$30M GITABy Andre Bagoo Friday, November 18 2011
FORMER CL Financial (CLF) corporate secretary Gita Sakal yesterday came under fire at the Clico Commission of Inquiry for her decision to push through a $30 million payment to herself from funds acquired by the unauthorised sale of CLF shares in Clico Energy back in February 2009.
On the day when the focus of proceedings at the Winsure Building, Port-of-Spain, zoned in on her own conduct in the weeks before and after the State’s 2009 $5 billion bailout, Sakal said she had no regrets about not telling the Ministry of Finance that former CLF executive chairman Lawrence Duprey was pushing through the sale of Clico Energy in the face of provisions of a January 2009 Memorandum of Understanding (MoU) which she admitted barred the sale. The former corporate secretary said Duprey told her to keep the sale–which was apparently in the works since January 24, 2009, while CLF officials were still in early talks with the State over CLF liquidity issues–confidential.
Duprey, Sakal said, orally authorised the payment of a $30 million “severance payment” to her which would have come out of funds acquired via the secret sale of Clico Energy.
Under cross-examination from attorney Terrence Bharath, of the Clico Policyholders Group, Sakal also admitted to being linked to two separate holdings companies which were apparently recipients of a total of more than $29 million in Clico payments, representing her salary and bonuses for the single year of 2008.
In relation to her $30 million severance payment, Sakal said Duprey–at an undisclosed date in the first quarter of 2009–worked out the sum and agreed to the payment. The amount represented “part payment of contractual termination”, though she had not yet left CLF and was working on a month-to-month contract.
“That payment was signed by Mr Duprey and myself and it was paid with the severance payment of all the other employees. Mr Duprey and I discussed it and I agreed that this was the amount. I also agreed that I would wait some months before cashing. That month there was a shortfall of cash,” she said.
She said she authorised her own payment, alongside Duprey (who has denied this).
“It was nothing out of the ordinary, it was something I did all the time,” she said.
Sometime in March 2009, Sakal got a bank draft from the finance department.
In her statement submitted to the inquiry, Sakal deposes, “I placed it in the draw of my desk and left it there until April 30, 2009.”
“I think you are one of the very few people in the country who holds on to a $30 million cheque without wanting to get the interest,” Bharath quipped, referring to this claim yesterday.
“The bank is not giving interest anyway,” Sakal retorted.
“It might be small to you,” Bharath replied.
Colman asked if there was a “private payment system” at Clico. Sakal said, “Yes.”
Sakal confirmed that the $30 million–which was to be paid directly to Republic Bank and not in her name–would have come from the proceeds of the sale of Clico Energy in February 2009.
“The money from Clico Energy was used to pay a lot of expenses including... severance,” she said. At the same time, she also admitted her role in the sale of Clico Energy. She said she later returned the cheque after “harassment” over it from former CLF financial director Michael Carballo.
Sakal said while she chose not to disclose the unauthorised Clico Energy share sale of February 2009, she said she raised objections given the terms of the MoU but was “over-ruled” implicitly by Duprey. She admitted the sale was in breach of the January 2009 MoU. The breach, she explained was in CLF failing to give the Ministry of Finance prior notice of the sale, as mandated by the terms of the MoU.
At the same time she did not think the breach of the MoU was significant and assumed that Duprey would report the sale eventually to the Ministry of Finance.
“The Clico Energy transaction commenced before the MoU. At the time there were little breaches with the MoU. I agree it was not strictly followed,” she said.
“I did not think the (defect of) procedure was something that could not be corrected,” she added. Noting that Duprey was at the time in 2009 still in regular contact with the Ministry of Finance, she said, “That procedural thing could have been overcome at one of those meetings.”
Duprey, she said, had told her to keep the sale confidential.
“Mr Duprey had asked that the details of the sales not be disclosed to anyone,” she said. “He normally had his reasons for wanting to keep it confidential. I didn’t think it was wrong. I had a duty of confidentiality so I did not say anything about it.”
“I took instructions from the chairman and I undertook my duty of confidentiality very seriously,” she said. “I am not happy with it, but I don’t regret doing it. My signature appears on the escrow agreement. I was conflicted between informing the (sales) committee (of the CLF board) and obeying the instructions of the chairman. I chose to obey the instructions of the chairman.”
“There is nothing odd about this, there is nothing sinister,” she argued.
Yesterday the inquiry spent hours unravelling Sakal’s remuneration and her ties to CLF subsidiary CL Marine.
Sakal confirmed getting paid $17 million per year through her company Corporate Consultants Limited. Bharath confronted her with fresh evidence which also suggested that, at least for the year 2008, she got $12.2 million through another company Discrete Logic Limited. That included a $6.5 million bonus and a $13,455 payment through a “US a/c”, according to a CLF profile which appears to have been produced by the Board of Inland Revenue, which was submitted to the inquiry yesterday.
Sakal admitted being tied to Discrete Logic but could not recall if a $12.2 million payment was made in 2008. Inquiry chairman Sir Anthony Colman ordered her to produce the bank records for Discrete Logic for that year. Sakal is listed as the incorporator of the company. She is also listed as a director of Corporate Consultants with her brother Dexter Sakal.
Sakal also admitted to arranging the employment of a relative at CL Marine, apparently without a written contract. The issue was later subject to e-mails noting complaints written by Chase Hart, former CEO of CL Marine. (Hart is the son of former Udecott executive chairman Calder Hart.)
Sakal was also described as being in violation of good corporate governance in a letter written to her by Duprey, for her work as a director of Methanol Holdings Trinidad Limited (MHTL). She later returned to that company, which is a CLF subsidiary.
Asked why she stayed on at CLF even after the unauthorised sale of Clico Energy, Sakal said, “I didn’t think that it was something that called for resignation. I stayed to assist the company. I did not think that resigning would assist the company so I stayed on and signed the escrow agreement.”
Sakal, coming under increasing pressure in the cross-examination at one stage said, “now I understand why people pay the $2,000 fine and are staying out of the country rather than assisting the commission.” Under the Commission of Inquiry Act, a witness who refuses to turn up at an inquiry is liable to a $2,000 penalty.
After an objection from Sakal’s attorney Justin Phelps, Bharath was warned by the chairman to phrase his question in line with the logic of the evidence at the inquiry so as to “minimise the collateral damage” to Sakal’s reputation.
“I will try but the whole topic is explosive,” Bharath said.
At different stages during Sakal’s testimony, Carballo, who has submitted evidence against Sakal at the inquiry, chuckled and shook his head.
Colman asked Sakal if directors at CLF were capable of voicing dissent under the chairman.
“Their desire to please the chairman was greater than anything else,” she said.
Phelps objected to Bharath’s interrogation of Sakal, citing possible damage to her reputation through subsequent coverage in the press. Glancing at the press-pack at the back of the court-room, Colman noted of the day’s evidence, “they’ve got an awful lot to print tomorrow.”
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