DPP Roger Gaspard told Newsday yesterday he has been in receipt of several documents sent to him by the Central Bank — which initiated the civil lawsuits against Duprey and Monteil — and was of the view that he should seek the advice of a Queen’s Counsel in the matter.

While he noted that in the circumstances, he could not say he had reached the stage of initiating criminal charges against anyone in what is now widely regarded as the Clico scandal, Gaspard said he intends to seek advice on the issue, before he comments further.

Gaspard also disclosed that the transmission of documents to him by the Central Bank was an ongoing process and he would not be surprised if there are more to follow. Gaspard said he began receiving documents since mid- 2010.

On Tuesday, attorneys representing the Central Bank and the Colonial Life Insurance Company Limited (Clico) – a subsidiary company of CL Financial– initiated legal proceedings against Duprey and Monteil seeking what could amount to billions in damages.

The two are being made to answer as to why the conglomerate failed, taking with it millions of dollars of investments of policyholders and investors and threatening the stability of the country’s economy.

They have been accused of mismanagement of Clico, misapplication and misappropriation of the insurance giant’s income and assets to the detriment of its policyholders and mutual fund investors.

A statement from Central Bank said civil proceedings were filed against Duprey, Monteil, CL Financial, Dalco Capital Management and Stone Street Capital Limited – companies both men were affiliated with – rising from the failure of Clico which resulted in the Central Bank having to exercise its emergency powers under Section 44D of the Central Bank Act, in respect of the insurance giant.

A judge has already been assigned the case — which carries the case number CV 2011 02140 — and it is expected to be called once all the parties named in it have been served with the lawsuit, Newsday was told.

The lawsuit, some 200 pages in volume, identifies the numerous breaches of duty for which Duprey, Monteil, CL Financial, Dalco and Stone Street Capital are liable.

They include breach of fiduciary duty, breach of trust, failure to act honestly, preferring personal interests, using their position to make profits and gains for themselves, preferring the interests of other companies to the interests of Clico, causing the breach of legal and regulatory obligations, failure to ensure proper governance, failing to make disclosures of matters affecting Clico.

The lawsuit also identifies a series of specific transactions which show further breaches of duty by each of the defendants, which include numerous actions in relation to Republic Bank Limited, which were contrary to Clico’s interests, including the diversion of dividends, the diversion of “consultancy fees” and various other transactions designed to benefit other individuals and entities to the detriment of Clico, its policyholders and investors. Clico held the majority stake in Republic Bank.

According to the lawsuit, there were also breaches in relation to the financing and acquisition of Lascelles de Mercado which were contrary to the interests of Clico and of no benefit to it. Lascelles de Mercado is a Jamaican conglomerate which trades in wines and spirits, pharmaceuticals and home care products.

Other allegations made in the lawsuit are claims that Duprey entered into various property transactions in Florida which exposed Clico to financial risk, which were contrary to Clico’s interests.

The allegation against Monteil, who was also the former chairman of the Home Mortgage Bank (HMB), stems from the financing of a block of Clico-owned shares in the HMB to his private investment firm, Stone Street Capital. These shares amounted to seven million and were said not to be in the interest of Clico and were sold at a price which was not authorised by Clico.

There were also alleged breaches in relation to various energy transactions which were said to not be in the interests of Clico, including the diversion of dividends which were owed to Clico, the sale at an undervalue of Clico’s interest in Clico Energy and failure to observe the terms of the Memorandum of Understanding with the Government.

The Central Bank and the then PNM government were forced to take control of the conglomerate and its banking and insurance subsidaries, in January 2009, after Duprey sought a bailout when Clico and CIB’s liquidity problems were made public.

Clico almost immediately faced a slew of policyholder lawsuits stemming from its inability to pay claims as they fell due. The prized Clico was said to be weighed down with policyholders liabilities of more than $12 billion.

At that time CL Financial controlled over $100 billion of assets in at least 72 companies in 32 countries throughout the region and the world and its financial interests covered several industry sectors including banking and financial services, energy, real estate, manufacturing and distribution.

CIB’s banking licence was revoked and then Finance Minister Karen Nunez-Tesheira committed the PNM government to provide additional funding needed by Clico to meet its sizable statutory fund deficit.

