AUGUST 20, 2008 issue

Trinidad & Tobago

Big worry for HCU depositors

Liquidator inspecting books at troubled credit union

HCU President Harry Harnarine
By Sandra Chouti
Special to Indo-Caribbean World
Port-of-Spain - While a High Court-appointed liquidator inspects the books at the troubled Hindu Credit Union, depositors continue to worry if they will get back any of their savings.
Even as these developments unfold, the court has ordered the credit union to make a (Can) $166,000 payment for slander.
On August 5, Raymond and Pierre Ltd., a well-known valuation surveying firm, secured judgment and one of the highest awards of damages in the High Court against the HCU Communications Ltd., a wholly-owned subsidiary of HCU and Harry Harnarine.
The judgement is but one more in a series of disastrous events which have befallen the beleaguered financial institution over the last few weeks following the appointment of a provisional liquidator by the High Court on July 23.
The lawsuit against HCU Communications and Harnarine was for libel and slander arising out of an episode of the Financial Forum radio programme, aired on HCU Communications Radio Shakti 97.5 FM, on October 4, 2005.
During that programme, Harnarine carried on a heated monologue against Raymond and Pierre and in particular, Afra Raymond, one of the company's directors, in which he accused Raymond and the firm of a range of misdeeds, including racism and professional impropriety, in particular, undervaluing properties.
'Hundreds of workers invested huge sums of their VSEP in the HCU, and stand to lose all of it or retrieved very little.'

Raymond and the firm filed suit against HCU Communications and Harnarine and were awarded a judgment in January 2007 after HCU Communications and Harnarine repeatedly failed to show up in court to defend the suit. On July 23, 2008, Master Ralph Doyle awarded Raymond and the firm damages and costs in the sum of (Can) $187,000.
Commenting on the judgement, Raymond said, "This situation has been particularly difficult for us as the oldest valuation surveying firm in the country because our good reputation was being tarnished by Harnarine's bizarre and baseless tirade."
The High Court gave the government full control of the HCU after Commissioner for Co-Operative Development, Charles Mitchell, applied and got several orders taking full control of HCU, which has been experiencing financial problems over several months.
According to a statement of facts by Mitchell, there were more than 100 complaints against the HCU by members of the society to recover interest on fixed deposits/shares.
Part five of the document reads: "There are approximately 100 complaints against the HCU referred to the Commissioner by members of the society to recover interest on fixed deposits/shares, the value of which exceeds (Can) $4.1 million.
"In addition there are approximately 1,600 disputes referred to the Commissioner by the Credit Union against members, predominantly for delinquent loans. I am of the view that the HCU is unable to meet its financial obligations to both its members and creditors."
Harnarine, HCU’s president, wrote to Labour Minister Rennie Dumas on April 23, 2008, stating, "We have indicated to the Minister of Finance that our funding requirement is (Can) $11.8 million in the form of a loan that would be collateralised by real estate assets."
The letter had been sent to Dumas "upon request". It was to inform him officially of the state of affairs in his position as the minister with responsibility for co-operatives.
However, in a letter to Harnarine by Finance Minister Karen Nunez-Tesheira on April 25, 2008, the minister said: "For the purpose of clarification and for the record, I wish to state that there was no agreement by the Minister of Finance to provide funding in the sum of (Can) $11.8 million or otherwise.
"Further, there was no agreement that there should be any funding arrangements by way of a loan, whether securitised by real estate assets or otherwise."
An HCU inspection team sent a report to Commissioner Mitchell on June 8, 2007, revealing that an inspection into the credit union commenced on July 4, 2006.
Among those who are worried about their savings are former workers of the now closed Caroni (1975) Ltd.
Hundreds of workers invested huge sums of their voluntary separation of employment package (VSEP) in the HCU, and stand to lose all of it or retrieved very little.
While the HCU failed in its bid to lure most of the ex-sugar workers into investing with the organisation, they were able to catch some 20 percent, said Rawlins Boodan, former head of the group's advertising department.
Boodan, who said he lost close to (TT) $300,000 said, "The HCU had even set up a booth in the office of the All Trinidad Sugar & General Workers' Trade Union (ATSGWTU) to attract former Caroni workers. They also set up a fund claiming it was to assist them after the closure of Caroni Ltd," Boodan said.
Boodan said the HCU was disappointed that the majority of former sugar workers did not respond to their call.
"I remember certain high ranking officials came into the advertising department and made noise with us about it."
He said many of the ex-sugar workers invested instead in the Unit Trust Corporation and banks. A significant percentage put their money into agriculture.
"They were smart," Boodan said.
Rudy Indarsingh, former president of the ATSGWTU was unable to say exactly how many ex-sugar workers ended up investing their VSEP money with the HCU, but he knew some did.
"Since the appointment of a provisional liquidator for the HCU, a couple of the former Caroni Ltd workers who invested with the company have approached me for advice. I advised them to make sure they inform the Commissioner of Co-operatives about their matters and provide the necessary documents to substantiate their claims."
Indarsingh said it would be premature to say if these investors will recover their money because the audit exercise at the HCU was in progress.
Ex-sugar workers who lost all the money they invested in the HCU, or retreived little of it spoke on the condition of anonymity.
"We are afraid of some kind of backlash if we give our names," a St. Madeliene man said.
The 61-year old former Caroni Ltd yardman said he received (Can) $15,166 in VSEP money when the company closed and invested all of it in the HCU. He got back $3,300.
"And I had a lot of problems getting back this money. Every time I went, they kept telling me to come back. They gave me a lot of runaround."
He said quite a few of his former co-workers from the St Madeleine sugar factory also invested in the HCU and lost.
His father-in-law, 78, a former Caroni Ltd worker of Barrackpore, lost (Can) $18,300 he invested in the HCU.
"He resigned a long time before we got VSEP, but had been saving his money. It's all his life savings that he invested. "But when he tried to get back his money, they gave him all kinds of excuses. We invested because we were hearing people saying you were getting good interest," he said. "But they rob we bad."
He feels helpless about the situation: "I will leave it as it is and finish off with it," he said on a note of resignation.
In the meantime, members of the Hindu Credit Union Depositors and Shareholders Group are appealing to people who borrowed money from the HCU to honour their payments.
Deosaran Bisnath, PRO of the group, expressed concern that there would be individuals who believed that loans would be written off, and so refuse to make their monthly payments to the troubled institution.
He said: "You should not be lured into thinking that these loans would be written off because of the current situation. Every effort will be made to recover every dollar of our members' assets."
Harnarine has tried to explain what went wrong with HCU. In an interview, he said, "I should have liquidated and closed the company in 2004 when the run began. But I tried to hold on and turn it around and look at it today."
Harnarine said that HCU's membership had peaked at 190,000-plus members and had an assest base of (Can) $180 million. At the time of the liquidator being appointed, HCU had 900 employees on its payroll and (Can) $129 million in liabilities.
One credit union association has blamed lax supervision for HCU's demise. The Association of Cooperative Credit Union Presidents of Trinidad and Tobago (ACCUPTT) claims said the management of the HCU and those responsible for credit unions' supervision are to blame for its closure.
The ACCUPTT said while it is commited to working with government to enhance existing legislation, it is convinced the Co-operative Societies Act was sufficient to allow for earlier intervention and remediation.
President Lincoln Beckles said, "The warning signs were always there and they were loud and clear. The HCU was growing at a phenomenal rate without any institutional capital to support that growth. The management was also using short-term deposits to invest in high risk, long-term assets. In the business of finance, such strategies are never sustainable."


