Aleem Khan

For­mer CL Fi­nan­cial (CLF) chair­man Lawrence Duprey want­ed Gov­ern­ment of T&T to put the ini­tial $5 bil­lion bailout mon­ey di­rect­ly in­to CLF, the com­mis­sion of en­quiry in­to the col­lapse of CLF and the Hin­du Cred­it Union heard yes­ter­day.Go­ing against what was agreed with the Gov­ern­ment, CLF al­so tried to sell its Re­pub­lic Bank Ltd shares and used a Swiss es­crow agent to route pro­ceeds from the unau­tho­rised sale of its Cli­co En­er­gy sub­sidiary to a Swiss bank ac­count, the en­quiry al­so was told.

Tak­ing the stand yes­ter­day at the Win­sure Build­ing, Rich­mond Street, Port-of-Spain, yes­ter­day was the Min­istry of Fi­nance and the Econ­o­my's per­ma­nent sec­re­tary Al­i­son Lewis, who said: "I not­ed CLF was in breach of the mem­o­ran­dum."The Gov­ern­ment had signed a mem­o­ran­dum of agree­ment with Duprey on Jan­u­ary 30, 2009, through which tax­pay­ers' dol­lars were used to bailout out the fail­ing con­glom­er­ate be­cause of the sys­temic risk it posed to the sta­bil­i­ty of the T&T econ­o­my.

Un­der the agree­ment, CLF was pro­hib­it­ed from sell­ing any of its as­sets with­out the con­sent of Gov­ern­ment."There were at­tempts to sell a num­ber of the as­sets with­in the group (CLF) and they were be­ing done with­out the knowl­edge of the Min­is­ter of the Min­istry of Fi­nance," Lewis said.

For US$46.5 mil­lion, Cli­co En­er­gy was sold to Pro­man Hold­ings of Bar­ba­dos, the Ger­man part­ner with CLF in the Methanol Hold­ings com­pa­ny. The en­quiry heard the pro­ceeds from the sale were rout­ed to an es­crow ac­count in Switzer­land.Fol­low­ing the breach­es, Lewis told the com­mis­sion, she de­vel­oped the view that CLF could not be trust­ed with any mon­ey giv­en to it. Giv­en that the Cen­tral Bank could not take over CLF, the en­quiry heard the min­istry had to re­ly on CLF be­ing as good as its word.

When Pe­ter Carter, QC, coun­sel for the com­mis­sion, asked if the min­istry's ini­tial trust in CLF was sad­ly mis­placed, she said: "I be­lieve so, yes."As a re­sult, the Gov­ern­ment en­tered in­to a new agree­ment with CLF which gave the Gov­ern­ment greater con­trol over the board and man­age­ment."We didn't have con­fi­dence in the man­age­ment and the board at the time," she said.

Lewis said CLF ex­ec­u­tives were giv­ing in­con­sis­tent in­for­ma­tion. She added: "We had some con­cerns with re­spect to the ve­rac­i­ty of the in­for­ma­tion they were giv­ing us."Say­ing the group had a prob­lem with com­pli­ance, Lewis said: "We did have some knowl­edge that the Cen­tral Bank ba­si­cal­ly was con­sis­tent­ly ask­ing the en­ti­ties to pro­vide the fi­nan­cial state­ments with­in the time­frame."

Lewis said the min­istry in­ter­vened be­cause of the "con­ta­gion ef­fect" that the fail­ure of CL Fi­nan­cial would have had in the econ­o­my. "That was our im­me­di­ate con­cern," she said in re­sponse to Carter's ques­tion about the con­ta­gion ef­fect.She re­spond­ed af­fir­ma­tive­ly to Carter's ques­tion whether it was feared that oth­er fi­nan­cial in­sti­tu­tions would be dragged down by the Cli­co fail­ure.

Asked about re­pay­ment for its bailout, Lewis said it was ini­tial­ly be­lieved, when Gov­ern­ment pro­vid­ed the $5 bil­lion to res­cue the com­pa­ny, that "over time," the tax­pay­ers' dol­lars would be re­placed.She said that, at the time, it cost tax­pay­ers $7.3 bil­lion to bail out Cli­co, $2.3 bil­lion more than an­tic­i­pat­ed."None of it has been re­paid to date," she said in re­sponse to a ques­tion by com­mis­sion chair­man Sir An­tho­ny Col­man.

Lewis said she still be­lieved that over time if the com­pa­nies that form part of the CLF Group are re­struc­tured, there was hope that part of the bailout funds could still be re­paid.She said float­ing some of the com­pa­nies on the stock ex­change was al­so an op­tion.Pref­ac­ing his ques­tion with the fact that in oth­er coun­tries, a com­pa­ny like CLF would have been na­tion­alised, Col­man asked if that was ever an op­tion on the ta­ble.

Lewis re­spond­ed: "That was an op­tion that was nev­er dis­cussed. It was nev­er dis­cussed as an op­tion to na­tion­alise."The Se­cu­ri­ties and Ex­change Com­mis­sion gen­er­al man­ag­er Nor­ton Jack is due to tes­ti­fy to­day.