Asha Javeed

Ig­no­rance was detri­men­tal. That's the les­son for­mer Cli­co di­rec­tors learnt af­ter the com­pa­ny col­lapsed in Jan­u­ary 2009. Well-cush­ioned af­ter a glob­al re­ces­sion in 2008, some for­mer di­rec­tors claim they were kept in the dark about the com­pa­ny's chal­lenges. The rev­e­la­tions dur­ing last week's com­mis­sion of en­quiry by for­mer CL Fi­nan­cial Group head of fi­nance, Michael Car­ballo, have left them ques­tion­ing their di­rec­tor­ship tenures as they com­prised a board which ex­ist­ed on pa­per and clear­ly, there was an­oth­er board was en­gaged in the "func­tion­ing" of the or­gan­i­sa­tion.

Fur­ther, they are "dis­gust­ed" with the ob­scene bonus­es paid to man­age­ment of the failed Lawrence Duprey em­pire and that Cli­co was a cash cow milked dry by its par­ent com­pa­ny, CL Fi­nan­cial. "A lot of things we are hear­ing now is news to us...We were left in the dark," one for­mer di­rec­tor told the T&T Guardian yes­ter­day. The last board in place be­fore the col­lapse com­prised chair­man Lawrence Duprey, cor­po­rate sec­re­tary Ge­of­frey Leid, Ian Gar­cia, Karen Ann Gardier, Shama De­onar­ine, Nigel Sali­na and Hay­den Charles. The board, which met once a quar­ter, was paid $5,000 a ses­sion. To qual­i­fy the point, the di­rec­tor pro­duced board min­utes of the last three meet­ings of the Cli­co board.

In the meet­ings, save the last on Jan­u­ary 26, there is no in­di­ca­tion of the im­pend­ing "tsuna­mi" (as Duprey de­scribed it) that would crip­ple the com­pa­ny. Min­utes from the meet­ings show:

1. The board meet­ing of Sep­tem­ber 23, 2008, start­ed at 2.15 pm and end­ed at 2:25 pm. The on­ly item for dis­cus­sion was the in­ter-com­pa­ny bal­ance. "It was unan­i­mous­ly agreed that the in­ter-com­pa­ny bal­ance be sig­nif­i­cant­ly re­duced. Fur­ther, it was agreed that out­stand­ing bal­ances, div­i­dends owed to the com­pa­ny be pur­sued such as with MHTL."

2. The board meet­ing on De­cem­ber 8 at 11.35 am dealt with oth­er is­sues such as code of con­duct, ethics and com­pli­ance, a mar­ket­ing re­port from Oc­to­ber 31, 2008, was pre­sent­ed, the ac­counts as at Oc­to­ber 2008 were pre­sent­ed and that a re­view of in­ter­est rates be con­duct­ed. Di­rec­tor Hay­den Charles sug­gest­ed that lever­ag­ing cash flow should be looked at. The mar­ket­ing re­port stat­ed, on the draft bal­ance sheet as at Oc­to­ber 2008, that to­tal li­a­bil­i­ties were $18, 301,110,000 with to­tal eq­ui­ty at $25,097,883,000.

To ad­dress the fi­nan­cial cri­sis, the re­port sug­gest­ed a freeze on hir­ing, in­crease pro­duc­tiv­i­ty and re-eval­u­ate de­part­men­tal bud­gets. Their ob­jec­tives were:

• to al­lay fears that clients and the gen­er­al pub­lic might have with re­spect to the EF­PA guar­an­tee ad man­dat­ed by the Se­cu­ri­ties and Ex­change Com­mis­sion;

• to strength­en trust in Cli­co as a fi­nan­cial in­sti­tu­tion;

• to gen­er­ate end of year sales; and

• to po­si­tion Cli­co as a boom­ing com­pa­ny in these times against the glob­al fi­nan­cial land­scape.

Oth­er imag­ing strat­e­gy pro­pos­als in­clud­ed a pro­mo­tion of One Wood­brook Place, me­dia in­ter­views with Duprey and a press cam­paign to fo­cus on Cli­co In­vest­ments. "When you look at these meet­ings, which were in De­cem­ber, there was no sign of forth­com­ing col­lapse, there was no sign the com­pa­ny was go­ing to im­plode," the di­rec­tor told the T&T Guardian. "There was noth­ing in those meet­ings to sug­gest there was a cash crunch or a liq­uid­i­ty is­sue. The board was nev­er in­formed of any of this," the di­rec­tor ex­plained. Ques­tioned on whether they were aware of the statu­to­ry fund deficit at the time, the di­rec­tor said there were clear­ly peo­ple in "the know," but that in­for­ma­tion was not pre­sent­ed at the board.

