FIFI POCKETS $200M
By Andre Bagoo Friday, October 26 2012
IT WAS a contract signed on April Fool’s Day, 2005.
And purportedly under its terms, former Home Construction Limited (HCL) managing CEO Michael Anthony Fifi, 70, took home more than $200 million, drawing from the coffers of the CL Financial (CLF) Group – which was anchored by Clico insurance funds – in the years leading up to its collapse.
The joke appeared to be on taxpayers as Fifi, wearing a smart grey suit with a light blue handkerchief in his pocket, testified at the Winsure Building at Richmond Street Port-of-Spain, confirming an arrangement he entered into upon “retirement” in 2005.
Fifi told the Colman Inquiry that CLF wanted him to stay on at HCL and so he entered into an arrangement through his private, Barbados-registered company, PMI Limited. PMI Limited entered into a contract with HCL, which was part-owned by Clico and CLF.
Lawyer for the Clico Policyholders Group, Terrence Bharath, said Fifi’s company PMI Limited signed the contract with HCL on April 1, 2005 and proceeded to take home $135 million for the years 2004 to 2008.
Fifi denied pocketing the $135 million, saying the actual amount was around $79 million. He said the fees were “pay-off” and were “reimbursement” for work done previously at HCL. What PMI Limited – which employed a staff of two – actually did seemed unclear.
While former CLF executive chairman Lawrence Duprey would later pen a letter raising objections to Fifi’s contract, Fifi said Duprey knew about it.
“The chairman had full knowledge because the contract was brought to me by CLF. It was a contract brought to me by Mr Duprey,” Fifi said. “And Mr Geoffrey Leid. We negotiated and agreed to in consideration for the amount of value I added to the HCL group. That was fair compensation.” Fifi continued, “I had demitted office, I was asked to come back on. I was not getting share options. I was utilising my expertise to build and add value.”
BHARATH: “Mr Fifi, let me tell you what the contract is about. This contract was a contract designed to let you be paid handsomely from HCL group of companies. There was no skilled labour or unskilled labour which PMI Limited provided.”
FIFI: “That company was set up upon my retirement to do development abroad and then I was persuaded to take over HCL. It was me merely a device to operate the company efficiently.”
BHARATH: “It was a device to fill your pockets Mr Fifi!”
FIFI: “That is your opinion. In fact, HCL was very well-run, it was very profitable. And quite frankly for the quantum of work done I think it was very reasonable.”
BHARATH: “Even when the ship was sinking, you continued to reward yourself handsomely.”
FIFI: “That’s not true, I was paid fairly.”
BHARATH: “Precious money that Clico made, you filled your pockets with it.”
FIFI: “That is absolutely not true.”
Further, under cross-examination from Ministry of Finance attorney Jagdeo Singh, Fifi also admitted to getting sums upon what appeared to have been a second retirement in 2008.
In that year, Fifi said, he got a lump sum payment of $12 million; his company PMI Limited was bought from him for $30 million; PMI’s “debt” of $22 million was paid off and he got $3 million towards an apartment at One Woodbrook Place, all benefits totaling roughly $67 million. In all Fifi is reported to have drawn more than $200 million, but he said the amount is less.
Of a rumour that he got $176 million upon his departure in 2008, Fifi said, “I hear it being bandied about. I would love to have actually collected that.” Yet, despite these rich rewards, there is little to show at HCL today.
HCL’s signature project One Woodbrook Place, according to Bharath, has cost $2.35 billion and is yet to turn a profit. While the initial cost was put at $600 million, the distressed project is owing $1.4 billion to banks and needs $600 million to complete development. It can only hope to earn $400 million from the sale of a further 101 units.
“One Woodbrook Place is a success story from one point of view,” Fifi, who had to ask for a break during testimony, said. “But in terms of financing it seems to be in trouble. I don’t know what happened after I left in 2008. Don’t pin that on me.”
PMI Limited did not appear to provide any of the items listed in the contract which it was supposed to supply: such as skilled labour.
“PMI Limited did not directly provide labour. PMI saw their role as resourcing labour. Labour and skills went directly into HCL and they paid them,” Fifi said. PMI never paid for the labour, he said, adding, “I don’t think it was set up to fool anybody.”
In addition to retirement perks, Fifi benefitted from many other private contracts with HCL. HCL bought Toco land from him for $8.5 million for a project that never happened. It was a deal which made clear that HCL’s eyes were always on politics.
“That was a long time ago,” he said. “I think it was $8 million. Those purchases were done with the full knowledge of the board and all of these were signed off by Mr Duprey. I have those lands in Toco since 1978. I was trying to grow HCL in terms of government work and so on to persuade government to go into the Toco ferry and also to get involved in government houses. I was expecting the National Housing Authority (NHA) to get involved in village expansion. It seemed natural I should put that project into HCL. But the party in power lost the election and that project never went ahead.”
A building owned by PMI Limited at 122 St Vincent Street, Port-of-Spain, was rented by HCL’s “consulting arm” for two years while they were “in transition”. Fifi’s wife set up an outlet of the Benihana sushi chain paying a rent of $4 at Trincity Mall, an HCL mall, Bharath said. Fifi denied the figure and said, “Whatever it was it was absolutely fair.”
Fifi was also a member of the CLF board and the board of Clico. He could not say for sure how many subsidiary companies comprised the group. “I would not like to hazard a guess,” he said.
Though Cambridge-educated Fifi had no qualms about taking home the big bucks from HCL given his longstanding experience in real-estate, he was not as confident of his other expertise. Asked by lawyer for Clico Neal Bisnath if – in his capacity as a CLF/Clico director he had lived up to his duty to ensure things went well, Fifi said, “Possibly I was personally at fault. But I did not feel I had the expertise.”
See Page 18A