The headline ‘Duprey wants back CLICO‘ in the Sunday Express of June 28th 2015, did not surprise me at all. That is exactly the threat against which I have been warning throughout my campaign against this appalling and unprecedented bailout.
To allow Lawrence Duprey to regain control of CLICO would do serious violence to the fundamental notions of the law not allowing persons to benefit from their wrongdoing.
Already, we can see various positions being taken – the Movement for Social Justice and Peter Permell of the CLICO Policyholders’ Group stating their objections, while Mariano Browne (former PNM Treasurer and Minister in the Ministry of Finance) and Mary King (economist and former Minister of Planning) setting out what seem to be supportive positions.
The arrangements have been set in place a long time ago to facilitate exactly this move by Duprey at his convenience. It would be a travesty for us to allow this to proceed. If I am to believe certain reports, it may already be too late to stop Lawrence Duprey, so the facts must be stated clearly. It was reported that Duprey’s lead attorney for his intended legal action is former Attorney General Ramesh Lawrence Maharaj SC, while his negotiations with the other shareholders are former Hindu Credit Union (HCU) President, Harry Harnarine, former CLICO CEO, Claudius Dacon and former CLICO Agent, Carlton Reis.
The 27 March 2015 announcement by the Central Bank Governor of the ‘Resolution Plan’ for the bailout was intended to signal that the State had seen clearly how to recover all the Public Money advanced to CLICO in this massive bailout. It seems that with all the monies owed now being reported as either repaid or otherwise secured, Duprey is prepared to make a case to regain control of CLICO. It also seems that other claims of breach of contract and oppression are to be made.
This entire discussion is only possible because of two important aspects of the bailout – firstly, the shares remained with the original shareholders and secondly, the entire huge loan to repay all of CL Financial’s creditors was made interest-free. If the State had taken the shares at the outset or even a modest rate of interest had been charged, we would not be in this damaging position.
The fact is that the decision on the bailout terms were made by the responsible officials in negotiations during the first half of 2009. Those officials were in the Cabinet of the previous government and the bailout was presented to the public as a ‘done deal’.
In my view the respective officials need to give some explanation as to how and why these beneficial terms were extended to the CL Financial group. Some of those people appear unlikely to seek public office again, but others are certainly in the forefront of this heated election season with prominent roles as spokespersons. For the record, those high officials include –
- PM Patrick Manning,
- Finance Minister Karen Nunez-Tesheira,
- Mariano Browne,
- Colm Imbert and
- the PNM Chairman and Minister of Energy, Conrad Enill.
We need to hear from those persons who are responsible for negotiating this series of concessions.
Fit & Proper?
Apart from those critical elements of the bailout agreements, there is also the fact that the Central Bank has established rules to restrict the people who operate our country’s financial institutions. The ‘Fit & Proper’ Regulations are an essential control in deciding on the persons and entities who can own or serve as Directors, Officers, Auditors and Actuaries of Financial Institutions.
These Regulations define a person of ‘Good Character’ as follows –
- 8.1.7 Whether the person has been a director, partner, or otherwise involved in the management of a business that has gone into receivership, insolvency, or compulsory liquidation while the person was connected with that organization or within a reasonably short period (e.g. one year) after the person’s departure from the institution;
- 8.1.8 Whether the person has been dismissed, asked to resign or resigned from employment or from a position of trust, fiduciary appointment or similar position because of questions about honesty and integrity;…
- 8.1.10 Whether the person has not been fair, truthful and forthcoming in dealings with customers, superiors, auditors and regulatory authorities within the past ten years and has been the subject of any justified complaint relating to regulated activities; and
- 8.1.11 Whether the person demonstrates a readiness and willingness to comply with the requirements and standards of the regulatory system and other legal, regulatory or professional requirements and standards…
It seems clear to me that Lawrence Duprey does not qualify as a person of ‘Good Character’ as defined in these Regulations.
At the first page of the Central Bank Statement of 27 March 2015 is stated –
“…CLICO Resolution Plan was developed to repay all creditors and policyholders and to ultimately facilitate the transfer of CLICO’s traditional insurance portfolio to a suitable buyer by ensuring that enough appropriate assets are put aside…” (emphasis mine)
The acid question is whether the Central Bank can find the will to pursue the proper enforcement of these important regulations. Any decision to apply the fit & proper tests to Lawrence Duprey would raise questions on other parties who were serving before the crash.
Some of those other parties would be –
- Andre Monteil – former CL Financial Group Finance Director, PNM Treasurer and Chairman of several State Enterprise Boards.
- Dr Bhoe Tewarie – former CL Financial Board Director, now serving as Minister of Planning & Sustainable Development.
- Faris Al Rawi – Former Director of Clico Investment Bank, now a PNM candidate for the upcoming elections.
- PricewaterhouseCoopers – former auditors for CL Financial.
It seemed to me that the insertion of the conditional ‘suitable’ in the Central Bank statement was an intentional way to signal that the Fit and Proper Regulations could play a decisive role in this matter. We will see.
Code of Silence?
Duprey refused to testify to the Colman Commission, preferring to run the risk of paying the paltry $2,000 fine for that. I deplored that failure as something no responsible person could condone since it effectively undermined a lawfully-appointed enquiry which was intended to establish the facts about a situation of great public concern. If we deplore Abu Bakr’s no-show at the ‘Coup Enquiry’ then Duprey’s must also be deplored.
For the record, the five responsible parties who refused to appear before the Colman Commission were –
- Lawrence Duprey – Executive Chairman of the CL Financial Group
- Andre Monteil – former CL Financial Group Finance Director and PNM Treasurer
- Mariano Browne – former Minister in the Ministry of Finance and PNM Treasurer
- Conrad Enill – Former Minister in the Ministry of Finance and PNM Chairman
- Danny Montano – Former Minister of Labour.
The Chairman of the Enquiry lamented the refusal of those persons to give evidence which could have assisted in unravelling just what had gone wrong. To me, this conduct seems to amount to a kind of Contempt of Court from our leadership class.
I was not at all surprised at Duprey’s claim that he had been ‘duped’ in the bailout negotiation. That is the typical when someone is trying to escape fundamental responsibilities and conveniently play victim. Surely Lawrence Duprey would have had solid legal, financial and commercial advice in negotiating this bailout. It seems unlikely to me that Duprey was outwitted.
FREEDOM OF INFORMATION?
The final point is really the starting-point, since one of the serious criticisms of the entire bailout arrangements is that there was no legal or financial due diligence to define just what the parties were agreeing to. That lack of information at the start has continued to this day, with no audited accounts for the CL Financial group or any details as to the payout of $25 Billion of Public Money.
Before any decision to return CL Financial or any of its parts to the control of its former owners, there must be a full and proper accounting of those vast sums of Public Money. One of the points advanced by the State in my litigation for that information was that CL Financial was not subject to the Freedom of Information Act, since it was a privately-owned company. Of course my request was to the Ministry of Finance, which is subject to the FoIA, so the point was never argued.
‘Public Authorities’ are subject to the FoIA and they are defined at S 4 (k) as “…a body corporate…which is supported directly or indirectly by Government funds and over which Government is in a position to exercise control…” CL Financial is definitely supported by ‘government funds’ and the government appoints the majority of its Directors, so the details all constitute public information to which we are lawfully entitled.
Sunlight is the best disinfectant.