By Andre Bagoo Saturday, October 27 2012
IN 2009, former CL Financial (CLF) executives Andre Monteil and Lawrence Duprey approached the State seeking $500 million to save the CLF subsidiary, Clico Investment Bank (CIB). Yet months earlier, both men were among a list of CLF executives who got rich pay-outs from CIB, as it headed toward collapse.
Though CIB was later deemed to be a “lost cause” by the State, its liquidity levels seemed, at one stage, quite attractive to a favoured few.
Former CIB president Richard Trotman yesterday told the Colman Inquiry, at Winsure Building, Port-of-Spain, of strange commissions paid to high-level staff for selling products which were not yet generating cash-flow; a loan approval process that never seemed to be complied with; and millions in loans paid to several at CLF including:
. a total of $121 million in unverified “loans” paid to Lawrence Duprey;
. a $95 million loan to Monteil’s St Lucia-registered firm First Capital, a company later bought by Duprey for US$1;
. a $35 million loan to Monteil’s Stone Street Capital;
. a $14 million loan to former Home Construction Limited (HCL) CEO Michael Anthony Fifi’s Barbados-registered company Premium Management International (PMI) Limited;
. a $5 million “sign-on bonus” for Trotman to move from one part of CLF to another as well as a $3.7 million loan to buy land in Grenada.
Trotman, who was summoned to the inquiry and said he had not had time to prepare his testimony, said a credit committee would approve loans. But inquiry counsel Gerald Ramdeen, said more than half of the loans on the books were not found to have been so approved. Trotman confirmed the “majority” of the loans were to related parties.
Of Duprey’s loans, Trotman confirmed receiving instructions from CLF in relation to them in four letters addressed to him, mere months before CLF approached the State for a bailout. The first letter, dated May 1, 2008, related to a $78 million loan and was headed, “Assignment of dividend and bonus payments due to the executive chairman, Mr Lawrence Duprey”.
It read, “We hereby confirm that dividends, bonus payments, together with any ex-gratia pension payments due to the group executive chairman, Mr Lawrence Duprey, shall be sufficient to cover the loan of TT$78,000,000 and capitalised interest over a three (3) year period.” It was signed by Clinton Rambersingh, director, for and on behalf of CLF and Michael Carballo, group financial director, for and on behalf of CLF. Yet, Trotman said he never checked to ascertain if the claims in the letter were true.
RAMDEEN: “You see this document? Can you assist us with it?”
TROTMAN: “From what point of view?”
RAMDEEN: “What was the purpose of the document being written to you?”
TROTMAN: “This document, as I recollect, was signed by two directors of CLF when the First Capital transaction was transferred to Mr Duprey and his estate that apart from whatever security package this was tendered for that.”
RAMDEEN: “Did this go to the credit committee of the CIB?”
TROTMAN: “For approval? The document itself?”
RAMDEEN: “This was a proposal to liquidate a loan to Mr Duprey, correct?”
TROTMAN: “Yes. This was a confirmation of the ability to make repayments on the loan.”
RAMDEEN: “Did this go to the credit committee of the CIB?”
TROTMAN: “This letter?”
RAMDEEN: “This proposal! Mr Duprey had a loan correct?”
TROTMAN: “Yes but when you say proposal, I am reading this as him tendering this in addition to the collateral package that says, ‘I have the wherewithal.’ So that you could expect cash coming from this to service. To my mind, I don’t think this would have gone to the credit committee. We did not see it as a proposal necessarily.”
RAMDEEN: “Did you confirm that this stream of income could liquidate this loan on behalf of Mr Duprey?”
TROTMAN: “Well, I mean, based on the assertions of the directors we accepted it. We did not go to independently search out the offer. But based on their assertions we accepted it.”
RAMDEEN: “Did you take any steps to confirm this information in this document, Mr Trotman?”
TROTMAN: “Apart from confirming that the signatures were authentic and they were actually directors?”
RAMDEEN: “Did you check to see that CIB would actually be repaid this money?”
TROTMAN: “No I did not go to – I am a little puzzled as to – you are asking me if I went to what? Investigate the $78 million?”
RAMDEEN: “Did you investigate whether Mr Duprey would have been the recipient of those funds to liquidate the loan that he had at CIB?”
TROTMAN: “Well to the extent that they have asserted that, yes. I mean, to the extent that – if I go back to them they would say the same thing, won’t they?”
There were further letters for $16 million, $12 million and $15 million and a similar procedure was adopted. Asked if he was aware of whether any payments were made to CIB to “liquidate” Duprey’s $121 million loans, Trotman responded, “I am not aware.” Asked if he was aware that CIB received any funds, Trotman said, “I am not aware that these funds came. I am not aware of the current status.”
Lawyers at the inquiry have stated that Duprey’s loans have been repaid.
Trotman also revealed that Duprey bought Monteil’s St Lucia-registered company First Capital, which was one of the companies involved in the web of transactions which saw companies linked to him acquire and then sell millions in shares at the Home Mortgage Bank (HMB). Duprey bought First Capital for US$1. He also took over First Capital’s debt to CIB which amounted to $95 million. Yet asked if he ever took steps to recover the $95 million, Trotman said, “No, I did not take any steps to recover that.”
Trotman said Monteil’s Stone Street $35 million was assigned to fixed deposits, the quantum which he could not give. One day after the inquiry heard of Fifi’s $200 million in payments from Home Construction Limited (HCL), Trotman confirmed Fifi also got loans from CIB and $14 million was outstanding at one stage.
“I believe we went with Mr Fifi and we had an arrangement that when he was retiring that there guarantees would be re-organised,” Trotman said.
Trotman – who now describes himself as a consultant involved in chocolate manufacturing – was CIB president from February 2007 to January 2009. He first joined CIB in March 2005 upon a request, he said, from former CIB CEO Lennox Archer. Trotman said, though, he was asked to go to CIB by Monteil and he agreed. He said his $5 million “sign-on” was a hangover from his time at CLF. He said his $3.7 million loan was paid off in December. Trotman also confirmed the CIB had the striking practice of paying a one percent commission for each new loan taken on to high-level management. There would be an “initial” commission, he said, suggesting these commissions started even before the person with the loan began to pay installments. Former Central Bank and Ministry of Finance financial advisor Osborne Nurse yesterday told the Colman Inquiry that from the start of the State’s 2009 bailout, CIB was regarded as a “lost cause.”
Trotman was issued with a subpeona last year to testify. On a previous occasion in February, his attorney Pamela Elder SC, turned up at the inquiry but said she needed more time to take instructions and familiarise herself with the brief. Trotman’s summons was adjourned to September and he was given a deadline of July 9 for the submission of a witness statement, if inclined. No statement was submitted up to yesterday. On Monday, Trotman appeared at the inquiry without counsel. Yesterday, he said he had not had enough time to prepare for the cross-examination and will be allowed to return to give more evidence in December when the inquiry – which is now on break – commences a tenth evidence hearing. (See Page 15A)