This is the CL Financial letter of 13th January 2009, signed by their ‘Trinity Chief’ Lawrence Duprey, for readers’ comments. I dub Lawrence Duprey the ‘Trinity Chief’ since he was the majority shareholder, Chairman of the Board and CEO of CL Financial.
I made three applications for this document under the Freedom of Information Act. The first was to the then Minister of Finance, who held over 10,000 shares in CL Financial, Karen Nunez-Tesheira. The reply to that application directed me to the Central Bank, to whom the letter was addressed, which was an obvious ploy to thwart my enquiry, since Central Bank is immune from the Freedom of Information Act. My two subsequent applications (2 & 3) to the current Minister of Finance, Winston Dookeran, have done little better – those were never even acknowledged.
It seems to contain the same text as the one Karen Nunez-Tesheira read into Hansard on 4th February 2009 – see ‘Finding the Assets‘ – except that the table in the copy is titled “CL Financial Group – Assets Available for Restructuring“.
The current talking-point is the major lawsuit launched by the Central Bank against CL Financial sowatees, Lawrence Duprey and Andre Monteil.
From what has been in the press, the lawsuit seems to be aimed at recovering huge sums of money alleged to have been improperly taken from the CL Financial group.
There has been a mass of press comment and the reactions have ranged from relief at the launch of the lawsuit to great skepticism as to its duration, cost and effectiveness.
In the Business Guardian View of June 9, entitled ‘The path of good intentions‘, the Editor-in-Chief of that newspaper set out cogent grounds for his skepticism on the new Central Bank lawsuit. The old saying comes to mind – The road to hell is paved with the very best intentions.
For my part, I am doubtful of the choice of targets in the apparent attempt to deal with this financial fiasco.
The early questions emerging from this action by the Central Bank are for me ‘Why this lawsuit?’ and ‘Why now?’.
In the case of the CL Financial fiasco, the basic ‘fit and proper’ requirements have been ignored by the Central Bank, exposing us all to continued levels of risk.
The fit and proper requirements set a standard for those people who are responsible for the safe custody and investment of our monies. If they are upheld as an important part of the financial system’s architecture, they contribute to stability and confidence.
If they are not upheld, for whatever reason, we are all left to wonder, what is the point of having yet another set of rules which are not being enforced?
Here is an outline of the bare facts –
The ultimate Trinity – Lawrence Duprey was the majority shareholder, CEO and Chairman of the Board of the CL Financial group. In those multiple senses, he was the Chief of chiefs and the main figure of authority.
The Duprey letter – That elusive bailout request of 13 January 2009, signed by Lawrence Duprey, on CL Financial letterhead is the most solid piece of the puzzle. The plain meaning of that letter is that the CL Financial group had run out of money and was in imminent danger of insolvency. The reading of that letter into the Hansard on 4 February 2009, appeared to have been motivated by the desire of the then Minister of Finance, Karen Nunez-Tesheira, to protect her reputation from allegations of insider-dealing. That the signature on that letter was Lawrence Duprey’s is important. Having made three fruitless applications under the Freedom of Information Act, it seems clear that there is no will to disclose the Duprey letter.
The bailout negotiations which were consequent on the request are additional proof of the ‘failed or failing‘ companies.
The 30 January 2009 MoU was irrefutable proof that 5 companies had failed – CL Financial, Clico Investment Bank (CIB), British American Insurance, CLICO and Caribbean Money Market Brokers (CMMB).
Given the background, a finding by the Central Bank that the Directors and Officers of those 5 failed companies are no longer fit and proper would have been incontestable.
That action would have sent a strong and unmistakable signal that this type of costly failure cannot occur without some sanction. Of course we know of the deep links between the PNM party, then in government, and the CL Financial group. I have also written about the fact that these CL Financial chiefs are embedded into all our political parties and that is one of the externalities of this entire fiasco.
The Central Bank never took that line of action against the CL Financial group. Throughout all this time, the Central Bank has never disclosed its reasons for not implementing these elementary safeguards, which led to the position of four of the former Executive Directors of CMMB being able to obtain a licence to open yet another investment house in late 2010, KSBM.
The CL Financial group has failed on a colossal scale, so what are the penalties to be levied against their Directors and Officers?
The sidebar shows a Central Bank letter of May 2011, which is clear and strong in calling for the rigorous application of the fit and proper standards to all Directors and Officers of insurance companies. That letter was signed by the Inspector of Financial Institutions, Carl Hiralal, so the call for upholding of the correct standards came from the very top regulator. No right-thinking person could object to its contents. I think it is a strong and necessary letter.
