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| Madan Ramnarine: "Reasonably happy" with HCU until "things went awry from October 2003." |
The charge came from charter accountant Madan Ramnarine, who was the HC's external auditor.
Ramnarine said Harnarine told him, "Give us a clean report and we will sort you out". He said he refused to discuss any inducement and offered his resignation instead, which was initially refused. However the board later fired him.
Ramnarine gave an account of what he felt led to the problems that caused the collapse of the credit union. He said he "was reasonably happy" with the financial accounts of the HCU until "things went awry from October 2003".
He stated that the organisation was reluctant to provide a list of its "asset register" and information about the HCU's business dealings in Miami.
Ramnarine noted that in the 2003 financial year the HCU received $255 million in deposits and used $116 million to provide loans to members.
He added that in the first two quarters of the 2004 financial year the organisation received $85 in deposits but did not used any of it for loans. Instead the HCU invested the money in real estate and to provide funding to its subsidiaries.
Ramnarine described that trend as "disastrous", pointing out that while the HCU should have maintained a minimum liquidity position of 10 per cent of its deposits it kept it at only six per cent.
The witness said he brought the problem to Harnarine's attention, but Harnarine told him that within a week he could raise "$10 million in the morning to wipe out" the company's financial problems and correct the liquidity crisis.
Ramnarine said Harnarine sold properties to HCU subsidiaries at inflated prices
in an attempt to make it appear that the HCU was in a strong financial position.
He added that the HCU provided its subsidiaries with loans to buy the properties but he never saw documents to support the loans, which were never repaid.
The accountant said these issued made it impossible for him to complete the accounts for 2004, which led him to produce a draft report noting the deficiencies. He said it was at that time that Harnarine made the offer of an inducement.
The witness said he brought the problem to Harnarine's attention, but Harnarine told him that within a week he could raise "$10 million in the morning to wipe out" the company's financial problems and correct the liquidity crisis.
Ramnarine said Harnarine sold properties to HCU subsidiaries at inflated prices
in an attempt to make it appear that the HCU was in a strong financial position.
He added that the HCU provided its subsidiaries with loans to buy the properties but he never saw documents to support the loans, which were never repaid.
The accountant said these issued made it impossible for him to complete the accounts for 2004, which led him to produce a draft report noting the deficiencies. He said it was at that time that Harnarine made the offer of an inducement.
Ramnarine said in the 2004 financial year the HCU had $56 million in delinquent loans, of which $33 million were unsecured. He said the list of delinquent loans included staff members. He said fees and stipends for directors doubled and cleaning and janitorial services went up by $1 million.
Ramnarine also charged that officials instructed staff to stay quiet about all these irregular financial developments. At that time staff started to complain because they were unable to access salaries.
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