Twice in a lit­tle more than a year, this space has been used to ask some fun­da­men­tal ques­tions about An­gos­tu­ra Hold­ings Ltd, the CL Fi­nan­cial-owned rum and bit­ters pro­duc­er, which just hap­pens to con­trol T&T's best known glob­al brand, An­gos­tu­ra Bit­ters. On June 25, 2009, un­der the head­line "Whith­er An­gos­tu­ra," the is­sue of the com­pa­ny's fail­ure to pub­lish its 2008 re­sults sev­en months af­ter its year end was raised. That com­men­tary asked the ques­tion: "Is it that An­gos­tu­ra's mon­ey (along with mon­ey from its par­ent com­pa­ny CL Fi­nan­cial) went to buy the Ja­maican con­glom­er­ate Las­celles de­Mer­ca­do for a to­tal in­vest­ment cost in­clud­ing pro­fes­sion­al fees and oth­er ex­pens­es of US$676 mil­lion?" The com­men­tary al­so raised the pos­si­bil­i­ty that the re­ceiv­able that CL Fi­nan­cial owed An­gos­tu­ra would nev­er be paid be­cause of the Cen­tral Bank Gov­er­nor's firm stance against ho­n­our­ing re­lat­ed-par­ty trans­ac­tions in the bailout of CL Fi­nan­cial.

The col­umn "Can An­gos­tu­ra sur­vive (the si­lence)?" which was pub­lished on Feb­ru­ary 25 this year, al­so raised the is­sue of the lack of com­mu­ni­ca­tion by the Stock Ex­change, the lo­cal SEC and the di­rec­tors of the com­pa­ny. Mi­nor­i­ty rights ac­tivist, Pe­ter Per­me­ll, pro­vid­ed sound analy­sis of the law and the rules with re­gard to com­pa­nies that do not pub­lish their ac­counts in a time­ly fash­ion in the April 15 edi­tion of this news­pa­per. He al­so ques­tioned the fail­ure by the reg­u­la­tors and the com­pa­ny it­self to com­mu­ni­cate with stake­hold­ers on the long de­lay in is­su­ing fi­nan­cial re­ports. The si­lence was bro­ken on May 21 this year, three days be­fore the gen­er­al elec­tion, when a state­ment was is­sued that An­gos­tu­ra's ac­counts would be pub­lished by Ju­ly 30. The ac­counts, when they ac­tu­al­ly be­came avail­able, con­tin­ued to cause con­ster­na­tion.

In the re­port signed by the An­gos­tu­ra deputy chair­man, the com­pa­ny states that its con­sol­i­dat­ed fi­nan­cial state­ments for 2008 "have been, re­gret­tably, ma­te­ri­al­ly im­pact­ed by post year-end events in­volv­ing CL Fi­nan­cial, which re­flect­ed a pre­car­i­ous fi­nan­cial po­si­tion of our par­ent com­pa­ny and oth­er CL Fi­nan­cial sub­sidiaries and which, in turn, im­paired the col­lec­tabil­i­ty of cir­ca $1,185 mil­lion in re­ceiv­ables from the CL Fi­nan­cial Group." The deputy chair­man's state­ment pro­vides ab­solute­ly no clar­i­fi­ca­tion of the cir­cum­stances that "im­paired the col­lec­tabil­i­ty of cir­ca $1,185 mil­lion" from CL Fi­nan­cial.

Ref­er­ence was made, how­ev­er, to the board's dis­ap­point­ment at the fact that An­gos­tu­ra's ex­ter­nal au­di­tors, Price­wa­ter­house­C­oop­ers "have con­sid­ered it nec­es­sary to is­sue a Dis­claimer of Opin­ion in re­spect of the group's con­sol­i­dat­ed fi­nan­cial state­ments on the sole ba­sis of in­suf­fi­cient fi­nan­cial records for one US-based sub­sidiary name­ly An­gos­tu­ra Spir­its and Wine...."

