Clico Investment Bank (CIB) had the power to take legal action against its former chairman Andre Monteil after his $78 million loan was transferred to CL Financial chairman Lawrence Duprey without its knowledge.
Instead, CIB officials fabricated documents to make it appear that it was, in fact, Duprey who had initially taken the loan in February 2007.
This was revealed as former CIB president and chief executive officer Richard Trotman continued to be cross-examined in CIB’s ongoing lawsuit against him, Monteil and two companies associated with Monteil over the unpaid loan. This was the last day of testimony in the matter.
“It may be faulty legally but this is the way we approached it,” Trotman said as he admitted that the questionable manoeuvre was a failed attempt by him and his colleagues to ensure that Duprey would guarantee the loan.
As he was being questioned by CIB’s lawyer Michael Green, QC, Trotman denied that the action was reckless.
“It may be a failed attempt in your mind but it is what we did,” Trotman said as he denied that he and officials acted secretly.
While being cross-examined by Monteil’s attorney Jason Mootoo, Trotman clarified that the terms of the loan agreement gave the bank the discretion to take action in the event that the agreement was contravened as was done in the unapproved transfer.
However, he claimed that from his 20 years experience as a banker, banks would sometimes use their discretion not to take action in certain circumstances.
Referring to the original loan agreement between CIB and Monteil’s company Stone Street Capital, Mootoo asked whether it appeared to be risky based on the fact that Monteil’s company had almost $60 million in deposits at the bank at the time and that the loan money was used to purchase $110 million in Home Mortgage Bank (HMB) from CIB’s sister company Clico.
“It was reasonable. It would be a relatively low risk,” Trotman said.
In the lawsuit, CIB is claiming that Trotman and Monteil breached their fiduciary duties through the deal which left the bank unpaid and without sufficient security to cover the loan.
The deal consisted of a series of complex financial transactions done between 2007 and 2008. According to the evidence in the case, Monteil sought and obtained the loan through Stone Street in February 2007.
Shortly after, the debt was transferred to Monteil’s other company First Capital (St Lucia) Limited, which held his over 300,000 shares in CIB’s parent company CL Financial (CLF). At the time, the shares were valued at almost $444 million.
Monteil struck a deal with Duprey for him (Duprey) to take control of First Capital’s debt and assets in exchange for an option to purchase CLF’s 43 per cent shareholding in the HMB.
Monteil purchased the HMB shares for $110 million and sold them to the National Insurance Board (NIB) for almost exactly the purchase price.
CIB, which is currently under liquidation, is also being represented by Nadine Ratiram. Christopher Sieuchan is also representing Monteil and Stone Street. Trotman is representing himself.
Justice Avason Quinlan-Williams is expected to set the date for the delivery of her judgment in the case after the parties file their legal submissions.