Central Bank's lawsuit against Lawrence Duprey, others starts

Lawrence Duprey -

A DECADE-OLD lawsuit against the late CL Financial chief Lawrence Duprey and five others has commenced before a High Court judge.

The lawsuit, brought by the Central Bank and Colonial Life Insurance Company (Clico) against Duprey and the others, began before Justice Robin Mohammed at the Waterfront Judicial Centre, Port of Spain.

Civil proceedings were filed against Duprey, Andre Monteil, CL Financial, Dalco Capital Management and Stone Street Capital Ltd – companies with which both men were affiliated – as well as Gita Sakal, a former CL Financial corporate secretary. The claims arise out of the failure of Clico, which led the Central Bank to exercise its emergency powers under section 44D of the Central Bank Act in relation to the insurance giant.

The lawsuit alleges that Clico’s operations were “grossly deficient,” asserting that the interests of policyholders and mutual fund investors were used to fund personal needs and lifestyles, as well as private companies. The proceedings were initiated in 2011 against the five, seeking what could amount to billions of dollars. Duprey, who was 89, died on August 24, 2024.

The lawsuit calls on Duprey, Monteil and Sakal to explain how the conglomerate failed, resulting in the loss of millions of dollars in investments by policyholders and investors and threatening the stability of the national economy. They are accused of mismanaging Clico and of misapplying and misappropriating the company’s income and assets, to the detriment of policyholders and mutual fund investors. The lawsuit, which was amended in 2013, claims several billion dollars in losses, as well as damages and restitution.

The Central Bank and the government took control of the conglomerate and its banking and insurance subsidiaries in January 2009, after Duprey sought a bailout when the liquidity problems at Clico and Clico Investment Bank (CIB) became public. Almost immediately, the group faced a wave of policyholder lawsuits stemming from its inability to pay claims as they fell due. At the time, Clico was said to be burdened with policyholder liabilities exceeding $12 billion.

CL Financial then controlled more than $100 billion in assets across at least 72 companies operating in 32 countries worldwide. Its interests spanned several sectors, including banking and financial services, energy, real estate, manufacturing, and distribution. In the months following the bailout, the financially stricken Clico reportedly absorbed more than $5 billion in taxpayers’ money.

Towards the end of 2008, after determining that there was a significant deficit in Clico’s statutory fund in 2007, the Central Bank reportedly became concerned about the fund’s condition and contacted company officials. Clico was described as a “cash cow” and the “cash engine” of CL Financial. The lawsuit further alleges that there was no proper governance of Clico, CL Financial or CIB.

An Ernst & Young report noted that CIB “would have probably been deemed insolvent in 2007.”

Former finance minister Colm Imbert, in presenting the 2025 budget, stated that the Government intended to sell its 49 per cent shareholding in Clico. He also said that approximately $13 billion was still owed in respect of the CL Financial bailout.

Testifying on January 6 was former Central Bank governor Ewart Williams. He was questioned extensively by Monteil’s attorney, Christopher George, who asked him about an investigation into Clico’s operations conducted by the Inspector of Financial Institutions in December 2005. That investigation produced a report recommending that Clico comply with the Insurance Act, which George contended was not referenced in Williams’s witness statement.

Williams also accepted that Monteil was not among the senior management officials of Clico who participated in that exercise. George further questioned Williams about his witness statement before the Commission of Enquiry (CoE) into Clico’s collapse, particularly regarding an alleged deficiency in Clico’s statutory fund. Clico’s records indicated a $500 million excess as of December 2007.

Williams told the CoE that Central Bank checks showed a deficit of $600 million. He described the deficit as technical, explaining that the Central Bank’s calculations did not take into account fixed deposits that were due to expire and were renewed in January 2008. The former Central Bank governor maintained that his description of the deficit was analytically correct.

The trial continues.