|Clico horror stories |
Sunday, September 25 2011
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Former CL Financial CFO Michael Carballo manages a smile at last week's Clico Commission of Inquiry. Carballo gave explosive testimony during the proc...
IT has certainly been a week of horrors for Clico policyholders trying to retrieve their money, having to hear daily revelations at the Commission of Inquiry about the huge sums bandied about by former top executives of the firm.
Minister of Food Production, Vasant Bharath, acting for an absent Finance Minister, Winston Dookeran, quite aptly said as much at Thursday’s post-Cabinet news conference. Bharath said, “I think those who are looking and reading these stories will to some extent be horrified at the nature and scale of what took place.”
How does the average citizen, facing virtual monthly hikes in his/her grocery bill and basically living from pay-cheque to pay-cheque to feed their families, relate to the multi-million dollar payouts made to CL Financial’s (CLF) former top brass?
While we have no problem with paying top-performers a true market rate for their services just as they would command elsewhere in the world, we must object that all these huge salaries, fees, commissions, write-offs, bonuses, allowances and incentives were paid to Clico executives in what seems to have been an unregulated free-for-all feeding frenzy.
Last Tuesday came allegations by Michael Carballo, former CLF chief financial officer, that his predecessor, Andre Monteil, had in 2008 sought a $206 million fee for his own firm, Stone Street Capital, to arrange the sale of Clico’s $12 billion worth of Republic Bank shares.
The same day, the inquiry also learnt of the colourful Mr Arnaud de Trabuc, a former CLF representative in Europe, involved in the dubious purchase of Chateau Online, a wine merchant, and the Belvedere Vodka firm. Trabuc earned himself significant sums, alleged Carballo, and when dismissed was found to have used funds for his personal purposes such as buying property for himself.
On Wednesday, the inquiry heard of Carballo’s claim that former CLF head, Lawrence Duprey, had enjoyed an annual base salary of $60 million, plus other hefty benefits such as a write-off of a $121 million loan, a $5 million business trip to Las Vegas and a $6 million business trip to the Far East. This gave Mr Duprey a whopping $90 million in income in 2007, reported Newsday.
The inquiry on Thursday heard claims by Clico attorney, Neal Bisnath, that Duprey had earned some $1.1 billion in fees for the years between 2004 to 2008.
That day also came news that former CLF corporate secretary, Gita Sakal, had received payments of $30 million in 2009, $9 million in 2008 and $12 million in 2007. For many CLF former officials, not only were huge payments given but under circumstances that do not suggest an independent body within the company making arms-length payments to the specific individual, but rather it being a case of himself-unto-himself.
Of course, we keenly await to hear the proverbial “other side of the story” from those whose names have hitherto been called.
While some defenders of Clico have sought to blame its crash on its over-leveraging and over- exposure on the United States market, which crashed in the Great Recession of 2008, the past week suggests that at the core of Clico was a “Wild West” culture echoing Wall Street’s lack of compliance with State regulators and a failure by agents of fiduciary care such as auditors, that had caused the 2008 global crash.
So even as more shocking revelations are likely to continue daily, we urge Clico claimants to keep their focus on deciding how to respond to the Government’s recent payout plan for them, and not try to get hot under the collar at the inquiry’s revelations.