The Hindu Credit Union (HCU) paid its president Harry Harnarine $5 million to travel around the world while the financial organisation was in deep trouble and facing serious cash flow problems.
"In most instances we were not provided with supporting documents such as bills and invoices," Daniel said, adding that Harnarine approved the approved the payments to himself. In addition he received a monthly salary of $50,000.
"I also want to mention that at this point in time February 2008 when the HCU was having difficulties there was also a loan granted for $900,000 for the president," she said. Daniel also said the HCU paid "an unexplained sum of $242,000 in 2004" to one of Harnarine's relatives through a wire transfer.
She said June 2008 her firm conducted a "due diligence investigation" into the operations of the HCU but was locked out of the HCU compound on July 17. She testified that when her team was allowed back the members were unable to access certain files because the computer they were using was attacked by a virus.
"This included editing transactions, posting to the general ledger and changing the access level of users," she said adding that it created "an environment for things to take place. I am not saying that they did but what it does is it creates an environment where controls are not in place."
In addition to all the other discrepancies noted, Daniel said her firm found three separate payments made to Harnarine for a total of $250,000 in 2006 with no supporting documents and vouchers to explain why the payments were made.
"It is important to note that by 2007 based on the documents we saw, people could not get their fixed deposits repaid, staff was being rationed as to how their salaries were going to be paid, statutory obligations were not being paid, however $1.6 million was paid to the directors," Daniel said.
Daniel also spoke of the centralisation of authority, noting that just one group of people made all the strategic decisions for the 18 HCU branches and 28 subsidiaries. She said the HCU was spending more than its income and it was inevitable that it would face serious problems.
She said only one HCU subsidiary was profitable - Bankers Insurance. The others was recording losses of $800,000.
With respect to the operations of the HCU in the United States, Daniels said the managing director of the USA operations received a salary three years after the entity closed down.
 |
| Maria Daniel |
That's what Ernst & Young partner Maria Daniel said Friday when she testified at the inquiry into the collapse of the Chaguanas-based credit union.
Daniel said Harnarine travelled to India, the United Kingdom, the United States of America, the Dominican Republic, Mexico and El Salvador. He received a total of $7.6 million over six years as "president's expenses", which included the hefty travel figure.
"In most instances we were not provided with supporting documents such as bills and invoices," Daniel said, adding that Harnarine approved the approved the payments to himself. In addition he received a monthly salary of $50,000.
 |
| Harry Harnarine |
"I also want to mention that at this point in time February 2008 when the HCU was having difficulties there was also a loan granted for $900,000 for the president," she said. Daniel also said the HCU paid "an unexplained sum of $242,000 in 2004" to one of Harnarine's relatives through a wire transfer.
She said June 2008 her firm conducted a "due diligence investigation" into the operations of the HCU but was locked out of the HCU compound on July 17. She testified that when her team was allowed back the members were unable to access certain files because the computer they were using was attacked by a virus.
She also pointed out that the chief executive officer had excessive access to the company's information technology system.
"This included editing transactions, posting to the general ledger and changing the access level of users," she said adding that it created "an environment for things to take place. I am not saying that they did but what it does is it creates an environment where controls are not in place."
In addition to all the other discrepancies noted, Daniel said her firm found three separate payments made to Harnarine for a total of $250,000 in 2006 with no supporting documents and vouchers to explain why the payments were made.
"It is important to note that by 2007 based on the documents we saw, people could not get their fixed deposits repaid, staff was being rationed as to how their salaries were going to be paid, statutory obligations were not being paid, however $1.6 million was paid to the directors," Daniel said.
Daniel also spoke of the centralisation of authority, noting that just one group of people made all the strategic decisions for the 18 HCU branches and 28 subsidiaries. She said the HCU was spending more than its income and it was inevitable that it would face serious problems.
Daniel said by 2004 it was clear that the organisation was "already making significant losses" and in May 2008, the HCU board wrote off loans to its subsidiaries valued at $197 million.
With respect to the operations of the HCU in the United States, Daniels said the managing director of the USA operations received a salary three years after the entity closed down.
Also, the HCU took out an $86 million loan with a bank in the United States for analogue television equipment but the company did not get the relevant licence to operate. She added that the HCU spent about $5 million for a real estate project called Jogie's Park but no work was done there.
She noted other irregularities:
She noted other irregularities:
- A marketing representative with the HCU was also awarded contracts for construction and janitorial services without any tendering
- The HCU also entered a deal with insurance giant CLICO to have an asset swap valued at $200 million to correct its liquidity issues
- Income tax was deducted from staff but the funds were not remitted as required by law
No comments:
Post a Comment