The CL Financial bailout - Submission by Afra Raymond B.Sc., FRICS to the Colman Commission of Enquiry into the failure of CL Financial et al and ...

The CL Financial bailout
                    Submission by
             Afra Raymond B.Sc., FRICS
to the Colman Commission of Enquiry into the failure of
       CL Financial et al and Hindu Credit Union
                www.afraraymond.com
           Wednesday 9th November 2011

Republic Bank Ltd's
           15th July 1996
       Letter to Shareholder's
     explaining why they should
 REJECT CLICO's ATTEMPT
TO TAKE CONTROL OF YOUR
          BANK

THE NATURE OF BANKS AND
   WHY THEY MUST BE
       REGULATED

The Bailout Timeline

What did they know and when did
           they know it?
• When did the CL Financial group actually
  collapse?
• Who withdrew their investments and
  when?
• What are the reasonable conclusions we
  can form from the actions and statements
  of the responsible Officials involved?

Michael Carballo‟s statement
 published in the Business Guardian on 7th November 2008

Carballo said CL Financial, with $100 billion
in assets, could weather any storm.

“We are not exposed in any one particular
industry. That is our business model,”
Carballo said.

http://legacy.guardian.co.tt/archives/2008-11-07/bussguardian1.html

NGC‟s Management of its
                Financial Investments
NGC‟s Press Release of 4th February 2009
“…in accordance with the Company‟s policy for short-term investments,
  which has maximum placement limits for any financial institution or
  group of financial institutions, computed as a percentage of total
  investment. This policy is approved by the Board of Directors; it
  seeks to diversify the Company‟s investment portfolio…”

“…At the end of 2008, NGC‟s investment with the CL Financial group –
  Clico Investment Bank (CIB), CMMB and Republic Bank was 37%,
  compared with 40% at the beginning of 2008…”

“…In November 2008 CIB failed to return the principal and interest due
  upon the maturity of an NGC deposit (US $10 million). This deposit,
  plus interest, was paid in two amounts during the first week of
  December 2008,
  An additional two deposits, which matured in December 2008, were
  similarly affected, notwithstanding promises made at a meeting held
  in December to repay by year end...”

The Minister of Finance
'Everybody knew CIB was in trouble'
Sunday Express 15th March 2009 - http://www.trinidadexpress.com/news/_Everybody_knew_CIB_was_in_trouble_-
    115443989.html

"In an interview with the Express on February 4, Nunez-Tesheira also
confirmed that her sister made an application on December 30 to break the
$2.1 million deposit held in her late mother's name, Una Nunez.

In that interview Nunez-Tesheira said: "Everybody knew CIB was in trouble.“
But she stressed that she only received the formal brief on the issue of CL
Financial troubles on January 14.

In an interview on the same day with this newspaper, she stated: "The
information about CIB and the concerns about CIB, were out there in the public
domain for a long time, and my sister being a banker, would have been one of
the persons who would have heard the concerns about CIB."

Asked if in hindsight she should have declared her investments in CIB and
CMMB before making any statements in the Parliament on the issue, Nunez
Tesheira said she had no need to do so. "In answering that question, it would
imply that there was something that somehow was untoward," she said, adding
that there was not(hing untoward).“

The Inspector of Financial Institutions – 1

In his affidavit of 16th April 2010 in the winding-up action for CIB, the
   very Inspector of Financial Institutions states –
At para 5 he states “…On January 15th 2009 as part of its normal
   regulatory process, the Central Bank held a meeting with officials
   from the Petitioner, namely Messrs (sic) Devati Mooledhar, Senior
   Vice President etc.…”

At para 6 he states “…At the said meeting Ms Mooledhar stated that
   the petitioner was experiencing a liquidity problem…”

The Inspector of Financial Institutions – 2

At paras 9 c. and 10 g. he states “…the Petitioner (CIB) was not
maintaining high standards of financial probity and sound business
practices…”

At para 23 he states “…With respect to the Creditors of the Petitioner,
the Petitioner has met the statutory obligations for the Board of Inland
Revenue (except for Corporation Tax Returns for 2007, 2008 and 2009
which are being prepared and remain outstanding)…”

The Inspector of Financial Institutions - 3

In Hansard of 5th February 2009, Senator Conrad Enill, quotes (at page 62) from the
statements of the Governor of the Central Bank on the crisis at CIB and CLICO
“…Given the close integration of the two institutions within
  the group it is just a matter of time before one starts to
  come under severe liquidity pressure.

   Therefore in those circumstances, the Inspector of
   Financial Institutions and the Governor of the Central
   Bank met with the chairman and chief financial officer of
   the group on January 07, 2009...”

'Fit & Proper' Regulations

“...3.1 In accordance with governing legislation a person is
    considered to be fit and proper if the person essentially
    is of good character, competent, honest, financially
    sound, reputable, reliable and discharges and is likely to
    discharge his/her responsibilities fairly...”

LAWRENCE DUPREY

CL Financial letter of 13th January 2009
“…CL Financial being a significant part of the financial sector has been
  disproportionately impacted by these adverse conditions…”

That letter specifies the „Assets available for Restructuring‟ as being in
the sum of $23,913,993.014.
++++++++++++++++++++++++++++++++++++++++++++++++++++++
CL Financial Annual Report „The Next Wave of Growth‟
of 23rd January 2009, from the preamble -
“…We have confidence in our ability to not only navigate this financial
storm but to find fresh and profitable opportunities within it…”

CL Financial 2007 Annual Report
              „The Next Wave of Growth‟
                  of 23rd January 2009
From the Chairman‟s Letter to Shareholders
“…As the global economy and financial markets enter a new and
uncertain phase, the C L Financial Group stands at the cusp of the next
wave of growth and is preparing to shape itself as a formidable global
player in four main sectors:
• Financial Services
• Energy
• Drinks Manufacturing and Distribution
• Real Estate Development…”
_______________
The Consolidated Balance Sheet to that Report disclosed Total Assets
at $100,666,256.