an application by Ms. Maria van Beek she was appointed Judicial Manager by an order entered on February 26, 2009. Surprisingly, rather than insisting on an enquiry into Ms. Singh-Knight’s conduct, Ms. Van Beek appointed her as Assistant Manager challenging the old adage that wrong does not pay.

After technical arguments between Senior Counsel Mr. Ashton Chase for the Judicial Manager and Attorney-at-Law Mr. Roysdale Forde the Chief Justice appointed Mr. Lawrence Williams, the Governor of the Bank of Guyana as liquidator. In one earlier column I argued that had Mr. Williams in his capacity as the banking regulator moved against the company for taking deposits packaged as insurance, Guyana might have been saved billions.

The Liquidator
I have enjoyed a cordial relationship with Mr. Lawrence Williams who I sincerely believe is doing a very good job at the Bank of Guyana. But no matter how charitable one wishes to be, it is hard not to rate his stewardship as liquidator of Clico with almost the same grades as one rates Jagdeo in relation to the company. He has acted unlawfully, delegated his powers and duties without any logic or justification, and overseen spending on a scale that may bear comparison with Ms. Singh-Knight’s reckless management of the company.

Incredibly Mr. Williams who as court appointed Liquidator has enormous but not unlimited powers has had Ms. Singh-Knight as one of his top lieutenants in the liquidation process. Ms. Singh-Knight may not be prominent in front of the camera but her influence has none the less been crucial. The word is that she has been paid a seven figure salary as part of a triumvirate to do the work that the Court empowered and ordered Mr. Williams to do. That is not only recklessness; it is madness; it is lawlessness.

And while all of that was going on the Chairman of the National Insurance Scheme who is also the Head of the Presidential Secretariat has misled the public into believing that the investments of NIS in CLICO would be recovered. I said then that had the Board not included long-serving and experienced directors like Maurice Solomon FCCA and Paul Cheong, a top director of the Beharry Group, I would have said that it was a case of Luncheon taking the workers of Guyana for a $5.8 billion dollar ride. That he managed to take others along with him is a feat that only a Luncheon would contrive and succeed with.

Liquidator’s failure
Last Friday, after months of checking for the financial statement every liquidator is required to file with the Registrar of Companies, I finally came up with one such report which I am not suggesting that the report was prompted by my persistent enquiries. But before I go into the contents let us look at some of the statutory requirements and how the liquidator dealt with these.

The report itself states the Statement of Receipts and Payments was being submitted under section 379 (1) of the Companies Act. But let me quote that same section 379 (1). It says: “Every liquidator of a company which is being wound up by the court shall, at such times as may be prescribed but not less than twice in each year (emphasis mine) during this tenure of office, send to the Registrar an account of his receipts and payments as liquidator.”

The liquidator was appointed on September 10, 2010 and twice yearly reports should have been submitted for six months to March 2011, September 2011 and March 2012 with the next due at the end of this month. Let us assume that Mr. Williams does not know or is too busy to be informed about the requirements of the sections of the Act that affect his role as liquidator. Is it reasonable to believe that none of the triumvirate and their high-priced legal advisor was aware that the liquidator had been guilty of a continuing offence under the Act for more than five hundred days?

Registrar’s audit
The triumvirate could not have missed that section 379 (2) requires the statement to be in duplicate and verified by an affidavit or a statutory declaration. Nothing in the records at the Registrar of Companies suggests that these requirements have been met. Nor does it end there. The Registrar must now cause the accounts to be audited, for which purpose the liquidator is required to furnish the Registrar with such vouchers and other information which the Registrar requires. When the accounts have been audited, the Registrar is required to keep one copy and to deliver one to the court for filing. Both copies are available for inspection by any creditor or interested person. We wait to see whether the Registrar, who was recently installed by the Attorney General and whose own appointment has not passed without raising some eyebrows, will do what the law and the public interest require.

The Registrar is also confronted with section 380 of the Companies Act which requires her to take such action she may think expedient if a liquidator does not faithfully perform his duties and duly observe all the requirements imposed on him by statute, rules, or otherwise with respect to the performance of his duties. A failure of more than five hundred days can hardly be considered faithful and is probably the first public test whether the Registrar will act as she is required to under the Companies Act.

The Statement
Now let us turn to the contents of the statement which I saw for the first time two days ago. One would have expected that with Mr. Maurice Solomon as the financial and accounting agent to the liquidator, a highly professional prepared statement with such elementary omissions as proper heading, cross-referencing and some notes.

Source: Office of the Registrar of Companies: August 31, 2012

Next week I will undertake a detailed commentary on this statement and introduce an interesting document.

