Asha Javeed

Call it a mi­nus or a Mi­das touch. That's the ef­fect CL Fi­nan­cial chair­man Lawrence Duprey had on his em­pire. When it came to in­vest­ments, for­mer Group Fi­nance head Michael Car­ballo af­firmed that Duprey's "in­sa­tiable risk ap­petite" had cost pol­i­cy­hold­ers hun­dreds of mil­lions of dol­lars. "They placed a lot of faith in Lawrence and hoped he'd have a Mi­das touch," Car­ballo told the com­mis­sion of en­quiry on his third day on the wit­ness stand.

When it came to his re­mu­ner­a­tion though, mil­lions of pol­i­cy­hold­ers de­posits were forked out to pay his in­voic­es, Car­ballo ac­knowl­edged. Duprey earned $5 mil­lion a month for his ef­forts. In 2007, he was paid $90 mil­lion by the CLF board. That sum in­clud­ed a base salary, div­i­dend pay­ments and bonus­es. For­mer Group Fi­nance head Michael Car­ballo said while Duprey's salary was "sub­stan­tial" it was be­ing paid by Cli­co.

Among pay­ments re­ceived:

• In Jan­u­ary 2008, Duprey though his com­pa­ny Dal­co, billed Cli­co $5 mil­lion for con­sul­tan­cy ser­vices.

• Cli­co was al­so billed US$5 mil­lion by Dal­co for Duprey's "ser­vices ren­dered" af­ter three meet­ings in Las Ve­gas.

• At an­oth­er date, Cli­co was billed $6 mil­lion by Duprey's con­sul­tan­cy in South Africa with re­gard to ex­pand­ing the "spir­its" busi­ness for CL Ven­tures.

Cli­co's at­tor­ney Neil Bis­nath chal­lenged Car­ballo on the sums be­ing earned by Duprey. "I knew it was a sig­nif­i­cant sum on an an­nu­al ba­sis...This was a sit­u­a­tion I met," he said. Bis­nath ques­tioned how Duprey could be al­lowed to use Cli­co's mon­ey, which was raised from EF­PA pol­i­cy­hold­ers with in­ter­est rates from 7-15 per cent, to in­vest in "risky" ven­tures. For the first time since he took the stand at this hear­ing of the in­quiry, Car­ballo's ex­pla­na­tions, which were most­ly de­fen­sive, were cut short by three at­tor­neys-Bis­nath, CPG's Ter­rence Bharath and Min­istry of Fi­nance's Fyard Ho­sein-who cross-ex­am­ined him yes­ter­day. Bis­nath point­ed out that Cli­co was forced to buy as­sets-such as Burn Stew­art and Gold­en Grove Es­tate in To­ba­go-that were un­prof­itable and could not be held in the com­pa­ny's Statu­to­ry Fund, at the be­hest of Duprey.

Fur­ther, Bis­nath ar­gued, Cli­co was sad­dled with sev­er­al bad in­vest­ments made by oth­er sub­sidiaries with no hope of re­gain­ing its mon­ey. It was point­ed out that Cli­co had loaned CIB$100 mil­lion to fa­cil­i­tate a loan to An­dre Mon­teil to pur­chase shares at Home Mort­gage Bank. Up­on his de­par­ture of CLF, Mon­teil's $78 mil­lion out­stand­ing CIB loan was giv­en as a gift, claimed Bis­nath. The loan was tak­en over by Duprey. Bis­nath ob­served that Cli­co had no way of ever re­ceiv­ing monies owed to them. Ear­li­er, Bharath had high­light­ed a se­ries of bad in­vest­ments made on the Flori­da Re­al Es­tate Mar­ket which were per­cip­i­tat­ed by Duprey.

Ques­tioned as to who Duprey was ac­count­able to, Car­ballo said Duprey on­ly ac­count­ed to those in his trust. He ad­mit­ted that while there was "a lot of dis­cus­sion and de­bate" in the board over sev­er­al de­ci­sions be­ing pro­posed by the chair­man, "at the end of the day there was a un­der­ly­ing strat­e­gy and ul­ti­mate goal." "There was from my time on the board, many de­bates about in­vest­ments and jus­ti­fi­ca­tion for in­vest­ments." Com­mis­sion­er Col­man asked: "Es­sen­tial­ly, he al­ways pre­vailed?" Car­ballo an­swered: "Al­ways."

