During a recent meeting of the House of Assembly, Hon Goldray Ewing led a Private Member’s Motion recommending the establishment of a Select Committee to investigate the sale and agreement between TCIG and TOLCO (The purchasers of TC Invest Loans). This Motion was seconded by the Hon Clarence Selver.
In presenting this Motion, Hon Ewing spoke to the dismantling of TC Invest and the sale of loans declared non – performing to TOLCO (The Outstanding Loan Company). He stressed the need for this to done in an effort to see if any relief can be brought to the home owners who are suffering at the hands of a heavy handed debt collector. He called on all members to feel for their fellowmen and to support the Motion. Unfortunately all members did not support this Motion and the Premier together with three other members of his Cabinet (Hon R D Gardiner, Hon George Lightbourne and Hon Amanda Missick) absent themselves from the Chamber before the vote.
Governor’s Appointed Member Hon John Phillips stated in his contribution that he could not support the Motion because he wished to see recommendations as to what should be done. In a rebut, his fellow Governor’s Appointed Member, the Hon Lillian Misick in strong support and a former member of the TC Invest Staff also supported this Motion and stated that there must be an investigation first before recommendations can be made.
The debate saw limited contributions from members from the Government with the MOF being the sole speaker. He sought to blame the PAC for not recommending this investigation when the Audit Report laid on the Table by himself included this recommendation from the Auditor General. Hon Sharlene Cartwright Robinson, Chair of the PAC corrected him and stated that “following Hearings of the PAC, the PAC Report was laid on the Table and that further to this she and the entire PAC endorsed and supported that a full investigation should be carried out in its Report as they endorsed and supported the recommendations of the Auditor General.
During her contribution, the Chair of the PAC quoted from the Audit Report the following information and noted that this information ought to have prompted the Government to act.
The Auditor General’s Report stated as follows:
“No proper due diligence or tendering procedures followed in relation to non-performing loans – HR.” As it relates to the timeline, “In 2012/13 loans identified as non-performing were sold to TOLCO. A timeline of circumstances surrounding this sale were as follows:
30 July, 2012 – TOLCO was registered/formed
August, 2012 – A Sale and Purchase Agreement (SPA) between TCIG, Turks & Caicos Islands Investment Agency (TC Invest) and TOLCO was entered into for the sale and purchase of identified non-performing loans due to TC Invest.
September, 2012 – TC Invest was dissolved and TCIG agreed to accept the rights and obligations of TC Invest under the SPA
October, 2012 – Ordinance 33 of Public Procurement Ordinance was made on this day. The non-performing loan portfolio sold by TC Invest to TOLCO was listed as $7.7M. The purchase price payable by TOLCO (buyer) to TC Invest (seller) was 40% of all loan capital and interest received/collected. There was no up-front payment. TC Invest retained beneficial ownership in 40% “of the land shares created by the Security Documentation in relation to the Portfolio”.
The Auditor General stated, “…It is not clear how the valuation was determined. Only 40% of the total receivable balance was recorded in TCIG’s accounts i.e. $2.8M. However, this amount is approximately $250K less than 40% of $7.7M. .As at 31st March, 2014 a total of approximately $92K was received from TOLCO. The funds collected by TOLCO and shared with TCIG so far appear to be in the ordinary course of collections and not by way of foreclosure sales.
As it relates to the directorship of the company, the Auditor General stated that he had “expressed serious concern with this arrangement” particularly since 2 of the 3 directors of a company owning 42.5% of TOLCO either have been or are the subject of a series of alleged questionable dealings in relation to fraud, accounting improprieties among other matters. Reputational risk is therefore considered high and should be considered in relation to the SPA. It was his finding that “A proper process was not conducted to ensure that the owners were experienced and specialized in debt recovery. No proper due diligence was done to ensure that there was no conflict of interest or at a minimum have any conflicts declared. No proper due diligence was done to ensure that the companies with whom TCIG representatives engage in have a good reputation especially in large commercial contracts”.
The Auditor General, “A review was initiated by the NAO during 2014 and a further full special audit is anticipated to be done but lacks the resources needed to do so”.
Unfortunately, no resources have still been made available and though this Motion has successfully passed, the Select Committee has not yet been appointed by the Speaker, Hon Robert Hall. The PDM has since reminded the Speaker in the House of Assembly and has reduced our concerns in writing.
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