CrawfordThe following is a response from Don Crawford, former chairman of Century National Bank, to the second of a five-part series published in the Financial Gleaner under the caption, 'Anatomy of a Crisis', an examination of the 1990s financial sector crisis.
I READ with much interest, disappointment and dismay the second in the proposed five-part series, Anatomy Of A Crisis, an examination of the 1990s financial sector crisis, of The Financial Gleaner, from the Internet of Friday August 22, 2003, captioned "Hey Big spender".
Firstly, I am humbly proud to reaffirm the quote which I made on integrity and character in September of 1992, as carried at the commencement of your article, a call perhaps more applicable now than ever before. I say this against the background of the multitude of financial scandals, corporate disclosures, the decadence of morality and basic decency so evident in our 'Jamaica Land We Love'.
Please allow me at this point to pay maximum tribute to the life of Justice Neville Clarke, whose unparalleled and exemplary life of high morals, unshakable strength for justice and integrity made him a role model of excellence for all our leaders to pattern.
RESPONSIBITIES
In responding to the article, may I respectfully remind the public that my responsibilities to the more than 500 local and foreign investors remain, and I must continue to hold myself accountable for their investments, which prospectus was formulated, structured and presented by two principals of local, but highly reputable legal and accounting firms, namely, Rattray, Patterson, Rattray (Hon. Alfred Rattray O.J.) and Aulous Madden & Company, (Mr. Aulous Madden C.D.). The latter firm also represented at least two of the major accounting firms worldwide. Let me hasten to add that the integrity of both gentlemen is impeccable, stands way beyond reproach, and towers over the majority of their colleagues in practice today.
The contents of this second series have displayed a high level of carelessness for truth and accuracy, or a lack of understanding, and, rather than fact-based, was largely opinionated, and centred around some inappropriate and unfortunate comments and conduct.
For example, the trust deed involving Jamaica Grande was described as "steeped in fraud", while payments made to us by the duly empowered and authorised auditor was referred to as, "not entitled to these payments" and "busy helping themselves to the banks funds".
Please note that the deed was prepared by the bank's legal counsel, and all payments for the compensations highlighted by the bank's external auditor, duly authorised by the board to so act.
I shall respond to a few more important points raised.
FIRST TRADE (TRADE
FINANCE BANK)
This company was formed as a financial entity for the primary purpose of harnessing income from global trading between the Caribbean, Central and South American countries, and domestic United States of America where possible.
It is critical to highlight that this company was not owned by personal individuals, but by 10 member banks of each respective country. Each bank, therefore, had a representative or two, depending on the equity involvement.
CNB had two, myself and Mr. Williams as the most senior executives. These positions could be rotated or changed at the board's discretion.
CNB was therefore a 10 per cent shareholder, and the Central Bank Bank of Jamaica has been in possession of its structure, including the official annual reports, which First sends to the bank regulators annually. This was not a "fly by night" entity, and other substantial commercial and financial entities have been recipients of large credit facilities from First Trade. For good order and ethics, I shall refrain from stating names of these well-known multi-billion corporations and banks.
To say that US$25 million of the banks/depositors money "goes up in smoke" is another deliberate attempt to mislead the nation, and is a vicious manipulation of the real facts.
CNB Group or CNB Holdings is owned by several hundred shareholders/investors. The assets of the group have always been officially available to support and protect each member, and this understanding and agreement was clearly communicated in official form to the Finance Minister and the Bank of Jamaica, both by myself as well as the banks legal representative. There are letters on file to substantiate this.
The Jamaica Grande Hotel's acquisition cost of US$16 million, plus Blue Cross' initial cost of US$3 million, together with a capital injection into the three financial entities of US$6 million, fully reconciles the mystery of the US$25 million. Indeed I am aware, and have copies of letters of confirmation to FINSAC sent by our attorneys. The reconciliations are clear and unambiguous, to be understood by any average primary school student. The motive for providing misleading information has escaped my understanding.
NO LOSS
There has been no loss to the CNB Group of US$25 million, nor was there any financial loss of capital in the liquidation of First Trade Bank. Indeed, it could be argued that CNB Group benefited from the entity, as neither Jamaica Grande nor Blue Cross of Jamaica would have been created to form significant and gilt-edged value not just for the group but for the nation, so proudly recognised today.
On the issue of payments to Crawford and Williams, all payments were made by the external auditor, consistent with the mandate given by the board for compensation, and there is no deviation therefrom. As a matter of principle, and for good order, we never pay ourselves, and any payments made to us are done through the established accounting internal procedures, which require signatures and audit approvals, supported by vouchers/receipts.
Turning to a US$1.17 million payment, this is another glaring example of blatant manipulation. Further, reimbursement of expenses, duly supported by authentic invoices or documents evidencing the expenditure, are standard accounting procedures and could not specifically be stated as part of one's salary package until the expenses have in fact been incurred.
My policy to lead by example has always been maintained, never to compensate myself, never to accept compensation in percentage terms in excess of those paid to my colleagues/staff, never to enter into beneficial contracts or credit facilities to my family members, to the extent that I even found it difficult to offer employment to my only son, who was very qualified.
I even denied my family members of benefits, which should have accrued to them, to the extent that there was some criticism from the PriceWaterhouse Canada team. My own salary package was significantly below those of my peers and its now ironic that my entire family and myself have become the targets of a barrage of vicious attacks from persons holding high offices in Government as well as the judiciary. This whole issue is about justice and fairplay.
NO RECONCILIATION
It is also significant to note that neither FINSAC nor the Minister of Finance has provided any account reconciliations for the hundreds of millions of dollars of assets so far collected from proceeds of sale of CNB Group assets, nor has there been any transparency in terms of prices negotiated or settled, persons or entities to whom they are sold or adjustments to the judgment claims, despite formal requests in writing, including a letter sent by senior counsel on May 17th 2001.
Finally, I note from the last sentence of your article that part 3 of the series will comment on how Omar Davies ignored the warnings of the Bank of Jamaica and gave some bankers a 'bly'; it may be surprising to many to learn that some of the main characters and players at the centre of the CNB dilemma have yet to be mentioned.
