Derek Achong

Se­nior Re­porter

derek.achong@guardian.co.tt

De­spite At­tor­ney Gen­er­al John Je­re­mie’s an­nounce­ment in Jan­u­ary that the state would no longer pur­sue cost­ly lit­i­ga­tion re­lat­ed to the col­lapse of CL Fi­nan­cial and its sub­sidiaries, the liq­uida­tor of Cli­co In­vest­ment Bank (CIB) has ini­ti­at­ed an ap­peal over a case seek­ing to hold three for­mer ex­ec­u­tives and board mem­bers ac­count­able for the fi­nan­cial in­sti­tu­tion’s col­lapse, al­most two decades ago. 

Guardian Me­dia un­der­stands that the CIB liq­uida­tor, De­posit In­sur­ance Cor­po­ra­tion (DIC), filed the ap­peal af­ter its law­suit against for­mer CIB non-ex­ec­u­tive di­rec­tor An­dre Mon­teil and its for­mer ex­ec­u­tives and board di­rec­tors Lennox Archer and Richard Trot­man was dis­missed by for­mer High Court Judge and cur­rent Ap­pel­late Judge Car­ol Gob­in in March. 

The Cen­tral Bank of T&T (CBTT) has ap­plied to be added as an in­ter­est­ed par­ty to the case, which came up for case man­age­ment be­fore Ap­pel­late Judge Joan Charles, yes­ter­day morn­ing. 

The ap­peal in the case came months af­ter At­tor­ney Gen­er­al John Je­re­mie, SC, an­nounced plans to end civ­il lit­i­ga­tion over the col­lapse of the in­sur­ance com­pa­ny and CLF as he laid the re­port from the Sir An­tho­ny Col­man Com­mis­sion of En­quiry (CoE) in Par­lia­ment in Jan­u­ary. 

Je­re­mie re­vealed that the State had in­curred be­tween $3 and 4 bil­lion in le­gal, ac­count­ing, and ad­min­is­tra­tive costs in ad­di­tion to the ap­prox­i­mate­ly $28 bil­lion that was ex­pend­ed to bailout CLF and Cli­co. 

He said that the State could no longer jus­ti­fy con­tin­u­ing ex­pen­sive lit­i­ga­tion that has not pro­duced mean­ing­ful re­sults. 

While Je­re­mie not­ed that crim­i­nal pro­ceed­ings are with­in the DPP’s purview and the fi­nance min­is­ter has over­sight of the Cen­tral Bank, he not­ed that he had the pow­er to end civ­il pro­ceed­ings to en­sure that ad­di­tion­al tax­pay­ers’ funds are not en­gaged. 

“I can, how­ev­er, end civ­il pro­ceed­ings. And I pro­posed to do so now, in a cost-ef­fec­tive man­ner, hav­ing re­gard to the fact that the State has com­menced some of these pro­ceed­ings and might be re­quired to meet some rea­son­able cost to ex­it the pro­ceed­ings,” Je­re­mie said. 

In an af­fi­davit in sup­port of CBTT’s ap­pli­ca­tion, its Deputy Gov­er­nor Dr Do­ri­an Noel claimed that Jus­tice Gob­in made crit­i­cal find­ings against the bank as reg­u­la­tor with­out it be­ing a par­ty to the case and be­ing al­lowed to re­spond. 

“CBTT’s po­si­tion, in sum­ma­ry, is that in adopt­ing the ap­proach to the judg­ment, the Judge erred in law and/or reached con­clu­sions that were ir­ra­tional and/or con­trary to nat­ur­al jus­tice and/or en­tire­ly gra­tu­itous to the res­o­lu­tion of the mat­ters and facts in is­sue be­tween the Ap­pel­lant and the Re­spon­dents,” Dr Noel said. 

He sug­gest­ed that the find­ings were high­ly dis­parag­ing and dam­ag­ing to CBTT’s rep­u­ta­tion and had the po­ten­tial to open a “flood­gate” of fu­ture le­gal ac­tions against it. 

In her judg­ment, Jus­tice Gob­in found that the case sought to hold the trio li­able while ig­nor­ing the role of the Cen­tral Bank in fail­ing to pre­vent the col­lapse through its role as reg­u­la­tor. 

“There is suf­fi­cient to cause me to con­clude that this ac­tion may have been filed to shift blame from the reg­u­la­tor’s laps­es by at­tempt­ing to pin li­a­bil­i­ty on in­di­vid­u­als, the Re­spon­dents,” she said.

In Jan­u­ary 2009, the Cen­tral Bank un­der its emer­gency pow­ers as­sumed con­trol of CIB and ap­point­ed its In­spec­tor of Fi­nan­cial In­sti­tu­tions to man­age it. 

