ANDRE BAGOO Friday, November 2 2012

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IN LESS than two months time, former CL Financial (CLF) executive chairman Lawrence Duprey, 78, could regain control of CLF under the terms of a shareholder agreement with the State which will expire days before Christmas unless it is extended for a second time or unless the State finds a way to satisfy its terms.

Under the agreement, the Government was to sell assets to recoup funds spent by a specified expiry date, but that has not happened. With the clock ticking to December 12 – the agreed deadline – Minister of Finance Larry Howai yesterday refused to rule out the possibility of the State entering into talks with Duprey.

The State yesterday launched a trust fund which effectively hives off 42 percent of shares in the country’s largest bank, Republic Bank Limited, which were owned by CLF subsidiary companies Clico and Clico Investment Bank (CIB). These shares will now fall under a trust and the trustee will be the Clico Trust Corporation Limited, an entity controlled by the State with no ties to CLF.

The State is due to have discussions with the majority shareholders (66 percent) of CLF in relation to the terms of a June 2009 shareholder agreement in which managerial control over CLF/Clico was relinquished to the State in exchange for the Government’s bailout. Apparently under these managerial powers, the State placed the $5.1 billion in Republic Bank Limited shares into the trust yesterday.

The June 12, 2009 agreement came after the State entered into a Memorandum of Understanding with CLF on January 30, 2009, after CLF approached the Central Bank for assistance.

Item 9.2 of the June 2009 agreement placed a three-year expiry date on the entire arrangement of State intervention. That item reads: “This agreement shall continue in full force and effect until the third anniversary of its signing, unless the objectives are achieved at a time prior to that date whereupon it shall terminate forthwith, or unless repayment at shall have occurred.”

Among the objectives of the agreement was an understanding that CLF assets in general would be sold to satisfy debts and reimburse the State for any support offered.

The June 2009 deadline came on June 12, 2012 this year. At that time, majority shareholders gave the State a six-month extension to the agreement. Howai confirmed yesterday that the six- month period expires on December 12, about less than two weeks before Christmas.

Newsday questioned Howai at a media conference, held at the Finance Ministry in Port-of-Spain to launch the new trust fund, on the issue of returning CLF to Duprey.

On whether the State planned to enter into talks with Duprey on the issue of his resumption of control over CL Financial/Clico, Howai said, “No we are not at this time contemplating any discussions for Mr Duprey to take charge of the company.”

But Howai added, “Depending on how the discussions go we would not rule out any options that would be available to us. But at this stage the short answer to that question is no.” He said the State would consider all the options available.

“As you know the extension of the agreement ends on December 12 and that is a matter which is certainly the focus in my mind at the present time as we consider all the options available to us to ensure that we can fully recover all the money that the Government has put out,” the Minister of Finance said.

Duprey last week told Newsday he was in the country “sometime ago” but has not been in talks with the Government on regaining control of CLF. However, sources close to him have also said he desires to return to the helm of the company which he led into the maelstrom of 2008, when his empire collapsed.

Questions sent to a spokesperson for the CLF majority shareholders were not responded to.

Clico Policyholders Group spokesperson Peter Permell yesterday questioned why the June 2009 agreement had an expiry date in the first place.

“Why would they negotiate an agreement with an expiry? It makes no sense,” he said. “They placed an outer limit of three years not envisioning that it could take longer. It seems arbitrary.”

The June 2009 agreement was negotiated in the wake of the surprise disclosure that CLF officials had moved to sell 17 percent shares in Clico Energy Company Limited without Government approval over the Carnival weekend in 2009.

However, the agreement, signed by then Minister in the Ministry of Finance Conrad Enill, was never made public. The document only emerged after a blogger applied under the Freedom of Information Act and later the Colman Inquiry.

With CLF’s Republic Bank shares now in a government trust, Howai said the question of how the State will recoup approximately $20 billion spent on the CLF bailout will now be his focus.

“That is phase two of this exercise,” he said at yesterday’s launch. “Because our first aim was to settle these matters out there for the individual unit-holders and then the second aim is to settle our matter with Clico subsequently. That matter is proceeding apace.”

“The cost of this has moved our debt to GDP ratio up from about 38 percent to about 47 percent so it is my intention to recover as much as I can and thereby reduce that debt to GDP level and I am hopeful that we should see some progress on that in the coming months,” Howai said.

Checks by Newsday yesterday revealed the Government has applied to the Companies Registry to have Clico Life Insurance Company (2009) struck-off from the Registry.

The company, sometimes referred in Government circles as Clico (2009), had originally been envisioned to manage the affairs of Clico under the State intervention.

But by letter dated April 20, 2012, a civil servant, who was company secretary, wrote to the Companies Registry saying, “the company was incorporated to manage the operations of Clico...The company was never made operational and the purpose for which the company was established is no longer applicable.” Yesterday, Howai said the “traditional” Clico policies in existence now will be placed into a new company which will be set up in 2013.