For­mer Min­is­ter of Fi­nance, Win­ston Dook­er­an, has of­ten shied away from con­tro­ver­sy in his long po­lit­i­cal ca­reer.But in an ex­plo­sive af­fi­davit in re­sponse to a law­suit against the Gov­ern­ment's han­dling of the Cli­co af­fair, brought by his for­mer Cab­i­net col­league, Ramesh Lawrence Ma­haraj, Dook­er­an makes some as­ton­ish­ing rev­e­la­tions, in­clud­ing:

• It may take a fur­ther $21 bil­lion to re­solve the Cli­co is­sue;

• Why Cli­co's as­sets could not have been sold in 2009 and 2010

24. CL Fi­nan­cial is the par­ent com­pa­ny of the Group. The Group in­cludes com­pa­nies op­er­at­ing in bank­ing and fi­nan­cial ser­vices, man­u­fac­tur­ing, trad­ing, re­tail and dis­tri­b­u­tion, gen­er­al and life in­sur­ance, med­ical ser­vices, forestry and agri­cul­ture, re­al es­tate de­vel­op­ment, en­er­gy and petro­chem­i­cals, ma­rine ser­vices and al­so in the me­dia and com­mu­ni­ca­tions sec­tors. It was the largest pri­vate­ly held con­glom­er­ate in Trinidad and To­ba­go and one of the largest in the Caribbean. In ear­ly 2009, the group owned or con­trolled over 30 com­pa­nies and nu­mer­ous ad­di­tion­al sub­sidiaries un­der many of those com­pa­nies, lo­cat­ed in the Caribbean, the USA, Eu­rope and the Mid­dle East.

25. From the in­for­ma­tion which came to me on as­sump­tion of of­fice, it was ev­i­dent that the group pur­sued an ob­jec­tive of in­ter­na­tion­al ex­pan­sion. It ac­quired a num­ber of com­pa­nies in the al­co­hol in­dus­try and to this end ac­quired spir­its man­u­fac­tur­ing and dis­tri­b­u­tion com­pa­nies in the USA (in­clud­ing Tod­hunter In­ter­na­tion­al Inc., and Lawrence­burg Dis­tillers, In­di­ana) and Eu­rope. It al­so ac­quired Burn Stew­art Dis­tillers Lim­it­ed, Belvedere SA and Hine Co­gnac.

26. These ac­qui­si­tions were large­ly fund­ed by in­tra-Group lend­ing, a sig­nif­i­cant amount of which came from Cli­co.

27. Some key mem­bers of the Group's man­u­fac­tur­ing arm in­clud­ed An­gos­tu­ra Hold­ings Lim­it­ed (AHL) and Las­celles de Mer­ca­do {LdM) and, in the en­er­gy and petro­chem­i­cal sec­tor, Methanol Hold­ings Trinidad Lim­it­ed (MHTL). CLF re­lied on div­i­dend in­come from such prof­itable sub­sidiaries to fund its ex­pan­sion pro­gramme, al­though it ob­tained that in­come through its di­rect sub­sidiaries, par­tic­u­lar­ly Cli­co, which owned the shares in the rel­e­vant com­pa­nies.

28. Apart from those busi­ness­es, the oth­er sig­nif­i­cant sec­tor in which CLF was in­volved was fi­nan­cial ser­vices. Group com­pa­nies in­clud­ed:

(a) Cli­co In­vest­ment Bank (CIB). This was an­oth­er Group com­pa­ny which was fre­quent­ly used to pro­vide in­tra- Group fund­ing. Fol­low­ing a run on CIB in ear­ly 2009 (due in part to a large port­fo­lio of non-per­form­ing loans), CIB went in­to liq­ui­da­tion; and

(b) Caribbean Mon­ey Mar­ket Bro­kers Lim­it­ed (CMMB), which was sub­se­quent­ly trans­ferred to First Cit­i­zens Bank Lim­it­ed (FCB).

29. Cli­co to­geth­er with CIB al­so held a 55 per cent share­hold­ing in Re­pub­lic Bank Lim­it­ed (RBL), the largest bank in Trinidad and To­ba­go.

