MSJ: FCB IPO scandal shares should be forfeited

ALL 634,588 First Citizens (FCB) shares acquired by the bank's former chief risk officer Phillip Rahaman in 2014 through Bourse Security should be forfeited and placed into the open market for purchase by Unit Trust or the National Insurance Board, credit unions and pension funds.

Those were the words of Movement for Social Justice (MSJ) leader David Abdulah as he addressed the media on the initial public offering (IPO) scandal, at his office on Lord Street, San Fernando, on Sunday.

“A couple weeks ago the TT Security and Exchange Commission (TTSEC) started issuing public statements with regard to significant fines (that) had been imposed on Phillip Rahaman, (his relative) Imtiaz Rahaman and Subhas Ramkhelawan, the head of Bourse Security.”

The SEC fined the parties a collective $2.8 million. Rahaman and his relative each paid $750,000 "without any admission of liability" while Bourse paid $1.3 million, also not admitting liability.

The IPO was in August 2013. In early 2014 the media broke the story that Rahaman, then chief risk officer of FCB was able to acquire some 659,000 shares through the employee bucket – shares set aside specifically for employees. This bucket was undersubscribed and on the last day of the IPO purchase day, Rahaman bought his chunk – 659,588 shares for $14.5million. He sold 634,588 shares to his cousin, Imtiaz, for $26.7 million, making a profit of approximately $12.2 million. In addition, he also pocketed $718,000 in dividends.

“Rahaman sold the shares not on the open market but to his cousins... to companies owned by his family members. Therefore, it was a case of himself to himself sale,” Abdulah said.

Bourse Securities was deeply involved in this matter, Abdulah said, helping Rahaman acquire the shares in the first place in 2013. Bourse Securities was involved in both the front end and the back end of this deal as the company facilitated the sale of shares to Rahaman and to his family members as well.

“In the end it was a highly profitable transaction for Rahaman.”

In 2013, then finance minister Larry Howai (himself a former CEO of First Citizens) told the media the preliminary report and audit done by auditors PWC was in the possession of then AG Anand Ramlogan with a view to determine if the matter should be subjected to criminal investigation.

Abdulah posed a question to the Police Commissioner and the Director of Public Prosecution (DPP): “Why was there no criminal investigation on this matter and if there was one, what was the outcome of the investigation?”

If there was no investigation done on this matter, the MSJ is calling for one.

Abdulah said unregulated capital not only in TT but the world over, facilitates greed.

“Where there is opportunity and greed, then there is corruption.”

Abdulah also spoke about the then chairman of FCB, Nyree Alfonso, whom he said defended the Rahaman transaction. Back then, he said, Alfonso described the transaction as a political storm in a teacup.

“Alfonso was a practising attorney and was confident that there were no breaches of regulations, policies or procedures in the senior executive purchase of shares.”

Quite clearly regulations were breached, he said, and the MSJ would like to make it clear that, in its view, Alfonso is not fit to hold any public office in TT.

“Henceforth we should not accept her advice or word or judgement on any matters pertaining to corporate governance.”