Trini bank insider trading scandal…Players make major move on Dem Bank shares

Dec 24, 2017 News

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More than three years after a major scandal involving insider trading at a Trinidad bank, there is evidence that the players have now cast their eyes to Guyana.
They recently began buying up large chunks of shares in the locally-owned Demerara Bank.
According to trading information publicly available, Olympic Manufacturing Limited– on November 27, purchased 3,500,000 shares at $35.60 per share. It paid out to $124.6M.
On December 4, another company, Bourse International, purchased 4,500,000 shares at $35.60 per share- this transaction was valued at $160.2M. Both Olympic Manufacturing and Bourse International are based in Trinidad. They are also closely linked.
The shares were purchased from First Caribbean International Bank (Barbados) Limited.
In the last three years, the two transactions are by any means the largest trade for any shares in Guyana, according to analysis of information on the Guyana Stock Exchange website.
The transactions would have definitely triggered questions for authorities in Guyana. The two companies- Olympic Manufacturing and Bourse International were at the centre of a scandal in Trinidad and Tobago in early 2014 when the state-owned First Citizens Bank was going public with its shares.
Officials of the Guyana Securities Council could not be immediately reached over the weekend to confirm that it is looking at the matter.
According to Trinidad media reports of the scandal in which several bank executives were fired and there were resignations of regulators.

On the morning of January 14, 2014, businessman Imtiaz Rahaman, chairman of Bourse Securities and the cousin of former First Citizens executive, Philip Rahaman, purchased 377,000 shares of the state banking group.
Imtiaz Rahaman’s mother, Alia Rita Rahaman, bought 33,000 First Citizens shares.
Both Imtiaz Rahaman and his mother have the same Vistabella-registered address in their share ownership of First Citizens at the Share Register of the Trinidad and Tobago Stock Exchange (TTSE).
On that same day, five companies owned by the Rahaman family, which comprise the Rahamut Group, also bought blocks of First Citizens shares. The five companies were Rahamut’s Service Station; Olympic Manufacturing Ltd, Caribbean Metal Industries Ltd., Cedi Holdings Ltd., and Olympic Rentals Ltd.
The total share acquisition, through seven trading deals by the Rahaman family and the Rahamut Group, was 634,588. These shares were owned by companies with interlocking directorates, on that January 14 morning.
That was the day Philip Rahaman, former chief risk officer of the bank, disposed exactly 634,588 of First Citizens’shares he’d purchased during the company’s Initial Public Offering (IPO) on September 6.
Rahaman, who had paid TT$14.5 million for the shares, sold the 634,588 shares for TT$26.7 million, making a profit of approximately TT$12.2 million.
In addition, he had also pocketed TT$718,950.92 in dividends from the bank in December.
Rahaman was fired from the bank in late March 2014 following an internal audit by the bank on his purchase of 659,588 First Citizens’ shares and the subsequent sale of 634,588 of those shares four months later. The bank said it had lost confidence in its chief risk officer.
He had acquired the shares from the undersubscribed employee bucket when the government divested 19.3 per cent of its stake in the bank.
By the volume of shares which they have acquired, the group has become one of the largest shareholders of First Citizens, the Trinidad Express reported.
The transaction, the Banking and General Workers Union (BIGWU) alleges, constitutes insider trading.
It was the subject of investigations by the Securities and Exchange Commission (SEC), the TTSE and PricewaterhouseCoopers (on behalf of the Ministry of Finance).
Rahaman used Bourse Securities, at which Imtiaz was a former director and executive chairman, as his broker for his transaction.
The Sunday Express reported that in this transaction, Bourse was the broker for both parties—the buyers (the Rahamans and the Rahaman companies) and seller (Philip Rahaman).
Bourse Securities was headed by Subhas Ramkhelawan, an independent senator, who is also chairman of the TTSE.
The then Finance Minister, Larry Howai, has said the SEC had hired a team of forensic investigators from Canada to investigate the matter.
First Citizens Bank’s Chief Executive Officer, Larry Nath, resigned and Philip Rahaman was fired.
All the First Citizens directors who served during the IPO were replaced, most notably the bank’s chair, Port-of-Spain attorney Nyree Alfonso, who resigned just before a June 17, 2014 special meeting on the issue.
The subsequent 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.
Nath was recently named as the Chief Executive Officer of the Guyana Bank For Trade and Industry.
The purchases of the shares of Demerara Bank reportedly happened after this appointment.
Nath’s appointment is being probed by the Guyana Securities Council as well as Central Bank.

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