Among those:

• The Capri Project-a ma­jor ho­tel and con­do­mini­um on Fort Laud­erdale beach...un­der the "W ho­tel" brand. Cli­co in­curred a US$300 mil­lion loss.

• The Welling­ton Park Project-in­tend­ed to be an eques­tri­an and res­i­den­tial project in West Palm beach...a US$60 mil­lion loss.

• The Mer­rick Park Project-in­tend­ed to be a com­mer­cial com­plex in South Mi­a­mi.

• The Las Olas Projects-a mixed use res­i­den­tial and com­mer­cial project in Fort Laud­erdale.

Car­ballo ar­gued that far from tak­ing risks "with oth­er peo­ple's mon­ey," Duprey be­lieved the projects would bring in com­pa­ny to sat­is­fy the in­ter­est rate de­mands of the EF­PA pol­i­cy­hold­ers. Duprey, he said, did not an­tic­i­pate the crash of 2008 and the dev­as­tat­ing im­pact on the re­al es­tate mar­ket in the US. Car­ballo ad­mit­ted that CLF has not ben­e­fit­ed from a num­ber of in­vest­ments.

Oth­er in­vest­ments which in­curred heavy loss­es in­clude:

• the sale of Cruz Ann-lost US$10 mil­lion;

• Burn Stew­art-lost US$75 mil­lion;

• Belvedere-lost hun­dreds of mil­lions. Es­ti­mat­ed US$200-300 mil­lion:

• An­gos­tu­ra In­dia.

• Las­celles de Mer­ca­do.

De­spite spend­ing US$676 mil­lion, Car­ballo ad­mit­ted that the "ben­e­fits are not yet tan­gi­ble." "No, it has not been a suc­cess, Car­ballo told the com­mis­sion. Car­ballo said the vi­sion for Las­celles was nev­er achieved as the in­vest­ment led to An­gos­tu­ra be­ing delist­ed from the TTSE be­cause it did not pro­vide ac­counts in time. Fur­ther, the com­pa­ny car­ried a debt on its books from the Belvedere trans­ac­tion and it was un­clear af­ter the MOU whether it would have re­vived the monies owed to it by the CLF group. And while the com­pa­ny's liq­uid­i­ty prob­lems were recog­nised in 2008, Car­ballo was ques­tioned on his sig­na­tures on cer­tain doc­u­ments in which Duprey's div­i­dend and bonus pay­ments due from CLF were used to cov­er loans at Cli­co In­vest­ment Bank.

1. May 1, 2008-CL Fi­nan­cial con­firmed that a $78 mil­lion div­i­dend and bonus pay­ment to be as­signed to Duprey would off­set a $78 mil­lion dol­lar loan and cap­i­talised in­ter­est at the bank.

2. Sep­tem­ber 8, 2008-CLF again wrote to CIB stat­ing that a $16 mil­lion loan would be re­paid with div­i­dend and bonus pay­ments and set­tled with­in a year.

3. No­vem­ber 5, 2008-CLF wrote once more to CIB stat­ing that div­i­dend and bonus pay­ments would off­set a $12 mil­lion loan by Duprey from CIB.

4. No­vem­ber 11, 2008-CLF again wrote to pres­i­dent of CIB Richard Trot­man stat­ing that div­i­dend and bonus pay­ments due to Duprey would be suf­fi­cient to cov­er a $15 mil­lion loan to be set­tled with­in one year.

Duprey's div­i­dend and bonus pay­ments due from Cli­co were al­so used to cov­er loans at Cli­co In­vest­ment Bank.

1. Au­gust 4, 2008-Cli­co wrote to CIB stat­ing that div­i­dend and bonus pay­ments due to Duprey should cov­er a US$3.8 mil­lion loan with in­ter­est in one year.