Sev­er­al months lat­er, Ernst and Young (EY) was ap­point­ed to pro­duce a re­port on CIB’s fi­nan­cial sta­tus. It con­clud­ed that CIB was heav­i­ly in­sol­vent with its li­a­bil­i­ties ex­ceed­ing its as­sets by $4.7 bil­lion. 

In Oc­to­ber 2011, then High Court Judge and cur­rent Chief Jus­tice Ron­nie Boodoos­ingh grant­ed an ap­pli­ca­tion for CIB to be wound up and for its as­sets to be liq­ui­dat­ed to clear its li­a­bil­i­ties. 

The DIC was ap­point­ed liq­uida­tor and brought the law­suit against the trio al­leg­ing that they act­ed reck­less­ly and fraud­u­lent­ly in man­ag­ing the com­pa­ny be­fore its col­lapse. 

The law­suit re­lat­ed to the pro­vi­sions of Sec­tion 447 of the Com­pa­nies Act, which al­lows for find­ings of li­a­bil­i­ty against for­mer of­fi­cials of a com­pa­ny be­ing wound up. Of­fi­cials whom find­ings are made against may be banned from hold­ing a po­si­tion in any oth­er com­pa­ny for up to five years. 

In de­cid­ing the case, Jus­tice Gob­in crit­i­cised the DIC for fail­ing to dis­close the EY re­port in the wind­ing up pro­ceed­ings be­fore Jus­tice Boodoos­ingh. 

She al­so took is­sue with the fact that the DIC failed to bring key of­fi­cials of the Cen­tral Bank, in­clud­ing for­mer gov­er­nor Ewart Williams, to tes­ti­fy over the cir­cum­stances that led to the in­ter­ven­tion in CIB. 

She not­ed that while Williams’ health was cit­ed as the rea­son, he par­tic­i­pat­ed in a sep­a­rate law­suit pur­sued by the Cen­tral Bank against for­mer of­fi­cials of CIB’s par­ent com­pa­ny CL Fi­nan­cial (CLF), which was re­cent­ly dis­con­tin­ued. 

Jus­tice Gob­in al­so ques­tioned why the trio was sin­gled out while oth­er for­mer mem­bers were ex­clud­ed from the case. 

Con­sid­er­ing com­pos­ite risk as­sess­ments done by the Cen­tral Bank for CIB be­tween 2003 and 2004, Jus­tice Gob­in not­ed that it (the Cen­tral Bank) al­lowed CIB to op­er­ate de­spite some con­cerns over reg­u­la­to­ry breach­es. 

“In my opin­ion, the reg­u­la­tor’s con­duct or ne­glect to take any ac­tion en­abled the Re­spon­dents and the Board of CIB to car­ry on,” Jus­tice Gob­in said. 

“The reg­u­la­tor was less con­cerned with the cul­ture of non-com­pli­ance than it was with the over­all fi­nan­cial strength of the in­sti­tu­tion,” she added. 

She al­so found that there was no ev­i­dence of fraud and mis­rep­re­sen­ta­tion by the trio as al­leged.  

Jus­tice Gob­in al­so point­ed out that she found in­con­sis­tent ev­i­dence over the se­quence of events that led to the Cen­tral Bank as­sum­ing con­trol. 

Short­ly af­ter Je­re­mie’s an­nounce­ment in Jan­u­ary, the CBTT with­drew a law­suit against for­mer CLF ex­ec­u­tive chair­man, the late Lawrence Duprey, Mon­teil, their pri­vate com­pa­nies and for­mer CLF cor­po­rate sec­re­tary Gi­ta Sakal over Colo­nial Life In­sur­ance Com­pa­ny (Cli­co). The with­draw­al came in the mid­dle of the tri­al of the case. 

Through that law­suit, filed in 2011, the Cen­tral Bank and Cli­co were seek­ing dam­ages and resti­tu­tion for the loss­es suf­fered by the com­pa­ny dur­ing the group’s tenure. 

A month lat­er, the Court of Ap­peal re­versed a de­ci­sion of a High Court Judge to up­hold a $100 mil­lion case against Mon­teil and Trot­man over a con­tro­ver­sial un­se­cured loan to Mon­teil be­fore the bank’s col­lapse.

In that case, CIB claimed that Trot­man and Mon­teil breached their fidu­cia­ry du­ties through the deal which left the bank un­paid and with­out suf­fi­cient se­cu­ri­ty to cov­er the loan. 

In de­ter­min­ing the ap­peal, the pan­el found that CIB’s liq­uida­tor rat­i­fied the no­va­tion process for the loan in cor­re­spon­dence sent in 2015. 

It al­so found that Mon­teil’s fail­ure to dis­close a deal with Duprey had no im­pact on the loan.