by Ria Taitt Political Editor

risky business: Finance Minister Karen Nunez-Tesheira during yesterday’s sitting of Parliament at the Red House in Port of Spain. -Photo: Roberto Codallo

Government’s attempt to work out a bailout arrangement with the Hindu Credit Union was frustrated by the less-than-honest attitude of the principals in that company, Finance Minister Karen Nunez-Tesheira said yesterday.

She said Government twice tried to purchase property from the Hindu Credit Union but found they could not because the property was not free and unencumbered.

Speaking on a private members’ motion filed by Opposition Leader Basdeo Panday, calling on Government to take immediate steps to protect HCU shareholders and depositors from loss, Nunez-Tesheira, looking directly at HCU members who filled the public gallery in the parliamentary chamber, stated: “I want the persons who are sitting in the gallery to understand Government bent over backward to help.”

“They (the UNC) want you to think that we did not care. We bent over backward,” she said, adding that the story of the HCU is tragic.

She said when the main players of the HCU came to Government on April 11, 2008, they said they were illiquid, and they needed financial assistance in the sum of $71 million. Government, she said, understanding the implication of the loss to thousands of depositors, decided to give assistance by way of the purchase of a property which Government was interested in acquiring.

“It was an opportunity, according to them, to pull them out of a temporary glitch… They had land but could not meet the demands of depositors whose deposits had matured. We said we were interested in the property, which was the Towers in Chaguanas.”

She said Government held discussions with the Urban Development Corporation of Trinidad and Tobago (UDeCOTT) about purchasing that property but later found that it could not buy it.

“When they could not sell that property, we said, ‘Okay, let us look at another property,’ which Government was again prepared to buy. We again went back to them. It was at Calcutta Settlement in Freeport, and the credit union stated it was free from encumbrances. Mr Speaker, we found out that the property was highly encumbered. We did the title search, and we found out that what we were told was not the case,” Nunez-Tesheira stated.

“Not only that but the valuation report that they indicated to us was done by a firm that the Central Bank used, when we checked with the Central Bank, we found out that it was not true. What is the Government to do? You dealing with…the major players, and they are not levelling with you.”

She said in the meantime, Ernst and Young went into the HCU, and what they reported was that the organisation was not illiquid (as the HCU stated) but insolvent…and for all the wrong reasons.

“So to give the impression to the HCU members that the Government just sat back and did nothing is absolutely untrue. An effort was made. But the attitude is important when you are trying to assist. The major players must come to the table, acknowledge…and be prepared to come with clean hands,” she said, adding that full disclosure was a problem.

Addressing the issue of the CLICO bailout, Nunez-Tesheira said Government did not assist CL Financial but was acting in accordance with its responsibility under the law to manage the economy. She said the systematic risk which a CL Financial collapse posed to the rest of the economy was a critical factor. Government intervention was to prevent the contagion effect -the problem of CL Financial spreading to other financial institutions-thereby putting at risk the whole financial system.

She noted the CL Financial Group controlled over US$100 billion in assets and had financial interest in several industries, including banking, real estate, energy, general and life insurance, manufacturing, retail, distributive, media and medical services. She said CLICO controlled 52 per cent of the insurance industry, owned 55 per cent of the largest bank and 49 per cent of the total assets of the non-banking sector.

In July 2008, HCU assets were frozen and a liquidator appointed to oversee the sale of its assets.