The CL Financial bailout

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PowerPoint presentation to accompany testimony in Colman Commission on CL Financial bailout

PowerPoint presentation to accompany testimony in Colman Commission on CL Financial bailout

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  • 1. 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 9 th November 2011
  • 2. Republic Bank Ltd's 15 th July 1996 Letter to Shareholder's explaining why they should REJECT CLICO's ATTEMPT TO TAKE CONTROL OF YOUR BANK
  • 3. THE NATURE OF BANKS AND WHY THEY MUST BE REGULATED
  • 4. The Bailout Timeline
  • 5. 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?
  • 6. Michael Carballo’s statement published in the Business Guardian on 7 th 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
  • 7. NGC’s Management of its Financial Investments
    • NGC’s Press Release of 4 th 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...”
    • http://www.ngc.co.tt/Media/pdfs/Publications/NGC%20press%20release-%20Feb%205.pdf
  • 8. The Minister of Finance
    • 'Everybody knew CIB was in trouble'
    • Sunday Express 15 th March 2009 –
    • "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).“
    • http://www.trinidadexpress.com/news/_Everybody_knew_CIB_was_in_trouble_-115443989.html
  • 9. The Inspector of Financial Institutions – 1
    • In his affidavit of 16 th 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… ”
  • 10. 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)… ”
  • 11. The Inspector of Financial Institutions - 3
    • In Hansard of 5 th 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...”
  • 12. '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...”
  • 13. LAWRENCE DUPREY
    • CL Financial letter of 13 th 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 23 rd 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… ”
  • 14. CL Financial 2007 Annual Report ‘The Next Wave of Growth’ of 23 rd 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.
  • 15.