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Criminal investigation called for into failed Turks and Caicos bank
Published on May 7, 2014 Email To Friend    Print Version


By Caribbean News Now contributor

PROVIDENCIALES, Turks and Caicos Islands -- Some four years after it collapsed, the failure of the TCI Bank in the Turks and Caicos Islands (TCI) has still not been fully investigated and the latest call for a criminal investigation into the matter has been made by David Kosoy, chairman and chief executive of the Bahamas-based Sterling Financial Group, who made several attempts to purchase the bank prior to it going into receivership.

Also prompting renewed public scrutiny of the circumstances that led to the bank’s collapse are recent revelations that the bank made some $36.5 million in bad loans and 56 parcels of Crown land were purchased using money borrowed from the bank by uncreditworthy individuals, who are now in default and could have their property repossessed by the bank’s liquidators.

As a result of poor lending and management policies, the bank ran into solvency problems within five years of operations and closed its doors in April 2010, taking down with it money belonging to some 4,000 small depositors and $23.5 million in pension funds contributed by way of deposits and purchase of stock by the National Insurance Board (NIB).

Then CEO of the NIB, Trevor Cooke, who is now the national chairman of the ruling Progressive National Party (PNP), initially moved $18.5 million of pension fund assets into the TCI Bank.

In early 2010, when the bank was known to be experiencing liquidity problems, another $5 million, to be treated as a priority charge on the bank’s assets in the event of liquidation, was deposited by the NIB in a last ditch effort to save the bank.

However, although this attempted rescue was not widely known at the time except to the bank’s board, then Governor Gordon Wetherell and NIB officials including Cooke and then chairman Erwin Quelch, three large depositors were apparently tipped off as to the bank’s temporary liquidity and withdrew in excess of the $5 million bailout, leaving the bank in worse shape than it had been, leading to its immediate closure. The identity of the three depositors has never been revealed.

The inexplicable decision by the NIB to invest pension funds in such a high risk entity is belied by Quelch’s pronouncement shortly before the bank collapsed that the “NIB has a primary and fundamental duty and obligation to protect, enhance or mitigate against any potential losses to the NIB fund for the benefit of its thousands of stakeholders.”

In the meantime, former NIB director and CEO Cooke has been recently reappointed as a board member of the NIB and current chair Lillian Misick at the time took exception to a comment attributed to her in relation to Cooke’s re-appointment. Misick was quoted by a local newspaper as saying that Cooke’s many years experience with the organization and his corporate memory will be helpful in moving the NIB forward.

“Firstly, I said nothing of the sort. Secondly, the minister of finance appointed Mr Cooke and I was not privileged to his rationale for doing so. And thirdly, this is not only a false attribution, but it plainly misstates my views. In fact the public record is replete with my efforts as chair of the Consultative Forum to have the then chairman of the NIB appear before the Forum to explain to pensioners how $23 million of their pension funds landed in and were lost in TCI Bank. And since Mr Cooke was the CEO of NIB during this period and has yet to give proper account for what happened to that $23 million, I would hardly be lauding his experience and corporate memory,” Misick said.

The current finance minister who reappointed Cooke is Washington Misick, who also happened to be the chairman of the TCI Bank in the period leading up to its collapse. According to unconfirmed but persistent reports, Misick himself has a large unsecured loan from the bank that is currently in default. Misick’s Alexandria Resort in Providenciales also ran into financial problems and was placed into receivership.

Although efforts were made at the time to find a buyer for the TCI Bank, attorneys connected with the PNP appeared to act in concert to ensure that the bank was placed in the hands of receivers, not in the TCI but in The Bahamas.

Ariel Misick (the brother of Washington Misick), Clayton Greene, former speaker of the house and leader of the PNP, and Carlos Simons, a one-time PNP leadership candidate, representing depositors and creditors and the bank itself were joined by Sandy Lightbourne, head of the Financial Services Commission, to hurry the bank’s records out of the TCI to The Bahamas, while former Governor Wetherell apparently stood by and did not get involved.

No one has been questioned or audited in relation to the affairs of the TCI Bank except by the Bahamian accountants acting as liquidators.

Another of the many troubling aspects of the bank’s failure was the loss of a disaster fund account set up with the TCI Bank in late 2008 to help the residents of Middle Caicos following two hurricanes in late 2008.

Some of the disaster relief contributions were sent by US citizens and other foreigners, and, because Middle Caicos residents were left out of an aid grant by the EU, which was earmarked for Grand Turk and South Caicos only, at the very time the money was badly needed by affected Middle Caicos residents, it was lost when the bank failed.

The opposition Peoples Democratic Movement (PDM) has repeatedly asked in vain for an audit and public transparency in relation to all the factors that brought the bank down, joined by thus far unheeded public pressure for the identity of the three large depositors and the defaulted loan recipients to be revealed.

A meaningful investigation into the collapse of the bank may serve to dispose of the so far unresolved question of possible fraudulent or unfair preference on the part of three large depositors of the TCI Bank. If these creditors were “preferred” during the vulnerability period (usually six months) prior to the company being officially declared insolvent, it may be possible to claw back some or all of such preferred payments for the benefit of all depositors, including the NIB.

In a bizarre turn of events, even for TCI standards, while efforts were being made to find a buyer for the bank, Bahamas-based numbers racketeer, Craig Flowers, was reportedly approached to rescue the bank that desperately needed a $27 million cash infusion to stay afloat.

A report by the Bahamian-based liquidators for the TCI Bank revealed that among the persons or entities that “were contacted or either made inquiries with regard to a rescue plan” was “Mr Craig Flowers”. Flowers, whose wealth is suspected to have been achieved illegally through the numbers racket, was a regular visitor to the TCI.

Also never satisfactorily explained is the apparent failure of overall supervision in relation to the final days of TCI Bank by the British authorities at a time when the TCI was governed by direct rule from London, and included oversight of public agencies such as the NIB and the Financial Services Commission.
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