Govt told to put agriculture
before houses

Port-of-Spain – President of the Agricultural Society of Trinidad and Tobago, Dhano Sookoo, says the government must not allow housing or any other industry to take priority over this country's agricultural development.
Speaking at a seminar for root crop farmers last week at Sevilla House, Couva, she said food availability for all citizens must become a priority.
"We must now establish in Trinidad and Tobago a land use policy, so that our farmers would not be threatened and removed from the agricultural lands," Sookoo said.
"If we cannot feed ourselves, no one is going to do it for us. Every country today is looking after its own food security and we must do the same.
"As farmers, while we do not burn tyres and block the roads, we also have issues and problems that need government's assistance. Government and institutional leaders must not take our farmers of this country for granted." Sookoo said the government must do all in its power to ensure that the root crop industry is placed as a priority for immediate development.
"No longer must we rely on grains for flour and animal feed. But we must now look within ourselves and our country and find the solution to ensure food availability to all our people. As we seek to achieve developed country status by 2020, it is important that we expand and transform our domestic agricultural sector to meet the growing challenges of the world food situation."
Sookoo said farmers continued to express concern about security of land tenure, access roads, water for agriculture, praedial larceny, financing for agriculture and proper marketing.
"At the Agricultural Society, we have now dedicated ourselves and our resources to finding a solution to some of these problems.
"So far, in 2008, we had a very successful land tenure forum, where we were able to get together all the sectors involved in agriculture, who occupy agricultural state lands, and we were able to present one position paper to the government stating that the land lease rate rental for agricultural lands must not be more than (TT) $200 per acre," Sookoo said.
"With the citrus farmers, we are collaborating with the Citrus Growers Association where we will be setting up a plant propagation centre to make available to our farmers approximately 15,000 citrus nurseries, starting next year (and continuing), for five years in our effort to develop the citrus industry in Trinidad and Tobago."


Call to carry out sentences on convicted murders

Port-of-Spain - Fifty-two convicted killers who were removed from death row should be hanged for the crimes they committed, Crime Watch president Ian Alleyne said last week.
Commenting on the ruling by Justice Nolan Bereaux which removed 49 men and three women from death row, Alleyne slammed the government for failing to implement important legislation to deal with criminals.
Saying that Bereaux had no choice but to remove the convicted from death row, Alleyne said such a ruling would only cause lawbreakers to have no fear of the law.
“Justice Bereaux had no alternative but to make this ruling as a result of the decision of Pratt and Morgan, the Privy Council and the local Court of Appeal, but it is clearly a sad day for the victims and families who were affected by the actions of these callous and heartless group of 52 individuals,” Alleyne said.
“These people should not be spared...They broke the law, they murdered and they should face the ultimate penalty for murder, which is death by hanging.”
Alleyne said the government had failed to review the death penalty legislation and related laws and so criminals had no fear of penalty for the crimes they commit.


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