(Trinidad Express) CLICO Investment Bank (CIB), a subsidiary of CL Financial, was yesterday described as a “bran tub” and a “cancer” by one of its founders, ambassador Mervyn Assam.
Assam, Ambassador Extraordinary and Plenipotentiary with responsibility for trade and investment, was one of CIB’s founders in 1990.
He resigned from CIB in 1995 after a tiff with CL Financial executive chairman Lawrence Duprey over the dismissal of an employee named Mala Gandhi and also because Basdeo Panday requested that he contest the general election on the United National Congress (UNC) slate.
Assam returned as the executive chairman of CIB in 2008 following the resignation of Andre Monteil from the post.
Assam originally began his testimony at the enquiry last week Friday but returned yesterday for his cross-examination to be completed.
During cross-examination by Stuart Young, legal representative for Ernst and Young, Assam described CIB as a “bran tub” in relation to its granting of loan facilities.
“I described what happened at CIB, I do not know if you know about it, I called it a bran tub, you know Catholic churches have a bazaar annually and they have a bran tub and you go and you put your hand into the bran tub and you pick up and you go. That is how loans were dispersed, like that and that was the end of it, it was a bran tub situation,” Assam said.
Assam said Monteil, through his company Stone Street Capital, was granted a loan for $78 million on February 14, 2007.
The loan was not booked on CIB’s financial records until a year later.
Assam said when he returned to CIB the financial shortcomings of CIB had already spread and was destroying the institution like a cancer.
“I would suspect that it was almost in my opinion like a cancer that had started sometime before and the cancer was becoming a little more aggressive and I was hoping that I would be able to do something to arrest the spread of that cancer and bring it back to remission,” Assam said.
Assam had pointed fingers at the Central Bank and auditors PricewaterhouseCoopers for allowing the financial institution to collapse because of lax regulations.
Queen’s Counsel Bankim Thanki said the Central Bank approached the Director of Public Prosecutions (DPP) to take action against CIB for the late filing of financial reports.
For four consecutive years CIB published their financial reports late, Thanki said.
Thanki said that there was also an incident when CLICO refused to allow the Central Bank on their premises to conduct an on site audit.
Assam threw the blame back at the Central Bank.
“It is passing strange that the (Central) Bank accepted a licence fee from CLICO Investment Bank (CIB) to open up a branch in San Fernando on February 3, 2009. It is most interesting,” Assam said.
On January 30, 2009, a Memorandum of Understanding (MOU) was signed with the former People’s National Movement (PNM) government for a billion-dollar bailout of CL Financial.
“Another interesting thing is I was advised that persons who were involved at CIB and who got some of these negative reports in terms of the various lack of compliance, these very persons were granted a provisional licence by the Central Bank to open up another financial institution in San Fernando. These are very interesting things to note, Mr Commissioner,” Assam said.
“If the Central Back were carrying out its business as it ought to have been carried out it is my view that they could not have accepted these things,” Assam said.
“The Central Bank in my respectful view exhibited some negligence in the conduct of its affairs under the Financial Institutions Act,” he said.
Assam also accused CL Financial’s external auditors PricewaterhouseCoopers (PwC) of “dropping the ball”.
The enquiry is scheduled to resume on February 23.