30. As of De­cem­ber 2007 (lat­est au­dit­ed fi­nan­cial state­ments), the Group's as­sets were de­clared to be in the re­gion of TT$IOO bil­lion, 43 per cent of which re­lat­ed to com­pa­nies op­er­at­ing in the fi­nan­cial ser­vices sec­tor. As TT$IOO bil­lion was broad­ly equiv­a­lent to 70 per cent of the 2009 GDP of Trinidad and To­ba­go, the size of the Group and its sig­nif­i­cance to the econ­o­my of Trinidad and To­ba­go can­not be over­stat­ed. Giv­en the mag­ni­tude and di­ver­si­ty of the Group's op­er­a­tions, any in­sol­ven­cy is­sues with­in the Group would have cre­at­ed a re­al po­ten­tial for sys­temic risk to the fi­nan­cial sys­tem of Trinidad and To­ba­go.

The Group bor­rowed over TT$6 bil­lion from fi­nan­cial in­sti­tu­tions in Trinidad and To­ba­go. A large por­tion of this debt was with two in­sti­tu­tions up­on whom the col­lapse of the Group would have im­pact­ed neg­a­tive­ly, and such a col­lapse would have af­fect­ed Trinidad and To­ba­go cit­i­zens di­rect­ly and in­di­rect­ly. This would have put at risk the sta­bil­i­ty and en­durance of the fi­nan­cial sys­tem of Trinidad and To­ba­go.

31. Due to an ap­par­ent lack of ef­fec­tive man­age­ment and cor­po­rate gov­er­nance struc­tures, the Group lost bil­lions of dol­lars on its ac­qui­si­tions, a num­ber of which were sub­se­quent­ly sold. A num­ber of sig­nif­i­cant group com­pa­nies across the Caribbean are cur­rent­ly in­sol­vent and un­der ju­di­cial man­age­ment or in liq­ui­da­tion in­clud­ing BAICO (Ba­hamas), Cli­co (Ba­hamas) and Cli­co (Bar­ba­dos).

32. One par­tic­u­lar­ly sig­nif­i­cant mem­ber of the Group is Cli­co, which is a

reg­u­lat­ed in­sur­ance com­pa­ny un­der the In­sur­ance Act, Chap­ter 84:01. Cli­co writes tra­di­tion­al poli­cies, which gen­er­al­ly in­volved the pay­ment of reg­u­lar pre­mi­ums, with the poli­cies pro­vid­ing ben­e­fits ei­ther at a par­tic­u­lar point in time or up­on the oc­cur­rence of a par­tic­u­lar event.

33. Cli­co al­so wrote a range of STIPs, in­clud­ing EF­PAs, which were sold to res­i­dent as well as non-res­i­dent in­di­vid­u­als and groups. Cli­co was al­so the spon­sor, man­ag­er, and dis­trib­u­tor of a se­ries of mu­tu­al funds.

34. Cli­co was one of the largest fi­nan­cial in­sti­tu­tions in Trinidad and To­ba­go, with a cus­tomer base of around 250,000 clients, rep­re­sent­ing ap­prox­i­mate­ly 20 per cent of the pop­u­la­tion of Trinidad and To­ba­go, and in­clud­ing more than 15,000 pen­sion­ers and around 100 cred­it and trade unions. Of those clients, 225,000 held tra­di­tion­al poli­cies and 24,800 held EF­PAs or mu­tu­al fund in­vest­ments.

35 .In ac­cor­dance with sec­tion 37 of the In­sur­ance Act, Cli­co and British Amer­i­can In­sur­ance Com­pa­ny (Trinidad) Lim­it­ed (BA) were re­quired to es­tab­lish statu­to­ry funds in re­spect of their li­a­bil­i­ties un­der all of their long-term in­sur­ance busi­ness, in­clud­ing the EF­PAs (these funds are here­in re­ferred to to­geth­er as the statu­to­ry funds, and the fund re­lat­ing to Cli­co is re­ferred to as (the statu­to­ry fund), though by 2009 the as­sets in the Statu­to­ry Funds were not suf­fi­cient to cov­er the li­a­bil­i­ties. The statu­to­ry funds were cre­at­ed in ac­cor­dance with sec­tion 37 of the In­sur­ance Act and no sep­a­rate trust deed gov­ern­ing the op­er­a­tion of the Statu­to­ry Funds ex­ists.