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W(h)ither the accounting profession?

Introduction
At that age where reminiscing is one of life’s remaining pleasures it is with fondness that early memories of the accounting profession come to mind. It may be that it was unwarranted hero-worshipping, but many newcomers to the profession held those referred to in that bygone era who were respectfully described as “qualified” accountants in the highest esteem. Undoubtedly young and impressionable, we held onto those images that we had created for dear life and it drove new entrants to the profession to try to achieve great things so as to gain the approval of their heroes and be admitted into their realm. We aspired to be like them; we worked hard, studied hard and played hard, because that is what accountants did in those days behind the boring, stodgy facade. The seniors and partners at Pannell Fitzpatrick, (the largest accounting firm in Guyana at the time and grandfather of the current TSD Lal & Co) along with Willie Stoll, Victor Gangadin, Yesu Persaud, Alan Luck, John Barcellos, Ossie Baptiste and Sugrim Mohan, the pre-eminent accountants of the era, were men of mystery who every young accountant knew were the big men on campus and hoped someday to be like.Sadly today not too many in the profession possess that aura.

Those days have long gone, but still it was jarringly noticeable that in his speech calling for an assault on corruption the outgoing chairman of the Private Sector Commission (PSC) Mr Ramesh Dookhoo mentioned the accounting profession not once but twice. This reference could be interpreted in two ways: either the gentleman feels that the accounting profession has a role to play in attempting to curtail corruption or cynically, that it is already playing a role, but as an accessory. It was not an inopportune time, coming in the midst of a furore in which the highest ranking accountant in the country is embroiled in a controversy in which anyone, save those directly involved and those in the Guyana Government, can see an obvious and blatant conflict of interest. Such is the egregious nature of the situation that it moved no less a person than the Vice-President of the domestic accounting regulator, the Institute of Chartered Accountants, Mr Chandradat Chintamani – no stranger to conflicts of interest himself – to pronounce “…my position is that it is deemed as a conflict of interest.”

Mr Dookhoo of course speaks with some knowledge and experience of the shenanigans of the accounting profession and their sometimes inappropriate liaison with corporate management. He would know of instances in which management has been less than cooperative with the internal auditors – the frontline warriors against poor accounting and controls and the kinds of internal dealings engaged in by management. As a long-standing director of the Private Sector Commission he would have been privy to both anecdotal and empirical information and indicia on corruption and tax evasion. The PSC has often made noises about tax reform, even though when it comes to walking the talk it has failed spectacularly. So I have some empathy with the negative views of the profession expressed by Mr Dookhoo, even though I do not think it was a collective mea culpa.

Where I differ from Mr Dookhoo – and without holding any brief for the local profession which deserves even stronger criticisms than it currently receives – is that he fails to see or acknowledge the unholy alliance between corporate Guyana and their auditors, not unlike the complaint against the police or customs officer who is castigated and sometimes prosecuted for receiving a bribe while the perpetrator goes unpunished.

Mr Dookhoo will be familiar with the improper transactions in which many company directors engage with their companies; unrecorded sales and related parties transactions; under-the-table payments by them, the source of which is never pursued and their destination never accounted for; and the tax free payments made to staff as “non-taxable” allowances to facilitate a reasonable take-home pay. As an accountant I can say that the avenues of tax evasion are varied and many, but like the rest of the private sector, the Private Sector Commission has never ventured to categorise tax evasion as corruption; rather it is euphemistically called tax minimization. Nor did Mr Dookhoo unambiguously question the role in all of this played by significant segments of corporate Guyana which are then prepared to reward their accountants commensurately. He was lucky that the President was in a charitable mood and did not respond to his call for him to address corruption at high government levels by pointing out that the public sector does not have a monopoly on corruption and that the private sector plays a not insignificant role in the scheme of things.

If the Private Sector Commission wants to achieve more than mere positioning itself on the right side of the corruption debate, then its officers must do more than just make farewell speeches. Mr Dookhoo’s statement about the profession would have had even more credence and weight if he had called on the President to ensure that the Public Procurement Commission is established without delay, associated the PSC with Transparency Institute’s call for anti-corruption legislation; pledged its support for the national efforts to stamp out tax evasion; and had reminded the President that the Tax Review Committee needs to be reconceived to replace the one that was stillborn. Hopefully his successor would take a stronger stand in the national interest.

