(Trinidad Express) Gita Sakal, former corporate secretary of the collapsed CL Financial empire, said yesterday she kept a US$5 million cheque tucked inside her desk drawer for almost two months because she received a “significant pay” and did not need to run to the bank to deposit money every month.
Sakal made the statement yesterday while being cross-examined by Terrence Bharath, the legal representative for policyholders of failed insurance giant CLICO.
CLICO is a subsidiary of CL Financial.
She also admitted it was “regular practice” for executives of the conglomerate to approve payments to themselves.
Sakal yesterday took the witness stand for the second successive day at the Commission of Enquiry into the collapse of CL Financial and the Hindu Credit Union (HCU) at the Winsure Building, Richmond Street in Port of Spain.
In her witness statement Sakal said she received a US$35,000 monthly salary from CL Financial and a monthly retainer of $40,000 from CLICO for legal advice.
As the corporate secretary of CL Financial, Sakal said she received a US$5,000 fee for every board meeting she attended.
Sakal was paid more than TT$27 million from CL Financial the year before the cash-strapped conglomerate approached the State for financial assistance, Bharath said.
CL Financial received a financial rescue from the then PNM government after depositors requested hundreds of millions of dollars back from CLICO.
In 2008 Sakal was paid TT$12.2 million through her consultancy firm Discreet Logic Ltd and a further TT$14.9 million through her second consultancy firm Corporate Consultants, Bharath said.
On January 30, 2009 a bailout of the conglomerate was announced by the Central Bank at a press conference in Port of Spain.
In March, 2009 Sakal was paid a US$5 million cheque out of the accounts of CL Financial.
It was a “part payment of her contractual termination package”, Sakal said.
Asked who approved that payment, Sakal said the cheque which was made payable to Republic Bank Ltd was signed by Lawrence Duprey and herself.
Sakal said it was “nothing out of the ordinary” for executives to approve their own payments.
“It was the practice. It was not good corporate practice but there was no other practice to follow,” Sakal said.
Commissioner Sir Anthony Colman, described the policy adopted by CL Financial as a “private payment system”.
Bharath described the US$5 million payment to Sakal approved by herself in the midst of the financial difficulties of CL Financial as “the worst infraction of corporate governance”.
Asked by Bharath what she had done with the US$5 million cheque, Sakal said she kept it in her desk drawer.
“I placed it in the drawer of my desk and left it there. If you look at my pattern of deposits you will see not every month I make deposits because if you check my salary you will see I got a significant pay every month and I am not the type of person every month to take a cheque and run to the bank,” Sakal said.
“You will see sometimes I will have about three or four (cheques) and put it in the bank. I am not the person to go every month to the bank. This (the US$5 million cheque) was no different. It was there, it was handed to me, it was there. I did not go to the bank,” she said.
“I think you are one of the few people in this country who would keep a $30 million cheque for such a long time without seeking interest on it,” Bharath said.
“The bank does not give good interest anyway,” Sakal said in response.
Sakal said she returned the cheque after receiving threats from Michael Carballo, former group financial director of CL Financial, to tell all to the media.
Justin Phelps, Sakal’s attorney, described the manner of Bharath’s cross-examination as “oppressive” and aimed at “ruining” Sakal’s reputation.
“I now see why people paying a $2,000 fine and buying tickets to fly out of the country instead of coming to this Commission of Enquiry,” Sakal said during her cross-examination by Bharath.
Sakal said other executives of CL Financial were compensated in the same manner she was and her remuneration was not out of the ordinary.