36. Al­though GORTT has in­ter­vened in both Cli­co and BA, I will con­fine my ev­i­dence large­ly to Cli­co as it is that in­ter­ven­tion which is in is­sue in these pro­ceed­ings.

38. As to para­graph 16 of the Ma­haraj Af­fi­davit, it is ad­mit­ted that there was a run on CIB and a rush of de­pos­i­tors seek­ing to with­draw their as­sets. I am un­able to say whether the fi­nan­cial cri­sis, of which Ms. Ma­haraj speaks, led to a loss of con­fi­dence and the run on CIB.

40. Para­graph 18 of the Ma­haraj Af­fi­davit is ad­mit­ted save and ex­cept that the MOU makes no ref­er­ence to GORTT pro­vid­ing col­lat­er­al­ized loan fi­nanc­ing to Cli­co and BA. The MOU in fact states that in the event that there is a short­fall in the sale of as­sets, CLF war­rants and un­der­takes to pro­vide col­lat­er­al which may in­clude a se­cure charge on the as­sets of CLF, Cli­co and BA, suf­fi­cient to se­cure any fi­nan­cial as­sis­tance to be pro­vid­ed by GORTT.

49. As to para­graph 30 of the Ma­haraj Af­fi­davit, Karen Tesheira's state­ment to the Par­lia­ment re­ferred to was not made on 16 June 2009. It was in fact made on 24 June 2009. In re­spect of the state­ment at­trib­uted to the KNT, I say that it must be tak­en in its prop­er con­text. Hansard records show that Tesheira stat­ed at page 340:

"How­ev­er, the Gov­ern­ment and you read the agree­ment - there is a re­struc­tur­ing agree­ment and that is car­ried out in the Mem­o­ran­dum of Un­der­stand­ing signed with CL Fi­nan­cial - is com­mit­ted to re­struc­tur­ing CL Fi­nan­cial as a go­ing con­cern to en­sure that if in­vest­ments are re­alised and all those per­sons in­clud­ing the cred­i­tors, share­hold­ers and all those per­sons are not left want­i­ng, they, at the end of the day will get back and re­coup all of their loss­es and po­ten­tial loss­es, but to guar­an­tee is not a guar­an­tee to them. We guar­an­tee the pol­i­cy­hold­ers and res­i­dents of this Coun­try that is our guar­an­tee, but we are com­mit­ted to see­ing that Cli­co be­comes a go­ing con­cern be­cause we want to en­sure that the mon­eys that the tax­pay­ers have in­vest­ed are re­couped and in so do­ing the per­sons to whom you spoke will there­fore ben­e­fit be­cause that will be part of the whole ex­er­cise of cre­at­ing sol­ven­cy for Cli­co and CL Fi­nan­cial. "

50. As to para­graph 31 of the Ma­haraj Af­fi­davit, I have read the state­ments at­trib­ut­able to KNT as con­tained in ex­hib­it "VM13" to the De­cem­ber 2011 Ma­haraj Af­fi­davit. I am un­aware that the state­ment re­ferred to in the said para­graph 31 is in re­sponse to pol­i­cy­hold­ers who had kept their funds in Cli­co be­yond ma­tu­ri­ty.

52. As to para­graph 33 of the Ma­haraj Af­fi­davit, I am un­aware as to the me­dia con­fer­ence re­ferred to there­in and to the Gov­er­nor's pur­port­ed state­ment that he planned to put a gen­er­al scheme to the Cab­i­net for its ap­proval.

