Over golf, the empire fell

The event was the annual Proman Golf Tournament, which was scheduled to take place over two days at Mount Irvine’s 18-hole golf-course with its serene and idyllic views of the Caribbean Sea.

But like the subterranean irrigation network that keeps the world-famous golf- course pristine, there were things happening which were not apparent. As the executives met, the mammoth financial empire of which they were a part was collapsing.

The news spread over dinner, according to Rampersad Motilal, the Methanol Holdings Trinidad (MHTL) CEO, as he testified at the Clico Commission of Inquiry last week. That news came days after then CLF executive chairman, Lawrence Duprey, wrote the Central Bank Governor, Ewart Williams, saying CLF was taking “urgent and decisive” action to prepare for the liquidation of assets in “short order”.

“We may need urgent liquidity support,” Duprey wrote on January 13, 2009.

On the weekend of January 24 to January 25, according to Motilal’s former colleague, former CLF corporate secretary Gita Sakal, a deal to sell a key CLF asset was struck.

Also testifying last week at the Clico inquiry, Sakal said Duprey instructed her to use her trip to Tobago to speak with Proman AG boss Joseph Cassidy (a director CLF subsidiary MHTL), in order to strike up a deal for the sale of CLF’s shares in Clico Energy.

“My conversation with Mr Duprey was in Trinidad prior to my leaving Trinidad to go to Tobago,” Sakal recalled at the second-floor courtroom of the Winsure Building, Richmond Street, Port-of-Spain, a cramped space which is a far cry from the comforts of the Mount Irvine resort.

Sakal noted that on the same weekend as the Proman golf event, CLF officials were in emergency talks with the Minister of Finance, Karen Nunez-Tesheira. At a meeting on January 24, 2009, at the Ministry of Finance, Twin Towers, Port-of- Spain, the minister requested Duprey’s attendance.

“Mr Duprey was out of the country but she requested that he come and said she needed to see him as the head of the group. I remember leaving the meeting,” Sakal said.

She continued, “I had a short conversation with Mr Duprey. He knew I was going to Tobago and we suggested—I cannot remember if it was him or I—whether it would be a good idea to speak to Mr Cassidy and see whether they would be interested in assisting us by probably making some arrangement to sell to them some of the Clico Energy shares.

“I went to Tobago. I spoke with Mr Cassidy privately. I informed him about the serious problems that the company would now be faced with.”

In a witness statement submitted to the inquiry, Sakal said, “I cannot now recall my exact words to Mr Cassidy or his to me, but I know that the possibility of saving CLF’s liquidity crisis by a sale of the Clico Energy shares was clearly understood.”

Duprey, she said, did not attend the golf event.

Sakal said her conversation with Cassidy was on January 25, 2009, one day after she met with the Minister of Finance in Trinidad. Also on January 25, at 9 am, Duprey, now in the country, met with the Minister of Finance in Trinidad. He did not appear to disclose any specific plans relating to the sale of Clico Energy shares.

However, at one point in the meeting with the Minister, Duprey said, “We are trying to pin down what assets we can find.”

Despite the Minister’s insistence on specific information on available assets, Duprey would not disclose details. He said he had hired his longtime business partner, L Andre Monteil, to get a sale of Republic Bank shares. (Duprey and Monteil were this week referred to as “Batman and Robin” by a lawyer at the inquiry because of their close, collaborative relationship.) A minute of the meeting of January 25, 2009, records Sakal as also being in attendance, on the same day she reportedly spoke with Cassidy.

On January 30, the State signed a Memorandum of Understanding (MoU) with CLF, agreeing to a bailout under specific terms and conditions.

Duprey signed the agreement. Clause 11 of the MoU stipulates that CLF would sell its Republic Bank and MHTL shares and, “other assets of the CLF group of companies, of such quality and value as agreed to by the Government of the Republic of Trinidad and Tobago and as may be required”.

Clause 20 of the MoU stipulates that, “CLF will instruct the boards of the Clico and British American to cease any…disposal of assets without a schedule provided to the Government of the Republic of Trinidad and Tobago for its prior approval”.

Sakal said last week that she did not see the entire MoU and had seen the signature page. In her witness statement, she said she read the MoU in the newspapers.

The day after the MoU was signed the CLF board met at company headquarters on St Vincent Street, Port-of-Spain, and resolved to affirm an earlier decision to establish a committee to review all future sales of assets. The committee was to comprise group financial director Michael Carballo; Motilal; CLF director Bhoe Tewarie and Sakal. The committee was to review agreements or “contracts to be signed in connection with the disposal of CLF assets”. Such disposals were to be “signed by all members of that committee”.

