Open letter to the Minister of Finance on The CL Financial bailout

Honourable Minister,

This government agreed a bailout of the CL Financial group and announced that on 30th January 2009.

It was an historic step and the stated reasons for so doing were to ensure the stability of the national/regional financial system.  The size of the CL Financial group at some $100Bn, as well as the sheer reach of its activities, were cited as part of the rationale for the bailout.  The interests of depositors and policyholders were to be safeguarded by this State intervention.

Since the signing of the Memorandum of Understanding on 30th January 2009, several serious concerns have come to light and those have been highlighted in the press.

This letter is intended to form part of the formal record in this matter.  Its principal concern is the actual size of the bailout commitment.  According to your statement to Parliament on Wednesday 4th February 2009, the Executive Chairman of CL Financial estimated its assets as being worth $23.914Bn.  That statement is taken from page 628 of Hansard and can be accessed at  Mr. Duprey’s estimate was stated by you to form part of his letter of 13th January, as Executive Chairman of CL Financial, to the Governor of the Central Bank.

What possible justification could there be for repeatedly stating that the CL Financial group had about $100Bn of assets, if Mr. Duprey estimated the figure to be $23.914Bn?

There are 3 possibilities here –

  1. Firstly, PWC’s Consolidated Balance sheet for the CL Financial group is accurate in disclosing an Asset Value of $100.666Bn.  CL Financial’s Consolidated Balance Sheet is at page 23 of their Annual Report 2007 ‘The Next Wave of Growth’ –  Those audited accounts, as at 31st December 2007, were published on 18th November 2008.
  2. Secondly, CL Financial’s letter of 13th January 2009 to the Governor of the Central Bank, signed by its Executive Chairman, Lawrence Duprey, is accurate in disclosing an asset value of $23.914Bn.
  3. Thirdly, if we accept that the first and second statements are both correct, we would have to somehow account for the dramatic decline in the CL Financial Asset values.

In his prepared address to the 30th January press conference to announce the CL Financial bailout, the Central Bank Governor was clear in his appreciation of Mr. Duprey’s stance in the matter “..I would like to acknowledge the high level of cooperation that we have received from Mr. Duprey in our efforts to address what must be a very difficult period for the CL Financial Group.”  It is reasonable to assume that the high level of cooperation referred to by the Governor would have been accompanied by levels of frankness, good faith and full disclosure.  It is therefore all the more puzzling when one considers the Governor’s statement, made in that very address –

“…For the record, ladies and gentlemen, the CL Financial Group has an imposing presence with potentially systemic consequences for the financial sector and the economy of Trinidad and Tobago and the entire region.

For example,

  1. The Group controls over ($100) billion of assets in at least 28 companies located throughout the Region and the world.
  2. The Group’s financial interests cover several industry sectors including banking and financial services, energy, real estate and manufacturing and distribution. The four largest financial institutions in the Group manage assets of over $38 billion, over 25 per cent of the country’s GDP.”

How can one possibly reconcile that official account, made to justify the bailout, with Duprey’s letter, clearly stating that the assets are worth $23.914Bn?

What could have caused such a dramatic decline in CL Financial’s asset values?  The intervening period could either be 12 months and 13 days or 56 days, according to how you count it.  Either way, it is a tremendous decline.  Our Treasury is now committed to restoration of asset values – as per the Angostura Notice to Shareholders of July 2009 – we must understand the reasons for the decline in asset values.

The audited accounts of the CL Financial group for 2008 are now easily overdue and it would be instructive to consider the Balance Sheet as at 31st December 2008.  That would be a mere 13 days before Mr. Duprey wrote to the Central Bank Governor.  Has CL Financial’s audit for 2008 been completed?  If not, why not?  If yes, why the delay in its publication?
This is an aspect of the fiasco which has not been discussed in public, so far.

Your urgent and public response is now needed on these important points –

  1. CL Financial 2008 Audited Accounts – When are these to be published?  What is the reason for the delay in doing so?
  2. The second MoU with CL Financial – The first MoU was published on the Ministry of Finance website on 9th April, 9 weeks after it was signed.  Using even that slow timetable, the new MoU is overdue for publication.  Some 16 weeks have now elapsed.  What is the reason for its omission from the Ministry’s website?  The second MoU creates new and onerous commitments for the country and its publication must no longer be delayed.  I emailed you on 19th September to request your clarification on this, but there has been no reply.
  3. Forensic Audits – We have seen various official reports of forensic audits being carried out at CL Financial and some of its subsidiaries.  Have these been completed?
  4. The interest rate – What is the interest rate being charged to CL Financial for this open-ended financial assistance?
  5. Status Reports – We have had no interim reports as to the disbursement of State funds or the disposal of CL Financial Assets.  When do you intend to start providing regular reports on the progress of the bailout to the public?
  6. The equity position – How is the equity position of the shareholders being adjusted in this deal?  Has their shareholding been diluted to reflect the position?  Has the State now taken an equity position in the group?  If not, what is the upside for the State in all this?

Afra Raymond


One thought on “Open letter to the Minister of Finance on The CL Financial bailout

  1. Afra this is the the most searching article written on this topic. I commend you for your order, pertinence and relevant questions.

    It is said that pledges were made to third parties
    by CLF Chairman Mr. Duprey using such valuable assets as Republic Bank as collateral. Government should tell us if that is true and if so, what is the quantum.

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