One of the country’s foremost commercial banks has appointed a new chief, but it has immediately raised eyebrows.
Larry Nath was recently appointed Chief Executive Officer (CEO) of the Guyana Bank For Trade and Industry (GBTI), which is controlled by the Beharry family.
Nath headed Trinidad and Tobago’s state-owned First Citizens Bank, but resigned in December 2014 amid a major investigation into insider trading at that institution.
A number of executives and the bank’s board in the Twin Island Republic resigned in the ensuing fallout.
Nath’s presence on the local banking scene has raised several questions for Central Bank, which regulates the operations of financial institutions in Guyana.
As the new CEO of GBTI, Nath’s experience and track record in Trinidad and Tobago were supposed to play a critical role during considerations of his appointment here.
Under regulations, the bank would have had to submit documents that speak of him being “fit and proper” to the regulator. This regulation is not only for Central Bank scrutiny, but also for the Guyana Securities Council.
With tough new anti-money laundering laws enacted in recent years, Central Bank has been cracking down on other issues to ensure compliance.
In the case of Central Bank as regulator, GBTI, like any other financial institutions that is under mandatory monitoring, has to submit the credentials of new executives, and even for board members to the Central Bank.
With the CEO position a critical one, since he has access to sensitive information, including at the securities trading level, the “fit and proper” criteria would take even more importance.
Central Bank’s Governor, Dr. Gobind Ganga, was unavailable for comment yesterday, but official sources indicated that the matter is engaging the attention of the regulator.
It was unclear whether Central Bank green-lighted Nath’s appointment.
With regards to Nath, Trinidad’s news houses – Trinidad Guardian and Trinidad Express– in 2014 and 2015 were heavy on the coverage of the First Citizens scandal.
The Trinidad Express, on December 4, 2014, reported that Nath, First Citizens’ CEO, resigned from the company with immediate effect.
Nath, the Express reported, had come under pressure in the previous months following the bank’s Initial Public Offering (IPO).
According to the report, he was the subject of an internal investigation by the former Nyree Alfonso-chaired board following the Hassan Philip Rahaman Initial Public Offering (IPO) scandal.
The investigation had recommended disciplinary action be taken against Nath, deputy chief executive and corporate secretary, Sharon Christopher, and head of the legal department, Lindi Ballah-Tull.
During the bank’s IPO, Rahaman, the bank’s former chief risk officer, bought 659,588 shares from the employee bucket and sold 634,588 of those shares four months later to his cousin, Imtiaz Rahaman; his aunt, and to five Rahaman-controlled businesses.
The share purchase raised questions about ethics while the financing of the transaction was said to be under investigation, the Trinidad Express reported.
The IPO scandal has had several casualties– Rahaman, Subhas Ramkhelawan, the managing director of Bourse Securities, who resigned as an independent senator and former chairman of the Trinidad and Tobago Stock Exchange; and the entire First Citizens Board.
The matter in December 2014 was still the subject of two investigations—one by the Securities and Exchange Commission (SEC) and the Trinidad and Tobago Police.
In the meantime, the Trinidad Guardian reported that at the IPO, Nath acquired 215,000 of the bank’s shares for TT$4.7 million.
As at December 2014 trading price, those shares were worth TT$7.9 million.
“Among the senior executives and directors of First Citizens, Nath’s purchase of shares in the IPO was eclipsed only by the group’s former chief risk officer, Phillip Rahaman, who acquired 659,588 shares.
Rahaman’s purchase of the shares for over TT$14 million generated a huge controversy in the first half of 2014 over how he financed the acquisition and whether he bought the shares for himself or some relatives,” the Guardian reported.
One month into the controversy, the board dismissed Rahaman, saying it had “lost confidence” in his ability to carry out his duties following an extensive internal investigation.
All the First Citizens directors who served during the IPO have been replaced, most notably the bank’s chair, Port-of-Spain attorney Nyree Alfonso, who resigned just before the June 17, 2014 special meeting.
GBTI was rocked by a major fraud over the last year that saw its Bartica, Region Seven, manager sent home and gold dealer, Saddiqui Rasul charged after over $900M that was paid out to cheques there were not cleared. The fraud had dented GBTI’s profits.
The bank is also clashing with, and is in court with the police’s Special Organised Crime Unit (SOCU) over the release of information regarding investigations involving the Guyana Rice Development Board (GRDB) and the 2007 Cricket World Cup.
With regards to GRDB, it is said to be the biggest fraud under investigation, involving over US$500M.
A few weeks ago, GBTI’s board members were criminally charged with alleged contempt of the court for those records.
Last week, the bank was granted court orders blocking SOCU from accessing information regarding transactions of the Cricket World Cup.
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