The emerging issue for me here, given these events, is the extent to which our Central Bank could be under political control. What is the desirable level of political control to which the Central Bank should be subject?
Those questions on the degree of independence of the Central Bank would inevitably lead to consideration of the charged issue of campaign finance/political party funding. There is considerable evidence that CL Financial made large political donations and that is a key part of the story here.
So, to summarise on the new lawsuit, the Central Bank did not take the effective, incontestable actions available to it in the CL Financial matter. It chose instead, having steadfastly maintained its silence on its inaction, a complex, risky and expensive course of action. Why?
What are the results of this new lawsuit?
The Central Bank at last appears to be taking decisive action
The forensic reports are now placed outside the consideration of the Colman Commission, which can limit damage to the CL Financial chiefs and the regulators, auditors etc. That is because the Colman Commission is televised with its daily proceedings posted onto its website, while the High Court is proceeding under antiquated rules which prohibit any private recording devices, cameras or even the use of pen and paper!
The potent issue of ‘double jeopardy’ will no doubt rear its head, sooner rather than later, with the probable effect of derailing the Colman Commission.
The big question for me, given their positions, is whether the Governor of the Central Bank and the Inspector of Financial Institutions are themselves fit and proper to continue in their ruling on this matter. If any decision has to be made on this CL Financial matter, it will only be human for them to give some consideration to how that decision might possibly affect their individual interest, as the responsible people for such a significant period in the build-up to this fiasco.
* In response to a question whether he took part in the reported decision to pay CLF dividends even after the approach to the State in 2009.
CL Financial’s final Annual General Meeting was the most interesting meeting in the saga of its collapse.
That meeting took place at the Trinidad Hilton on Friday 23 January 2009, so consider the timeline –
18 November 2008 – CLF publishes its 2007 Annual Report, including its audited accounts, which showed assets of $100.666Bn and after-tax profits of $1.74Bn.
13 January 2009 – CLF writes, under Lawrence Duprey’s signature, to the Governor of the Central Bank to request urgent financial assistance. See pg 628 of Hansard of 4 February 2009 for the text of that letter, which specified that CLF’s asset value was $23.9Bn.
16 January 2009 – CLF pays a dividend of $3.00 per share.
23 January 2009 – CLF convenes its final AGM before the ‘official’ collapse.
30 January 2009 – The bailout of CLF is announced at a Press Conference at the Central Bank. All the speakers at that event stated the CLF asset value at $100Bn.
Given that the normal function of an AGM is to inform a company’s shareholders and stakeholders of its performance and prospects, that timeline raises some intriguing questions.
For whatever reason, there have been no published reports of that final CLF AGM, so I posed these questions to a CLF shareholder in an email exchange –
Q Did you attend that AGM?
A Yes
Q Was it at the Ballroom of the Trinidad Hilton on Friday 23rd January 2009?
A It was at the Hilton but not in their ballroom. It was in one of the restaurants/meeting rooms that overlooks the Savannah. Can’t remember the name.
Q About how many shareholders were there in attendance?
A I would guess about 30-40
Q Which Directors were present?
A Clinton Ramberansingh, Rampersad Motilal, Bhoe Tewarie, Gita Sakal and Michael Carballo.
Q Which Executive Directors were present?
A Roger Duprey (I think)
Q What was the ‘tone’ of the meeting? Was there any clue as to the grave difficulties facing the CLF group? Was the ‘bailout letter’ mentioned at all?
A The tone of the meeting was “normal”. There certainly was no indication that CLF (or the CLF group) was in any imminent danger. The effects of the global downturn was mentioned in light of the reduced dividend (from $5 to $3) and we were told by Carballo that although the group, like everyone else, was feeling the effects of the global recession, it was still performing well and that he expected the performance to improve over the course of the coming year. One interesting “fact” that did emerge (I say “fact” because I have no idea as to the veracity of the claim) had to do with the value of CLF shares. One shareholder had complained about not really being able to derive any value from his CLF shares apart from receiving a dividend. No bank would accept it as security. Carballo advised that CIB would accept the shares as security for a loan………….had I known I’d have taken a big loan and never paid it back!! Certainly the bailout letter was never disclosed to the shareholders.
If true, this account of the events is deeply disturbing.
The question is whether CLF’s Independent Directors were aware of its true position. Could it be that the Board was unaware of Duprey’s letter and that they were surprised when the bailout was announced? If that were the case, it would mean that Board of Directors was kept in the dark over this bailout.
If the Board was informed as to the bailout letter, we would be contemplating an even more unacceptable case. If that is what happened, it would have been fraudulent for the CLF Directors to have carried out that AGM without informing the shareholders of the company’s true position.