53. In fur­ther re­sponse to para­graphs 15 to 33 of the Ma­haraj Af­fi­davit, I state what fol­lows here­un­der.

54. On 13 Jan­u­ary 2009, Mr Lawrence Duprey in­formed CBTT that:

(a) the glob­al fi­nan­cial cri­sis was af­fect­ing the avail­abil­i­ty of liq­uid­i­ty in Trinidad and To­ba­go;

(b) the Group had been se­ri­ous­ly af­fect­ed by this and many cus­tomers were with­draw­ing their funds;

(c) Group com­pa­nies had met their oblig­a­tions to cus­tomers to date, but a con­tin­gency plan was be­ing de­vel­oped in case the trend of with­drawals con­tin­ued; and

(d) Group as­sets could not be read­i­ly liq­ui­dat­ed with­out in­cur­ring sig­nif­i­cant loss, and liq­uid­i­ty sup­port may be re­quired.

55. Meet­ings be­tween CLF, GORTT and CBTT com­menced on 15 Jan­u­ary 2009. On 30 Jan­u­ary 2009, KNT, act­ing on be­half of the For­mer Ad­min­is­tra­tion, and CLF (act­ing for it­self and its af­fil­i­ates in­clud­ing Cli­co, CIB and BA en­tered in­to a Mem­o­ran­dum of Un­der­stand­ing (the MOU) in an at­tempt to cor­rect the fi­nan­cial con­di­tion of CIB, Cli­co and BA.

56. On 13 Feb­ru­ary 2009, CBTT ex­er­cised its emer­gency pow­ers pur­suant to sec­tion 44D of the Cen­tral Bank Act (the CBA), and as­sumed con­trol of Cli­co.

57. Pur­suant to the MOU and fol­low­ing fur­ther dis­cus­sions be­tween CLF and GORTT, on 12 June 2009, CLF and GORTT (amongst oth­ers) signed a share­hold­ers' agree­ment (the Share­hold­ers' Agree­ment). The main pur­pose of the Share­hold­ers' agree­ment was to reg­u­late and for­malise cer­tain as­pects of CLF's af­fairs and GORTT's deal­ings there­with.

58. Since the prob­lems with Cli­co came to light in 2009, GORTT has pro­vid­ed var­i­ous funds to mem­bers of the Group and to Cli­co in par­tic­u­lar. Ini­tial­ly some TT$5 bil­lion was pro­vid­ed to Cli­co. This com­prised:

(a) an ini­tial ad­vance of $1.9 bil­lion in cash to meet ini­tial liq­uid­i­ty de­mands af­ter the first stage of the in­ter­ven­tion; and

(b) a fur­ther sum of ap­prox­i­mate­ly $3.1 bil­lion in the form of long-term GORTT bonds with vary­ing ma­tu­ri­ties and coupon rates.

59. Since that ini­tial tranche of fund­ing, GORTT has fur­ther com­mit­ted sig­nif­i­cant sums, in­clud­ing, as at 9 Ju­ly 2012, ap­prox­i­mate­ly $9.542 bil­lion which has been paid to EF­PA pol­i­cy­hold­ers with poli­cies worth more than $75,000.

60. As­sum­ing that the re­struc­tur­ing of Cli­co pro­ceeds as de­tailed be­low, GORTT will ad­vance fur­ther funds to­talling ap­prox­i­mate­ly $12.097 bil­lion for pay­ments to EF­PA pol­i­cy­hold­ers with poli­cies worth more than $75,000.

61. I re­it­er­ate that the above num­bers are ap­prox­i­mate and rep­re­sent a sum­ma­ry of the funds GORTT has paid out to date and is like­ly to ad­vance, de­pend­ing on, in­ter alia, the num­ber of pol­i­cy­hold­ers who ac­cept the of­fer re­ferred to be­low.

62. In 2010, GORTT es­tab­lished a Com­mis­sion of En­quiry in­to the fail­ure of CLF. Karen Tesheira pro­vid­ed a state­ment to the Com­mis­sion of En­quiry. I have read that state­ment and ver­i­ly be­lieve that the for­mer ad­min­is­tra­tion took the po­si­tion that the fi­nan­cial con­di­tion of CIB, Cli­co and BA threat­ened the in­ter­ests of de­pos­i­tors, pol­i­cy­hold­ers and cred­i­tors of those in­sti­tu­tions and po

sed a dan­ger of dis­rup­tion or dam­age to the fi­nan­cial sys­tem of Trinidad and To­ba­go.

