Parliament committee questions Eximbank over potential forex abuse

Eximbank’s foreign-exchange allocation system came under sharp scrutiny on December 1 as the Public Administration and Appropriations Committee (PAAC) examined whether weaknesses in the national forex framework allow importers to “double dip” by presenting the same invoices to multiple banks.

Appearing before the committee, Eximbank executive Navin Dookeran outlined the bank’s methods for validating pharmaceutical importers and allocating scarce foreign exchange.

However, committee chairman, Speaker Jagdeo Singh pressed him repeatedly on whether those controls prevent manipulation outside of Eximbank’s operations.

Dookeran explained that Eximbank’s pharmaceutical facility, which serves roughly 30 companies, relies on financial statements, cost-of-goods-sold data, monthly trade reports, usage patterns, and supplier due-diligence checks to determine allocations.

“We do not ask only for invoices. We request full financial statements and use several empirical data points to determine the amount allocated to each company,” Dookeran said.

He added Eximbank pays international suppliers directly and vets unfamiliar suppliers through enhanced due diligence, including corporate searches and verification of banking details.

“In one case, Google Street View showed what appeared to be a residential house. We stopped that transaction immediately,” he said.

Singh, however, raised concerns that importers often create their own US-based supply companies with different ownership profiles, allowing them to mask related-party transactions.

“This allows for common ownership structures that are hidden. Is anything done to verify that the party issuing the invoice is not a related party?” Singh asked.

Dookeran maintained that Eximbank performs such checks, but Singh challenged if the bank could truly detect concealed ownership arrangements.

Another concern emerged when Singh asked if Eximbank has any mechanism to verify if an importer has already used the same invoice at another commercial bank.

“We do not currently have a transaction-level cross-check with other banks,” Dookeran said.

Singh seized on the point, asking if there is a lingering probability an importer can apply to a commercial bank with the same documents due to a lack of an integrated system to prevent “double or triple dipping.”

“Yes, you are correct,” Dookeran replied, agreeing with Singh’s point.

While Dookeran noted the Central Bank receives transaction-level reports, including invoice numbers, Singh argued it does not prevent abuse at the point of application.

“My point is whether the system, as it currently exists, is capable of being abused, and it is,” Singh said.

Dookeran emphasised Eximbank’s practice of paying suppliers directly reduces risk in its programme but agreed commercial banks are not required to do the same.

“As far as I am aware, some banks have started similar practices, but it is not a requirement,” he said.

Singh concluded a lack of real-time cross-bank verification leaves the overall forex ecosystem exposed.

“The system is fully capable of being abused,” he warned, “because there is no cross-referencing mechanism to prevent double or triple dipping into the foreign-exchange reserves.”

Independent Senator Dr Marlene Attz challenged claims made by the Private Pharmacy Retail Business Association that there is no shortage of forex, saying TT dependence on the energy sector has left it vulnerable.

She said declining domestic energy production since 2014 has reduced foreign-exchange earnings, while demand remains high, creating a “mismatch between demand and supply.”

Attz linked this shortfall to the price of pharmaceuticals, highlighting limited competition in the importation of generic drugs keeps costs high. She warned when a single company controls both brand-name and generic versions of a drug, prices remain inflated, denying citizens potential savings.

Representatives from the private pharmacy sector told the committee outdated drug-registration laws and restrictive recognition of foreign regulatory authorities prevent cheaper, high-quality generics from entering the market.

They stressed a large portion of generics now comes from India and Eastern Europe at significantly reduced costs, but these countries are not recognised as stringent regulatory authorities (SRAs) under current legislation.

Pharmacist Glenwayne Suchit said regulatory oversight is failing to allow the public to benefit fully from generics, citing potential savings of $174 million if the system were reformed.

Aneil Maharaj of ExecutivePRO echoed concerns, urging the Ministry of Health to proactively invite companies to register generics once patents expire, rather than waiting for a few firms to monopolise the market.

Responding, Ministry of Health permanent secretary Astif Ali explained the chief chemist and drug inspector regulates the approval process for all pharmaceuticals but does not control pricing.

He added the approval process applies equally to brand-name and generic drugs, and that safety verification is particularly challenging for products from countries without local regulatory representation.

Ali acknowledged while the requirements can be onerous for suppliers, they are necessary to prevent substandard or ineffective drugs from reaching patients, stressing that public safety remains the ministry’s top priority.