It was the man­age­ment's view, ac­cord­ing to the deputy chair­man, that the "in­suf­fi­cient fi­nan­cial records" for An­gos­tu­ra Spir­its and Wine was "not ma­te­r­i­al to the con­sol­i­dat­ed fi­nan­cial state­ments tak­en as a whole" giv­en the fact that the sub­sidiary's 2008 rev­enue rep­re­sent­ed a mere three per cent of An­gos­tu­ra's con­sol­i­dat­ed group rev­enue. In oth­er words, the au­di­tors Price­wa­ter­house­C­oop­ers is­sued a Dis­claimer of Opin­ion based on a sub­sidiary that ac­count­ed for three per cent of An­gos­tu­ra's rev­enues, but nei­ther the au­di­tors nor the board chose to shine any light on the $1,185 mil­lion in re­ceiv­ables from the CL Fi­nan­cial group. The con­sol­i­dat­ed fi­nan­cial state­ments, at note 33, re­fer to the fact that dur­ing 2008, An­gos­tu­ra "guar­an­teed bor­row­ings in the amount of US$102 mil­lion un­der­tak­en by its par­ent com­pa­ny, CL Fi­nan­cial in re­spect of its ac­qui­si­tion of Ja­maican con­glom­er­ate Las­celles de Mer­ca­do. That note, which falls un­der the rubric con­tin­gent li­a­bil­i­ty, goes on to re­fer to the fact that An­gos­tu­ra "could be called up­on to make good its guar­an­tee for any amount in ex­cess of the val­ue re­alised on the sale of the se­cu­ri­ty held by the lender, specif­i­cal­ly 26,284,806 shares in Las­celles.

In oth­er words, An­gos­tu­ra guar­an­teed a loan to CL Fi­nan­cial (the sub­sidiary guar­an­teed a loan to the par­ent!!!) and as a re­sult, a po­ten­tial li­a­bil­i­ty of US$17,362,925 (TT$110 mil­lion) ex­ist­ed as at Ju­ly 19, 2010, ac­cord­ing to the con­sol­i­dat­ed fi­nan­cial state­ments. This li­a­bil­i­ty, it seems, has the po­ten­tial to grow if Las­celles shares fall in val­ue, as they are like­ly to do giv­en the 42 per cent de­cline in the Las­celles net prof­it for the nine months end­ing June 30. One won­ders whether the man­age­ment of the com­pa­ny would be will­ing to pro­vide some guid­ance to its var­i­ous stake­hold­ers on this is­sue. Note 34 of An­gos­tu­ra's con­sol­i­dat­ed fi­nan­cials states that the com­pa­ny was owed $973.9 mil­lion as a re­ceiv­able from the par­ent and that the pro­vi­sion for the im­pair­ment of the re­ceiv­able was $973.9 mil­lion.

Again, there is no oth­er in­for­ma­tion about the cir­cum­stances sur­round­ing the de­ci­sion by An­gos­tu­ra to write off $973.9 mil­lion. If one adds the $110 mil­lion po­ten­tial li­a­bil­i­ty as a re­sult of the loan guar­an­tee to the $973.9 mil­lion which has been writ­ten off, one gets near­ly $1.1 bil­lion. Does this mon­ey have any­thing to do with some­thing called a Bid In­duce­ment Agree­ment be­tween a com­pa­ny called Calla Lil­ly and An­gos­tu­ra in No­vem­ber 2007? Calla Lil­ly is a com­pa­ny which had two share­hold­ers, the Las­celles chair­man, George Ashen­heim, and the com­pa­ny's man­ag­ing di­rec­tor William Mc­Connell. Calla Lil­ly held 9.5 mil­lion or­di­nary shares and 50,000 pref­er­ence shares.

At the time, the shares in Calla Lil­ly were worth be­tween US$95 mil­lion and US$100 mil­lion. Yet, while Calla Lil­ly was worth US$100 mil­lion it was trans­ferred to CL Fi­nan­cial (not An­gos­tu­ra, the pub­licly owned com­pa­ny, mind you) for the prince­ly sum of J$2, which would have been worth less than US$.03. In oth­er words, CL Fi­nan­cial paid three US cents for some­thing worth US$100 mil­lion. How did such a mir­a­cle of mod­ern au­dit­ing oc­cur? Un­for­tu­nate­ly, the An­gos­tu­ra ac­counts and the con­sol­i­dat­ed fi­nan­cials are both quite silent on this Calla Lil­ly mir­a­cle–as are the man­age­ment of the com­pa­ny, the au­di­tors and the fi­nan­cial reg­u­la­tors

Is any­one sur­prised?