Michael Carballo was the CLF Group Financial Director since Andre Monteil’s retirement in early 2008. Given Carballo’s position in the group and the high quality of his professional skills, it is very difficult to accept that he did not himself know CLF’s true position.
Dr Bhoe Tewarie swearing-in
According to this email exchange, neither Lawrence Duprey nor Andre Monteil attended CLF’s final AGM. With only one week to go, they would likely have been attaching more priority to the negotiations for the bailout.
So, Dr. Tewarie – a shareholder and former Director of CLF – is now appointed to Cabinet at the very moment that it is reviewing the bailout of the same CL Financial group. That man, noted in the field of business education – his last post, before this appointment, being Director of UWI’s Institute of Critical Thinking – when asked about his attendance and participation in the Board meeting which approved those CLF dividends is reported to have said – “…I cannot remember, I may have, I cannot remember the exact timing, I may have—I don’t know…The records would indicate whether I did or not...”.
We are being asked to believe that Dr. Tewarie cannot really remember this meeting, probably the final one before CL Financial folded and likely the most eventful in even a high-profile career such as his. The old people have a saying that you start as you mean to go on. Dr. Tewarie’s reply can hardly inspire confidence. It verges on being dismissive and disrespectful of the public. We are paying for all the mess created by CL Financial and yes, that is the same public Dr. Tewarie just swore to serve. It does not augur well.
The essential questions for Dr. Tewarie include his attendance and participation in this final AGM and what he knew about the state of the group at the time.
It seems unacceptable to me for holders of high office in our country to be persons who would be disqualified under the ‘fit and proper’ criteria. That practice must be revised as part of the New Politics we are being promised.
Given the tremendous stakes and the complete silence by all the responsible people, we need to ensure that this affair does not carry our country any further into peril.
These responsible and silent people must be banished into obscurity, at the very least.
SIDEBAR
PricewaterhouseCoopers
It is a well-established custom that AGMs of large organisations are attended by the responsible partner of the auditor’s firm, who reads the auditor’s letter to the audience. Did a partner of PriceWaterhouseCoopers attend this meeting? Which one? Did a PwC partner read aloud that auditor’s letter?
Real Responsibility
On the one hand, a Cabinet Minister is dismissed over a $100,000 contract and I consider that to be good progress in the correct direction. The fact that a reasonable suspicion had arisen cost that Minister her job, which is good. In keeping with the State’s exemplary behaviour, our leaders should not behave in a fashion which causes suspicion or derision.
On the other hand, we are seeing a replacement Cabinet Minister, who at last record was known to be a shareholder of the huge, failed CL Financial group and one of its Board Directors at the time of the colossal crash. The official version is that CL Financial is a $100Bn group. There have been recent reports that the Cabinet is about to consider a new approach to the bailout and the public is bound to wonder at the timing of this appointment.
Fit and Proper
The Central Bank’s ‘Fit and Proper’ Guideline (sic) sets out the official position as to the type of person held to be ‘fit and proper’ to be a Director or Officer of a Financial Institution.
It states –
3.1 In accordance with governing legislation a person is considered to be fit and proper if the person essentially is of good character, competent, honest, financially sound, reputable, reliable and discharges and is likely to discharge his/her responsibilities fairly.
The PP government is establishing a ‘new normal’ insofar as ethics and acceptable standards of behaviour in public office are concerned. As with any real-time and complex situation, the signals are mixed, but from my point of view, the direction is a welcome one.
To me, the main positive signs were –
Coup Enquiry – The July announcement of the Commission of Enquiry into the 1990 attempted Coup, now underway, was most welcome. It seems certain that we would still be waiting in vain, if either Manning or Panday were still in power.
CL Financial bailout – Dookeran’s decision to review the payout to beneficiaries of the bailout was necessary and long-overdue. Dookeran has done his cause no favours by with-holding the accounts and seeming to suppress vital information, but the decision to revise the bailout terms was a sound one. On that occasion, he also took the steps of introducing relief for Hindu Credit Union depositors, which was a step in the direction of equity. Even those of us who did not support any bailout can concede that point.
On October 1, the Prime Minister resisted the temptation to use the PP’s Parliamentary majority to force through a new law to limit the legal rights of CLICO policyholders. The PM chose to set aside that legislative proposal and embark on an act of persuasion. That was a defining moment in our nation’s development of a democratic culture. The announcement of a Commission of Enquiry into the entire financial collapse (CL Financial and HCU) was another high point.
