The credibility of former CL Financial's finance head Michael Carballo was challenged yesterday as attorneys, questioned his stewardship and the role he played in the failed Lawrence Duprey empire. He was challenged at the commission of enquiry into the collapse of the CL Financial Group and the Hindu Credit Union at the Winsure Building, Richmond Street, Port-of-Spain. Leading the firing line was Christopher Hamel-Smith, attorney for Proman Holdings, which had controversially acquired one of Clico's prized assets, Clico Energy Ltd (CEL) on February 4, five days after CLF had signed a MOU with the Government of Trinidad and Tobago. Carballo had told the commission the asset, which was valued at over US$200 million, had been sold for a paltry US$46.5 million, with the knowledge of three CLF directors-Gita Sakal, Rampersad Motilal and Duprey.
CEL was one of three assets, the other two being MHTL and Republic Bank Ltd owned by Clico, which CLF's 289 depended on for cash. Hamel-Smith argued that Clico had been in the habit of inflating its asset prices and that, despite Carballo's reliance on data provided to him by Clico that CEL was worth US$200 million, there was a possibility that its value was much lower. Further Hamel-Smith observed that Carballo's figure did not take into account discount rate and "back-up" calculations. In seeking to justify Proman's right to acquire CEL, Hamel-Smith observed that both corporate secretary Sakal and Motilal, as part of CLF's sub-committee to review investments, were part of sale negotiations. Commissioner Colman agreed to allow an independent financial expert to consider Proman's case.
Meantime, Fyard Hosein SC, representing the Ministry of Finance, questioned how CLF could have paid a dividend to its shareholders on January 23 on the same day it was meeting with the ministry to sort out the company's liquidity woes. Hosein observed that CLF was in breach of the Companies Act and further, that CLF directors could be held accountable. Carballo argued that had the dividend, which was owed for the 2007 financial year and already had been set aside, there would have been a significant uprising, given the power of Duprey's family interest. Hosein even questioned how Carballo felt after being overlooked by Duprey, in favour of his predecessor, Andre Monteil, to lead negotiations with the Government. Despite his admission that from early 2008 CLF was having liquidity issues, Carballo told the inquiry that while he was "upset" over the situation, he "could not in my own conscience leave the company in that state."
And while holding a top job in the company, he maintained he had no knowledge of Duprey's salary even when Clico's attorney Neil Bisnath pointed out that that Clico had paid $1.1 billion from 2004-2008. Central Bank's lead attorney Bankim Thanki referred to e-mails by former Clico chief financial officer, Karen Gardier, in which dividend payment from MHTL was requested by CLF to aid in its purchase of Lascelles de Mercado. Clico, she had argued, had needed the money to pay policyholders. Gardier had warned that if Clico was unable to pay its policyholders it would trigger a run on all three institutions-CIB, Clico and BA-with the suggestion that Carballo and Monteil, who were intrinsically involved in Lascelles negotiations, would jeopardise the group. Carballo's cross-examination continues tomorrow.