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Finding closure on Clico/CLF

Friday, June 5, 2015

The Central Bank and other entities presiding over the resolution of the Clico/CLF financial meltdown would do well to heed the advice of the Transparency Institute of T&T and ensure there is a much higher level of transparency and accountability in this matter. 

The raised eyebrows over the reported $48.5 million allocated to ten former Clico directors and their companies demonstrates that up to today, more than six years after the implosion of Clico/CLF and months after Central Bank Governor Jwala Rambarran announced a resolution plan to pay all the company’s creditors and policyholders, there is still a lot of doubt, anger and suspicion. Although Clico has made its first payment to its single largest creditor—the T&T Government—and payment of approximately $950 million is being made to some 1,500 non-assenting policyholders, closure remains elusive. That is mainly because of a perception in the financial community that those responsible for the collapse are yet to fully answer for the consequences of their stewardship. 

The Central Bank’s assurance in a statement late Wednesday that no payments will be made to three key players in that financial debacle—Lawrence Duprey, Andre Monteil and Gita Sakal—is unlikely to build public confidence in the resolution activities now in progress.

The Central Bank’s statement makes reference to an investigation conducted by forensic accountant Robert Lindquist and a breach of fiduciary duty civil case brought against Duprey and Monteil in June 2011, to which Sakal was added in March 2013. 

Curiously, the Central Bank statement made no reference to the Colman Commission of Enquiry, which heard hundreds of hours of testimony, from dozens of witnesses and generated over 1 million pages of evidence.

Sir Antony Colman’s report on the Clico aspects of the Commission of Enquiry is overdue, which cries out for some official explanation from the Government.

But, more to the point, when he does report, it is not beyond the realm of possibility that Sir Antony may find that some of Clico’s directors and officers were more directly responsible for its collapse than Andre Monteil and Gita Sakal—one of whom ceased being a Clico director years ago and the other who never served in that position. It would appear to be shortsighted, reckless and naive for the Central Bank to pay Clico directors and officers before they have been “cleared” by the Commission of Enquiry, unless there is cogent and compelling evidence that a particular director or senior officer did not participate in wrongdoing. Why would the Central Bank even consider paying directors and senior officers without considering Colman? While the Central Bank argues that “there would be no legal basis on which Clico may now withhold payment to them as policyholders/creditors,” how would it look if Clico directors or officers collected millions under the Central Bank’s Clico resolution and were shortly after named in the Colman report or were issued with Salmon letters?

By all means, the Central Bank must ensure that all of Clico’s creditors are paid from the divestment of the company’s assets, but clearly some creditors must be made to wait longer than others. It must never be forgotten that the January 2009 corporate failure of Clico/CLF, the largest conglomerate in T&T and the Caribbean, triggered a financial crisis throughout the region, the effects of which are still being felt more than six years later.

Regional governments are still struggling to stabilise their financial systems and the T&T Government is still saddled with the huge public debt incurred as a result of that event. 

The collapse of economies and financial systems across the region was only averted because of the intervention of the T&T Government and the Central Bank. 

However, considerable damage was done, so that the process of restoring public confidence is proving to be a slow and painful one. Until a stronger and more aggressive financial regulation reform process is in place, and until the public is satisfied that directors and officers of Clico have been held to account for what occurred on their watch, it is hard to see where there can be closure in this matter. This is not just about settling final debts, it is also about ensuring that proper accountability is done.


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