The Cen­tral Bank is claim­ing that there were two Ponzi schemes be­ing op­er­at­ed in Cli­co, which con­tributed to the col­lapse of the in­sur­ance com­pa­ny in Jan­u­ary 2009. In its state­ment of case filed in the High Court on Tues­day against for­mer ex­ec­u­tives of CL Fi­nan­cial, as­so­ci­at­ed com­pa­nies and the con­glom­er­ate it­self, the Cen­tral Bank iden­ti­fied an ex­ter­nal Ponzi scheme in which the in­sur­ance com­pa­ny took in new mon­ey from pol­i­cy­hold­ers and mu­tu­al fund in­vestors "with­out suf­fi­cient or prop­er re­gard to what was re­quired to fund fu­ture li­a­bil­i­ties to them."

The Cen­tral Bank al­so al­leges that CL Fi­nan­cial was op­er­at­ing an in­ter­nal Ponzi scheme in which mon­ey was di­vert­ed or mis­ap­pro­pri­at­ed away from Cli­co in or­der to fund Cli­co In­vest­ment Bank, CL Fi­nan­cial or oth­er group en­ti­ties "of­ten in re­turn for worth­less or whol­ly in­ad­e­quate pur­port­ed con­sid­er­a­tion and/or se­cu­ri­ty." The case that the Cen­tral Bank is seek­ing to build is that this was done in cir­cum­stances in which it was known "that there was lit­tle or no prospect of re­turn." The Cen­tral Bank will al­so at­tempt to prove that it was known or ought to have been known that "CL Fi­nan­cial and Cli­co In­vest­ment Bank were each high­ly de­pen­dent up­on Cli­co not seek­ing re­pay­ment of prin­ci­pal and ac­cu­mu­lat­ed in­ter­est on ex­ist­ing in­debt­ed­ness from them...as well as un­able to pay its debts to Cli­co as they fell due." The state­ment of case refers to Cli­co as a cash cow and al­leges mis­ap­pro­pri­a­tion and im­prop­er deal­ing with the in­sur­ance com­pa­ny's mon­ey.

Ac­cord­ing to the Cen­tral Bank's case, Cli­co's mon­ey was used to fund CL Fi­nan­cial, its par­ent com­pa­ny, in par­tic­u­lar in the form of ad­vi­so­ry fees" or "man­age­ment fees." The Cen­tral Bank claimed that in 2007, sums to­talling $200 mil­lion were paid by way of man­age­ment fees and that MHTL and Re­pub­lic Bank div­i­dends or equiv­a­lent sums were di­vert­ed from Cli­co to CL Fi­nan­cial. Cli­co was re­quired to pro­vide funds and/or se­cu­ri­ty and/or guar­an­tees to oth­er group en­ti­ties such as Cli­co In­vest­ment Bank and An­gos­tu­ra Hold­ings Ltd, ac­cord­ing to the state­ment of case. In the Cen­tral Bank's case, it is claimed that over the years, Cli­co "was caused to loan in­creas­ing amounts to Cli­co In­vest­ment Bank," con­sist­ing main­ly of fixed de­posits, which to­talled $4.24 bil­lion, ac­cord­ing to the in­sur­ance com­pa­ny's 2008 ac­counts, pre­pared af­ter the Cen­tral Bank's in­ter­ven­tion in Jan­u­ary 2009. Of the to­tal of $4.24 bil­lion in fixed de­posits, Cli­co was forced to make an im­pair­ment pro­vi­sion for $2.5 bil­lion.

Cli­co al­so lent ever-in­creas­ing amounts of mon­ey to its par­ent com­pa­ny, CL Fi­nan­cial, with this reach­ing a to­tal of $2.4 bil­lion by 2008. Of that amount, $1.22 bil­lion was in the form of un­se­cured, in­ter­est-free, short-term debt. The in­sur­ance com­pa­ny was al­so called up­on to pro­vide fund­ing, guar­an­tees or se­cu­ri­ty for oth­er busi­ness projects in which Cli­co ei­ther had no in­ter­est or in which its in­ter­est was in­suf­fi­cient to jus­ti­fy its fi­nan­cial in­put, such as the Flori­da prop­er­ty trans­ac­tions or the Las­celles de­Mer­ca­do ac­qui­si­tion. The state­ment al­so al­leges that a com­pa­ny called DAL­CO, in which for­mer CL Fi­nan­cial chair­man Lawrence Duprey had a 99 per cent eq­ui­ty stake, is es­ti­mat­ed to have re­ceived "pay­ments and fi­nan­cial as­sis­tance to­talling $468.9 mil­lion" for the pe­ri­od 1997 to 2008 in the form of com­mis­sions and oth­er pay­ments.