In the face of the MoU and the CLF board’s own resolutions, the Clico Energy shares were later purportedly sold to Proman (which already had a 49 percent share in the company) by way of an escrow payment for US$42 million (TT$265 million). The sale agreement was drawn up on February 3, 2009, with Duprey writing Proman on that day telling them, “We would be extremely pleased to enter into immediate discussion with you with a view to selling our entire 51 percent shareholding in Clico Energy Company Limited.”

The Ministry of Finance, the CLF board and the CLF sub-committee were never given prior notice of the sale.

“If the transaction had been a legitimate transaction, what puzzles me is why the board was not told,” attorney for the Central Bank, Bankim Thanki QC, said on Friday as he cross-examined Sakal.

“Its express approval was never sought.”

“The board was never told, there was nothing unusual about that,” Sakal replied. “Because of the ostensible authority of the chairman.”

The assets were reportedly valued at US$72 million (TT$453.6 million) at the time of the purported sale. Sakal admitted she had concerns the sale price was not “fair value”.

“I contacted PricewaterhouseCoopers because I had a concern with valuation,” Sakal said.

“I would have preferred a better valuation.”

The only valuation done in relation to the transaction, she admitted, was done after the sale had already gone through and was provided by Proman, the buyer. She admitted the sale was a breach of the MoU.

“It was more than a slight breach, it was a procedural breach which could have been cured,” she said.

The money for the sale was placed into an escrow account for which the escrow agent was a principal of Proman. A sum of $98 million was later paid out of the escrow account to CLF at Sakal’s instruction. Sakal last week said that money was used to fund CLF’s operations in February, 2009, including payment of severances.

At the same time, Sakal said, at an undisclosed time in the first quarter of 2009, she had a discussion with Duprey about her severance.

“I had discussions with the chairman and he signed instructions to the bank for a draft in the sum of US$5 million ($30 million) which was the figure agreed,” she said in her witness statement.

“I was the other signatory.”

She got a draft and placed it in the drawer of her desk and “left it there until April 30, 2009”. She explained to Clico Policyholders Group attorney Terrence Bharath that she was not in a rush to cash the draft, as she had agreed to not cash it immediately given the cash shortfalls. With many of Clico’s products over the years boasting high interest rates, Sakal also had no qualms in noting that bank interest rates were low.

“The bank is not giving interest anyway,” she quipped on Thursday.

At all stages, Sakal said, she followed Duprey’s instructions to not tell anyone about the Clico Energy Company share sale. It was her duty not to, she said. She objected to the sale but was “overruled”. Torn between the chairman and her own supposed objections to the sale, she chose the chairman.

Motilal denied knowledge of the Clico Energy sale. He also denied knowledge of what happened at a February 2009 meeting at the MHTL boardroom, at which the sale of Clico Energy was apparently finalised. The boardroom adjoins his office. Motilal also said the January 2009 golf tournament saw “general discussion” among unnamed “company executives” about the collapse of CLF and an approach to the Central Bank. He did not say who relayed the information to the parties present. Motilal has not submitted a statement to the inquiry.

Sakal said there was a culture of high salaries for executives at CLF. She said Carballo got US$40,000 (TT$252,000) a month and financial advisor Ram Ramesh US$34,000 (TT$214,000). Ibis Management Consultants—a firm reportedly tied to Duprey and his wife Sylvia Baldini-Duprey, a fact which Sakal said she did not know until this year—got about $2.5 million a month; and had $360 million pumped into it for three investments. The work Ibis did, she said, was not up to par and there were objections to their retainer.

Cross-examination of the former CLF corporate secretary will continue in January when the next phase of the inquiry resumes.

Sakal’s tenure at CLF lasted for 15 years. She said she joined the firm out of law school in 1995. Fourteen years later, on January 23, 2009, Sakal and Duprey had a conversation at the MHTL offices Point Lisas. By that time, she had risen to the rank of corporate secretary and general counsel. In the conversation, Duprey told her to try to “meet with the fellas” on the fourth floor of company headquarters. Those “fellas” were the executives—including Carballo and Ramesh—who were members of the company’s “Financial Service Sector Working Group”. Sakal said she did not know Duprey had by that time already written the Central Bank. She did not think Duprey’s warning was about something serious.

When Sakal left the MHTL headquarters at Point Lisas on Friday, January 23, 2009, with the golf tournament ahead of her that weekend in Tobago, it was already the beginning of the end.