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posted 21 Jul 2020, 19:03 by Gerry Kangalee   [ updated 21 Jul 2020, 19:11 ]
I know that it’s a stretch but imagine for a moment that you're a corrupt official, always on the lookout for opportunities to feed from the public trough at the expense of all other citizens. I ask you to do this because it is one of the classic ways to preempt fraud or to recognize it when it occurs. Put simply, we the citizens and the gatekeepers that we have appointed should always be on guard for the conditions that facilitate fraud.

So it was then, that I submitted a Freedom of Information request about the breakup of Petrotrin into three smaller entities. Petrotrin assets per the last audited statement prior to this transaction were valued at 51 billion dollars. That is roughly equal to total budgeted expenditure for the entire country in any of the past four or five years. This was a massive transaction by any measure.

The line Ministry for Petrotrin as I understand it was the Ministry of Energy and Energy Industries (MEEI). I therefore expected that they would assume responsibility for oversight of the breakup. including transfer of all assets and liabilities. Who else would be responsible for seeking and validating that taxpayer interests were protected?

What follows (in italics and bold) is an extract from the covering letter that accompanied my request. I will discuss their response and its consequences thereafter.
I respectfully submit the enclosed Freedom of Information request re. Petrotrin -
  1. Last audited statements of Petrotrin prior to demerger to three companies
  2. All unaudited statements and management accounts of Petrotrin after the last audited statement per (1) above
  3. Reconciliation between last statement and opening balances of demerged companies
  4. Description and values of all revaluations during the demerger showing values both before and after
  5. List of disposals during the demerger showing book value, market value and sale price
  6. List of all acquisitions during the demerger showing description and purchase price
  7. List of all write-offs during the demerger showing description, book value and market value
I look forward to your acknowledgment of receipt and subsequent responses within the legally stipulated period.

Those questions include the minimum of high level information that MEEI should have sought so as to ensure that the assets and liabilities were reliably and accurately transferred to the three new 
companies. There is a long list of other questions that I could have asked and which I expect that MEEI must have themselves asked. However, this limited list would enable a diligent Minister to be satisfied that assets and liabilities had been properly transferred.

Not unusually when dealing with such requests to Ministries, the reply was some time in coming. The statutory time limit was exceeded and I only obtained a reply after I submitted a reminder well after the lapsing of the statutory time limit. Despite that, I was pleased to eventually receive a response which I quote here (in italics and bold). This was the answer to each and every one of the seven questions:

The information requested is not available at the MEEI. However, you may make a request to Trinidad Petroleum Holdings Limited under the Freedom of Information Act, Chap 22:02.

Naturally, I am now in the process of seeking the information from Trinidad Petroleum Holdings Limited but this implies that the company which has been given control of 51 billion dollars of our assets is the one also responsible for ensuring that there is no malfeasance during the transfer operation. They have been handed the equivalent of an entire year's budget and then the line Ministry simply looked the other way.

You don't have to be an accountant, a forensic investigator or a fraud specialist to recognize an unconscionable dereliction of duty by the State over the custody and safeguarding of 51 billion dollars of the country's assets in this matter. Has no-one at the Ministry taken responsibility for oversight of this transaction? That is what their response means to me. What does it say to you?

In further pursuit of this matter, I will, as suggested, make a request to the new company. I will also make the same request of the Minister of Finance in his role as Corporation Sole. Corporation Sole is the office in which ownership of State Companies is vested. That office will surely be expected to ensure that all such companies are held accountable for the assets under their control.

Given the staggering amount of money at stake and the clear dereliction of duty by the line Ministry, where are our validating elites? Why have we not heard from the Institute of Chartered Accountants, the Energy Chamber, the various Chambers of Commerce, our many analysts, even UWI? Are they not concerned by the lack of oversight of this 51-billion-dollar transaction?

Given the sheer scale of this transaction we need to go back to the drawing board even at this late stage. Putting Trinidad Petroleum Holdings Limited in charge of both the transfer and its oversight is unacceptable and as clear an invitation for fraud on a stratospheric scale as could be imagined. I ask every other analyst or commentator, even if you missed the significance of how this transaction has been handled to please contact me so that we can push for accountability. My email address is d.walker@alcindorwalker.com.

As dreadful as this transaction is, we must understand that it is not a one off. This lack of accountability has occurred each and every time a company has been demerged or several companies merged. The claim usually is that these are done to improve efficiency. Whether it is the primary reason or not, each of these transactions results in a golden opportunity for the corrupt to feed at the trough with absolutely no oversight.

Remember that Petrotrin itself came about because of a merger that was supposed to result in greater efficiency. Now the demerger is sold to us on the same premise - improved efficiency. Which company or companies will be next? I see that there is to be a merger of two or more companies owned by THA in Tobago. Will there be any oversight and accountability?

If you were that corrupt official we imagined at the start of this piece, would you not have loved to be part of the team breaking up Petrotrin or any other State Enterprise? The field has been cleared for you by the Ministry and none of our validating elites gives a damn.

My message is a simple one and it builds on the widely held view that taking down one large white collar criminal will do more to combat crime than a hundred small fish whoever they may be. Investigate the Petrotrin breakup now. I guarantee that it will yield results. Follow that up with investigations of every other merger or demerger of State Enterprises. Do we really want to stop corruption in the public sector? We need to act now!