CL Financial Bailout – The Real Case

Sen. Larry Howai, Min of Finance
Sen. Larry Howai, Min of Finance & the Economy

In 2013 I sued the Minister of Finance & the Economy for his continuing failure or refusal to provide the details relating to the huge $25 Billion bailout of the failed CL Financial group.

On Wednesday 22 July 2015, the High court ruled in my favour by ordering the release of all the requested information.

The basic principle behind the Freedom of Information Act is that the information held by Public Authorities belongs to the public, unless one of the valid exemptions is applicable.

The Court also granted the State a 28-day stay of execution which seems intended to allow them the time to decide whether to appeal before they have to provide the requested information. Given the ongoing Information War and the high stakes to maintain the ‘Code of Silence’ in relation to this bailout, I would not be at all surprised if the State were to appeal against this ruling.

The unexplained gap

On 1 October 2010, the Prime Minister addressed Parliament to explain that $7.3 Billion had been spent on the bailout and that a further estimated $7.0 Billion was required to settle all debts. That is a 2010 estimate of $14.3 Billion to settle the CL Financial bailout, but the current estimated cost of the bailout is in excess of $25 Billion. That means that over $10.5 Billion more than the 2010 estimate has been spent, so where did all that extra money go? That information and the defined official policy of secrecy are at the heart of this scandal.

The ruling

So what details has the Court ordered published? That explanation is critical to mapping this epic financial crime.

  1. The Accounts

    I requested –
    CL Financial Limited’s audited financial statements for the years 2008-2011 along with any interim, preliminary, draft or unaudited statements which have been relied upon by the Minister of Finance.

    In the absence of the audited accounts, which absence is still unexplained, the Court ordered publication of

    “…Any interim, preliminary, draft or unaudited statements for the years 2008-2011 which were relied upon to prepare the affidavit of Minister (of Finance) Winston Dookeran filed on 3 April 2012 in High Court proceedings CV 2011-01234 Percy Farrell and Others v Clico and Others…”
    [para 50 (i)]

    Even if one concedes that there are no audited accounts available for CL Financial, which has been under State control for the past six years, what could possibly be the objection to releasing ‘… Any interim, preliminary, draft or unaudited statements for the years 2008-2011…’? Is it that those unaudited statements, upon which the Minister of Finance must have been relying, cannot withstand serious scrutiny? Are these figures, which we have been fed from time to time, based on some questionable data or assumptions?

    It is important to note that at no point in the litigation did the State ever deal with the figures the Minister of Finance was using. The State arguments were restricted to the unavailability of the audited accounts. In my view, the silence on the Minister’s data was an eloquent one.

  2. The briefing of the Senators

    I requested –
    The presentation made to Members of Parliament in September 2011 as a briefing for the debate on The Central Bank (Amendment) Bill & The Purchase of Rights and Validation Bill 2011 including copies of all slides, power-point slides, tables, charts, schedules, text or other information which comprised that presentation.

    The Court ordered publication of that information and noted in para 25 of its ruling that “…Either a presentation had happened or not…”.

    So, the State has never denied that this briefing of our Parliamentarians took place as described, they simply refused to share the contents of that briefing. In my view, that is a real abuse of office to brief our Parliamentarians on important proposed laws and to do so in a calculated fashion so as to deny the public any details.

  3. The details of the payout

    I requested –
    Any other information or analysis as to the composition of the creditors of CL Financial, in particular EFPA holders, the dates of repayment and the identities of those whose investments have been repaid.

    The Court ordered publication of –

    “…Any list of the creditors of CL Financial as at the date of the request, the names of the EFPA holders, the dates of the repayment of EFPA holders and the identities of those whose investments have been repaid…”
    [para 50 (iii)]

    This ruling effectively repudiated the concerns raised by the State as to the rights of those investors to confidentiality. This has been a contentious point, with investors claiming that they made a confidential investment so their rights are paramount.

    But the point has to be taken in two aspects.

    1. Firstly, if the investment had remained entirely private, it would indeed have enjoyed its confidentiality. As soon as Public Money started to be spent in those vast amounts to refund these investors and creditors, the private arrangements under which they are claiming cover was entirely changed. It is against every tenet of good sense and proper public administration that these vast sums of Public Money be spent in secret.
    2. Secondly, the secrecy which has disfigured this entire questionable bailout is exactly the kind of turbid arrangement which financial leeches and tricksters revel in. Without all the details of all the payments, we will never know how that bailout total ballooned from its 2010 estimate of $14.3 Billion to today’s estimates in the $25 Billion range. We will never know who got what, when and on what pretext. Who got interest and how much? Who was denied interest? All these questions and more will remain unanswered without all the details.

In January 2009, we were told that the bailout was estimated to cost $5 Billion. In October 2010, we were told an estimated $14.3 Billion would cover the cost of the bailout. Today’s estimates are five times more than the original. What is worse, in the absence of proper accounts or details, there is absolutely no way to know just how much Public Money has actually been paid out.
paying the devil

The State’s right to appeal

At this point, the State has the right to appeal this ruling. An appeal would be a clear statement as to the control which the unseen elements exert over our rights. Our money, Public Money, is being spent to rescue a reckless financial group and its chiefs from the consequences of their decisions, yet our right to the detailed information is being strongly opposed. The State, which should be seeking the Public Interest, seems to me to be elevating private interests to the status of a State Secret. That is where our Republic is.

The State has argued its case and the High Court has ruled. The Minister of Finance & the Economy should now place the public interest first, as required by both his Oath of Office and the Freedom of Information Act. The requested information must now be published. The Public Interest demands nothing less.

Sunlight is the best disinfectant. Come clean.

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6 thoughts on “CL Financial Bailout – The Real Case

  1. Nothing is predestined: It’s been said there is a philosophy of life that difficulties vanish when faced boldly.
    You are a man of virtue you make the difficulty of overcoming first business, success only a subsequent consideration. Confucius
    Keep fighting the good fight of faith~

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