DUPREY: DON'T BLAME ME
By Andre Bagoo Thursday, October 25 2012
In his 40-page witness statement of defence to the Colman Inquiry, former CL Financial (CLF) executive chairman Lawrence Duprey, washes his hands of all that went wrong at the financial behemoth he led, insisting that he was not responsible for key decisions of many of the company’s subsidiaries which later brought down the tangled web of CLF, taking with it $20 billion in State funds.
Andre Monteil, Mervyn Assam, Michael Fifi, Dr Bhoe Tewarie, Claudius Dacon and Michael Carballo, Duprey says, are the ones to whom the Colman Inquiry into the collapse of Clico should direct its questions. These players, in his view, had a more direct role in the affairs of the group.
Someone else who should be asked questions, according to Duprey, is former corporate secretary Gita Sakal, whom he said he “trusted” to draw up her own contract unknowing of the fact that the contract called for a US$5 million severance. The Florida resident says he believed that Sakal had informed the Ministry of Finance in 2009 about Clico Energy and the purported sale of shares in that company which took place behind taxpayers’ backs.
Duprey also says he did not become aware of the problems caused by surrounding an insurance company with a series of risky commercial ventures until the late stages. He says he sought to maximise profits to reduce risk.
And of the millions he was paid by CLF entities, some of this was for “political donations to all parties.”
He makes a point of the fact that he got no “benefits” from the Central Bank when he was terminated from the post after the collapse.
“I did not control,” Duprey says. “Rather than being a decision-maker, one of my roles was that of identifying opportunities for revenue-earning to grow the company.”
Of the liquidity problems that brought the CLF empire crashing down, Duprey said he was not aware of them until late and they were decisions taken by the office of the group financial director— Monteil until 2007 then Carballo.
“The increasing liquidity problems for CLF and the individual group companies flowed from internal financial transactions administered by the office of the Group Financial Director and his staff,” Duprey says. “I myself was not kept apprised of the nature and extent of these problems, and was not made live to these issues until mid to late December 2008 when Michael Carballo and I met. While it is stated by Michael Carballo at paragraph 135 of his witness statement that he had frequent discussions with me at about this, I have no recollection of him doing so.”
Of the problems at Clico Investment Bank (CIB), Duprey says, “CIB was managed by Mervyn Assam at the time of the global financial crisis. CIB had a board of directors. I was not aware of the liquidity problems being experienced by CIB, nor does Mervyn Assam suggest that he informed me of such problems. I was not on the board and was not involved in the day-to-day operations of the company.”
Of the key questions relating to the levels of the statutory fund – needed to guarantee the safety of policyholders funds – Duprey said this, too, was not something he dealt with.
“The handling of the statutory fund was a finance function,” he says. “The Chief Information Officer had been delegated by the chairman and the executive team of Clico to liaise and work closely with representatives of CBTT with respect to all dealings concerning the company’s compliance with their regulations.”
The way the company treated deposits and premiums as if income, not liabilities, was not something he could explain.
“This fell under Mr Monteil’s purview as Group Financial Director,” Duprey says.
The acceleration of payments for the Lascelles de Mercado deal – identified as the billion-dollar straw that broke the camel’s back – had nothing to do with Duprey.
“I was not aware of the reason for this decision. Michael Carballo had responsibility for the
execution of this acquisition,” he says. Yet, Duprey, a few paragraphs later, says, “My recollection is that I would have preferred to have continued with the delayed completion as the Board of Lascelles de Mercado was not going to be easy to remove given the entrenched positions and longevity of their positions.”
Of Gita Sakal, he says he trusted her and thought she told the Government about Clico Energy.
“She was given leeway to draft her own contract which appeared reasonable at the time and it was approved. The contract with the company contained a termination clause for the sum of US$5 million in the event of her employment with the group being terminated before expiry of the term of the contract. I have to say that I had not knowingly agreed to this clause being included, I had trusted her to ensure that the contract was drawn fairly.” He says top staff found it “difficult” to work with her.
“When Claudius Dacon assumed the role of CEO at Clico in 2003, he found it difficult to maintain a working relationship with her and Geoffrey Leid was hired as the corporate secretary at Clico,” Duprey tells the Inquiry. The same Sakal was supposed to tell the State that CLF was going to sell shares in Clico Energy even after the January 2009 Memorandum of Understanding (MoU) froze things.
“Gita Sakal indicated to me that she had disclosed the proposed sale — which had been arranged over a year previously — to the Ministry of Finance,” he says. “It is my belief that the sale of Clico Energy was not a breach of the MoU.” Duprey continues, “I am unaware of the details of how the proceeds of the sale were handled, as to the best of my knowledge this was handled by Gita Sakal and Michael Carballo.”
Sakal, too, holds the key, Duprey states, to the transfer of Methanol Holdings Limited shares. “I am not aware of the details of this proposed transaction. The explanation should be sought from Gita Sakal,” he says.
Why did group audits and audits for individual companies for the years 2006 and 2007 take so long? According to Duprey the answer cannot be found at his door.
“Mr Monteil was the Group Financial Director of CLF during that period and this should be directed for his response,” he says. “I was not involved in the preparation of financial statements and I am therefore not in a position to comment on audit problems. There was an Executive Board of Clico, which met regularly and the proceedings were recorded, by an Audit Committee and an Investment Committee.”
The inquiry has heard evidence suggesting that there was no evidence that this committee functioned as it might or met regularly.
What was the cause of the company’s “convoluted” corporate structure? It was, in part, the result of a transformation process overseen by Tewarie, then the head of UWI’s Institute of Business and now the Minister of Planning.
“The corporate structure, which was worked out in consultation with officials of the UWI Institute of Business (IOB), was part of the transformation structured by the IOB and is described in a book entitled Power Politics and Performance written by Winston Dookeran with the assistance of Dr Manfred Jantzen (who conducted the transformation exercise at CLF in conjunction with Dr Tewarie).”
The huge problem of inter-company balances was apparently not something Duprey was concerned with.
“I was not involved in the detailed accounting processes. There seem to have been accounting practices in place with regard to the disbursement of funds by Clico to related parties in the group or inter-company balances that continued over time without being questioned,” he says. “These accounting practices were not the result of any policy or directive emanating from me, and were quite frankly outside of my technical competence.”
On the billion-dollar Green Island project at Florida, for which he is being sued, Duprey says it was British American (Trinidad) executive chairman Brian Branker who did this, not him.
Duprey adds, “Many other officers of the company and of the Group were decision makers. For example, Fifi made the financial and operational decisions at HCL, de Souza made the decisions at Flavorite, Ng Chow at Colonial Fire & General Insurance Company (Colfire),” he says. “I would from time to time work with these CEOs....It could be said that I was on my way to achieving steady growth and exercise good risk management with Clico, but instead began handing over to the next generation, led by Claudius Dacon.”
But though he defers to others, Duprey admits that some decisions were taken unilaterally by him without CLF board sanction.
“The minutes of the BOD (board of directors) meeting of Clico/CLF clearly indicate that strategies were discussed at board level and decisions taken at board meetings – there may have been one or two exceptions to this, but it was certainly not the norm,” he said. Yet, having admitted to exceptions, he adds, “The insinuation that decisions were taken by executives outside board meetings and were reported to the board rather than board deciding strategic issues is false.”
Duprey, who last week told Sunday Newsday his health is “normal”, deposes of medical problems which he says have hindered his ability to respond to all the allegations at the inquiry.
(See Page 15A)