By Trevor Sudama
November 09, 2010 – newsday.co.tt
It is said that those who do not learn from the lessons of history are condemned to repeat them. It is my view that it is a government’s duty to have a holistic view of the circumstances and situation of the various elements of the society and, in the light of that assessment, pursue the national interest which may be defined as the greatest good of the greatest number.
It therefore behoves the government to balance the legitimate claims of competing interest in pursuit of the larger good.
In doing this a government needs to be largely independent of particular interests in the society and pursue policies unfettered by undue influence from any one quarter and this is where the UNC government compromised itself in its dealings with Clico and its management in that the latter were able to exercise overwhelming influence on key members of the UNC administration, particularly its leader Basdeo Panday.
As a result the government was unable to effectively carry out its statutorily mandated function of supervision, regulation and sanction over a key element of the financial sector.
But a little history of the position taken by Panday prior to the 1995 General Election is relevant. Readers will recall that before that event Panday was fulsome in his condemnation of what he termed the “parasitic oligarchy” in the society. The composition of this oligarchy was not restricted to any ethnic group but comprised all ethnicities. Its defining feature was that it ensconced itself in a monopolistic position in different sectors of the economy and sustained itself through a symbiotic relationship with the higher echelons and key decision makers of the government. It vigorously resisted any competition or attempts to encroach on its demarcated spheres of economic activity. The overall development of the society was the least of its concerns. It was not a tightly knit group but its solidarity was based on the members’ understanding of the commonality of role, circumstances and interests.
As a result the “parasitic oligarchy” was able to exploit the society and extracted from it substantially more than it contributed. It was construed to be an impediment to socio-economic development that encompassed all sectors and interests. Panday must have read Machiavelli who emphatically stated that “it is impossible to satisfy the oligarchy without doing violence to the interests of others”.
Thus it was that in the late eighties and early nineties Panday was vehement in his criticism of the parasitic oligarchy arising from his leftist philosophy as trade union and working class leader as well as the conviction that the oligarchy has sufficient influence with ANR Robinson to have him removed from the NAR government. Subsequent events would lead one to speculate whether Panday was earnest in his condemnation or whether it was just platform rhetoric.
In the run-up to the 1995 general election, it appeared that Panday had softened his position on the parasitic oligarchy and was willing to accommodate certain representatives in the persons of Brian Kuei Tung, Ishwar Galbaransingh and Steve Fergusson. It is not known what financial contribution and other resources these ex PNM stalwarts brought to the UNC to enable it to win 17 seats. It would be useful to recall that prior to these elections, the UNC controlled 14 seats and in 1991 had come close to winning the other three – ie San Juan/Barataria, St Joseph and Ortoire/Mayaro.
It is a moot point whether the UNC needed the intervention of Kuei Tung, Galbaransingh and Fergusson to win these three seats given the party’s much stronger electoral position in 1995 than in 1991. Nevertheless they were able to convince Panday that they were responsible for the UNC’s victory in 17 seats and hence, on the night of the 1995 Election, Panday would express his deep gratitude and boundless indebtedness to Brian, Ish and Steve. The vanguard of the parasitic oligarchy was not only welcomed but given dominant positions in the Panday administration. Brian Kuei Tung was made Minister of Finance in charge overall of all revenues, borrowings and investments. Steve Fergusson was made Chairman of NGC which not only set natural gas prices and built gas pipelines but was also responsible for screening all energy sector investments in Trinidad and Tobago. Ish Galbaransingh was made Chairman of TIDCO which was responsible for screening all non-energy sector investments in the country. It was this trio who collaborated early in the life of the administration and decided that the Piarco Airport Development Project, which included the construction of the new airport, would be the flagship project and investment of the Panday administration. It is now history that these three would be brought before the courts on various fraud and corruption charges and two of them are facing extradition.
