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By ANDRE BAGOO Saturday, September 24 2011

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FORMER CL Financial chief financial officer (CFO) Michael Carballo, the man who gave sworn evidence in relation to former CLF executive chairman Lawrence Duprey and former CL Financial CFO L Andre Monteil, yesterday refused to withdraw allegations of corruption, greed and mismanagement at CL Financial in the face of an angry onslaught of questions from Monteil’s lawyer, senior counsel Martin Daly.

“You have attempted to bring my client into odium and disrepute and I am entitled to attack your credibility,” Daly told Carballo at the Winsure Building, Richmond Street, Port-of-Spain. The senior counsel exchanged heated barbs with the witness, threw words at counsel for the inquiry and suggested political motives behind Carballo’s coming forward to give evidence at the proceedings.

As Carballo took the stand for a fifth day in a row, Daly several times asked him to withdraw remarks made in a 90-page statement filed with the inquiry. But Carballo, on each occasion, stood firm.

In particular, at the very end of yesterday’s sitting Daly asked Carballo to withdraw remarks he made in relation to the now infamous Home Mortgage Bank share swap which saw Monteil’s Stone Street Capital take home HMB shares in a $110 million transaction in 2007. The deal raised serious questions of conflicts of interest, breach of fiduciary and director duties.

Carballo, in his statement, said, “many senior executives within the CL Financial group, including me, expressed shock that Clico would dispose of its shareholding in the HMB for a sum that many thought was a significant undervalue. HMB was a company that was regarded as being highly profitable and in receipt of many concessions such as taxation and which had the ability to pay a substantial amount of their profits earned via dividends.”

But there was no basis, Daly argued, to say that the shares had been undervalued. “Would you like to withdraw the allegation that it is an undervalue?” Daly asked. “You have made a grievous allegation against my client. Have you been reckless in coming here and making an allegation of undervalue when they knew there was no undervalue?”

“I am not withdrawing that allegation,” Carballo said. “That is the opinion of many. I don’t think that was reckless.” He added, “You tell me Mr Daly is the sale of HMB of benefit to Clico at this time? The sale of HMB is not in the best interest of Clico policyholders.”

Inquiry chairman Sir Anthony Colman interrupted the exchanges between the two men to adjourn the sitting at 4.30 pm, the closing time for hearings which he has strictly maintained for the proceedings thus far. But not before Daly said, “That is the standard of this commission? To come here and listen to rake? Steups!”

It was the end of a dramatic day of cross-examination at which Daly focused on attempting to undermine Carballo’s credibility. However the senior counsel did not seek to deny the allegations that Monteil sought a $206 million fee to rescue CL Financial, or to change in any fundamental way the picture of gross wheeling and dealing which reportedly took place at CL Financial from 2008 to 2009, as painted by Carballo over the last five days at the public inquiry. MG Daly and Company, the firm at which Daly is a partner, has featured prominently in the inquiry as the company selected by Monteil’s Stone Street to perform legal duties in relation to negotiations with the Central Bank in January 2009.

The sparring between the two men became so intense that at one stage, Colman intervened, questioning the witness. He said, “I am asking the question Mr Daly” before going on to say something that was not clearly audible but was thought to be an order to shut up.

At the very start of his cross-examination, Daly gave hints of the style of questioning he was to adopt in order to attempt to fulfill his express objective of undermining Carballo’s credibility.

“I have a few introductory questions,” Daly said. “In your witness statement and giving evidence, you have set out to distance yourself from any personal responsibility that you have had and to place blame on other persons.”

“No I would not say so,” Carballo replied. “I sought to speak the truth.” Daly asked the former Angostura Holdings CFO if he believed it was wrong to spread gossip and “water-cooler talk”, and accused him of doing precisely that in his witness statement. He noted that at several parts of the statement, Carballo reports what others had reported.

In relation to reports of hefty bonuses at CIB, Carballo said these were reported to him from executives. “That is what I was made to understand by people in CIB,” Carballo said. “I did not see the evidence but I verily believe and I am telling the commission the truth as I see it.”

“Oh? We are coming to the truth,” Daly replied. “On what basis were you spreading these stories?”

“Discussions given to me by certain executives and certain executives of CIB,” Carballo said “And that is not a rumor one executive got $13 million on her departure. I had a document at the time. I don’t have it now. But this is a commission of inquiry and I am telling the truth we are looking at policyholders funds here.”

“Do you appreciate that you have just spread another story, yes or no?” Daly asked. “It is a story but it is not a rumour,” Carballo replied. “You just that minute mauvais langued a female executive of CIB!” Daly replied.

“If one is sitting on a board and certain things are discussed you cannot say that is gossip coming out of a meeting,” Carballo said.

“Do you bear personal resentment against Mr Andre Monteil?” Daly asked. “Of course not. In giving my statement I bear no personal resentment against Mr Monteil and nobody else. I am giving this as the truth the whole truth and nothing but the truth because I have nobody to protect. The only two people I have to protect are my two children.”

Carballo continued, “At the end of the day the ultimate objective is to tell the truth.”

“Yes, to tell the truth and lick up Monteil,” Daly replied. As his back faced the television cameras used to cover the inquiry, the senior counsel became animated, adopting an aggressive style of cross-examination. Daly suggested Carballo was upset over being dropped by Duprey during the crucial January 2009 CLF talks with the State.

“I am going to give you plenty (sic) chance to withdraw before I discuss certain things, trust me,” Daly told Carballo at one stage. He accused Carballo of telling two lies: 1) of saying he did not sign an agreement to pay Monteil the $206 million fees and; 2) of saying, in annotations to his statement, that he did not recall whether he signed.

Daly produced a copy of a letter signed by Carballo in relation to the $206M fee agreement.

Carballo noted that during testimony on Tuesday last, he had clearly stated that he refused to sign the agreement when first presented to him by Monteil but was later advised so to do by Duprey.

“I immediately discussed it with Lawrence Duprey and he said he did not have any discussions with Andre Monteil,” Carballo said. But, “he felt he was not sure whether the proposal being put forward by Mr Monteil was real or not. He said the only way to see if he was serious or not was to sign the mandate.”

“My question is was this done in facilitation of a sale or not?” Daly asked. He said Carballo, when he was at Angostura, benefitted from discounts on Tobago land. Carballo said the discounts were given to all executives and he was not treated favorably.

At one stage, Carballo asked Daly why would he (Carballo) have an axe to grind. “He get the big wuk and you ain’t get it,” Daly snapped back. “Ask me a stupid question, you get a stupid answer. Stop questioning me. I am suggesting to you that this whole story, all of that was said in expediency to paint a picture that you were distancing yourself from what was going on.”

Daly said Carballo never expressed dissent in any written form over the years. Carballo said there was at least one board minute in which his dissent was documented. Daly argued that Carballo left out a big part of the CL Financial collapse story: Home Construction Limited.

“It was a contributor to the collapse. And this witness has come here with a certain agenda which I am trying to demonstrate,” Daly said. “My client does not understand how this witness has not been asked anything about HCL. Everything about this witnesses evidence and how it has been presented is pointing all one way and we are pointing out that this is so where statements have been about by my client by the political executive.”

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