The Central Bank and Clico yesterday filed civil proceedings against former Clico chairman Lawrence Duprey and former CL Financial executive Andre Monteil, arising out of the failure of the insurance company in January 2009. The action by the Central Bank and Clico also names Dalco Capital Management Ltd and Stone Street Capital Ltd, two private companies which were held by Duprey and Monteil personally. In a press release issued last night, the Central Bank stated that the civil proceedings were based on claims which include "allegations of mismanagement of Clico and misapplication and misappropriation of its income and assets to the detriment of its policyholders and mutual fund investors."
In its statement of case, the Central Bank and Clico allege a breach of statutory and common-law duties and related accessory liabilities on the part of the defendants.
The statement of case also highlights certain "egregious transactions involving the use of Clico's assets and income to its detriment, such as:
•transactions related to shares in Republic Bank Ltd;
• drinks transactions, including Lascelles deMercado;
• energy transactions, including the sale of Clico's stake in Clico Energy Ltd;
• Florida property transactions; and
• the sale of seven million Home Mortgage Bank shares.
The Central Bank and Clico are seeking damages, equitable compensation and declarations related to certain agreements and property of Clico, according to the statement issued last night. The pleadings allege that the defendants subordinated the interests of Clico, its policyholders and mutual fund unit investors to the private interests of Duprey and Monteil and their companies. The pleadings also allege lack of proper governance and serial mismanagement and the improper dealings with Clico's assets and the funds of policyholders and mutual fund unitholders. The Central Bank stated that the civil proceedings against Duprey and Monteil were based on the forensic investigations commissioned by the Central Bank into the affairs of Clico.
Those investigations include forensic audits of Clico, conducted by Canadian forensic accountant Robert Lindquist and the global professional services firm, KPMG. The Central Bank's statement said that the forensic investigation commissioned by the Central Bank into the affairs of Clico was continuing and "may result in the expansion of the (civil) claim and/or further action." According to press reports, the Director of Public Prosecutions received a report from Lindquist in 2009. The Office of the DPP is responsible for starting criminal actions.
Attorneys for the Central Bank had argued before the Colman Commission of Enquiry into the collapse of CL Financial and the Hindu Credit Union that the Lindquist and KPMG reports should form no part of the enquiry because they were commissioned for the purpose of litigation and therefore protected by litigation privilege. In the Commission of Enquiry hearing on April 17, Central Bank attorney, Ian Benjamin, argued that the litigation "both anticipated and in two instances actual and ongoing" was being undertaken with a view to protecting depositors and policyholders by way of recovery. Benjamin is being led by British Queens Counsel Bankim Thanki. Contacted for comment last night, Andre Monteil said he met with his attorneys yesterday and they advised him that the case brought by the Central Bank and Clico was "frivolous and political." A woman answering the phone at Duprey's Florida residence last night said that he was "out."