To em­pha­size the point, the di­rec­tor pro­duced the board min­utes of an emer­gency meet­ing.

3. An emer­gency board meet­ing held on Jan­u­ary 26, 2009, at 6 pm. Ac­cord­ing to Car­ballo, a CLF team had met with the Min­istry of Fi­nance on Jan­u­ary 23 and 24 and Duprey had flown in on Jan­u­ary 25 to dis­cuss the com­pa­ny's bailout. Cli­co's as­sets-its RBL shares and MHTL shares-were be­ing con­sid­ered for ne­go­ti­a­tions be­fore board ap­proval. The first item on the board's agen­da was the statu­to­ry fund. Gardier ap­praised the board that "change in the econ­o­my al­tered the com­pa­ny's plan to sup­port the statu­to­ry fund. Though there was an in­crease in pre­mi­ums, the net out­flow was de­fi­cient." Di­rec­tor Charles raised the ques­tion of whether peo­ple were aware of the large with­drawals from Cli­co.

Gardier said with­drawals were high­er than de­posits, as a re­sult of peo­ple feel­ing the ef­fects of the eco­nom­ic cri­sis and pay­outs are de­layed by a few days. Charles added that he found this to be a dan­ger­ous sit­u­a­tion and not­ed that cheques were usu­al­ly giv­en in the in­ter­est of ser­vice with­in a short­er time frame than re­quired. The pub­lic's con­fi­dence was ques­tioned. De­onar­ine in­quired about the ex­act po­si­tion of the statu­to­ry fund. Gardier did not give a fig­ure but ad­vised that Cen­tral Bank had a dif­fer­ent ac­tu­ar­i­al ap­proach and stricter ad­her­ence to reg­u­la­tions. At the com­mis­sion of en­quiry, Min­istry of Fi­nance at­tor­ney Fyard Ho­sein, SC, re­vealed that the pro­ject­ed deficit of the statu­to­ry fund as at De­cem­ber 31, 2008, was $10.3 bil­lion.

Charles asked what is ex­pect­ed of the com­pa­ny and Gardier in­di­cat­ed that a meet­ing was held with Cen­tral Bank to dis­cuss the course of ac­tion and the pro­pos­al to use sur­plus val­ue of Methanol shares was un­der con­sid­er­a­tion. Gardier told the board that the strate­gic map to re­struc­ture was al­ready planned out and ad­vised that TT debt could be swapped for Methanol shares and give an op­por­tu­ni­ty to re­pur­chase. "Any­one's who's ever been as­so­ci­at­ed with Cli­co of CL Fi­nan­cial has been taint­ed by the ac­tions of a few. There were agents work­ing hard, even if it was work­ing hard for their com­mis­sion, but there were agents work­ing hard to put mon­ey in­to the com­pa­ny. The sto­ry is of cor­po­rate greed but no one's look­ing at the agents who lost their homes. It is very dev­as­tat­ing," the di­rec­tor said.

Ques­tioned on the in­ter­est rates of­fered to EF­PA pol­i­cy­hold­ers, the di­rec­tor ex­plained that it needs to be put in­to per­spec­tive. "If you have mon­ey to in­vest and you put it in­to good in­vest­ment and get a good re­turn, the cus­tomer ben­e­fits," the di­rec­tor said. "In this re­gard, there was a slim mar­gin for the com­pa­ny. Now if the com­pa­ny is do­ing well, you pay off hand­some bonus­es and its okay. But if the com­pa­ny is do­ing bad, which we didn't know, it would be un­fair to take those bonus­es. "We were aware of some of the in­vest­ments. Some were good. Some were bad. A lot of deals we were not privy to."

The di­rec­tor was un­aware that Cli­co paid Duprey's salary. "A lot is com­ing out in the news. It has cost me per­son­al­ly." The di­rec­tor ex­plained that while Cli­co pol­i­cy­hold­ers were able to get back some of their mon­ey from the Gov­ern­ment for their in­vest­ments, their poli­cies had been put on hold. "Di­rec­tors can be held li­able. But how can di­rec­tors be held li­able for some­thing which you did not know." De­spite the hard­ship, the di­rec­tor ad­mit­ted to hav­ing a "soft" spot for Duprey. "The agents loved Duprey. He had that charm over every­one."