CL given free reign
By ANDRE BAGOO Wednesday, March 6 2013
THE MANAGEMENT of CL Financial Group were allowed to “have their cake and eat it” in their dealings with auditors by double-counting valuable “crown jewels” among the group assets, counsel for the Colman Inquiry Edwin Glasgow QC said yesterday.
Glasgow noted that CLF management assured auditors, PricewaterhouseCoopers, that the entity was viable citing both the large pools of assets as well as dividend income stemming from these assets. Yet, the attorney said, in truth it should have been a case of one of the other. If the assets were sold, there would be no dividend income.
“Do you think your clients were too much dependent on their ownership of RBL (Republic Bank Limited) shares and wanted to have their cake and eat it?” the QC asked, as he cross-examined PwC partner Gerald Olliverre at the Winsure Building, Richmond Street, Port-of-Spain. “I think it is a possibility,” the witness replied. He said PwC did not keep minutes of its meetings with CLF. Only one instance of minutes to a PwC/CLF meeting has been submitted to the inquiry.
Glasgow, at another point, stated, “They were saying, we’ve got the crown jewels and we can sell them. But when they actually needed money for some reason the crown jewels did not provide the solution. Not only was the family silver being held over for a disaster, but it had already been pledged.” Glasgow noted the mantra of CLF officials appeared to involve quoting the strong share price of the RBL shares.
“But the share price is relevant to the value of the asset,” he said. “It has no relevance to the issue of performance. If you sell an asset you would no longer be able to get a dividend. They were having their cake and eating it.” Under cross-examination from attorney for the Clico Policyholders Group, Lynette Seebaran- Suite, Olliverre – who handled the consolidated CLF Group accounts – said he had never been closely involved in the audit of subsidiary British American Insurance Company (Trinidad) Limited (BAICO). He said it was not “part of my purview”.
Seebaran-Suite said a valuation relating to the $1.8 billion deal, which PwC described in notes in accounts as being at “fair value”, was actually done on behalf of the seller, not CLF or an independent source. The witness said, “I don’t know of this.” He said the valuation should be looked at in context.
The witness said former CLF corporate secretary Gita Sakal held prominence in the CLF Group. “Ms Sakal was corporate secretary, legal counsel and also had responsibility for some companies within the group,” he noted.