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Duprey ‘dreamt’ of rum empire
Lawrence Duprey dreamed of establishing a rum empire. And, according to former group financial director Michael Carballo, he would let nothing stop him. Rum, he often told Carballo, was a sleeping giant which he felt he could awake, said Carballo, in testimony at the Commission of Enquiry into the collapse of CL Financial and Clico, which resumed yesterday. “When Lawrence travels to all these countries, he’s not sleeping at night. Late at night. All 3’o clock in the morning, just dreaming up these visions of these number one spirits market,” he told the Commission of Enquiry yesterday. “The consumption of rum was limited. The consumption of scotch was high. And he wanted rum. He saw rum growing to a level and he wanted to be the number one man in it,” he said.
Duprey’s vision led to risky investments, which streched the CL Financial empire with its demands for loans and liquidity. Being the “last man standing” Carballo said it was in support of this “spirits” pillar to complement CL Financial’s other three—real estate, financial sector and energy, that led to a series of poor decisions which included—high unsecured, intra-company loans, a leveraging of Angostura beyond its capacity and to CLF being bled by Duprey’s spirits commerical advisor Arneaud Trabuc.
Carballo outlined a series of bad investments-
Burn Stewart Distillers which attracted Duprey because he wanted to add a scotch to his spirits portfolio but which didn’t turn a profit after five years;
The shortlived acquisition of ‘big fish’ Belvedere, a French vodka company, in which the company lost about $200-300 million. Carballo explained that Duprey had been outsmarted after CL Financial had acquired a 68 per cent of the company because they were not able to participate in management;
The setting up of a office in Hong Kong in which three executives were stationed but did not return any money to the company and had to subsequently be shut down.
Carballo said the failings arose from a lack of due diligence on the companies being pursued, the use of Clico’s cash to support Duprey’s ventures and loose governance standards. He said CLF’s debt to Clico was $3 billion, which was an uncomfortable situation of a parent company owning a subsidiary.
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