The CL Financial bailout
Submission by
Afra Raymond B.Sc., FRICS
to the Colman Commission of Enquiry into the failure of
CL Financial et al and Hindu Credit Union
www.afraraymond.com
Wednesday 9th November 2011
Republic Bank Ltd's
15th July 1996
Letter to Shareholder's
explaining why they should
REJECT CLICO's ATTEMPT TO
TAKE CONTROL OF YOUR
BANK
THE NATURE OF BANKS AND
WHY THEY MUST BE
REGULATED
The Bailout Timeline
What did they know and when did
they know it?
• When did the CL Financial group actually
collapse?
• Who withdrew their investments and
when?
• What are the reasonable conclusions we
can form from the actions and statements
of the responsible Officials involved?
Michael Carballo’s statement
published in the Business Guardian on 7th November 2008
Carballo said CL Financial, with $100 billion
in assets, could weather any storm.
“We are not exposed in any one particular
industry. That is our business model,”
Carballo said.
http://legacy.guardian.co.tt/archives/2008-11-07/bussguardian1.html
NGC’s Management of its
Financial Investments
NGC’s Press Release of 4th February 2009
“…in accordance with the Company’s policy for short-term investments,
which has maximum placement limits for any financial institution or
group of financial institutions, computed as a percentage of total
investment. This policy is approved by the Board of Directors; it
seeks to diversify the Company’s investment portfolio…”
“…At the end of 2008, NGC’s investment with the CL Financial group –
Clico Investment Bank (CIB), CMMB and Republic Bank was 37%,
compared with 40% at the beginning of 2008…”
“…In November 2008 CIB failed to return the principal and interest due
upon the maturity of an NGC deposit (US $10 million). This deposit,
plus interest, was paid in two amounts during the first week of
December 2008,
An additional two deposits, which matured in December 2008, were
similarly affected, notwithstanding promises made at a meeting held
in December to repay by year end...”
http://www.ngc.co.tt/Media/pdfs/Publications/NGC%20press%20release-%20Feb%205.pdf
The Minister of Finance
'Everybody knew CIB was in trouble'
Sunday Express 15th March 2009 –
"In an interview with the Express on February 4, Nunez-Tesheira also confirmed
that her sister made an application on December 30 to break the $2.1 million
deposit held in her late mother's name, Una Nunez.
In that interview Nunez-Tesheira said: "Everybody knew CIB was in trouble.“
But she stressed that she only received the formal brief on the issue of CL
Financial troubles on January 14.
In an interview on the same day with this newspaper, she stated: "The
information about CIB and the concerns about CIB, were out there in the public
domain for a long time, and my sister being a banker, would have been one of
the persons who would have heard the concerns about CIB."
Asked if in hindsight she should have declared her investments in CIB and
CMMB before making any statements in the Parliament on the issue, Nunez
Tesheira said she had no need to do so. "In answering that question, it would
imply that there was something that somehow was untoward," she said, adding
that there was not(hing untoward).“
http://www.trinidadexpress.com/news/_Everybody_knew_CIB_was_in_trouble_-115443989.html
The Inspector of Financial Institutions – 1
In his affidavit of 16th April 2010 in the winding-up action for CIB, the
very Inspector of Financial Institutions states –
At para 5 he states “…On January 15th 2009 as part of its normal
regulatory process, the Central Bank held a meeting with officials
from the Petitioner, namely Messrs (sic) Devati Mooledhar, Senior
Vice President etc.…”
At para 6 he states “…At the said meeting Ms Mooledhar stated that
the petitioner was experiencing a liquidity problem…”
The Inspector of Financial Institutions – 2
At paras 9 c. and 10 g. he states “…the Petitioner (CIB) was not
maintaining high standards of financial probity and sound business
practices…”
At para 23 he states “…With respect to the Creditors of the Petitioner,
the Petitioner has met the statutory obligations for the Board of Inland
Revenue (except for Corporation Tax Returns for 2007, 2008 and 2009
which are being prepared and remain outstanding)…”
The Inspector of Financial Institutions - 3
In Hansard of 5th February 2009, Senator Conrad Enill, quotes (at page 62) from the
statements of the Governor of the Central Bank on the crisis at CIB and CLICO
“…Given the close integration of the two institutions within
the group it is just a matter of time before one starts to
come under severe liquidity pressure.
Therefore in those circumstances, the Inspector of
Financial Institutions and the Governor of the Central
Bank met with the chairman and chief financial officer of
the group on January 07, 2009...”
'Fit & Proper' Regulations
“...3.1 In accordance with governing legislation a person is
considered to be fit and proper if the person essentially
is of good character, competent, honest, financially
sound, reputable, reliable and discharges and is likely to
discharge his/her responsibilities fairly...”
LAWRENCE DUPREY
CL Financial letter of 13th January 2009
“…CL Financial being a significant part of the financial sector has been
disproportionately impacted by these adverse conditions…”
That letter specifies the ‘Assets available for Restructuring’ as being in
the sum of $23,913,993.014.
++++++++++++++++++++++++++++++++++++++++++++++++++++++
CL Financial Annual Report ‘The Next Wave of Growth’
of 23rd January 2009, from the preamble “…We have confidence in our ability to not only navigate this financial
storm but to find fresh and profitable opportunities within it…”
CL Financial 2007 Annual Report
‘The Next Wave of Growth’
of 23rd January 2009
From the Chairman’s Letter to Shareholders
“…As the global economy and financial markets enter a new and
uncertain phase, the C L Financial Group stands at the cusp of the next
wave of growth and is preparing to shape itself as a formidable global
player in four main sectors:
• Financial Services
• Energy
• Drinks Manufacturing and Distribution
• Real Estate Development…”
_______________
The Consolidated Balance Sheet to that Report disclosed Total Assets
at $100,666,256.
The Governor of the Central Bank
‘Govt left empty handed in CL Financial bailout’
Trinidad & Tobago Guardian 8th April 2009 - http://test.guardian.co.tt/?q=business/business/2009/04/08/govt-left-empty-handed-clfinancial-bailout
“…Williams said yesterday that CL Financial’s $100 billion assets are otherwise
committed…Williams said much of Clico’s assets are pledged in one way or
Another...“
“…I have two small deposits with CIB…” cited from the Governor’s statement at page 622
of Hansard for the Monday 2nd February 2009 sitting of the House of Representatives – see
http://www.ttparliament.org/hansards/hh20090202.pdf -
30th January, in describing the causes of the CLF problems – “excessive
related-party transactions which carry significant contagion risks. I should
note that the high level of concentration is not specifically prohibited by the
present legislation. An aggressive high interest rate resource
mobilization strategy to finance equally high risk investments, much of
which are in illiquid assets (including real estate both in Trinidad and Tobago
and abroad).”
13th February – “Clico/CIB were isolated cases of an overly-aggressive and
Risky business model.”
From the Governor’s ‘Remarks for the CIB/CLICO Media Conference of 30th January 2009.
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