The director of Public Prosecutions has been asked to give urgent attention to the Colman report from the Commission of Enquiry into Clico and the Hindu Credit Union which contains “very serious allegations of criminal misconduct on the part of a handful of privileged individuals who were associated with the Clico/CLF group of companies.”
“A number of adverse findings of criminal misconduct of a kleptocratic nature were found and recommendations made which would be for the DPP to consider,” Prime Minister Dr Keith Rowley said in Parliament yesterday.
Rowley delivered a statement on the report on the Clico/HCU enquiry submitted by Sir Anthony Colman (QC) on June 22.
Rowley said as at May 2016, total costs to taxpayers of the commissioner and attorneys retained to assist the Commission was $78,488,943.30.
Colman was one of three, out of a total of 13 counsels to the commission, who earned between $9 million and $23 million.
Colman was appointed by the past People’s Partnership administration, in 2010, to enquire into the failure of CL Financial Limited, Colonial Life Insurance Company (Trinidad) Limited, Clico Investment Bank Limited, British American Insurance Company (Trinidad) Limited, Caribbean Money Market Brokers Limited and the Hindu Credit Union Cooperative Society Limited and to make recommendations.
Evidence and submissions were heard from June 2011 to May 2013. Colman’s first report on HCU was on July 16, 2014. The second, on Clico-CLF, was presented to the president on June 22.
Rowley said the president sent him a hard copy, an electronic copy of the report, and a sealed confidential cover the same day. He said Cabinet decided the sealed copy should remain sealed and be sent to the DPP’s office for his “consideration and comments or advice on the time on which this document should be made public in its entirety/partially.”
Rowley said this was expressed to the DPP by a letter, on June 23, sent with the sealed electronic copy. He said he sought urgent attention to it, “given the sensitive nature, and widespread public interest and anticipation in the Clico saga and the report.”
He said the report couldn’t be published, since the findings must require the attention of law enforcement through the office of the DPP.
“... It’s my hope its findings are quickly acted upon ... and that this effort doesn’t gather dust on some obscure shelf,” Rowley said.
“It could have been avoided”
Rowley still cited certain parts of the report’s findings. It was noted that a number of Clico executives acted in conflict of interest positions. There was over leveraging and unacceptable, inter company transactions that seriously, negatively, affected Clico, CIB and BAT. It noted CLF paid high premium prices in acquiring various assets thereby resulting in overall prices being more than originally anticipated.
CLF’s auditors also expressed disquiet in 2008 at the rapidity with which the group was acquiring new companies, such as Green Island and Lascelles de Mercado (“LdM”), the growth of inter-company balances—particularly the indebtedness of CLF to Clico—and CIB, as well as the limited ability of CLF management to operate a much enlarged group and recommended there be no further acquisitions until the group had consolidated its new holdings and paid down the unsecured part of its indebtedness to Clico. But that recommendation was ignored.
It was noted that the underlying causes of the collapse of all of the companies were the defective business models of the CLF Group and the failure of senior management to act to change it, the methods of corporate governance in accordance with the requirements of the Central Bank and the recommendations of their external auditors.
Rowley said, “The business model which ultimately crippled the entire CLF Group involved as its central feature, the deployment by CLF, either directly or through subsidiaries, of funds originating in monies deposited by external depositors, as well as by Clico and BAT in CIB, funds originating in policy premium income and investment dividends belonging to Clico and BAT, for the purpose of making investments in equities and real estate and latterly for the payment of the operating expenses of CLF itself and other group companies.
“In essence, the insurance companies were treated as the means of funding the investments made by or directed by CLF. The fundamental defects in this business model were first that once funds had been transferred out of Clico, CIB and BAT and invested by CLF and/or other group component companies in real estate and equities, those assets lost the key attribute of liquidity, which was essential to the safe conduct of the business of both CIB and the insurance companies, Clico and BAT. Consequently, those companies lost the ability to respond to the requirements of external policyholders and depositors for money payments.”
He added, “The second major cause of the collapse was the continuing failure of senior management to adopt and give effect to the requirements of Central Bank and the recommendations of the external auditors. There was a continuing failure of senior management to deal adequately, or at all, with two of the fundamental weaknesses of the CLF business model, namely excessive related-party transactions and the pervasive asset liability imbalance...”
Rowley said the commission found that if during 2004 to 2008, Clico, BAT and CLF had made “any real effort to act with urgency to rebalance the group’s business model in accordance with Central Bank’s requirements and the recommendations of the external auditors, it’s probable the collapse would have been avoided.”
On recommendations, Rowley said the Finance Minister had laid insurance legislation in Parliament yesterday for much needed changes in the Insurance industry.
On witnesses’ failure to attend a Commission of Enquiry now carrying a maximum penalty of only $2,000, Rowley said he’d instructed the Ministry of the Attorney General to advise Cabinet on how legislation may assist in ensuring the attendance of witnesses and provision of documents in a better way.
Rowley stressed there was “no adverse finding and/or comment,” concerning Attorney General Faris Al-Rawi, who had served briefly on the CIB board and who wasn’t called before the commission.
He said once the Finance Minister completes his ongoing audit of Clico, he’ll give the exact amount of money expended by Government concerning the Clico bailout, including costs incurred for lawyers, accountants and other professionals.
LAWYERS’ FEES
@ May 2016:
Shankar Bidaisee $7,192,000
Gerald Ramdeen $5,855,468
Varun Debideen $4,955,000
Celeste Jules $2,155,500
Israel Khan SC $989,000
Wayne Sturge $567,600
Lemuel Murphy $250,000
Sir Anthony Colman QC
$9,130,618.02
Peter Carter QC $23,393,808.54
International Limited
$2,712,213.48
Edwin Glasgow QC $12,147,007.20
Ian Marshall $827,239.73
Marion Smith MC Gregor QC
$8,313,488.40
CLF response
In response to Prime Minister Dr Keith Rowley statement on the Clico Commission of Enquiry findings yesterday, former Clico executive Claudius Dacon, said, “I am disappointed the Prime Minister was unable to give the exact amount expended on the BA, Clico and CIB bailout. Sadly, I now believe the Government doesn’t know what this value is, after almost eight years of CBTT stewardship.
But we welcome Mr Rowley’s promise of open and transparent management, especially in the light of revelations that $6 billion is missing from the Clico accounts. We look forward to a speedy and equitable resolution of this predicament in the interest of all.”