An­tho­ny Wil­son

The civ­il case brought by the Cen­tral Bank and Cli­co against for­mer CL Fi­nan­cial chair­man, Lawrence Duprey, for­mer CL Fi­nan­cial ex­ec­u­tive, An­dre Mon­teil, CL Fi­nan­cial and pri­vate com­pa­nies owned by Duprey and Mon­teil is no doubt well-in­ten­tioned. The Cen­tral Bank is­sued a press re­lease in April in which it fore­shad­owed the lit­i­ga­tion and al­so re­spond­ed to crit­i­cisms that it was not co­op­er­at­ing with the Com­mis­sion of En­quiry in­to the col­lapse of Cli­co by fail­ing to pro­vide the com­mis­sion with foren­sic au­dits by KP­MG and Lindquist Foren­sic Ac­count­ing In­ves­ti­ga­tions.

In that press re­lease, the Cen­tral Bank re­ferred to a state­ment by sole com­mis­sion­er Sir An­tho­ny Col­man on the first day of the En­quiry that the COE "can­not or­der com­pen­sa­tion even if it finds that fi­nan­cial loss has been due to the fault of par­tic­u­lar in­di­vid­u­als, com­pa­nies, firms or gov­ern­ment bod­ies." The Cen­tral Bank then stat­ed: "Fi­nan­cial re­cov­ery for the de­pos­i­tors and pol­i­cy­hold­ers can there­fore on­ly come from civ­il pro­ceed­ings, which the Bank and its le­gal team have been ac­tive­ly prepar­ing. The Bank has a du­ty not to make any dis­clo­sures that would jeop­ar­dise those pro­ceed­ings, and by ex­ten­sion pos­si­bly af­fect de­pos­i­tors and pol­i­cy­hold­ers get­ting jus­tice from the courts."

So the in­ten­tion of this lit­i­ga­tion brought against Duprey, Mon­teil and as­so­ci­at­ed com­pa­nies, ac­cord­ing to the Cen­tral Bank, is to seek "fi­nan­cial re­cov­ery for the de­pos­i­tors and pol­i­cy­hold­ers," which can "on­ly come from civ­il pro­ceed­ings." It would seem, from this state­ment, that the Cen­tral Bank be­lieves that these civ­il pro­ceed­ings against Duprey, Mon­teil and their as­so­ci­at­ed com­pa­nies are the "on­ly" means by which the long-suf­fer­ing Cli­co and British Amer­i­can pol­i­cy­hold­ers and own­ers of mu­tu­al funds can achieve "fi­nan­cial re­cov­ery" of the $12 bil­lion owed to them.

If that was what the Cen­tral Bank was sug­gest­ing by this de­fin­i­tive state­ment-and one ac­knowl­edges that the Cen­tral Bank may sim­ply have been a lit­tle loose in its use of lan­guage-then sure­ly the Cen­tral Bank was mis­tak­en. Civ­il pro­ceed­ings again Duprey, Mon­teil and their as­so­ci­at­ed com­pa­nies are not the "on­ly" means by which the pol­i­cy­hold­ers and de­pos­i­tors can achieve "fi­nan­cial re­cov­ery." The In­sur­ance Act out­lines, in some de­tail, the process by which an in­sur­ance com­pa­ny can be the sub­ject of a wind­ing up or­der. This re­quires the pe­ti­tion of ten or more pol­i­cy­hold­ers own­ing poli­cies of an ag­gre­gate sum as­sured of not less than $100,000 or on the pe­ti­tion of the Cen­tral Bank.

The In­sur­ance Act re­quires that leave shall not be grant­ed to present a wind­ing up pe­ti­tion un­less a "pri­ma fa­cie case has been es­tab­lished to the sat­is­fac­tion of the Court." The Act re­quires that "on mak­ing an or­der for the wind­ing up of a com­pa­ny, the Court shall ap­point a liq­uida­tor," who acts un­der the con­trol of the High Court and who may con­tin­ue to car­ry on long-term in­sur­ance busi­ness "with a view to its be­ing trans­ferred as a go­ing con­cern to an­oth­er in­sur­ance com­pa­ny, whether in ex­is­tence or be­ing formed for that pur­pose."