Legislation was quickly passed to amend the Central Bank Act and the Insurance Act to give the bank the additional powers to deal with Clico’s problems. Nunez-Tesheira, on behalf of the government, signed with CL Financial a Memorandum of Understanding (MOU) to restructure the failed insurance company. Duprey was a signatory and Monteil, who was PNM treasurer at the time, was present for the signing at the Financial Complex in Port-of-Spain on January 30, 2009.

Immediately following the announcement, thousands of Clico policyholders sought to cash in and surrender their policies and other investments with the failed CL Financial companies, however they were unsuccessful and later the present Minister of Finance Winston Dookeran would announce in his first budget presentation as part of the People’s Partnership Government, in 2010, structured plans for the repayment of monies owed to depositors and policyholders.

In the months following its bailout, the financially-stricken Clico reportedly sucked up more than $5 billion in taxpayers’ money.

Nunez-Tesheira, it was alleged, however, used insider information to withdraw investments she had in CL Financial subsidiaries before the 2009 MOU was signed. This allegation was made by Siparia MP, now Prime Minister Kamla Persad-Bissessar. Nunez-Tesheira denied the charge, saying she withdrew her money from CIB because the funds had matured. Others were not as fortuitous and may have to wait 20 years before they can see the money returned to them. However, they are optimistically hopeful that this civil lawsuit filed by the Central Bank and Clico would result in them receiving their money much sooner.

Peter Permell, who represents the Clico Policyholders Group, says if the bank and Clico are successful in their lawsuits, it could mean that the court can order money to be returned to the company and its assets sold in order to settle the insurance company’s liabilities.

“It is a good sign. It would mean that money would be coming back to the company,” he said.

Permell said it gave policyholders – many of whom have mounted their own legal challenge of the decision by the Central Bank to suspend payments to them – “ a second bite at the cherry.”

He noted that while what has been said were simply allegations against Duprey, Monteil and the named companies in the lawsuit, the case could, given the nature of the allegations, amount to criminal conduct and the possibility of the DPP getting involved in the issue.

“It is early days still and we look on with interest to see how it all unfolds,” he told Newsday yesterday. Attorney General (AG) Anand Ramlogan, in a separate interview, said the legal action taken by the Central Bank against Duprey and Monteil was just one of several to come. He said the bank’s claims for damages, equitable compensation and declarations related to certain agreements and property of Clico were very wide and, if successful, will lead to a significant award that can be properly utilised in the interest of the company and its policyholders.

He said of the lawsuit, “What the claim really revealed is that a large and fast expanding insurance company led people to believe that it was safe for policyholders to invest in it and they will get a very high and attractive rate of return and in the end, there was an artificial layer within the management of the company which led it to implode as it were.

“The divergence of funds into several subsidiaries, the acquisition of substantial real estate holdings utilising funds from the depositors, we have the interest in Fort Lauderdale and elsewhere, the divergence of dividends which were owed to Clico, we have certain transactions within the energy sector which need to be looked at. Of course we have the sale by Clico to Stone Street of seven million HMB shares which was not in the interest of Clico, and at a price which was not authorised by Clico.”

On Tuesday, hours before the lawsuit was filed, Ramlogan met with the Central Bank Governor Ewart Williams and a high-powered team of attorneys from London as well as local counsel.

Leading the team is John Powell, QC, of 4 New Square Chambers in Lincoln’s Inn, a leading expert in financial services and complex fraud cases as well as professional negligence. Also part of the team is Leigh-Ann Mulcahy, supported by Nicholas Fletcher, a senior partner with Berwin Leighton Paisner in London. Also forming a part of the team are local attorneys Ian Benjamin and Elena Araujo, who filed the lawsuit at the Port-of-Spain High Court Registry at about 2.30 pm on Tuesday.

Ramlogan said he has ordered that all the information obtained from the investigations and inquiries into the failure of CL Financial and its subsidiaries be forwarded to the DPP to see whether they can be of assistance to him in deciding whether criminal charges should be laid.

The AG was adamant that the Government could neither influence nor pressure the Commissioner of Police or the DPP to initiate criminal prosecution.

But he added, the latest lawsuit was the first in a series of claims that will be filed in the Clico scandal.

“Others are in the pipeline and are nearing completion,” he said.



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