CBTT’s case against CLF on the table

Asha Javeed

Con­sul­tant Ed­i­tor In­ves­ti­ga­tions

Af­ter 15 years, the Cen­tral Bank’s civ­il case against the CL Fi­nan­cial (CLF) group be­gan on Jan­u­ary 6 be­fore Jus­tice Robin Mo­hammed.

Ten days lat­er, last Fri­day, At­tor­ney Gen­er­al John Je­re­mie an­nounced that he is of­fi­cial­ly end­ing civ­il lit­i­ga­tion by the State in­to the mat­ter, even as he de­scribed it as the largest case of fraud and fi­nan­cial tragedy in T&T and pos­si­bly the Caribbean.

He then laid the Sir An­tho­ny Col­man Com­mis­sion of En­quiry (CoE) re­port, which was in the hands of the Di­rec­tor of Pub­lic Pros­e­cu­tions (DPP) as he pur­sued a crim­i­nal in­ves­ti­ga­tion in­to the group and its of­fi­cers, in Par­lia­ment.

In a state­ment yes­ter­day, Cen­tral Bank Gov­er­nor Lar­ry Howai said the Bank is giv­ing its in­de­pen­dent con­sid­er­a­tion to the wider im­pli­ca­tions for the on­go­ing lit­i­ga­tion mat­ter against for­mer of­fi­cers of the CL Fi­nan­cial group.

He not­ed that the re­port is vo­lu­mi­nous (676 pages), and “the Bank is care­ful­ly re­view­ing and con­sid­er­ing its full con­tents.”

“The Cen­tral Bank is ad­mit­ted­ly con­cerned that the process is such a pro­tract­ed one,” he added.

He said the Bank would pro­vide more in­for­ma­tion as and when ap­pro­pri­ate to do so.

The Cen­tral Bank’s mat­ter against CLF in­cludes its for­mer ex­ec­u­tive di­rec­tors Lawrence Duprey, An­dre Mon­teil, and their re­spec­tive com­pa­nies, Dal­co Cap­i­tal and Stone Street Cap­i­tal, and for­mer CLF cor­po­rate sec­re­tary Gi­ta Sakal.

The CBTT and Cli­co (which had been un­der CBTT man­age­ment at the time) ini­ti­at­ed civ­il ac­tion against CLF and its di­rec­tors in 2011.

It be­gan un­der for­mer gov­er­nor Ewart Williams and con­tin­ued through for­mer gov­er­nors Jwala Ram­bar­ran and Dr Alvin Hi­laire.

The of­fi­cers are ac­cused of mis­man­ag­ing the com­pa­ny by mis­ap­ply­ing and mis­ap­pro­pri­at­ing the com­pa­ny’s in­come and as­sets to the detri­ment of pol­i­cy­hold­ers and in­vestors.

Through the law­suit, the CBTT and Cli­co are seek­ing dam­ages and resti­tu­tion for the loss­es suf­fered by the com­pa­ny dur­ing the group’s tenure.

The case is framed around “fraud against the pub­lic” al­lud­ing to two Ponzi schemes, fol­low­ing in­ves­ti­ga­tions by foren­sic in­ves­ti­ga­tor Bob Lindquist.

In their state­ment of claim, CBTT and CLI­CO ar­gue that the in­sur­ance com­pa­ny’s pre-2009 op­er­a­tion was gross­ly de­fi­cient and egre­gious in the fol­low­ing (and oth­er) re­spects:

The in­ter­ests of pol­i­cy­hold­ers and mu­tu­al fund in­vestors were sub­or­di­nat­ed to the in­ter­ests (and de­mands) of oth­ers, in par­tic­u­lar the pri­vate in­ter­ests of Mr Duprey and Mr Mon­teil;

Re­turns of­fered on prod­ucts and re­lat­ed costs were ex­ces­sive and un­sus­tain­able;

Mon­ey in­vest­ed by pol­i­cy­hold­ers and mu­tu­al fund in­vestors were im­prop­er­ly dis­bursed, in­clud­ing: (a) to fund Mr Duprey per­son­al needs and lifestyle, as well as those of oth­er mem­bers of his fam­i­ly and pri­vate com­pa­nies; (b) to fund ven­tures by oth­er com­pa­nies which were not in the in­ter­ests of Cli­co but rather in the in­ter­ests of Mr Duprey and Mr Mon­teil and com­pa­nies re­lat­ed to them; (c) to fund CLF notwith­stand­ing its fail­ure to re­pay pre­vi­ous in­debt­ed­ness to Cli­co; (d) to fund CIB by way of pro­vid­ing de­posits and a bond, notwith­stand­ing its fail­ure to re­pay pre­vi­ous in­debt­ed­ness of Cli­co.

Cli­co’s as­sets were im­prop­er­ly dealt with;

Cli­co was im­prop­er­ly ex­posed to li­a­bil­i­ties un­re­lat­ed to its in­ter­ests;

Cli­co was im­prop­er­ly caused to pro­vide se­cu­ri­ty for trans­ac­tions un­re­lat­ed to its in­ter­ests;

Cli­co was im­prop­er­ly caused to pro­vide an in­ter­est-free cur­rent ac­count fa­cil­i­ty to CLF; and,

As­sets were not matched to li­a­bil­i­ties, in par­tic­u­lar in or­der to gen­er­ate the sums need­ed to pay the rates of re­turn con­trac­tu­al­ly due to pol­i­cy­hold­ers and mu­tu­al fund in­vestors.

The state­ment of claim al­so said that there was no prop­er gov­er­nance of Cli­co (nor of CLF and CIB).

The claims al­so al­leged that Mr Duprey and Mr Mon­teil op­er­at­ed or pro­cured the op­er­a­tion of two types of Ponzi schemes:

“In­ter­nal Ponzi Scheme: Mr Duprey and Mr Mon­teil pro­cured im­prop­er di­ver­sion and mis­ap­pro­pri­a­tion of CLI­CO’s mon­ey, in­clud­ing pol­i­cy­hold­ers’ mon­ey, in or­der to fund CIB and/or CLF and/or oth­er group en­ti­ties, of­ten in re­turn for worth­less or whol­ly in­ad­e­quate pur­port­ed con­sid­er­a­tion and/or se­cu­ri­ty. They did so in cir­cum­stances where they knew or should have known that there was no or lit­tle prospect of re­turn. They knew or ought to have known that CLF and CIB were each (a) high­ly de­pen­dent up­on Cli­co not seek­ing re­pay­ment of prin­ci­pal and ac­cu­mu­lat­ed in­ter­est on ex­ist­ing in­debt­ed­ness from them, as well as de­pen­dent up­on Cli­co­for fur­ther fund­ing and (b) un­able to pay its debts to Cli­co as they fell due.”

“Ex­ter­nal Ponzi Scheme: Mr Duprey and Mr Mon­teil pro­cured im­prop­er deal­ing with new mon­ey from pol­i­cy­hold­ers and mu­tu­al fund in­vestors (i.e. mon­ey from new pol­i­cy­hold­ers/in­vestors and new mon­ey from ex­ist­ing pol­i­cy­hold­ers/in­vestors), in­clud­ing im­prop­er­ly fund­ing re­demp­tions and re­pay­ments to ex­ist­ing pol­i­cy­hold­ers/in­vestors, with­out suf­fi­cient or any prop­er re­gard to what was re­quired to fund fu­ture li­a­bil­i­ties to them.”