The professional association for realtors in the Cayman Islands has “expelled” two of its members for failing to comply with audit investigations following allegations concerning financial matters.
One of the two expelled firms – Cayman Real Estate Company – is the focus of a police investigation.
The firm’s boss, Tony Paolini, acknowledged he had “made a mistake” and broken CIREBA rules. Neither he, CIREBA, nor the police were prepared to specify the details.
But Mr. Paolini insists he has done nothing illegal and that the police investigation will vindicate him. He said, “I messed up, but I’m not a crook.” He added that he believes his firm has been dealt with “very harshly” by the Cayman Islands Real Estate Brokers Association, which, he says, did not give him a chance to explain his actions or appeal the expulsion.
A spokesman for the police financial crime unit confirmed that a 73-year-old man was arrested and bailed in January, “relative to financial irregularities involving a real estate transaction.” No charges have been brought at this point.
The other firm, Cayman Realty Consultants, said it was not expelled but chose to leave CIREBA after the association asked to investigate its books. Cayman Realty Consultants chief Luke McCoy said he was not prepared to let rival companies review his accounts.
He said he was considering legal action against CIREBA for potential economic hardship caused by an advertisement, taken out in the Caymanian Compass, saying his firm had been expelled.
In a statement to the Compass, CIREBA said it was within its rules and regulations to ask members to comply with an investigation when concerns were raised regarding financial matters.
“In both cases, cooperation with CIREBA’s investigation/audit was not forthcoming,” the statement read. “As a result, the board of directors took the decision to expel both of these member companies from the association.
“Because CIREBA takes its duty to protect the public seriously, the board also took the decision to advise the public through a paid advertisement that CRC and CARE have been expelled from the association.”
Mr. McCoy said he believes CIREBA was not acting in the best interests of smaller operators, such as his firm.
He said, “CIREBA has no authority to demand or inspect any private company’s books, they are not the police, courts or government, and to have other brokers come to go through your books and see the operations of your company, for what?
“It is like the USA telling Russia that they want to inspect their military to see if everything is in working order … you just don’t do that.”
Mr. McCoy said he had reluctantly joined the association around a year ago after concluding that it was difficult to operate in Cayman without being in CIREBA. He had previously brought a case against a CIREBA member, before joining the association, and won a higher share of a commission on a transaction – a conflict which he believes is at the root of the current situation.
Chief Justice Anthony Smellie, in his judgment in that case, questioned CIREBA rules preventing members from sharing proceeds from commissions equally with firms that were not part of the association.
He wrote, “While such covenants enforced by penalties may be effective as amongst CIREBA members in restraining dealings between CIREBA and non-CIREBA members, they can hardly be regarded as likely to foster competition in the public interest.”
Mr. McCoy cites the judge’s comments as evidence that the association is designed as much to protect the competitive interests of its members, particularly the larger firms, as it is to uphold ethical standards. He denies that his firm has done anything wrong, either ethically or legally.
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