CLICO $ absence a PNM handicap

First election in 19 years when CL big bucks won't boost party fortunes

By Camini Marajh Investigative Desk
Story Created: Jan 28, 2011 at 3:32 PM ECT

For more than a decade, the symbiotic relationship between CL Financial and Trinidad and Tobago's political system was good for business and good for one political cause or other.

From all accounts, CL Financial was allowed to operate outside the law for more than a decade.

And what's emerging from the findings of various probes into and forensic audits of past conduct in the company is a portrait of influence peddling and failed government regulation.

The influence of CL Financial's money crossed political lines. The People's National Movement Government (PNM) and the United National Congress (UNC), at different times in government, received direct payments and other considerations from the CL Financial Group.

In exchange for money CL Financial was putting into their respective campaign coffers, the PNM and the UNC allowed CL Financial to break the rules and blow past its risk limits-- a flawed business strategy that blew up in everyone's face in January 2009.
The business landscape has changed dramatically following the collapse of key financial institutions within the CL Financial Group.The changed financial condition of the CL Group has also shifted the political landscape.

No longer business as usual, this will be the first national elections in 19 years that CL's big money will not play a major part in greasing the PNM's campaign machinery.

As reported by this newspaper in June 2009, the CL Financial group was listed among the main political benefactors of the ruling party. While misrepresenting its financial state to the investing public, the group contributed some $20 million to the PNM war chest for the 2007 general election.

Though even then cash-poor, CLICO, the insurance giant, on June 28, 2007 issued to the PNM a cheque in the amount of $5 million. The CLICO cheque, drawn on a Republic Bank account at Independence Square, was made directly to the People's National Movement. It was endorsed less than a month before the November 4, 2007 vote by Rose Janneire, assistant party secretary, and by Linus Rogers, PNM elections officer.
At the time of the campaign payout, CLICO had already been flagged with solvency issues: a statutory fund deficit of close to a billion dollars, and dangerously excessive levels of inter-party transactions within the group.

The $100 billion financial behemoth, run by chairman Lawrence Duprey, took risk after risk, incurring scandal after scandal, and pursued brazen business tactics. It all worked well, until the international markets crashed in 2008.

CL Financial was mostly able to navigate past the many red flags raised almost two decades ago. This was not purely on account of luck but because of its political connections. And there were many.

But one man, Andre Monteil wielded tremendous power and influence within the Patrick Manning-led PNM Government, in office for four terms-- 1991 to 1995, 2001 to 2002, 2002 to 2007 and 2007 to 2010. Monteil, formidable powerhouse and dealmaker, was Duprey's top gun, former PNM party treasurer and, until April 2008, the CL Group's Financial Director, and chairman of CLICO Investment Bank.

His was the PNM face at CL Financial. Duprey has denied suggestions that he himself represented the UNC face. Still, despite his assertion that he is apolitical, his sympathies for former UNC political leader and Prime Minister Basdeo Panday were likely reflected in the scholarships he had given to Mr Panday's daughters.

Moreover, two of Duprey's top executives, Carlos John and Mervyn Assam sat in the UNC cabinet between 1995 and 2000..

Monteil's deal-making has drawn sharp criticism since 1995 when he made a takeover bid through a privately owned company of top CLICO executives, Viveka Holdings Ltd, for Republic Bank Ltd. Quietly in several transactions, Viveka had acquired a major block of Republic shares. The TTEC Pension Fund, of which Monteil was then chairman, had previously owned the controversial shares.

Frank Barsotti, then chairman of Republic Bank, resisted the hostile takeover, and argued that CLICO was not a suitable partner for the bank. But CL and its executives would go on to win the day, since the Stock Exchange lacked the legislated teeth to go after a private company, despite allegations of insider trading.

At the time of the transaction, Monteil's brother-in-law, Brian Kuei Tung was Finance Minister. Years later, Monteil, who is married to Kuei Tung's sister, Sherlyn, posted $1.6 million bail for his brother-in-law after the latter's arrest on charges related to the Piarco Airport project.

One Monteil deal in particular (the $110 million Home Mortgage Bank transaction) would challenge the credibility of the Manning Government. Prime Minister Manning upbraided his party treasurer in the House of Representatives and threatened to bring legislation to undo the deal, at no profit to Monteil. But before the Prime Minister could take that action, Monteil quietly sold the shares to the National Insurance Board for $130 million, pocketing $20 million profit plus two years of dividend payments.

By then, the close political bond between the Prime Minister and his party treasurer and chief fundraiser had become strained. Monteil was replaced on several state boards, including the HMB and he was also replaced as PNM treasurer.

At a time of tectonic shifts in CL's financial ground, the ruling party has gone into the electoral race with its two major fundraisers are off the field. Monteil is facing civil charges related to CIB borrowings used to fund the HMB acquisition and Calder Hart, the former executive chairman of UDECOTT, may face criminal charges.

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