Nizam Mohammed’s removal as Chairman of the Police Service Commission was overdue in my view, but not because of his ‘last-ditch/red-herring‘ attempts to martyr himself. His primary and unpardonable offence, given his position, was his bold-faced abuse of power in that traffic police episode.
Mary King
Even Mary King’s removal from office earlier this week was a welcome sign despite the doubts over who knew what and when. That was a good move because it is the first time a Minister has been fired for acting in a manner which causes reasonable suspicion. Up until now in this country the rule followed by the various Ruling Parties has been the ‘wrong and strong‘ one, joined-up with the ‘do as I say and not as I do‘ one. To have moved away from those immoral practices is a big step in the right direction, despite the ragged edges.
Even when I consider the disastrous Reshmi-gate episode, that list adds up to substantial progress in the right direction. Democracy is a messy affair and coalition politics has particular challenges, so progress will be uneven, with some pauses along the way. But progress we must.
The Prime Minister reportedly commented that there was no pressure from COP to replace Mary King with another of its members, so that the replacement would be chosen on merit.
I am very concerned at the fact that the CL Financial collapse has cast a literal shadow over our country. Aside from the financial costs, there are significant areas of collateral damage which are now becoming visible. I referred in an earlier article to one of the main externalities in this episode being the fact that many of the CL Financial chiefs are deeply embedded in our political parties.
Even now, with this new government – their honeymoon will end on the first anniversary, I think – we are witnessing acts which can make one wonder if the CL Financial disaster ever really happened.
The official Terms of Reference for the Colman Inquiry into this financial fiasco were published in the Trinidad and Tobago Gazette of 17th November 2010 – No. 144 in Volume 49. Here is the first sentence in the second paragraph –
…And whereas the President on the advice of the Cabinet has deemed it advisable and for the public welfare that a Commissioner be appointed to enquire into the failure of CL Financial Limited, Colonial Life Insurance Company (Trinidad) Limited, CLICO Investment Bank Limited, British American Insurance Company (Trinidad) Limited, Caribbean Money Market Brokers Limited and the Hindu Credit Union Cooperative Society Limited with a view to ascertaining why such events occurred…
Robert Mayers
Caribbean Money Market Brokers (CMMB)
The first example is Robert Mayers, former Managing Director of CMMB up until 7 December 2008 – see here. Mayers is also a Deputy Political Leader of the Congress of the People (CoP), a leading element in the Peoples’ Partnership government. CMMB collapsed along with some of the significant companies in the CL Financial group – the Terms of Reference for the Colman Commission refer.
On 20 November, there were reports that Robert Mayers had been offered a position as a Director of our Central Bank. Mayers is reported to have declined that offer on the basis of a conflict of interest. The burning question has to be ‘What kind of process could produce such a recommendation?’
Consider this arresting headline ‘Investment pros set up new business‘ at page 10 of the Business Guardian of 9th December. It was reported that a new investment house, KSBM, was launched and it seemed that they were profiling.
Given that all four of KSBM’s Executive Directors are ex-CMMB chiefs, Robert Mayers among them, there are inescapable questions –
How come the former chiefs of CMMB, a financial institution which is known to have failed on this scale, can be permitted to open another one? We are acting as if we have no capacity to learn from our errors. Just carrying on as though nothing happened. What is the role of the SEC and the Central Bank in all this? Have we learned nothing?
Mervyn Assam
Clico Investment Bank (CIB)
Mervyn Assam was the Chairman of CIB at the time of the collapse. Assam had been one of CIB’s founders in 1990 and was reportedly ‘cleaning house’ at the bank, which I do believe to be true.
But the picture is far from a simple one. On 22 January 2009, CIB hosted its inaugural Investment Seminar at the CL Duprey box at the Queen’s Park Oval – I spoke at that event, together with Professor Patrick Watson. Now, according to para 5 of the April 2010 affidavit submitted to the High Court by the Inspector of Financial Institutions, Carl Hiralal, in the CIB winding-up petition, the CIB liquidity problem was disclosed to him in a meeting on the 15 January. I have serious doubts as to the veracity of that statement, but yes, it is still a full week before the Investment Seminar.
Assam held 7,500 shares in CLF as at 7 February 2009.
Assam also launched a lawsuit to recover $1M he had deposited with CIB, that case went against him in January this year – see the judgment – and he is reported to have filed an appeal.
In October, Assam was appointed as Ambassador Extraordinaire and Plenipotentiary of Trade and Industry. He has served in the NAR period as High Commissioner to London and as a UNC Senator, both in Cabinet and during their recent spell in opposition.
