CL Financial, the economy and the future – Part 2

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The TTWhistleblower continues a deep and thorough look at CL Financial, the circumstances surrounding its corporate governance, and the impact it has had on the economy of Trinidad and Tobago by its collapse. In part two, we look Colman Commission of Enquiry.
In Part 1 of this series, it was stated that the CL Financial Asset Base once stood at US$100 billion; that should have read TT$100 billion.

Colman Commission of Enquiry

In response to widespread public outcry, the People’s Partnership instituted a Commission of Enquiry lead by Sir Anthony Colman in November 2010.

Sir Anthony was commissioned to probe and ascertain the reasons for the failure of CL Financial, CL Investment Bank, British American (T’dad) Ltd, Caribbean Money Market Brokers Ltd (CMMB) and the Hindu Credit Union Co-operative Society Ltd. The Commission was also required to provide recommendations.

Five million pages; 77 lawyers and five years later, on 22 June 2016, a large, two-volume report was presented to President, His Excellency Anthony Carmona. A copy was also sent to the Prime Minister.

According to Sir Anthony, ‘the one motive’ that drove both HCU’s Harry Harnarine and CL’s Lawrence Duprey was ‘vision.’ He said in spite of all the warnings from the Central Bank and Auditors, “they went on, like Icarus, only to be destroyed by the sun of their own vision.”

He said it was not the appropriate time to comment on the report’s findings with regard to responsibility for the CLF Group collapse, or on the mechanism of failure which caused the Government to intervene in such large measure. However, he said there were two matters which needed immediate legislative action.

Sir Anthony said the powers of regulatory control of the insurance industry by the Central Bank were found to be fundamentally deficient.

It was this deficiency that Sir Anthony said “was starkly shown up by the autocratic style of management of CLICO and the CLF Group.”
Describing the business model as ‘seriously flawed’, Sir Anthony noted ‘the cavalier manner in which CLICO and the CLF Group treated attempts by the Inspector of Financial Institutions to regular the company.

A new CL/CLICO drama

By 03 August 2017 two new probes were launched by Finance Minister, Colm Imbert to ascertain:

  • How Lawrence Duprey transferred shares of a multi-billion-dollar company called Dalco Capital Management Company Ltd to a director, Carlton Reis, for just $99?
  • How all the profits from the companies under CL World Brands were being injected into CL Financial alone to settle debts of its subsidiaries and not being used to pay back the billions in taxpayers’ money used to bail out the company?

In 1998 Dalco Capital, which owns 26 per cent of CLF, was incorporated with Lawrence Duprey as the owner. By 2015, Reis was appointed a Director of Dalco.

Reis is reported to have said that the CL Financial Group currently could be worth approximately TT$40 billion. However, in January 2016, Duprey transferred his shares to Reis for TT$99.

In announcing the investigations, Imbert said: “The shares were transferred at a value of $99. So Dalco is the owner of 26 per cent of CL Financial which, according to Mr Reis, is worth $40 billion. So 26 per cent of $40 billion is $10 billion stamp duty and a transfer of shares worth $10 billion is $50 million.”

The second probe, Imbert said: “Involves CL World Brands and its relationship to Angostura Ltd.”

Imbert said information from Colonial Life’s audited accounts showed that Angostura is owned “45 per cent by a company called Rumpro, thirty-two per cent by Colonial Life Insurance Co and 22 per cent by the public… more or less.”

According to Imbert, Rumpro is owned 100 per cent by CL World Brands incorporated in Scotland by a series of declarations of trust and transfers for money received. CL World Brands is owned 42 per cent by Colonial Life, 38 per cent by CL Financial and 20 per cent by CLICO Investment Bank.

The Finance Minister noted that, between Colonial Investment Bank and Colonial Life, they own 62 per cent of CL World Brands.

“When you add the 32 per cent that is owned by Colonial Life directly and Angostura and then take account of the 45 per cent of Rumpro that is owned by CL World Brands, the net result of all of this is that CL Financial only owns 17 per cent of Angostura,” Imbert said.

In Part 3 of ‘CL Financial, the economy and the future’, the TTWhistleblower will look at the new dramas surrounding CL and its sale of No Man’s Land to the Government.

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