63. At para­graph 48 of W.D.4, Tesheira ex­pressed con­cern that there may be a run on Cli­co, which could cause its col­lapse and lead to con­ta­gion in the wider fi­nan­cial ser­vices sec­tor. Tesheira was par­tic­u­lar­ly con­cerned be­cause Bear Stems, a ma­jor US in­vest­ment bank, had re­cent­ly col­lapsed over the course of a sin­gle week­end.

64. The for­mer ad­min­is­tra­tion's ac­tions by en­ter­ing in­to the MOU, and the state­ments it made to re­as­sure de­pos­i­tors and pol­i­cy­hold­ers, was nec­es­sary to pre­vent a run on the Trinidad and To­ba­go fi­nan­cial sys­tem and to pre­serve the in­tegri­ty of and con­fi­dence in the fi­nan­cial sec­tor.

This point is well made in para­graph 38 of the state­ment an­nexed as W.D.4, which states that if news of the is­sues fac­ing the Group "leaked out and the rate of with­drawals con­tin­ued and oth­er de­vel­op­ments were made pub­lic this would un­doubt­ed­ly re­sult in a run on CIB and Cli­co with a very re­al risk to the sta­bil­i­ty of the fi­nan­cial sec­tor and ul­ti­mate­ly of Trinidad and To­ba­go."

65. In a state­ment to the House of Rep­re­sen­ta­tives on Mon­day 2 Feb­ru­ary 2009, KNT stat­ed that "the ac­tions [GORTT] has tak­en will per­mit an or­der­ly re­struc­tur­ing of the in­sti­tu­tions and safe­guard the in­ter­ests of our cit­i­zens who are de­pos­i­tors, in­sur­ance clients, and pen­sion fund mem­bers". She fur­ther stat­ed that the in­ter­ven­tion was "time­ly and nec­es­sary", and that it was "tak­en to pro­tect our fi­nan­cial sys­tem".

66. Be­tween Jan­u­ary and April 2010, as part of the on­go­ing dis­cus­sions aimed at for­mu­lat­ing a com­pre­hen­sive ap­proach to the prob­lems at Cli­co, GORTT again con­sid­ered the rea­sons for in­ter­ven­tion. It was clear that the ob­jec­tives of the in­ter­ven­tion were:

(a) to pro­tect the coun­try's eco­nom­ic and fi­nan­cial sys­tem from risk and to re­store con­fi­dence;

(b) to pro­tect res­i­dent pol­i­cy­hold­ers and de­pos­i­tors in the in­sur­ance and fi­nan­cial ser­vices com­pa­nies of the

CLF group;

(c) to con­tin­ue Cli­co and BA as go­ing con­cerns as the means of restor­ing con­fi­dence and main­tain­ing sys­tem

sta­bil­i­ty;

(d) to re­pay third par­ty­CIB de­pos­i­tors;

(e) to pro­tect oth­er sys­tem ex­po­sures that might be trans mit­ted through CMMB;

(f) to de­ter­mine and pur­sue ac­count­abil­i­ty with­in the group for the prob­lem; and

(g) to re­cov­er fund­ing from wher­ev­er pos­si­ble with­in CLF

67. In the pe­ri­od from GORTT's ini­tial in­ter­ven­tion un­til ear­ly in 2010, var­i­ous state­ments were made in re­la­tion to Cli­co, all of which are re­ferred to in the Ma­haraj Af­fi­davit and/or in the ex­hibits there­to.

68. In or­der to pro­tect the coun­try's eco­nom­ic and fi­nan­cial sys­tem from risk and to re­store con­fi­dence, and to con­tin­ue Cli­co as a go­ing con­cern as a means of restor­ing con­fi­dence and main­tain­ing sys­tem sta­bil­i­ty, it was es­sen­tial that pol­i­cy­hold­ers and in­vestors main­tained con­fi­dence that their in­vest­ments were pro­tect­ed. It was to this end that those state­ments were made.