Dr. Bhoendradatt Tewarie
CL Financial (CLF)
Dr Tewarie was a Director on the Board of the parent company, CLF, which wrote to the Central Bank, seeking a bailout, on 13 January 2009. On 16 January 2009, CLF paid dividends of $3.00 per share to its shareholders. According to the CLF Annual Return of 7 February 2009, Dr Tewarie held 1,171 shares.
As I write this, we are informed that Dr Tewarie has been sworn in, to replace Mary King.
To be perfectly clear, I am making no allegation of theft against Mayers, Assam or Dr. Tewarie.
Does the ‘fit and proper’ criteria apply to these CLF chiefs? Should those criteria apply to the holders of high office in our country? What do you think?
We need new politics like no time before in our country, but that must involve new thinking. The State must behave in an exemplary fashion if we are to uplift ourselves without civil disturbance and unnecessary confusion. The State needs to set the standard.
I trust that the Colman Commission will give the proper attention to these episodes.
When you consider increasing lifespans, inflation and the greater likelihood of major medical expenses as one ages, it is clear that proper retirement planning should be a major factor for most people.
Some extracts from relevant advertisements to start off –
Company A
“Maintain your lifestyle – even after retirement…”
The time passed so fast and now you cannot imagine life without the luxuries you have come to know, the luxuries you deserve. The Company A annuities and pension plans allow you to live the lifestyle that you have become accustomed to – even after you’ve retired – without sacrifices that will affect your current quality of life.
Company B
“I WANT TO RETIRE COMFORTABLY”
It can be daunting to consider how much money it takes to retire in comfort. And government pensions do not provide the guarantees that they once did. But it’s never too late – or too early – to get started.
Company C
“At the rate things change today, long-term financial planning has become a concern for all of us.”
The responsibility for securing a comfortable retirement continues to shift from employers to the individual. Whether your goal is saving for retirement or you’ve already reached that goal and you want to be sure that you will never outlive your savings, an annuity may be just what you’re looking for. In Trinidad & Tobago as in the wider world, life expectancy has lengthened considerably with people living well past their retirement age. This introduces a new risk – outliving your savings.
Company C’s preferred plan features “…guaranteed income for the rest of your life…”
Yes, Retirement Planning is an essential part of any good investment planning.
Central to the growth and long-term success of the CL Financial group was its ability to mobilise the retirement savings of the Caribbean people in pursuance of its wider commercial objectives. I have been writing on how it all went wrong and who is to blame.
In preparing my submissions for the Colman Commission it occurred to me that the financial provisions made for the 3 CL Financial chiefs who departed in the last 12 months before the group collapsed is central to understanding the entire fiasco. It is rich in irony.
Fiduciary Duty of Directors and Officers
The burning questions are –
When did the Directors and Officers of CL Financial (CLF) know that the group was heading to collapse?
When did the Directors and Officers of the failed subsidiaries know?
What did they know and when did they know it?
How much warning did their management controls give them?
The questions are pertinent and the time-line is instructive –
31 March 2008 – Andre Monteil retires as CLF’s Group Finance Director.
6 August 2008 – Anthony Fifi retires as Managing Director of the Home Construction Limited (HCL) group, which is wholly-owned by CLF. Fifi remained on the board of the parent company, CL Financial.
Mid-October 2008 – CLF purchases Jamaica Money Market Brokers’ 45% shareholding in CMMB. Please note that CLF owns 40% of JMMB.
18th November 2008 – CLF 2007 Annual Report is published – its Consolidated Balance Sheet disclosed a Total Asset Value of $100.666Bn.
8 December 2008 – Robert Mayers proceeds on pre-retirement leave from his position as Managing Director of CMMB, pending his scheduled retirement, on 28th February 2009, as Managing Director.
13 January 2009 – Lawrence Duprey, CLF’s Executive Chairman, writes, detailing an asset value of $23.9Bn, to the Governor of the Central Bank to seek urgent financial assistance. See ‘Finding the Assets‘ published on 23 August 2009 for the text of that letter.
16 January 2009 – CLF pays a dividend of $3.00 per share.
23 January 2009 – CLF has its final and fateful Annual General Meeting at Trinidad Hilton.
30 January 2009 – The bailout is announced at a Press Conference at the Central Bank.
What benefits did the departing Directors and Officers enjoy? Three of the most important and senior CLF chiefs departed in the 12 months prior to the collapse. To be fair, Fifi was retiring from HCL, which has not been described as a failed company, despite its challenges. To understand the picture properly it will be necessary for the Colman Commission to examine the terms of the retirement of these CL Financial chiefs.
Those departures must be examined from the documents if they were to be approached from the compensation aspect. What I mean is that these chiefs would have been paid upon departure and that would likely have been documented.