As the UNC administration settled down to the task of governing, it was clear that Panday had had a conversion to the virtues of unbridled capitalism and absolute faith in private sector investment for achieving national growth and progress. It was a sea change in his philosophy which might have come about by consorting in high society and being offered the blandishments of comfort and a taste of luxury living not hitherto experienced. Thus it was that the working class hero and his wife acquired the hobby of golfing and fine dining.
By Trevor Sudama
November 16 2010 – newsday.co.tt
For the General Election of 1995, Clico and Lawrence Duprey had supported the PNM as indeed they did for the General Election of 1991, but, by 1997, Duprey as a dominant figure of the “parasitic oligarchy” was well on board the UNC Government’s bandwagon when the issue of Clico’s purchase of an eventual total of 55 percent shareholding in Republic Bank Limited came up for the approval of the government. Such a purchase would have enabled Clico (and indeed CL Financial) to have a controlling interest in Republic Bank Limited.
There were arguments for and against this transaction. A Committee of Ministers headed by the then Prime Minister was set up to hear the representations of both sides. I recall Claude Musaib-Ali and others appearing before this committee to make the case for the Clico bid. After the committee listened to presentations, I strongly opposed the proposition by Clico on two basic grounds, among others.
Firstly, if Clico was permitted to proceed with the acquisition it would further facilitate the concentration of economic power in the country in a single enterprise, and indeed, in a single individual and his cohorts, placing the management of billions of dollars worth of financial assets in their hands. The largest insurance company in the country would have then been controlling the largest bank.
Secondly, it was uncertain what kind of influence the directors of Clico and CL Financial would wield over the management of Republic Bank and how this would affect the loan portfolio of the bank. In my mind there was a particular concern that an additional source of substantial savings would have been at the disposal of the controllers of Clico and CL Financial and that depositors’ monies could have been applied towards significant risky investments at the whim and fancy of Duprey and his boys, in contravention of good banking practices.
The Committee of Ministers was never reconvened and we subsequently learnt that the UNC Government had approved the transaction and Clico had had its way. There was no doubt in my mind that the hand of Lawrence Duprey operated behind the scenes and Basdeo Panday had made the key input in the decision to grant approval. In hindsight it seemed that all these representations and discussions were merely a formality and compliance with the wishes of Duprey was a prior consideration in Panday’s mind.
In the years that followed, the entrepreneurial acumen of Lawrence Duprey was loudly praised and promoted and the close and cordial relationship between him and Panday was deepened so much so that Panday would leave urgent party and government business in Trinidad to fly off to Miami to attend the christening ceremony of Duprey’s son.
As the divestment of state enterprises proceeded under the aegis of the Divestment Secretariat with Jerry Hospedales, a key Duprey associate, as its head, Panday became more and more convinced that private sector take over of state enterprises would significantly assuage our economic problems and, in this mode of thinking, Duprey’s intervention was seen as crucial and compelling.
I was not opposed to divestment per se, but was apprehensive about the manner in which it was to be implemented. I had many concerns which included whether there was a transparent invitation and tendering process, a proper valuation of assets, a reasonable quantum of proceeds on sale accruing to the Government, the nature and extent of concessions to be granted by Government, and above all else, the immediate fate of workers employed in these state enterprises.
It was obvious that no private sector concern which contemplated outright purchase or a controlling interest in a state enterprise would want to continue with the existing modus operandi of these enterprises. They would focus on strategies to achieve profitability which would mean the reduction of costs. And the largest element of cost was labour. It was inevitable that one consequence would be either wholesale or significant retrenchment of employees in these enterprises. It was incumbent on Government to consider the socio-economic impact of such an outcome.
These were concerns I raised when the CL Financial group made its bid for purchase of controlling interests in a number of state enterprises. When the company’s offer on Trinidad Lake Asphalt had come up, the union raised strong objections, no doubt sensing serious loss of employment by its members. When CL Financial made its bid for Tanteak Limited, I insisted that the conglomerate should agree to a moratorium on retrenchment for two years during which time the workers likely to be affected would have some respite in order to seek alternative employment or retraining.