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Montei and Trotman ordered to pay CLICO almost $100M

by

#meta[ag-author]
Derek Achong
20210430205052
20210501

Derek Achong

For­mer Cli­co In­vest­ment Bank (CIB) chair­man An­dre Mon­teil and for­mer CIB Pres­i­dent Richard Trot­man have been or­dered to pay al­most $100 mil­lion in resti­tu­tion to their for­mer em­ploy­er over a con­tro­ver­sial un­se­cured loan to Mon­teil be­fore the bank’s col­lapse.

De­liv­er­ing a 129-page judge­ment, last week, High Court Judge Ava­son Quin­lan-Williams said that both Mon­teil and Trot­man were re­spon­si­ble for the un­paid $78 mil­lion loan as they breached their fidu­cia­ry du­ties to the bank in fa­cil­i­tat­ing it, well over a decade ago.

Quin­lan-Williams said: “I have found that the first and sec­ond de­fen­dants (Mon­teil and Trot­man) to lack cred­i­bil­i­ty and in many re­spects to be un­truth­ful wit­ness­es.”

“I make this state­ment be­cause those find­ings were crit­i­cal in the court’s fact-find­ing ex­er­cise and in com­ing to the con­clu­sion that the claimant (CIB) has suc­cess­ful­ly met their bur­den in prov­ing the case against the de­fen­dants,” she added.

In the law­suit, CIB was 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 his com­pa­ny Stone Street Cap­i­tal in Feb­ru­ary 2007 to help pur­chase shares in Home Mort­gage Bank (HMB) held by CIB’s par­ent com­pa­ny CL Fi­nan­cial (CLF).

Short­ly af­ter, the debt was trans­ferred to Mon­teil’s oth­er com­pa­ny First Cap­i­tal (St Lu­cia) Lim­it­ed, which then held his over 300,000 CLF shares, which at the time, were val­ued at al­most $444 mil­lion.

CIB was ini­tial­ly to hold Mon­teil’s new share­hold­ing in HMB as se­cu­ri­ty but when the debt was trans­ferred to First Cap­i­tal, it was sub­sti­tut­ed to that com­pa­ny’s CLF shares.

Mon­teil struck a deal with for­mer CLF ex­ec­u­tive chair­man Lawrence Duprey for him (Duprey) to take con­trol of First Cap­i­tal’s debt and as­sets in ex­change for the op­tion to pur­chase CLF’s 43 per cent share­hold­ing in HMB.

Mon­teil pur­chased the HMB shares us­ing the loan and oth­er fi­nances for $110 mil­lion and then sold them to the Na­tion­al In­sur­ance Board (NIB) for al­most the ex­act pur­chase price.

CIB filed the law­suit against the par­ties af­ter the Cen­tral Bank took over con­trol of it and CLF fol­low­ing the Gov­ern­ment’s bailout of both or­ga­ni­za­tions in 2009.

Tes­ti­fy­ing in the tri­al of the case in 2009, Trot­man ad­mit­ted that CIB of­fi­cials fab­ri­cat­ed doc­u­ments to make it ap­pear that it was, in fact, Duprey who had ini­tial­ly tak­en the loan in Feb­ru­ary 2007.

“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.

In dis­pos­ing of the case, Quin­lan-Williams ruled that CIB was en­ti­tled to resti­tu­tion for the $78 mil­lion loan less the a lit­tle over $1 mil­lion in HMB div­i­dends it re­ceived be­fore its hold over it was sub­sti­tut­ed to First Cap­i­tal’s CLF shares.

She al­so stat­ed that CIB was en­ti­tled to two and a half per­cent in­ter­est on the mon­ey be­tween when the law­suit was filed in 2011 and her judge­ment was de­liv­ered.

She de­clared that the trans­fer of the debt and se­cu­ri­ty sub­sti­tu­tion was void as they were not done with prop­er au­thor­i­ty and in breach of the duo’s fidu­cia­ry du­ties.

She al­so ruled that the duo and Stone Street had to ac­count for the as­sets they hold or held in their pos­ses­sion, which was ac­quired di­rect­ly or in­di­rect­ly from the pro­ceeds of the loan. CIB was al­so al­lowed to trace their as­sets for such in­for­ma­tion.

With re­gard to Mon­teil, Quin­lan-Williams not­ed that he knew that the loan was unau­tho­rised, in oral terms, did not have ad­e­quate se­cu­ri­ty and was grant­ed with­out due dili­gence from Trot­man.

“He knew that this was high­ly ir­reg­u­lar and not in CIB’s best in­ter­ests yet as Chair­man and a Di­rec­tor of CIB, he al­lowed it to hap­pen, leav­ing CIB ex­posed and un­se­cured,” she said.

She al­so said he act­ed dis­hon­est­ly by not dis­clos­ing the true pur­pose of the trans­fer and sub­sti­tu­tion.

“He de­lib­er­ate­ly mis­led Mr Trot­man and the CIB Board that the trans­fer of the loan oblig­a­tions was to an­oth­er of his com­pa­nies that would be a Stone Street sub­sidiary, name­ly FCL St Kitts,” she said.

Deal­ing with Trot­man, Quin­lan-Williams said he breached his fidu­cia­ry du­ty to act with care dili­gence and skill as a pru­dent ex­ec­u­tive would have done in com­pa­ra­ble cir­cum­stances.

She al­so not­ed that he failed in his fidu­cia­ry du­ties of loy­al­ty, hon­esty and good faith and did not act with the high­est stan­dard of pro­fes­sion­al and eth­i­cal com­pe­tence.

As part of the judge­ment, Quin­lan-Williams or­dered Mon­teil, Trot­man and Stone Street to pay CIB’s le­gal costs for bring­ing the law­suit.

She al­so grant­ed a 60 stay of ex­e­cu­tion of the judge­ment.

CIB was rep­re­sent­ed by Michael Green, QC, Na­dine Rati­ram, and Keilah Granger.

Ja­son Mootoo, Christo­pher Sieuc­hand, and Shiv­an­gelie Ra­moutar rep­re­sent­ed Mon­teil and his com­pa­ny.

Matthew Gayle rep­re­sent­ed Trot­man.


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