The suggested line of enquiry is –
How much did Messrs. Monteil/Fifi/Mayers receive upon retirement? Does anyone believe that these chiefs left without compensation after years of service, at the highest possible level? The amounts actually received and the bases on which those sums were calculated promises to be very interesting.
How were those retirement payments calculated? – Were the amounts arrived at by a ‘set’ formula? Was that formula specified in their employment contracts?
Were those sums reduced to reflect the impending crash? – That alternative is the crux of the issue, coming to the point of what did they know and when. If the sums were reduced to reflect the poor performance of those failed companies, we need to question the misleading accounts given as to the group’s health right up to the very brink of the collapse.
Shifts in asset values – I am also wondering if the sudden drop in asset values from $100Bn + to just under $24Bn, in the space of less than 2 months is part of this aspect of the story. Only when we have those employment contracts published will we be able to consider whether there was any connection between the chiefs’ compensation formula and the asset values or, to put it another way, their departures and the sudden drop in asset values.
Performance-related? – Ultimately, we have to wonder as to the implications of the other alternative. If we learn that these CL Financial chiefs were able to depart the failing group with no reduction in their retirement payments, that would be very serious indeed. If that were the case, we would be contemplating employment contracts which divorced pay from performance. Given contemporary norms that link pay and performance, that would be an appalling vista. We would be seeing that our region’s largest investment group was saddled with a leadership which had constructed for itself the ultimate high-return, no-risk employment and retirement benefits, all at the expense of everyone else. The ultimate irony.
I am fully expecting that there will be further legal arguments to silence or shroud any efforts by the Colman Commission to delve into this aspect of things. Colman must be robust in his probe – he must follow the money.
There were several important developments in the Colman Commission last week, with the widely reported appeals of Sir Anthony Colman QC for the Central Bank to change its position with respect to the presentation of accounts to the Enquiry.
From my own attendance at the opening session of the Colman Commission on Friday 11th March and the various reports, it seems that there are various moves afoot to restrict or stop the enquiry. I expected this sort of scenario in declaring the main players to be part of a ‘Code of Silence’ – it is no surprise to me.
There are three strands which are becoming evident as we move into the new phase, with the Colman Commission and several legal actions swinging into action.
Firstly, we had former HCU boss Harry Harnarine challenging the Colman Commission in Court, claiming it to be illegal etc. Obviously, Harnarine did not relish the thought of having to answer questions on TV. The Appeal Court rejected those claims on Monday 4th April and the reports were contradictory, to say the least –
“Speaking with reporters following the ruling, Harnarine said he was not satisfied with the panel’s ruling.
Harnarine said he welcomed the enquiry and would make objections “at the right time”.
Harnarine wanted the court to declare the commission null and void, that it was an abuse of the court’s process and that it was unlawful and illegal, among other requests.”
Secondly, the Central Bank’s action to wind-up Clico Investment Bank (CIB) was challenged by the National Gas Corporation (NGC) and the National Insurance Board (NIB). On 27th January the judge in that case ruled that the petitioner must be questioned. The Central Bank’s attorneys had fought very hard to resist that. The petitioner was the Inspector of Financial Institutions, Carl Hiralal. I have already questioned the apparent anomalies in his affidavits – in ‘The House on the Corner’ parts 1 & 2 – so Hiralal’s cross-examination was one to be anticipated. On 28th March, NGC withdrew from that lawsuit, which was to recover some $1.1Bn from CIB. There has been no statement as to why that was done. Given that the missing $1.1Bn is our taxpayers’ money, an urgent statement to clarify this decision is needed. WHERE IS THE NGC’s MISSING $1.1Bn?
The NIB’s lawsuit is still ongoing and I await that cross-examination of Hiralal with great interest.
Thirdly, we now have reports of various objections being raised by the attorneys in respect of the accounts for CL Financial.
Readers need to be clear that there are three types of accounts in this matter. Given the room for error it is important to get this straight:
Annual Audited Accounts – These are routine and ought to have been filed by now. The last accounts for the CL Financial Group and its subsidiaries were by PriceWaterhouseCoopers (PWC) as at year-end 2007. We therefore have a situation in this country with two insurance companies – CLICO and British-American – open for business with no accounts filed for 2008, 2009 or 2010. That is unacceptable and further delaying will only bring discredit to the responsible parties. The sidebar contains more on this.
