In 2008 the Central Bank wrote a letter to the Anti-Corruption Investigation Bureau (ACIB)?over Clico Investment Bank's (CIB) refusal to produce audited financial statements. This was one of the issues that came up yesterday at the commission of enquiry into Clico and the Hindu Credit Union being held at Winsure Building, Richmond Street, Port-of-Spain.
On Wednesday, former Central Bank Governor Ewart Williams, under cross-examination by Peter Carter, Queen's counsel for the commission, said the Central Bank wrote to the office of the Director of Public Prosecutions (DPP) "complaining" about CIB.
Yesterday, Carter raised the issue of the letter the Central Bank sent to the ACIB?because it was the third year that CIB had failed to publish its consolidated balance sheet within the time stipulated. Carter asked Williams if the DPP did anything after the letter was sent.
Williams replied: "To the best of my knowledge, he did not, because soon after we received the audited financial statement and everything was dropped. In the final analysis, we know how the system works and this underscores the Central Bank's view as to how serious this situation was. I am not sure we were hopeful because we know how our system is."
Chairman of the commission, Sir Anthony Coleman, also enquired of Williams if the DPP ever replied. Williams said as far as he recalled, the DPP never responded to the Central Bank. Carter questioned Williams on Republic Bank Ltd and how well run Republic Bank was compared to Clico. Williams said it was successfully managed.
Ewart defends CLICO inaction
Carter said: "The only potential problem was its association with Clico and CIB because the CL Group had a majority shareholding in Republic Bank." |Williams replied: "They faced some tremors in early 2009 as a result of the Clico crisis."
Coleman asked Williams to compare characteristics of Clico with Republic Bank, "which was material to the survival of Republic Bank."
"Republic Bank was careful and conservative, Clico was adventurous. Republic Bank had a model that made it very profitable. For a while, the perception was that Clico was also successful, but I think we had exaggerated Clico's position. When we began to look more closely, we saw that strong profitability was not real; it was more a perception. I am trying to think of things they had in common, but nothing comes to mind," Williams said.
Wendy Ho Sing, deputy inspector of financial institutions at the Central Bank, also testified yesterday. Carter asked Ho Sing about Colfire insurance company, which is a subsidiary of the CL Financial Group. She replied that it had an independent board and did not collapse like Clico. Carter also referred to board documents in 2006 involving Gene Dziadyk, a former CL Financial board member, who raised concerns about where the group was heading.
Dziadyk said Duprey wanted to invest other people's money when he needed to manage his own. Carter, reading from board documents of CL Financial board meetings, said Dziadyk compared some of the activities of the CL Financial Group to a "Ponzi scheme." Carter asked Ho Sing if she was aware of any of these statements at the time. She replied that she was not.