69. Even at this ear­ly stage, GORTT was aware that cer­tain state­ments had been made cre­at­ing an ex­pec­ta­tion on the part of Cli­co pol­i­cy­hold­ers res­i­dent in Trinidad and To­ba­go aris­ing from the fol­low­ing words: "I wish to re­it­er­ate this Gov­ern­ment's com­mit­ment to en­sure that de­pos­i­tors' as­sets will not be at risk' as stat­ed by Tesheira in the State­ment for the CIB\Cli­co Me­dia Con­fer­ence of 30th Jan­u­ary 2009. In the me­dia re­lease of GORTT and CBTT dat­ed 30th Jan­u­ary 2009, it is fur­ther stat­ed: "The Gov­ern­ment will pro­vide fund­ing sup­port to ful­ly back Cli­co and BAICO to meet any Statu­to­ry Fund deficits that might emerge af­ter the com­pa­ny has made all pos­si­ble arrange­ments to place sat­is­fac­to­ry lev­els of cash and oth­er as­sets in­to the Statu­to­ry Fund in or­der to en­sure the short as well as medi­um and long term liq­uid­i­ty and sta­bil­i­ty of Cli­co".

70. It was clear from April 2009 that Cli­co and the wider Group need­ed to be re­struc­tured. Oth­er­wise, Cli­co would have been forced in­to liq­ui­da­tion, which could have had a dev­as­tat­ing ef­fect on the fi­nan­cial sys­tem and the wider econ­o­my.

71. Be­tween 30 April 2009 and March 2010, GORTT and CBTT worked to man­age the ini­tial pub­lic pan­ic and to be­gin to ring-fence risks with­in the CLF group. In re­la­tion to the in­sur­ance com­pa­nies, GORTT fo­cussed on the deficit in the Statu­to­ry Funds and pro­vid­ed an in­jec­tion of funds to Cli­co, which is ex­plained in greater de­tail be­low. Sim­i­lar ac­tion was al­so tak­en in re­la­tion to BA.

72. This in­jec­tion of funds had al­lowed GORTT sig­nif­i­cant breath­ing space, quelled pan­ic, and al­lowed Trinidad and To­ba­go to sat­is­fy the con­cerns of in­ter­na­tion­al rat­ing agen­cies (which had im­me­di­ate­ly put the coun­try on neg­a­tive watch when the cri­sis broke). How­ev­er, the funds made avail­able could not re­al­is­ti­cal­ly cov­er a de­mand for liq­uid­i­ty that could have re­alised all the short term poli­cies, in­clud­ing EF­PAs, is­sued by Cli­co. The li­a­bil­i­ties un­der those poli­cies amount­ed to ap­prox­i­mate­ly $13 bil­lion. It was there­fore im­per­a­tive that GORTT find a way to ad­dress the is­sue of Cli­co's li­a­bil­i­ties and re­struc­ture its busi­ness.

73. From the in­for­ma­tion that came to me it ap­peared that at the time that the MOU was signed the in­ten­tion had been that cer­tain valu­able group as­sets,such as shares in RBL and MHTL, could be sold or col­lat­er­alised. How­ev­er, it be­came ap­par­ent that this could not hap­pen, be­cause:

(a) the ma­jor­i­ty of Cli­co's RBL shares were held in its statu­to­ry fund (which was sig­nif­i­cant­ly in deficit);

(b) the re­main­der of Cli­co's RBL shares were sub­ject to se­cu­ri­ty in favour of CIB;

(c) most of the RBL shares owned by CIB were

hy­poth­e­cat­ed to se­cure that com­pa­ny's bor­row­ings;

(d) deal­ings in the MHTL shares owned by the Group were sub­ject to the terms of a share­hold­ers' agree­ment.

74. Giv­en the size and scope of the Group's busi­ness, and notwith­stand­ing GORTT's in­ter­ven­tion, there re­mained sub­stan­tial sys­temic risks in­her­ent in the fi­nan­cial sit­u­a­tion and con­di­tion of the Group. These in­clud­ed its third par­ty as well as its re­lat­ed par­ty debt, par­tic­u­lar­ly as they im­pact­ed on state-re­lat­ed in­sti­tu­tions and on Cli­co it­self.