The Reviews of Accounts – Post-bailout, the Central Bank has hired Ernst & Young (E&Y) to review the accounts of the Clico Investment Bank and CLICO. In addition, the Commissioner of Co-operatives had hired E&Y to do the same for Hindu Credit Union (HCU). From what I have read, E&Y seem to be objecting to both the production of those reports to the Colman Commission and the subpoena to its Executive Chairman, Colin Soo Ping Chow – see Trinidad Express of 6th April – see here. I am not at all clear what is the objection to releasing those reports, after all, the E&Y report into CIB formed part of the Central Bank submissions to the High Court in the winding-up petition.
Forensic Audits – These were reportedly done by Bob Lindquist and KPMG Canada for the Central Bank on CLICO, with the latter firm now claiming that their client is objecting to disclosure. The grounds appear to be that if those reports were disclosed, it would undermine the intended prosecutions. That seems to me to be a reasonable rationale to pause the publication of those reports until that impasse is resolved.
So, what is at stake here?
Sad to say, but this is reminding me of the actions of Calder Hart/UDeCOTT in trying to derail and frustrate the Uff Enquiry. On that infamous occasion we had the spectacle of a State-owned company challenging the Uff Commission – which had been established by the State – in the High Court. I hope that my view is incorrect.
This led to Colman’s appeal to the public as reported in the Trinidad and Tobago Guardian on 7th April and Trinidad Express of Friday 8th April. The first of those reports contained an intriguing fragment in which former AG and Law Association President, Russell Martineau SC raised objections on behalf of his clients, PWC, on grounds of confidentiality. That mystified me, since PWC’s audits seem to be confined to the first, most innocuous group, as outlined above.
According to Colman, if the Commission has to get fresh reports into these matters it will mean more delays and more expense. He said that would be a matter for the public to decide if that is in their interest, hence these efforts.
The Central Bank made a press release on 14th April which confirmed that they intend to take legal actions. Please note that the press release was silent as to the Annual Audited Accounts. For whatever reason, the Central Bank is continuing its silence as to the status of the most innocuous class of accounts.
It is unacceptable for these issues to be mixed in this misleading fashion. Simple and inescapable questions need to be answered now –
Are the CL Financial annual audited accounts for 2008, 2009 and 2010 ready?
If yes, why have they not been published?
If not, why not?
What is the objection to publishing the Reviews of Accounts?
It seems that we are being given a tough choice, between –
a solid investigation, which preserves the secrecy of the forensic reports, with probable prosecutions, or
a wide-open investigation, with a high level of information emerging about the entire fiasco, but little chance of successful prosecutions.
The decisive question, for me, is whether the Central Bank has a track record upon which we can rely. The basis of their objections is the notion that prosecutions are to be mounted against the offending parties. Can we really accept that?
The Central Bank’s track-record on these matters has been doubtful and people are right to be concerned. From the CIB’s reported failure to file Corporation Tax returns for 2007, 2008 and 2009 to the continued inaction on the ‘Fit and Proper’ regulations, to the failure to recover the dividends CLF paid after the bailout was requested. A poor record of proper enforcement.
We are now being asked to believe that an organisation which is unable or unwilling to pick those ‘low-hanging fruit’, will be able and willing to prosecute ‘high-flying smartmen’.
I am being reminded of those childish spelling-games we all played –
A for Apple B for Bat C for yuhself!
Trinidad & Tobago Transparency Institute made a press release on the issue, which called on the Central Bank to act in an exemplary fashion. That is a welcome statement.
My vote, for what it is worth, is that we should preserve the secrecy of the forensic reports so as to remove any escape hatch for these fraudsters and their accomplices. Leave them no avenue to claim that if this or that had not happened they would have been able to prosecute. There is probably enough material in the other two classes of accounts to progress the Colman Commission.
SIDEBAR
Freedom of Information – Having had three applications under the FoI Act ignored, I have now given the Ministry of Finance ten (10) days to provide a copy of CL Financial’s letter of 13th January 2009 requesting the bailout and the 2008 Audited Accounts for the CLF group – see here . If those documents are not supplied, it is off to Court we go.
Legal Opinions – At this point in the mix, we sorely need to hear from the legal columnists as to what is the position in this heated contest – Martin Daly, Dana Seetahal, Ken Lalla and Martin George, we await.
Afra Raymond sits with host, Fazeer Mohammed on the Morning Edition television show to discuss the Colman Commission into the CLICO/HCU collapse. Video courtesy TV6
This – clfFoI-1 – is a copy of the letter sent today from my attorney to the Ministry of Finance, requesting that they provide –
‘The Duprey letter’ – The fateful 13th January 2009 CL Financial letter, signed by Lawrence Duprey, seeking urgent and massive financial assistance from the Central Bank.
