Possible Criminal And Civil Charges For Former Head Of Failed Hindu Credit Union

PORT OF SPAIN, Trinidad, CMC – Prime Minister Kamla Persad Bissessar Friday said that the former president of the Hindu Credit Union (HCU) Harry Harrarine could face several criminal and civil charges arising out of the 2008 collapse of the financial institution.

She told Parliament that the sole Commissioner, Sir Anthony Colman, had listed at least 18 possible criminal charges that could be brought against Harrarine and other members of his executive.

“I have instructed the … Attorney General to deliver copies of this report to the Director of Public Prosecutions and Commissioner of Police so that an immediate criminal investigation can be launched. I have further instructed the Attorney General to pursue civil action for the recovery of monies and damages in accordance with the Coleman recommendations,” she said.

Sir Anthony, earlier this week submitted his report to President Anthony Carmona and earlier this month, Finance and Economy Minister Larry Howai said that the collapse of the HCU in 2008 left a deficit of TT$700 million (One TT dollar = US$0.16 cents).

The government recently announced that it would plough an estimated TT400 million into a bailout plan to help depositors recover some of their investments.

Prime Minister Persad Bissessar told legislators that she wanted to “take this opportunity to apologise on behalf of the Government, to the thousands of our citizens for the pain and suffering, distress and inconvenience they have been forced to undergo as a result of the shortcomings and failures on the part of so many, including the regulatory mechanisms of the state.”

But she said she wanted to assure them that “those responsible for their hurt and pain will feel the full brunt and weight of the law. The chips will fall where they must, no stone shall remain unturned in this quest for social justice on behalf of the people.”

She said that the Commissioner had noted that the conduct of Harnarine “was such that the Director of Public Prosecutions (DPP) should take immediate steps to test the sustainability of criminal proceedings against him.”

She said Sir Anthony was of the opinion that aspects of his conduct could be found upon further investigation “to give rise to or evidence criminal liability” in a number of areas.

She said these include conspiring during the period from 1 January 2002 to 23 July 2008 with the principal officers and members of the board of directors (BOD), and/or the managers of HCU, namely Gayndlal Ramnath, Yadwanath Lalchan, Jameel Ali, and Ravindra Bachan to defraud members of HCU and their depositors.

Sir Anthony also found that the HCU had put at risk “by agreeing dishonestly…the value and recoverability of the members’ investments and/or deposits by members” and “recklessly pursuing an improvident investment policy by causing HCU to purchase tangible assets at an over-value, without the prior approval of the BOD and without the prior valuation of such property by independent [valuators].”

The Commissioner made particular reference to the purchase in 2003-4, properties acquired in Florida in the United States.

The criminal charges could also stem from the Harrarine and his executive “recklessly causing HCU to form and/or acquire subsidiaries and to manage them without prior permission from the CCD and without exercising prior due diligence and without any or sufficient business plan.”

He said the “subsidiaries were incapable of producing sufficient revenue to finance their day to day operations and which could only survive with loans from HCU and recklessly failing to procure adequate monitoring of the deteriorating financial condition of those subsidiaries.”

Moreover, there is the allegation that the Harrarine and his executive “knowingly or recklessly causing HCU to solicit deposits at a time (2005-2008) when it could not meet its immediate liabilities” and “causing HCU’s reckless and excessive expenditure on items which were not in the interests of HCU or its members, specifically payments for personal purposes to Mr Harnarine (amounting, according to the Liquidator to TT$5,994,953) and to HCU’s directors and managers and to related parties.”

The allegations against Harrarine and his executive also include “knowingly or recklessly causing HCU and its subsidiaries and the subsidiaries of HCU Financial to trade while insolvent; knowingly causing HCU to fail to comply with its statutory duties to provide accurate financial statements to the CCD, knowingly or recklessly causing inaccurate and misleading financial statements to be issued to members of HCU.”

In addition they are also accused of “knowingly or recklessly inducing members of HCU to retain deposits in HCU by issuing to them misleading letters of comfort and assurances that HCU was solvent” and “knowingly or recklessly causing HCU to acquire illiquid assets without regard to the risk of the repayment requirements of HCU members and other depositors.”

Prime Minister Persad Bissessar said that apart from the possible criminal charges, the Attorney General was being asked to look into civil remedies arising out of the failure of the credit union.

She quoted Sir Anthony, the Deputy Chief Justice of the Commercial Law Court in Dubai, and an eminent and internationally respected jurist, as saying that Ramlogan could seek civil remedies on behalf of depositors who are owners of investment deposits in HCU, and who have been determined to be eligible to receive grant relief up to TT$75,000 from the government under the Grant Relief Payment Scheme.

Prime Minister Persad Bissessar said she had also instructed the finance minister to examine the report  “which deals with attempt to reform the regulation of credit unions so this can inform the drafting of a new law for the proper and effective monitoring and supervision of credit unions to prevent a recurrence of this debilitating fiasco.”