Noble profession?
Members of the profession should not be surprised if the latter of the two interpretations of the remarks by Mr Dookhoo is embraced by anyone. In fact the statement offers an opening and a challenge to those still committed to practise professional values while offering leadership to those aspiring young accountants who have hitherto seen accounting as a noble profession. Why should they and the rest of society not be cynical about the declarations concerning integrity, high ethical standards and professionalism, when they see them being trampled upon and violated by members of the profession? The question we must answer is how did the profession arrive at this place where worldwide it is on the verge of becoming synonymous with greed and financial scandal?

Sounding the alarm
As far back as 1985, long before the much publicized demise of Arthur Andersen resulting from the Enron scandal, the American Institute of Certified Public Accountants was beginning to press the panic button. A report by its Special Committee on Standards of Professional Conduct had this depressing but prescient observation:

“There has been an erosion of self-restraint, conservatism, and adherence to basic professional values at a pace and to an extent that is unprecedented in [the] profession’s history… we believe the profession is on the brink of a crisis of confidence in its ability to serve the public interest” (Special Committee 1985 3-4).

The most damning portion of this statement is the last, that warns of a crisis of confidence in the ability of the profession to serve the public interest. The warning was vindicated with the spate of accounting scandals bearing the name Enron. Users of financial statements over time have relied on accountants to use their professional, training, skill and judgment to give objective assessments of financial information. The profession – until the relatively recent past and the repeated black eyes it has received as a consequence of aggressive practices, greed, and disregard for ethical standards – has been by and large self-regulating in many countries, and this is still the case in Guyana.

The view of the professions, and accounting was no different, was that their members possessed the requisite skill and would exercise due care in the execution of their duties. They were perceived as being special and therefore they were allowed to set their standards, establish their own rules and were given the authority to discipline their members. This works well if their membership maintains those standards which over time establish and reinforce the credibility and integrity with which to serve the public interest.

Without this a profession is of no consequence and many countries recognizing the failings of the accounting profession have increasingly introduced regulations to compensate for its shortcomings. It is time that the fig leaf of self-regulation be revisited in Guyana – but then what do we do about the incompetent, incapacitated Audit Office? We are in a real dilemma.

Impeccable record?
The Institute of Chartered Accountants of Guyana (ICAG) has been noticeably absent from the public discourse on any issue, even if it has direct implications for its members or relates to matters on which it has a responsibility to educate the public. In Guyana, the impeccable record of the profession has never, as far as this writer can recall, been tarnished by any disciplinary action against any of its members; an amazing accomplishment perhaps worthy of recognition by the good folk at the Guinness Book of Records. Based on recent events, however, it appears that there is a blot on that record on the horizon because surely the Institute of Chartered Accountants of Guyana must now deal with the twin issue of the Minister of Finance and his wife who are both professionally qualified accountants and subject to the strictures of the local body. It is hoped that the usually indolent body will now move expeditiously in a manner that restores Mr Dookhoo and the public’s faith in the ability of the accounting profession to regulate its members.

Hard choices
There has been enough adverse publicity for the profession almost on a daily basis, so there is no point dwelling on the litany of scandals with which it has been confronted worldwide. The focus should be on whether the members of the profession are prepared to engage in the introspection necessary to redeem their reputation. The deafening silence in the face of both public and private sector abuses must no longer be the cloak behind which the protection of fees takes precedence over the discharge of statutory and professional obligations. While the profession throughout the world has issues, my concern is with what is happening in Guyana, and the worn out cliché that there are problems everywhere does not cut it. The ICAG has a duty to take principled positions when necessary even if they are unpopular and have a financial cost, because it is the only way to carry out its mandate of serving the public interest. It also must not shy away from exercising its authority to institute disciplinary measures against any of its members, high or low, whenever necessary if it wants to restore its credibility in the eyes of the public.

Conclusion
Accountants who want to be respected as professionals must walk the walk or they do grave disservice to the profession, the public and all those many young people who are just getting into or are thinking of embarking on careers as accountants.

The almighty dollar must not be the shrine at which pseudo professionals are prepared to sacrifice their principles and ethics.

Perhaps there is a message in Mr Dookhoo’s statement perhaps not; only he knows that. What everyone does know is that the reputation of the accounting profession, though not quite in tatters, is not a long way away from achieving that status. It may be that an unintended consequence of the fallout from this latest exhibition of arrogance on display from the Finance Minister and his colleagues is the long awaited awakening of the ICAG from its long, deep slumber. Its Vice-President has left the door ajar; maybe other members will have the courage to kick it open. One can only hope.

On a final note, Mr Dookhoo also appended the legal profession to his charge. It is not certain whether that profession is any better than the accountants. But since it is known for its prolixity, the legal profession might wish to say something to help restore its own image and the reputation of its practitioners.