It is note­wor­thy that Sec­tion 79 (1) of the Act re­quires the liq­uida­tor to as­cer­tain "the val­ue of the li­a­bil­i­ty of the com­pa­ny to every per­son who, ac­cord­ing to the books of the com­pa­ny, is en­ti­tled to or is in­ter­est­ed in a pol­i­cy is­sued by the com­pa­ny and shall in­such man­ner as he thinks prop­er give no­tice to every such per­son of the val­ue so as­cer­tained." In the event of a wind­ing up or­der, the as­sets in the statu­to­ry fund should be val­ued and sold and the pro­ceeds there­of dis­trib­uted pari pas­su to all the pol­i­cy­hold­ers, ac­cord­ing to my un­der­stand­ing of this is­sue.

The In­sur­ance Act even has a pro­vi­sion where­by di­rec­tors, prin­ci­pal rep­re­sen­ta­tives or of­fi­cers of an in­sur­ance com­pa­ny can be held li­able and found guilty of mis­fea­sance if the statu­to­ry fund has been di­min­ished in con­tra­ven­tion to the law. So, civ­il pro­ceed­ings are not the "on­ly" way to en­sure "fi­nan­cial re­cov­ery" for the pol­i­cy­hold­ers and de­pos­i­tors (not even to men­tion a Gov­ern­ment-spon­sored bailout like the one Fi­nance Min­is­ter Win­ston Dook­er­an is about to un­veil or the res­o­lu­tion strat­e­gy pro­posed in this space re­cent­ly).

But is go­ing af­ter Duprey, Mon­teil and their as­so­ci­at­ed com­pa­nies the "best" way to en­sure fi­nan­cial re­cov­ery for the pol­i­cy­hold­ers and de­pos­i­tors? While it may pro­vide the coun­try with good the­atre and sat­is­fy those who feel that the "big boys" at CL Fi­nan­cial must be held to ac­count, there is co­gent ev­i­dence that civ­il pro­ceed­ings, as en­vis­aged by the Cen­tral Bank, are nei­ther cheap nor quick-es­pe­cial­ly when the lit­i­gants are per­sons of means. The lengths to which Ish­war Fal­barans­ingh and Steve Fer­gu­son have gone in at­tempt­ing to avoid be­ing ex­tra­dit­ed to the US to face bid-rig­ging and mon­ey laun­der­ing charges should be in­struc­tive as to the is­sue of time and cost.

There is no doubt that Duprey and Mon­teil will be as vig­or­ous in de­fend­ing them­selves with con­sti­tu­tion­al mo­tions, ju­di­cial re­view ap­pli­ca­tions, ap­peals fol­lowed by more mo­tions and ju­di­cial re­view ap­pli­ca­tions for years and years and years. The Cen­tral Bank is al­so, it seems to me, tak­ing a cal­cu­lat­ed risk in go­ing the way of civ­il pro­ceed­ings. It is a fact that Cli­co, along with oth­er in­sur­ance com­pa­nies in this coun­try, was placed un­der the reg­u­la­to­ry am­bit of the Cen­tral Bank in 2004. This means that for five years Cli­co was re­quired to sub­mit its ac­counts to the Cen­tral Bank and ex­pose it­self to pos­si­bil­i­ty of on­site vis­its from the reg­u­la­tor.

Any civ­il pro­ceed­ings brought against Duprey, who was chair­man of Cli­co for years up to Jan­u­ary 30, 2009, may serve to lay bear the ex­tent of reg­u­la­to­ry fore­bear­ance that Cli­co was al­lowed, ne­go­ti­at­ed or de­mand­ed. Duprey and Mon­teil may have in their pos­ses­sion let­ters, doc­u­ments and re­ports that they would wish to make pub­lic in the event the civ­il pro­ceed­ings go ahead. It would be in­ter­est­ing, there­fore, to see whether these pro­ceed­ings are held in open court or in cham­bers. The fact that the state­ment of case was not made avail­able to the me­dia on Tues­day when this mat­ter was filed may be in­struc­tive in how this case will pro­ceed.

I am ful­ly aligned with those who feel that the ex­ec­u­tives re­spon­si­ble for the col­lapse of Cli­co, CL Fi­nan­cial, Cli­co In­vest­ment Bank and British Amer­i­can should be held to ac­count. Giv­en the oth­er reme­dies avail­able for "fi­nan­cial re­cov­ery," if the Cen­tral Bank had re­al ev­i­dence of malfea­sance, maybe the doc­u­men­ta­tion in its pos­ses­sion should have been turned over the Di­rec­tor of Pub­lic Pros­e­cu­tions, who is the per­son re­spon­si­ble for bring­ing crim­i­nal charges. There is a great deal of ex­pla­na­tion that the Cen­tral Bank needs to do in this mat­ter.