CL Financial’s 2008 audited accounts – These should have been prepared by PriceWaterhouseCoopers, as at 31st December 2008 and of course those are of great interest, since the 2007 audited accounts (published on 18th November 2008) disclosed assets of $100.6Bn, while ‘the Duprey letter’ showed assets of $23.9Bn.
The letter invites the Ministry of Finance to send the documents in 10 days or we go to the High Court.
Given the current state of play at the Colman Commission, there are no prizes for guessing which of those is going to happen.
This is the official copy of CL Financial’s Annual Return from the Companies Registry, as at 17th February 2009 – it bears the official stamps and is signed by CLF’s then Corporate Secretary, Gita Sakal.
The company had a paid-up capital of $7.5M, with that number of $1.00 shares in issue.
The 325 shareholders are listed alphabetically, as at 7th September 2008, with details of their occupations and addresses also supplied. Of course, that list shows, at #289, the then Minister of Finance – Karen Nunez-Tesheira – as Karen Tesheira, Attorney-at-Law – holding some 10,410 shares.
Another thing that is striking is that Lawrence Duprey would appear to have only three blocks of shares in his ownership –
#47 – CL Duprey Investment Trust – holding 1,634,335 shares, but we are unable to find the details on that company.
#78 – DALCO Capital Management Company Limited of #37 Frederick Street, POS – holding 1,947,833 shares. I am assuming that DALCO is a play on his initials – Lawrence Andre Duprey LAD, reversed.
I am taking that to mean that Lawrence Duprey had under his direct control a maximum of 3,701,313 shares – i.e. 49.35% of the group’s entire shareholding…slightly less than half.
I am leaving it to the better-informed readers to help fill in the gaps in this story.
As to Andre Monteil, the recently-retired Group Finance Director, his 337,269 shares were transferred from Stone Street Capital Limited to First Street Capital Limited on 31st March 2008, the date he retired from the CLF group. Both companies’ registered address is the same – 33b Perseverance Road, Haleland Park, Maraval.
Afra Raymond’s submission seeking to be made a party to the Commission of Enquiry into the failure of
CL Financial Limited
Colonial Life Insurance Company (Trinidad) Limited
Clico Investment Bank Limited
Caribbean Money Market Brokers Limited and
The Hindu Credit Union Credit Union Co-operative Society Limited
My name is Afra Martin Raymond and I am a Chartered Surveyor, being a Fellow of the Royal Institution of Chartered Surveyors. I am Managing Director of Raymond & Pierre Limited – Chartered Valuation Surveyors, Real Estate Agents and Property Consultants. I am also the President of the Joint Consultative Council for the Construction Industry (JCC), an umbrella organisation which represents the interests of Engineers, Surveyors, Architects, Town Planners and Contractors in this Republic.
This submission is being made in my personal capacity and does not represent the position of either Raymond & Pierre Limited or the JCC.
My work on this vital issue has all been based on the public record and can be seen at www.afraraymond.com.
I am willing to give oral evidence before the Commission.
I have been conducting a campaign in the public interest on this important matter. My work is unfunded and I have no assistance. Indeed, I have no legal adviser at this Enquiry.
Having followed the issue so closely and attended the opening session on Friday 11th March, I am of the view that the parties thus far identified in this Enquiry are all seeking to advance their own interest.
I am here seeking to be made a party to this Enquiry, in seeking the interest of the silent majority, the taxpaying public, who have had to pay for this huge financial fiasco.
I am making this submission under rule 2. of the Commission’s Rules of Procedure, as a person whose “…participation in the Enquiry may be helpful to the Commission in fulfilling its mandate…”
I await your reply.
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Afra M. Raymond B.Sc. FRICS
Port-of-Spain
This is the CL Financial letter of 13th January 2009, signed by their ‘Trinity Chief’ Lawrence Duprey, for readers’ comments. I dub Lawrence Duprey the ‘Trinity Chief’ since he was the majority shareholder, Chairman of the Board and CEO of CL Financial.
The current talking-point is the major lawsuit launched by the Central Bank against CL Financial sowatees, Lawrence Duprey and Andre Monteil.
* In response to a question whether he took part in the reported decision to pay CLF dividends even after the approach to the State in 2009.
In preparing my submissions for the Colman Commission it occurred to me that the financial provisions made for the 3 CL Financial chiefs who departed in the last 12 months before the group collapsed is central to understanding the entire fiasco. It is rich in irony.
There were several important developments in the Colman Commission last week, with the widely reported appeals of Sir Anthony Colman QC for the Central Bank to change its position with respect to the presentation of accounts to the Enquiry.
AfraRaymond.net 